App Review: Any.do To-Do List & Task List

Today’s app review is for the Any.do app, the premier to-do and task list manager. It’s so easy to get overwhelmed with your endless list of things to do — Any.do really helps out.

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What Any.do Is

The Any.do app lets you organize to-do and task lists. When you first install it, it asks you what you would like to organize.

Any.do Organize

Once you choose your categories, you can then add your to-do list. As you add them, you can quickly mark them as completed by swiping right. You can also reorganize tasks by dragging them to the order you desire.

Any.do To Do List

If you would like to share a list with someone else, you simply add them as a sharer. Imagine that you and your spouse are grocery shopping and you want to split up the duties of getting groceries. You could make a list, share it with your spouse, and each of you can see as the other crosses items off the list.

Any.do Shared Lists

Who Made Any.do

Any.DO was founded in 2010 by Omer Perchik, Yoni Lindenfeld & Itay Kahana. Frustrated by the inefficiency of the available tools to actually help organize his life, Omer was inspired to do something about it. His goal was to create a tool to simplify the way people organize their lives, to allow them more time for fun. He really hit the mark with Any.do.

Why Any.do is Awesome

The simplicity of the user interface is what makes Any.do so awesome. For example, to add a new item, you swipe down. To complete an item, you swipe right. To get rid of completed items, you shake your phone and the app exclaims “WOW!“. Very cool.

Download for iPhone  |  Android

About this Blog

Steve and his wife built a software company, sold it and retired early. Steve enjoys blogging about lifestyle freedom, financial independence and technology. If you like this blog, subscribe here to get an email each time he posts.

If you like this post, you might also like these prior posts:

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Can working from Home make you Happier?

Have you ever tried working from home? Can it make you happier or will it stress you out? I’ve worked from home for many years and I definitely prefer it to going to the office. Here is why.

Less Wasted Time

You probably know people who spend an hour each way commuting each day.

Working from home

By the time you factor in a round trip, it could be 2 hours of wasted time each day. Imagine digging into your work for those 2 hours, you could accomplish a lot more and finish up sooner so that you can head outdoors and do something really fun. Working from home has its advantages.

Fitness can be part of your Day

If you’re an early riser like me, you can get started working while still in your pajamas. After you’ve worked a couple of hours, you can break for a couple of hours and enjoy some exercise. For me, it’s cycling, working out with weights, hiking, walking on the beach, or golfing.

Working from Home Allows Fitness

Once you’ve finished your exercise, you can wash up and spend several hours really heads-down on your work. You’ll come at it with a renewed state of mind. Working from home will undoubtedly be more productive.

Eliminating Time Draining Meetings

When you work in an office environment, it leads to lots of unnecessary meetings. By working from home, you can close the door, shut down your email, and work with a purpose.

Working from Home eliminates meetings

I find that I accomplish lots more when working at home than in the office because I am not constantly interrupted. When I do have virtual meetings, I limit them to 1 hour and I ensure we have clear objectives for the meeting and assignments once we leave.

Scheduling House Hold Appointments

Sometimes you need to be at home for an appointment. Whether it be meeting the cable person, waiting for a package to arrive or something similar, working from home gives you the freedom to schedule those types of appointments.

Working from Home Meet Others

If I get pulled away from my work during these appointments, I can work later that night if I need to make the time up. It provides a lot of flexibility.

Conclusion

Working at home can be a big improvement over working in an office. You will be more productive, more flexible, and happier. If you’ve worked at home before, please share your story in the comments below.

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About this Blog

Steve and his wife built a software company, sold it and retired early. Steve enjoys blogging about lifestyle freedom, financial independence, and technology. If you like this blog, subscribe here to get an email each time he posts.

If you like this post, you might also like these prior posts:

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Why it’s important to have Twitter Followers (and how to get them)

Just a year ago, I had 630 Twitter followers. At the time of this writing (November 2015), I have 22,600 Twitter followers. By growing your Twitter followers, you will get your message out to more people. This will result in more sales (if you are a business) or more visibility and social clout if you are doing it from a personal perspective.

Twitter statistics

So how did I go from 630 followers in November 2014 to over 22,600 a year later?

Related post: Success stories for driving more blog visits

Follow Others

The first key is to follow other Twitter accounts, especially people who have similar interests as you or to what you are selling. When you follow someone, they are more likely to follow you back. I try to follow about 500 new people per day.

Unfollow Others

If you begin following someone and they are not following you back, consider unfollowing them. There are times when you will want to follow people who are not following you back. For example, you may follow business mentors, famous people, or others that are unlikely to follow you back. That’s totally fine and it makes sense in those scenarios. But for the most part, unfollow those that don’t follow back.

Unfollow Inactive Twitter Accounts

Some people create a Twitter account but never use it. If they are not using it, they will never see your message, so there’s no need to continue following them. My rule of thumb is that if someone is not active in Twitter for a month, I unfollow them.

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Follow Competitor’s Followers

If you are selling a product, it’s a good idea to find out who is following your competitor and follow those people. If they were interested enough in your competitor’s tweets, they are probably open to seeing yours.

Follow People with Similar Interests

If you are selling a product that helps with productivity, you can easily find Twitter accounts that follow productivity experts. By following those people, they will probably be interested in your product since it solves an issue they are already interested in.

Tweet Often with Good Content

I normally tweet about once an hour and I tweet articles that I am interested in. I figure if I find a cool article, my Twitter followers will also enjoy that article. By streaming hourly Tweets, you will build fans that want to see more of your tweets.

Twitter Automation

If you made it this far into this post, you are probably scratching your head saying “how can you follow 500 people a day and tweet every hour?”. The secret is automation. I spend about 30 to 45 minutes a day building my Twitter followers and setting up automated tweets that fire every hour.

I use a tool called Crowdfire to follow 500 people a day, unfollow those that have not followed me back, unfollow inactive Twitter accounts, and to find new followers with my interests or from a competitor. Crowdfire costs me $9.99 a month and is well worth the cost.

Crowdfire

To tweet every hour of the day, I use a tool called ViralContentBuzz. ViralContentBuzz allows you to post your own articles for others to tweet. In exchange, you can find interesting articles that others have posted and schedule them to tweet on whatever schedule you decide (I do it hourly).

ViralContentBuzz

ViralContentBuzz has a free edition (that’s the one I use) and it allows you to build up credits by tweeting other people’s articles. Since I am doing this hourly, it gives me plenty of credits to allow other people to tweet my articles.

Further Reading

If you really want to maximize visitors to your website or blog, there are other strategies you can use as well. For example, you will need to implement good SEO strategies, post your articles on different distribution platforms, and market your blog. If you want more information on that, see an article I recently wrote entitled “WordPress SEO: 10 Tips to Boost your Google Ranking“.

Also, check out these success stories I’ve been a part of for driving more blog visits.

Conclusion

By following the tips in this article, you will begin gaining more Twitter followers and driving more traffic to your website or blog. If you’ve discovered other strategies that have worked, please share them in the comments below.

About this Blog

Steve and his wife built a software company, sold it and retired early. Steve enjoys blogging about lifestyle freedom, financial independence, and technology. If you like this blog, subscribe here to get an email each time he posts.

If you like this post, you might also like these prior posts:

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Financial Independence 101: How are Stocks and Bonds Classified?

This is a continuation of my Financial Independence blog posts related to financial education. I’m creating the blogs so that our two sons that will be graduating college soon will have a better understanding of personal finance.

How are Stocks Classified?

Normally you will see stocks classified by market capitalization and industry.

Stock Classifications

Market capitalization (commonly referred to as “market cap”) is how much a company is worth. In other words, it is the number of shares of stock outstanding multiplied by the current stock price for a specific company.  When looking for stocks, you will see 3 types of market capitalizations:

  • Small cap – Companies worth less than $2 billion
  • Mid cap – Companies worth between $2 billion and $10 billion
  • Large cap – Companies worth more than $10 billion

Industry categorization refers to what type of industry the company is in. For example, companies may be in utilities, healthcare, energy, telecom, technology, etc.

Finally, stocks may be domestic or international. Sometimes, domestic stocks do better than international funds (think about the financial issues in Greece), but sometimes international funds fare better than domestic ones.

How are Bonds Classified?

Normally you will see bonds classified by bond type and credit rating.

Bond classifications

Bond types refer to different segments of bonds. For example, companies issue corporate bonds while governments issue treasury and municipal bonds. Additionally, you will see agency bonds, high yield bonds, and foreign bonds.

Credit rating reflects how credit worthy the issuer of the bond is.  It is similar to grades we received in school (A, B, C, and D), with A being the best (meaning the least risky). Within each grade (A for example), you can have varying levels of credit worthiness (A-, A, A+, AA-, AA, AA+, AAA), with AAA being the most credit worthy available. When looking at bonds, here is a general guideline of riskiness:

  • A- through AAA – Not very risky.
  • B- through BBB – Medium risk.
  • C- through CCC – High risk.
  • D through DDD – Very high risk.

Why should you care about Classification?

When investing, it’s a good idea to diversify your portfolio. In other words, if you put all your money in a single stock like Exxon, what happens if the company has a major oil spill and the company goes belly up. You guessed it, you would lose all your money.

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In that example, let’s say you diversified but within the same industry (let’s say you put money in Exxon, Texaco, and Chevron). If an oil crisis happens, you will probably lose money in all 3 of these stocks because they are in the same industry.

Similarly, when investing in bonds, you may not want to buy only government bonds because there may be times when the government defaults on bonds or money for them dries up. So like stocks, it is a good idea to diversify your holdings among different classifications.

Meet Mr. Diversification

Now that you have a good understanding of classifications, you probably figured out that it’s a good idea to diversify your stocks and bonds in different categories so that you spread out your risk. If that’s what you’re thinking, you’re right!

However, figuring all of this out and buying enough different stocks and bonds can be a maintenance headache. Luckily, there’s a solution. It’s called mutual funds and bond funds.

A mutual fund is comprised of lots of different stocks and they may be in different industries and market capitalization. So rather than buy a lot of different stocks, you can simply purchase two or three mutual funds and be fully diversified. You can even purchase stocks that are comprised of the S&P 500 (giving you a really well-diversified investment).

Similarly, you can purchase bond funds that invest in different types of bonds with different credit ratings and this provides the diversification you seek.

Conclusion

Now that you have an understanding of stock and bond classifications, let’s get to the bottom line. Once you start your career, set aside money for savings and have that money automatically deducted from your paycheck. Start with 15% of your paycheck, more if you can swing it.

Open up a Fidelity account and begin contributing money to a few mutual funds. If you want to really diversify, I suggest these 4 funds to invest equal amounts in:

  • FUSVX – A mutual fund that invests in S&P 500 stocks
  • FSEVX – A mutual fund that invests in small and mid cap stocks
  • FSITX – A bond fund that invests in credit worthy bonds (note: if you are young and have 30 or more years before you retire, you may consider delaying the purchase of bonds for a while since you will not care as much about market fluctuations).
  • FSIVX – A mutual fund that invests in international stocks (like those in Europe).

Finally, track your budget and investments with an online tool. Personal Capital is an excellent tool for this and best of all, it’s free**. This is a great start to financial independence!

** Note: I have no affiliation with Fidelity nor do I get any compensation, I am just more familiar with their services than other investment companies so that is why I recommend them in this article. I am an affiliate for Personal Capital, it is a totally free and superior way to keep watch over your investments. I would never recommend anything that I don’t personally use and completely believe in, so give it a try.

About this Blog

Steve and his wife built a software company, sold it and retired early. Steve enjoys blogging about lifestyle freedom, financial independence, and technology. If you like this blog, subscribe here to get an email each time he posts.

If you like this post, you might also like these prior posts:

What do you think of these financial independence training articles? Leave me a comment to let me know your thoughts!

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How to fix Selfie Photos (Facetune makes it beautiful)

Today’s app review is for the Facetune app. If you’ve ever create a selfie or photo of a friend and it did not turn out well, you can fix it with Facetune.

Beautify photos with Facetune

What Facetune Is

The Facetune app is all about improving your photos. We all create photos that are not picture perfect. Correcting photos with tools like Photoshop can be expensive and hard to learn. With Facetune, you can smooth blemishes, erase imperfections, whiten teeth, and cover over gray hair. You can even reshape jawlines, apply makeup, reshape noses, and much more.

Once you open a photo, you can choose an action (like to smooth an area of skin) and correct it:

Facetune Smooth Blemishes

You can also whiten teeth and enhance your smile. You can even make smiles wider and more pronounced:

Facetune Whiten Teeth

Removing pimples and other facial blemishes is a breeze:

Facetune Erase Pimples

Once you’ve edited a photo, you can quickly compare it to the original.

Who Made It

Lightricks Ltd is the developer of Facetune.

Why Facetune is Awesome

Facetune is awesome because you can quickly fix selfies and other photos without purchasing expensive photo editing software like Photoshop. It’s easy to use and quick to learn.

Download for iPhone  |  Download for Android

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About this Blog

Steve and his wife built a software company, sold it and retired early. Steve enjoys blogging about lifestyle freedom, financial independence, and technology. If you like this blog, subscribe here to get an email each time he posts.

If you like this post, you might also like these prior posts:

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How to Accomplish More (Dream Big Baby!)

Throughout the years, I’ve met lots of people who dream big. Here are some common dreams I hear:

  • I am wrapped up in a career I hate, I would just love to [job they would love to have]
  • I have a great idea for a product, I bet it will do really great
  • I would love to retire early and travel
  • It would be great to save a million dollars and only work on things I’m passionate about
  • If only I could become a scratch golfer [or similar sports-related goals]
  • I want to work for myself and plan out my own day

I’ve met lots of people who set these types of goals. Some make them happen and some don’t. Meet an interesting couple that made their dreams come true:

Dream Big: Bob and Robin Charlton

Bob and Robin Charlton were in their late 20’s, in debt and working in jobs that no longer excited them. They had a dream to travel more. But how could they do it? They had an epiphany. They decided that if their dream was to come true, they had to put a plan in place to make it happen. Here’s how they did it:

  1. They dared to dream big: Retire within 15 years
  2. They set goals for accomplishing the dream
  3. Robin retooled her skills so that she could get a better paying job
  4. They attacked their debt and built an emergency fund
  5. They invested every extra cent into index fund investments
  6. They reduced their expenses and rented out part of their home to bring in additional income

Fast forward 15 years later, Bob and Robin retired at age 43. Now they travel to exotic locations– for many months at a time. They are still very frugal and live on 4% per year of their investments — a safe withdrawal rate that will last them the rest of their lives without the need to work again. Dream big, it pays off!

Bob wrote a book entitled “How to Retire Early” that tells their story in detail– it is very inspirational. If you want to see their travels, check out their website.

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Dreaming Big Without Committed Goals

I could mention another 5 or so people I’ve known over the years that have shared their dream with me and I’ve seen them convert that dream to reality. However, I could tell you about another 50 or so people who have shared their dream but never saw it through. Here’s why:

  • It must be a shared dream. If you’re married, your family must buy into it or it will not work.
  • Dreaming is not enough, you also need goals. You must have a plan for making it happen. You have to set “dream big” goals and create a list of tasks you do every day that supports that goal.
  • You have to analyze everything. Once you begin working on daily tasks that support your goal, you will find that some things work and some don’t. You must build in the time to analyze everything you do and adjust until you find the right formula for what works.
  • Conquering big dreams takes a lot of work.  If it were easy, everyone would do it. It’s very hard and time intensive to your reach your goals, so be prepared to sacrifice to achieve it.

Conclusion

I hope this post has inspired you to dream big and to figure out what goals you must put into place to make them a reality. If you’re working towards a “dream big” goal (or have already accomplished one), please share your story in the comments below.

About this Blog

Steve and his wife built a software company, sold it and retired early. Steve enjoys blogging about lifestyle freedom, financial independence, and technology. If you like this blog, subscribe here to get an email each time he posts.

If you like this post, you might also like these prior posts:

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3 Favorite Travel Blogs of the Week

I hope you had a great week. Since the weather’s turning colder, I thought it would be a good time to share some travel blogs, these are my favorites from this week. I hope you enjoy it, have a great weekend!

The Gorgeous McWay Falls of Big Sur in California

We visited Bir Sur, California a few years ago, but this blogger really captured the beauty of the rugged cliffs and incredible seas.  Read the full article

Travel Blogs: McWay Falls Big Sur California

Planning a Trip? Organize Your Documents!

Travel Blogs - Organize Your Documents

If you’re planning a trip out of the country, it’s wise to think about the types of documents you’ll need handy (passports, etc.). This blog talks about the documents you will need and how to safeguard them. Read the full article

Thailand’s 10 Most Beautiful Beaches

I’ve always wanted to visit Thailand, it is still on my bucket list. This week I found an article that provides a slideshow of the 10 most beautiful beaches there (#5 was my favorite).  Read the full article

Travel Blogs - Railey Bay Thailand

About this Blog

Steve and his wife built a software company, sold it and retired early. Steve enjoys blogging about lifestyle freedom, financial independence, and technology. If you like this blog, subscribe here to get an email each time he posts.

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If you like this post, you might also like these prior posts:

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Ask Alexa: How Popular is your Website or Blog?

I’ve been blogging for years, but I’ve just started taking it more seriously a couple of months ago. I decided I would start blogging more often and I wanted a way to determine how well the strategy was working. Here are some strategies for determining your blog popularity using Alexa and to build your following more quickly.

Using Alexa to determine my blogs popularity

Using Alexa to Determine Blog Popularity

Alexa (http://www.Alexa.com) is a ranking system created by Amazon that tracks the number of visitors sites get. The lower your Alexa score, the more popular your site is — if your score is below 200,000, you’ve got a pretty popular website.

When I first checked my Alexa ranking a couple of months ago, it had a Global Ranking over 10 million and the USA ranking was over 1 million. Not so good.

Now after 3 months of focused blogging, I have improved my Alexa ranking to just over 1 million globally and about 148,000 in the USA and it is improving by leaps and bounds each month.

Related Post: Success stories for driving more blog visits

Using Alexa to Analyze Your Website

If you want to check your Alexa ranking, simply navigate to Alexa.com and type in your website URL, it will analyze your site.

Alexa Traffic Rank

Here’s what mine says as of the date of publishing (October 2015):

Alexa Traffic Ranking

Once my blog is ranked under 100,000, it will start to compare my site to others so I am working hard to reduce my ranking.  It will also tell you where the majority of your traffic comes from — for me it is from the USA and India.

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Visitor Engagement

Next, it shows me how engaged my visitors are, here are my stats:

Alexa Engagement Statistics

I am pretty proud of these numbers, here’s what they mean:

  • Bounce Rate – This is how often people come to my site and only view the page they landed on. For my site, it is 34% of the time. In other words, 66% of the time, people find other content on my website that they like and continue looking at other pages. If you can get your bounce rate to 50% or less, you are doing well.
  • Daily Pageviews per Visitor – This is the number of pages a single user will view on your site in one day. If you can get this number over 3, you are doing well.
  • Daily Time on Site – This is how long people are hanging out on your site. My visitors are spending over 10 minutes a day on my site — that’s pretty good. If you can get that number over 5 minutes, it is good.

Sites Linking In

Finally, use Alexa to view the number of sites that are linking to you. If other sites are linking to your site, search engines reward you because it assumes you have important content on your site. One of your strategies is to get more people linking to your site and this is a way of determining if this strategy is working:

Alexa Sites Linking In

The Alexa Toolbar

If you want to check the Alexa ranking of any site you land on, consider installing the Alexa toolbar, it makes it a lot easier.

How I Improved My Alexa Ranking

I greatly improved my site visits and Alexa ranking in under 3 months, so you may be wondering how I did it. Here’s my strategy:

  • Create Great Content – I spend a lot of time thinking of interesting content that I think others will enjoy.
  • Blog often – I try to create at least one new blog post a week, more if I can.
  • Make each blog SEO friendly – If you’re spending the time creating a blog post, make it SEO friendly so that the search engines can find it, here is how to do that.
  • Market each blog post – I market my blog posts on Twitter, Facebook, Stumble Upon, ViralContentBuzz, Google+, LinkedIn, BlogSpot, Tumblr, Pinterest, Medium, Niume.com, Buzzsumo, and Gizmodo.
  • Follow Other Blogs – I follow other bloggers that I admire and am interested in. Each time they post a blog, I post a comment on their blog. Many of those blogs use a tool called CommentLuv which puts a backlink to your website when you post a comment. This is how to get other sites linking back to you.
  • Build Your Twitter Following – At the time of this writing, I have almost 22,000 Twitter followers. When you tweet something (like your blog post), a lot of people see it and many times they will retweet it to their followers. Use a tool like Crowdfire to build your following.
  • Participate in Discussion Forums – I regularly participate in discussion forums where I ask and respond to questions. In each forum, I have a link to my blog and my Twitter account. People are curious and will visit your site as they see you posting in these forums. The forums I used most often are Mr. Money Mustache, Reddit, and Blonde on a Budget. I don’t use this strategy specifically to drive traffic, I just enjoy the interactions. But it does have a side benefit of driving traffic.
  • Joining a Tribe – I’ve just discovered this technique, but the idea is that you can interact with a group of other people that have similar blog content and you can share each other’s content. The software I use for this is Triberr and I think this will become a regular part of my blog strategy.
  • Create an About.Me page – An About.Me page is an online profile where others can learn about you, here is mine.  I include that information in the signature line of each email that I send out, here is how my email signature looks:

    Steve Miller
    www.FlipFlopSoftware.com
    Twitter  |  Facebook  |  LinkedIn  | About.Me

Conclusion

With a bit of effort, you can drive more visitors to your website and improve your Alexa ranking. I hope you enjoyed the tips I provided for building your website following, do you have other tips that I haven’t considered?

Related Post: Success stories for driving more blog visits

About this Blog

Steve and his wife built a software company, sold it and retired early. Steve enjoys blogging about lifestyle freedom, financial independence, and technology. If you like this blog, subscribe here to get an email each time he posts.

If you like this post, you might also like these prior posts:

Follow me: Twitter  |  Facebook  |  LinkedIn  |  Subscribe to this Blog

Dont Worry Be Happy

Don’t Worry Be Happy

How many times have you worried about things that never came to pass? I call these ghost worries and I’ve had my share in the past. As the Bobby McFerrin song goes “Don’t Worry Be Happy“. I have to admit, I enjoy being positive and happy. It’s much better than the alternative. Here’s how I approach it.

Be Happy Free Your Mind

Be Happy: Free Your Mind

We all get worked up about things in life. Our job is a big contributor. We think about all of the things that can go wrong with customers, peers, and management. If you are running your own business, you are probably worrying about revenue, paying your employees, the next sale, and your exit strategy.

When we built our business, I had a laundry list of things I regularly worried about that never came true. If only I would have had the fortitude to put those thoughts to the back of my mind, it would have saved a lot of strife. Fast forward 16 years after I started my business, I realize how unfounded that worry was. I am happy, it all worked out OK.

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Since then, I’ve learned to free my mind of worry. If worry begins to bottle up, here is how I address it:

  • Find a quiet spot and sit with my eyes closed
  • Focus on removing all negative thoughts, be mindful of happy thoughts
  • Stay still for 10 minutes practicing removing the negative thoughts

Be happy by hanging out with positive people

Be Happy: Hang Out with Positive People

People can bring drama into your life or they can be incredibly encouraging. Why deal with drama? Life’s too short. So how do you find people that are positive and happy? Start by being positive yourself. Here’s how:

  • When you see people, give them a smile and say hello
  • Do something special for someone without expecting anything in return
  • Listen intently when talking with friends, put your phone away
  • Provide advice when asked and be supportive
  • Be truly happy for your friends when great things happen in their life

You’ll find that the more positive energy you emit, the more that is returned to you. Before long, you will be attracting only positive people, so the negative people will simply fall by the wayside.

Be Happy and dont worry about things outside of your control

Don’t Worry About Things Outside of Your Control

We all have spears of control. For example, I can control my health by not smoking, exercising, and eating healthy. However, some things are totally outside of my control. For example, I can’t control taxes, how a particular senator votes or how a specific person feels about me (in fact, it’s really none of my business how someone else thinks of me, it’s their own personal thought that belongs only to them).

For things I can’t control, I don’t spend time worrying about them. Complaining to my neighbor or friend about taxes, the government or a rumor I heard about someone is a waste of time. I can’t change it, therefore, I’m not going to spend energy worrying about it.

Instead, I spend my time focusing on things I can control: my health, being happy, my financial situation, and my relationships. Those are things that deserve my attention.

Tell Me About Your Experiences

Drop me a comment to let me know how you’ve focused on being happy and becoming worry free. What tips have you find that worked well? How has it affected your life?

About this Blog

Steve and his wife built a software company, sold it and retired early. Steve enjoys blogging about lifestyle freedom, financial independence and technology. If you like this blog, subscribe here to get an email each time he posts.

If you like this post, you might also like these prior posts:

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What are bonds

Financial Independence 101: What are Bonds?

This is a continuation of my Financial Independence blog posts related to financial education. I’m creating the blogs so that our two sons that will be graduating college soon will have a better understanding of personal finance.

Financial Independence 101: What are Bonds?

Investors tend to talk about buying and selling stocks and bonds. But what is a bond?

Bonds are simply a loan or an IOU, but you serve as the bank. 

Stocks and bonds are the primary ways companies raise money to grow their business. As discussed in our last blog post, when you purchase stock, you are purchasing ownership in the company. When you purchase bonds, you are lending money to the company and receive interest payments on that investment.

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Bonds have a fixed term (called a maturity date), normally 5 to 20 years but companies that issue bonds may “call them” (purchase them back) prior to maturity.

Related Post: Financial Independence 101: What are Stocks?

Who Issues Bonds?

Both companies and the government issue bonds to finance projects. Municipal bonds are issued by city and state governments. The US government issues Savings Bonds, Treasury securities, T-Bills and Treasury Bonds.

Why buy Bonds?

Buying bonds is a defensive play when you are building a balanced portfolio. Generally, the value of a bond rises when interest rates fall and fall when interest rates rise. So normally if the stock market starts to tank, your bond values will rise, protecting you from the ups and downs of the stock market.

When the stock market tanked in August of 2015, the value of my stock index mutual funds tanked but my bond index funds did well. This was my protection. Because we are retired, I draw money from our retirement portfolio every so often to pay for our living expenses. Since our stock funds were down, I could cash in some of our bond funds if I needed cash, and we would not lose money from the stocks that were in decline at the moment.

How do you purchase bonds?

Bonds are sold through brokerage accounts (Fidelity, Vanguard or some other financial institution).  You can also purchase government bonds directly from the US Treasury at TreasuryDirect, but I recommend having an investment account (like Fidelity). Once you have an account, you can buy and sell stock and bonds online. This account will become your portal to financial independence.

Is it risky to purchase bonds?

Bonds are much less risky than stocks but do not normally produce as high of a return. Again, it is your defensive play for when the stock market is in decline. One of the drawbacks of investing in bonds is that they have a set maturity date, so you cannot sell them at will.

Bond mutual funds solve this issue. A bond mutual fund is a collection of bonds (normally hundreds of bonds) that allow you to buy or sell at any time. The mutual fund is managed by a company and you pay a small fee to the mutual fund management company for having them manage it. The amount you pay is called the expense ratio, so look for mutual funds with low expense ratios (I look for those with an expense ratio of .15% or less).

Conclusion

Now that you have an understanding of bonds and financial freedom, let’s get to the bottom line. Once you start your career, set aside money for savings and have that money automatically deducted from your paycheck. Start with 15% of your paycheck, more if you can swing it.

Open up a Fidelity account and begin contributing money to a few mutual funds. If you want to really diversify, I suggest these 4 mutual funds to invest equal amounts in:

  • FUSVX – Invests in S&P 500 stocks
  • FSEVX – invests in smaller yet stable companies
  • FSITX – Invests in bonds (note: if you are young and have 30 or more years before you retire, you may consider delaying the purchase of bonds for a while since you will not care as much about market fluctuations).
  • FSIVX – Invests in international stocks (like those in Europe).

Finally, track your budget and investments with an online tool. Personal Capital is an excellent tool for this and best of all, it’s free**. This is a great start to financial independence!

** Note: I have no affiliation with Fidelity nor do I get any compensation, I am just more familiar with their services than other investment companies so that is why I recommend them in this article. I am an affiliate for Personal Capital, it is a totally free and superior way to keep watch over your investments. I would never recommend anything that I don’t personally use and completely believe in, so give it a try.

About this Blog

Steve and his wife built a software company, sold it and retired early. Steve enjoys blogging about lifestyle freedom, financial independence and technology. If you like this blog, subscribe here to get an email each time he posts.

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