This presentation was very interesting because it was introducing the main concept about personal finance management, on different perspective, thanks to a mortgage planner, a financial planner and a tax advisor.
Here are some of the key points of the presentation.
Don't put all your eggs in the same basket:
Most of the time, when you invest, as you know a specific market or industry, you keep your focus on it. For example, if you are from the pharmaceutical industry, you will try to get the best companies of the market. But you have to enlarge the picture, because in case of a market crash, you will be happy to have some other shares invested in other industries keeping growing to counter balance the loss.
In the Silicon Valley, people have a big egg in a basket:
Indeed, a lot of Silicon Valley residents have large stock options, worth sometimes couple of million dollars. These options are centered on one company and, of course one industry, the High Tech. This is a very dangerous situation, especially because the High Tech business is highly speculative, as we have seen with the Internet crash couple of years ago. Therefore, it is primordial to have your money balanced between different industries.
House rich, cash poor:
This situation occurs when you own a property, especially in California, worth a million dollar for example, but you don't have no cash. In this situation, you are in big trouble, because if you lose your job or you have an unplanned expense coming up, you won't be able to face it. Cash is king, you must have a cash reserve in order to have a financial security.
Don't forget cahs is king. Cash is what allow you to jump on an occasion (whether it is an investment or a big expense) but also to support you during by time. Because you might have an equity of 1 million dollars, but to access it while you are in need, you will have to sell your house... So plan it and try to get some equity out at least to face wisely some possible issues.
The power of having a tax advisor
People don't really see the value of a tax advisor. If you manage well your taxes, you will be able to save an extensive amount of money.
There are three different persons that you can give your money to after you pass away:
- Your familly
- The government
The seminar was very interesting and people seemed to learn a lot. I did.