Alan’s Financial Tips – Ask Yourself

We saw a 50% or greater drop in equities as we did in 2008, at my age, could I absorb that loss??  Negative returns are painful. And the ugly mathematical reality is that gains and losses are nonsymmetrical.       For example, a loss of 14.08% requires a gain of 16.39% to break even.   A loss of 20% requires a subsequent …

Alan’s Financial Tips – Warnings for Excessive Debt

Rule 20 Total consumer non collateral debt should not exceed 20% of net monthly income. Rule 28 Total collateral debt should not exceed 28% of net monthly income. Rule 36 Total debt should not exceed 36% of net monthly income. There is a high incident of default when debt exceeds any of these limits, and most always when debt exceeds …

Alan’s Financial Tips – Compound Interest

Those who do not plan, plan to fail. The first person to live to 150 is alive today. There is no such thing as a free lunch.  (Milton Friedman) Compound interest is the most powerful force in the universe.  (Albert Einstein) A $10,000 investment compounded at 7% would grow to:   $20,000 after 10 years $40,000 after 20 years $80,000 …