Worst mistake people make in financial planning?
They focus on a ‘magic number’ to reach, instead of asking, ‘What does it cost me to live and how can I create cash flow to cover the cost?’ People must know if they can afford their lifestyle.
How should they create cash flow?
People say, ‘I want to grow my money from $100K to $200K.’ But I’d rather they say, ‘I want my $100K to give me a 5 percent return each year.’ We need income streams.
Dividends are critical, moreso than what stocks are worth. Why?
Some companies pay dividends every quarter and have for 50 years. Some have raised dividends yearly for the last 10 years. Do your research. Investing in companies that make consumer staples is smart.
Why should those still in their 50s think about downsizing?
Unless there’s untold millions, most people need to consider how they can cut costs in the near future. You may not need that big house anymore. You invest differently for your needs than your wants.
What else should people ask themselves?
‘Can I throw another hat in the ring?’ Start an entrepreneurial venture even if you have a job. I would not want to rely on someone else’s benevolence for my ability to live.