The Pros and Cons Of Working Oversea

Ever thought about working oversea? Not a bad idea huh, I will list some pro & con of working oversea.

Pro’s of working oversea:

•You make good money depend on your location. I have been working in the Middle East for over 2 years so you can expect around $80,000 - $250,000 if you’re looking in the Middle East. There are many construction projects worldwide that you can consider like Africa, Dubai, Germany, and more.

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When is it a good time to Invest? NOW!

So when is it a good time to invest? Face it a lot of people are nervous about the market. Some have witness several bear market like the dot-com crash @ 1991-2001 and the financial crash @ 2008. Developing a plan and sticking to it will help you achieve your long term goals. (Check out my asset allocation plan Here. The key is to not panic when the market is due on a correction. Now is the time to invest!

The reason you should invest now is that no one has a crystal ball that will tell you if the market will rise or fall. The longer you wait the more procrastinating you’re doing its impossible to time the market, currently the S&P 500 is at an all time high of 1800 points. No one can tell you that next year it will gain 500 points or lose 500 points. Your best option is to dollar cost average your money into the market. This will take your mental emotion out of the way trying to time the market. The younger you are the more time you will have to ride out the bump on the road. Focusing on your long term goals will prevent you from taking any shortcuts,

What’s the best plan? To contribute a fix amount monthly, some month you will buy low and some you will buy high. Remember you’re investing toward your future, keeping your money in a saving account will do you no good because it will not be able to keep up with inflation. Sometime you have to take a little risk to gain a bit. By risk I do not mean to invest all in one stock diversify your holding and do not put all your eggs in one basket. Learn more about index investing for diversification Here. Remember the longer you wait the more time you will lose from seeing your basket grow. Just set it and forget it (Okay maybe not forget it, but just automate monthly fund to your investment account).

Developing a Asset Allocation Plan

What is an asset allocation plan? Basically it is an individual investment plan that is pertain to your level of risk, diversification, and to achieve your financial goals. Figuring out how much risk you want to take, do you want to go 100% stock or 80% stock and 20% bond? Diversification can be investing in foreign holding, REIT, small cap, mid cap, large cap, and etc. Constructing a diversify portfolio will minimize your risk, if one sector go down the drain the other might not be affected. The other sector may be able to post some gains and lift under performing sectors. Many people have the mentality of just following the media and the hype of big company. When price drop they tend to panic and sell. Developing an asset allocation plan can ease your mind; make an effort to rebalanced your portfolio every year so your portfolio doesn’t go out of whack. Since you develop a plan you will be able to sell high and buy low. Remember you’re investing for the long term and remember your financial goals, because everyone will eventually want to retire and sitting on a beach drinking some tequila. I know I want to eventually.

Building a Financial Foundation

Think of building a concrete foundation for a house. Without proper mixture in concrete the concrete will become weak and eventually crack. This is the same concept of building a foundation for your finances. We need strong support pillar in order to have comfortable lives. How do we do that? There is several ways.

Budgeting – How much are you spending & earning? Write down every dollar you spend that way you can develop a habit to track your money. I recommend trimming any unnecessary expense; do you eat out for lunch often? Brown bag your lunch, instead of driving, try biking or walking depends on your location. Look for bundle package deal for entertainment like your internet, television, and phone. Make sure you’re not spending more then you make.

Debts – Having tons of debt will be a setback, find ways to trim expense and add more to your payment. Student loan can be both good and bad. Although it can further your education it can also leave you in a position drowning with debt. Search for marketable skills that will be useful and have employment growth. Only you can decide if it’s worth going for a major that is in demand or going for a major of your passion.  Pay off credit card if you have high interest rate. It does not make sense if you have a credit card bill with a interest rate of 6%+  and also putting money in an saving account earning less than 1%.

Emergency Fund – Consider opening a saving account for emergency enough for 3 – 6 month. This will be your last resort fund, and should not be touch unless you absolutely need it. Like for car repairs, medical emergency, and etc.

Retirement account – Do take advantage of your employer company 401k, you should contribute enough to get your company match. If you have excess money you can contribute up to the max $17,500 for 2014. If you still have more left over consider opening a Roth/IRA account the max you can put is $5,500 for 2014 and will vary between your incomes. Check with your tax advisor to see if you are eligible for Roth there is an income limit on an ROTH IRA.

Investing – If you still have money left over consider investing in index funds. I advise not to invest in individual stock it is too volatile, you can try if you would like but only invest in a certain amount that you’re willing to lose. I prefer investing in Vanguard due to their low cost index fund, but there are several other companies you can go with. I recommend figuring out an asset allocation like 80% stock and 20% bond, depends on your comfort zone.

By taking these small steps you can build a strong foundation, that way when you have several small cracks you can weather the storm.