Writer, All About Business

I will be a change-agent in bridging the wealth creation gap for African-Americans.  Before the start of my freshman year in college, I found out my father committed credit fraud on my brother and I,  because my father didn’t effectively manage his credit, debt, or budget.  Sadly, this story is told too often in the minority community because we, in the minority community, lack the education and the training necessary to not make this a reality.

The lack of knowledge and exposure to investing among African-Americans represents an emerging national crisis that will add to the already growing financial burdens facing our society.  Research has shown that African-Americans have largely been left out of wealth building opportunities due to a variety of factors, including financial barriers such as high minimum investment requirements, high transaction fees, and high commissions.  I hope to help reduce these barriers so that everyone can participate.

I am dedicated to spending the rest of my life perfecting this craft – providing services that equip minorities with the knowledge needed for economic independence and financial security.  I love working with money, multiplying money, and investing money.  Having grown up in a household where my mother worked tenaciously to provide for my younger brother and me, I realize that there is a vast disparity of opportunity between people who have money and those who do not.  The black community has to think about building adequate nest eggs to carry themselves through old age and to leave for generations to build upon.  We need to learn how to let money make money for us.

Society has shaped me to love the value of the dollar bill.  I realize that money fuels every facet of life from municipal philanthropic endeavors to multibillion dollar conglomerates; money is the lifeblood of it all.  Money breeds opportunities and my vision is to eventually run a company whose services enable families – the Wall Street professionals, the middle-class parents, and especially people who may be unaware of the importance of those services when they first walk through the office doors – to effectively plan for their futures and financial freedom.

Mark Steward is a native of Texas and a humble 2006 graduate of Morehouse College where he obtained his BA in Business Administration with a concentration in Accounting.  Upon graduation he worked for a couple of years as an Investment Banking Analyst in the Financial Institutions Group for JPMorgan Chase based out of New York. Mr. Steward moved back to Dallas, Texas in 2008 and is currently a Reinsurance Financial Analyst for State National Companies.  His customer base includes a wide range of insurers from reinsurance to property & casualty.  Mr. Steward is a President of Toastmaster’s Aegonizers, member of Student Sponsor Partners and math tutor at KIPP Truth Academy.  Mr. Steward also serves on the executive board of the Urban League of Greater Dallas. Since leaving his home state of Texas, Mr. Steward continues his commitment to mentorship wherever he resides.  Regardless of the audience, Mr. Steward’s passion for continuous improvement, whether in finance or community outreach, always manifests itself.

Written By Manyell L . Akinfe , SVP of Optimum Capital Management, LLC

The Credit Card Accountability, Responsibility and Disclosure Act better known as CARD went into full effect yesterday.  The act which was signed by Obama last May will put a stop to some of the most unfair tactics creditors use to increase their bottom line. But reform does not take the place of responsibility.  While CARD covers a number of important areas which are summarized here, it does not put a cap on interest rates or fees. Companies still have plenty of room to recoup the billions they’re set to lose as a result of the act.  It’s  more important than ever to read both your statement and the annoying leaflets that come along with them each month. Companies usually bury important changes and modifications to your account in these leaflets and it’s your responsibility to read them.  Be on the lookout for the three most common fees. 

INACTIVITY FEE: If you don’t use it, you’ll pay for it. It cost the credit card companies money to maintain your account and they expect activity in return. Activity translates into dollars when you use your  card irresponsibly.  Since many cardholders are scaling back usage the inactivity fee is a way to stay in your pockets regardless of your activity. 

STATEMENT OR PAPER FEE: That’s right. Every little penny counts so if you wish to continue receiving paper statements be prepared to pay.  The buck a month they usually charge seems pretty petty but there are over 630 million credit cards in circulation which means more than $7.5 billion in additional revenue.  KACHING!

ANNUAL FEE: Long gone are the days when it was easy to find a card without an annual fee.  More companies are charging for simply carrying their card.

Searching Want Ads

Jobs, jobs, jobs…while the economy seems to be improving, those who have stumbled upon the ranks of the unemployed find little comfort in recent statistics (i.e. three months of US housing price increases). Even though many economists project slightly positive Gross Domestic Product growth in the US  during the third and fourth quarters of 2009,   it will still continue to feel like a recession to millions across this country because the labor market is usually one of the last economic indicators to show improvement in an improving economic environment.  With this country on a course to see a double digit unemployment rate according to many economist estimates, is there any reason to have hope?  The answer is absolutely! 
 
Whenever I discuss financial tips/strategies for the unemployed, many in the audience respond with bewildered looks coupled with a “huh?!”  Or I get the classic oversimplified response which states, “FIND A JOB!”  This is great advice, but there are other financial strategies for those who find themselves unwillingly placed into the ranks of the unemployed. 
 
1.      Get Rid of Foolish Pride – Many people feel that their job is an integral part of their identity.  They take pride in their career and being laid off or fired can be a huge blow to the ego.  I have spoken with many who experience a sense of shame upon finding themselves unemployed.  This shame can lead to medical ailments such as depression or stress.  Going into a shell or becoming the life of the party to mask the reality of your situation from your friends are both very normal occurrences.  Picking up the dinner tab with friends, shopping sprees, and trying to put on the facade that things are still normal is a very destructive and expensive habit. Not only are you using money which should be kept in your savings, but you are depriving yourself of a very important resource…your network. 

Your network of family, friends and acquaintances who can help you find employment is often more expansive than you realize.  Very often your friends and family are more likely to work harder for you to find employment than random strangers who read your resume on websites and with employment agencies.  The more people who know about your situation, the more support you will have from those willing to go the extra mile to provide assistance.  Warm referrals, placing resumes directly into the hands of people who can make hiring decisions, and constantly monitoring the employment scene are more likely to occur by people who care about your future.  In addition, using social networking sites like Linkedin, Facebook, and Myspace can magnify your outreach to others who can assist you in your search. 
   
2.      File for Benefits – There are some unemployed who feel so disillusioned and embarrassed by their situation that they are reluctant to file for unemployment benefits.  However, there are measures in the recent stimulus bill that are designed to help those who have lost their jobs which include:
•         lengthening the period which people can be eligible for unemployment benefits.
•         suspending the taxation of benefits up to $2,400
•         providing a 65% subsidy to cover COBRA health insurance premiums for up to nine months
•         increasing the maximum monthly food-stamp benefit by 13%
 

3.      Join the Ranks of the “Under Employed” – Having “a” job is better than having “no” job.  The mortgage company or your landlord will not stop collecting rent just because you lost your job.  If you find it hard to find a job in your first field of choice, you must begin to look for the next best thing.  There are thousands in my hometown of Detroit who are in this very predicament…they were laid off from the automobile industry and have no other training but that which applies to a suffering industry.  If you can, find a job that will at least help pay bills you can remain above water. While you are working as an “under-employed” individual, consider other options that you might pursue while you are working – options that will expand your scope of career choices and therefore make you more marketable.  For example, community colleges offer inexpensive classes and training, non-profits offer free and inexpensive certification courses (consult your local politicians office for a list of community resources), and the internet has made the new education and training search much easier. Never look at a temporary job as a negative or a step backwards; think of it as a positive event that buys you the time to look for the job of your first choice while allowing you to pay your bills. 

4.      Get CHEAP! – Your pot of funds now has a finite ending and every penny spent gets you one penny closer to that scary ZERO figure! Now is the time to design a budget for your household, tighten your belt, use coupons, buy food in bulk, use only your ATM machine to avoid charges, and eliminate all impulse spending.

Lowering your interest rates can assist in lowering your monthly bills so inquire about lowering your interest rates on your credit cards or your eligibility to refinance your home.  Fannie Mae has reported that up to 50% of individuals who own a loan from Freddie Mac or Fannie Mae and who are eligible for a loan refinance have not taken advantage of the opportunity to get a lower interest rate. 

Here are a few other quick tips that will allow you to cut costs:

• Cut all unnecessary luxury spending that create monthly bills such as cell phone bills (use a house phone and carry two quarters), gym memberships (work out at home), garage parking in the city (park on side streets), and magazine subscriptions (read articles on the internet for free at the library).
• Only take on additional debt in the case of an emergency. 
• Talk to your accountant about researching all legal tax strategies that you can utilize.
• No more loans or money gifts to family members and/or loved ones. 

5.      Make Job Searching a Job – If you are unemployed, your new job is to find a job.  Create an organized database listing all places that have received your resumes, the primary contact person and and an expected date to hear from them.  Rank them in your database according to the likelihood of receiving a yes.  Start your search early in the morning and set as many appointments as possible.  Schedule meetings and appointments on a daily basis since the more time that you spend away from home the more productive you will be and less time will be spent watching daily talk shows. 
6.      Stay Healthy – Even with the 65% COBRA subsidy from the government, maintaining health insurance can be costly.  Whether you elect to maintain health insurance or not (I always advise against going without health insurance) make sure you are taking every precaution to remain healthy. Eat more healthy foods and less junk food.  As we all know, junk food is not only high in calories but it is usually filled with sugar which leads to more costly trips to the dentist.  Work out at least three times per week for a minimum of 30 minutes per day, wash your hands regularly, get plenty of sleep, and take up yoga at home.  Staying healthy is not only good for the body, but it helps to maintain a positive/confident outlook that will make for a more impressive job interview. 

7.      Don’t Touch Your 401K (if you can help it) – Try your best not to have a knee jerk reaction to raid your 401K or company retirement plan.  Keep in mind, just because your statement reads “$50,000” does not mean you have that much to withdraw.  If you consider the federal, state, and perhaps city taxes on the funds that you have invested along with the 10% early withdrawal penalty and the possibility of deducting any matching funds contributed by your company (if you are not fully vested), that $50,000 could easily turn into  $25,000.  Raiding the company retirement plan should be the absolute last option. 

8.      Investing is Not a Priority – If you have other investments, don’t use this as a time to check your portfolio every minute hoping that the $10 stock turns into the next Google.  This is unnecessary stress in your life.  If you were putting funds into an account monthly, those funds should now be diverted into your checking or savings account with the most access.  Liquidity is your best friend in these times of hardship and stocks are not liquid.  Even if you have your funds i n a standard, non-qualified brokerage account you may not have to pay a penalty for the sale of a stock but you have tax liabilities if you have gains.  As with the 401K, stop your investing in these funds, but don’t rush to liquidate these funds at first.  However, if you are forced with the choice between paying rent and keeping a position in a stock, and you have exalted ALL other options, feel free to sell the stock. 

9.      Decide Which Bills to Pay First – After you have exhausted all options, if you are unemployed there may be a time to make hard decisions about which bills take priority.  This should not be determined by which collection agencies are the most annoying or seem to yell the loudest.  If you cannot pay your light bill you may lose your lights.  If you cannot pay your phone bill you may lose your phone.  However, if you cannot pay your rent or mortgage you will lose your home.  Losing your phone or lights might be a tremendous loss, but not as big of a loss as having to sleep on the street.  I am not suggesting that it is okay to skip any bill payment that you owe as this is irresponsible and negatively impacts your credit; however, when hard times are upon us we must keep things in proper perspective. 

Here are a few things to consider BEFORE you decide to skip a bill payment:

• Have you called the companies before to negotiate a payment plan?
• Have you checked your budget and cut all luxury expenditures to see if you can squeeze out a few extra dollars?
• Do you have any items around the home of value that you would consider selling? Is it time to host that yard sale that you have been considering?
 
10.  Don’t Get Suckered – When desperation sits in, financial offers that you would not have considered before now begin to look more attractive. The financial predators are constantly swimming in the waters trying to attract those who are worried, anxious, and concerned that using “traditional” strategies of working hard will not be effective.  These are the commercials that only play during the middle of the day or late at night when the typical employed person will never see them. They offer you overnight fame by purchasing the most effective real estate system ever created or magical options trading software that can never be incorrect.  For a small  fee you will be able to purchase your financial freedom…what a deal!  Your money is too valuable to waste on false notions of fast prosperity.  

11.  Have Faith! – What other choice do you have? Faith is not waiting on a unicorn to prance into your life or a rainbow to form which signifies the end of your misery.  Faith is half believing and half acting on that belief.  People behave according to what they believe will happen.  So if you believe that things will continue to be bleak, your job search will weaken and this will lessen the chances of finding a job.  However, if you believe that your future will be bright, and you hold onto this positive outlook, you will be more likely to do the work that is necessary to find employment.  I promise this to you, if you hold on to the belief that you will find a job, and aggressively pursue that belief, you will survive these hard times!

Given today’s economic challenges, this is not the time to start panicking. Instead we must carefully plan our next financial steps to ride out this storm intact. The steps outlined below are tangible solutions to guide you and your loved ones in making sound financial decisions during this uncertain time. Let one of Optimum’s qualified advisors work with you to start your tomorrow today!

At one time or another we’ve all heard the ominous, monotone and quite frankly annoying tone that typically interrupts our favorite television or radio program to let us know these famous words—”This is a coordinated monthly test of the Emergency Alert System (EAS). If this had been an actual emergency, official messages would have followed the alert tone. This concludes this test of the Emergency Alert System.” We are then returned to our regularly scheduled program already in progress. Like EAS, today’s economic crisis may initially frustrate and confuse us, but we should not panic thinking the world is on the verge of total collapse. Therefore we must heed sound instruction and most importantly use this as a signal to adequately prepare and protect our financial futures.

Rising foreclosures, decreasing values of retirement plans, tight credit lending, plummeting stock markets and bank recovery plans have experts saying we are experiencing our biggest financial emergency test since the Great Depression. But the good news is that all is not lost and we WILL recover if we are patient and diligent enough to ride out the ups and downs of this economic storm.

So How Do I Prepare?

We’ve all heard the advice, “Save for a rainy day” but lately today’s economy makes me wonder if we should be saving for a monsoon! With that being said, preparation is the key to riding out any storm, including economic storms. Most Floridians put together hurricane kits ready at a moment notice with basic survival items just as Californians will have a similar earthquake kit and New Yorkers may have one for adverse winter weather. As a person who rode out several hurricanes and tornadoes, I can attest that being prepared helps calm some of the fear and anxiety that often comes with uncertainty. It gives a sense of peace that at the very least, I know my basic needs will be provided. The same is true for our finances. We can be calm about our financial situation during times like these when we’ve taken the time to plan. Our Economic Survival Kits should include the following:

• Develop a written budget that is enforced and realistic, avoiding large purchases unless absolutely necessary and affordable within the budget.
• Ensure everyone is held accountable for following the household plan.
• Contribute to an Emergency Savings account to cover at least 3-6 months (or more depending on your occupation) of your living expenses in a high-yield savings account.
• Create diversified investment portfolios (i.e. retirement acct) with the proper asset allocation according to your individual risk tolerance and market conditions.
• Consider alternative methods for earning extra income to further increase your savings potential (e.g. selling unwanted items on eBay, consignment stores, yard sales, seasonal employment, etc.).
• Consider barter agreements with neighbors, family and friends for babysitting and other services.
• Maintain adequate life, health, disability and property insurance – now is not the time to drop coverage in order to minimize your expenses.
• Prioritize debt repayment with the goal of being completely debt free.
• Establish estate planning documents such as wills, trusts, living wills, durable power of attorney, etc.
• Don’t forget to continue in your efforts of responsibly “giving” to others who are in need, as we remember the proverb, “Give and it shall be given unto you”.

If you’ve already put together your Economic Survival Kit, Congratulations! You’re well on your way to minimizing your economic collateral damage and today’s economy will test your preparation efforts to sustain your family during financial downturns. But I suspect that most of you are reading this thinking, “I don’t have any of these items prepared for my economic future and I’m doomed for failure.” Not so, as there is still time to start putting these things in place. Even if you are only able to place one item in your Economic Survival Kit, it will go a long way in creating stability during these times. The most critical thing to start doing today is changing your bad financial habits (i.e. using credit card for consumption purposes, not saving) and replacing them with sound financial disciplines that will render the greatest results.
One of Optimum’s qualified representatives will gladly assist you with any questions you may have about how the economy directly affects you. Remember, we are in this economic test together so don’t stress knowing that at some point we will return to regular programming.

If you had a choice of receiving $100,000 toward your retirement or a penny that doubled for 30 years, which would you choose. Most would choose the $100,000 and miss out on a whopping $10.7 million.
Grow Penny Grow
Years Interest Earned Your Balance
1 $0.01 $0.02
2 $0.02 $0.04
3 $0.04 $0.08
4 $0.08 $0.16
5 $0.16 $0.32
10 $5.12 $10.24
15 $163.84 $327.68
20 $5,242.88 $10,485.76
25 $167,772.16 $335,544.32
30 $5,368,708.80 $10,737,417.0

Although financial institutes don’t offer you an annual percentage rate of 100% the above example illustrates the power of compound interest. Compound interest is the concept of earning interest on top of interest. It’s the reason a penny can grow to ten million without another cent being added to the account. Each year the dollar amount of interest earned increases in response to a growing balance. Without compounding, the account would have only gained $0.01 a year and grown to a measly $ 0.30.

Getting a head start on savings will also lower your monthly retirement bill making it easier to fit into your budget. Imagine you discover by using a retirement calculator that you’ll need $500,000 to retire at 65. If you start saving at 25 your monthly commitment would be $78 to achieve your goal, if you wait until your 35 that number increases to $219.* That extra $141 a month could be used to save for a house, pay off debt or take a vacation. What you use the money for is insignificant to the high price you paid for procrastinating.

Now that you’re clear nothing can replace the rewards of starting early, here are three things to remember when socking away money for retirement:

1. Maintain a positive attitude

Don’t look at saving as a burden. Focus on how you’ll feel once you reach your goal and take pride in knowing you are taking the necessary steps to plan for your tomorrow today.

2. Perform checkups

Examine your progress at least twice a year. Make sure your on track to retire at your desired age, verify your money will last and confirm you’ll be able to afford the lifestyle you want during retirement. To help with your examination work with a financial advisor or try one of the free retirement calculators on bankrate.com.

3. Keep a long-term perspective

Sometimes you’ll look at your balance and feel you’ll never reach your goal. You’ll come up with a million and one reasons to withdraw your money. Don’t do it! Remember you can only replace missed time with more money and who’s signing up for that.

We must be proactive in planning our financial future. With the cost of living increases, staggering health care cost and a troubled social security system we must partner with time to accumulate an adequate retirement fund.

To develop a retirement strategy that fits your income level and financial goals contact your Optimum representative today at 877-75-TEACH (83224).

Some of you might have started to add up the numbers for a few days, thought that the numbers weren’t adding up fast enough, and decided to take choice (a).  Others might have already known the power of doubling, and automatically selected choice (b).  Or, with the idea that there might be some sort of trick in place, some may have decided that (b) was the better choice.  However, how many of you actually sat down and worked it out to the end to see exactly where it would go?

Well, the answer, if you haven’t seen this question already is that (a) gives you $30,000, while choice (b) gives you $5,737,418 by day 30.  This simple test exemplifies the problem many of us have with our money.  Too many times we go for the “quick fix” instead of really trying to understand the powerful influence that money has over our lives.  Just as it is not responsible to automatically choose (a) or (b) for whatever reason, it is not appropriate to let your gut reflexes rule your behavior.

We often don’t realize, or even think about how our financial decisions are affecting our lives.  Do you drink Starbucks coffee everyday before work?  If it costs you $2.75 per weekday, you are spending roughly $700 dollars per year on coffee.  Seven hundred dollars invested at 6% per year equates to $3,945 dollars in five years, $9,226 in 10 years, and $38,405 in 25 years, and $55,340 in thirty years.  What kind of TV cable package do you have at home?  Do you have the basic package, or do you have all the extra channels?  This difference can equate to around $25 dollars extra spent per month.  This amount invested at 6% equates to $1,744 after 5 years, $4,096 after 10 years, $17,324 after 25 years, and $25,112 after 30 years.  How many regular cash outflows in your life can be cut and re-directed towards savings?

Don’t get me wrong, this is not to say that you do not deserve to have some of the finer things in life.  You work hard for your money, and you deserve to treat yourself occasionally.  There is no reason to live an unhappy life because you are totally depriving yourself. However, if you think about some of the things that used to make you happy when you were making less income, you will realize that happiness seems to change according to your income.  Items once thought to be luxuries are now purchased so frequently that they have become necessities.  Making more money should not mean that you spend more money.  With each dollar spent, ask yourself in what way is this going to benefit you; think about the investment.  Before you buy that $2,000 jacket on impulse, ponder your purchase decision overnight.  Most likely, you will find that you are not inclined to make that purchase the next day.  “There is an appointed time for everything.  And there is a time for every event under heaven.” (Ecclesiastes 3:1)  The right investment at the wrong time is the wrong investment.  This applies when buying coffee; and also applies when purchasing real estate, stocks and bonds.

I urge each of you to make a budget of your expenses.  Watch the budget and maintain it year after year.  As your income grows, you will be able to see where your extra money is going.  Put that extra money towards savings.  The sooner you begin to save, the faster your money will work for you.  A proficient financial planner can also assist you with this process.  If you save just $2.74 per day – $1,000 per year- and earn 10 percent on the savings, you will have $486,000 in 40 years.  Start just one year less, and save for 39 years, you will miss out on $45,260 worth of savings.  If you haven’t started already, plan to start saving today!

God bless, and make that money work people.

Author:  Ryan C. Mack, President of Optimum Capital Management, LLC
If you have any questions call 718-623-3423 and email info@optimum-capital.com.

This behavior is not just in this city, however.  You can find exuberant spending habits all over the nation.  In the US, by their 65th birthday, 93% people are either passed or require financial support of family, friends, and/or social security.  This means that only 7% of individuals are able to support themselves comfortably upon retirement.  It seems a shame to think that most in this nation will work for 40 – 50 years only to be dependent.

Our resource allocation really needs a lot of assistance.  A recent survey by AC Nielsen revealed that 28% of Americans have no spending cash after covering expenses.  Out of the 38 countries surveyed, we ranked among the highest in income, but we also ranked among the highest in consumer spending and debt acquisition.  In terms of saving of our assets, we ranked 33rd among the nations surveyed.  Bottom line is…we have to do better!

Each of us has an obligation to our future families and ourselves to be a responsible steward of our finances.  We can’t live like 50 Cent, if we only have 50 cents in our pocket.  We must determine what is important to us, and determine from our values and beliefs what will truly make us happy.  The majority of millionaires are unaffected by pressures of society, and from media hype that attempts to portray what is “cool”.  You will hear about Mike Tyson tipping a waitress $10,000, but you won’t hear about Warren Buffett still living in the same house he purchased with his wife before he made his fortune.  Or the multi-millionaire CFO of a major Fortune 500 company spotted in the Men’s Warehouse purchasing a $200 suit off the rack, then putting his new suit into the trunk of his brand new Honda Civic.

How much do you have left over after you have covered your expenses?  How many miscellaneous expenses are you incurring each month that aren’t necessary?  Do you really need to eat out every day?  When drinking alcohol, while you call yourself a social drinker, are you really drinking because you like to drink?  Or do you accept the 300%-400% markup on a beverage because of pressures of society (heaven forbid that you are the only one at the event without a drink in your hand)?

We each need to budget, plan, and save if we are to be able to achieve true wealth.  We must prepare for the days of necessity.  I will leave you with this Aesop’s fable…

The Ant and the Grasshopper

In a field one summer’s day a Grasshopper was hopping about, chirping and singing to its heart’s content.  An Ant passed by, bearing along with great toil an ear of corn he was taking to the nest.

“Why not come and chat with me,” said the Grasshopper, “instead of toiling and moiling in that way?”

“I am helping to lay up food for the winter,” said the Ant, “and recommend you to do the same.”

“Why bother about winter?” said the Grasshopper; we have got plenty of food at present.” But the Ant went on its way and continued its toil.  When the winter came the Grasshopper had no food and found itself dying of hunger, while it saw the ants distributing every day corn and grain from the stores they had collected in the summer. Then the Grasshopper knew:

Author:  Ryan C. Mack, President of Optimum Capital Management, LLC
Contact: 877-75-TEACH (83224) or info@optimum-capital.com

WHAT TO DO WHEN YOU ARE A VICTIM OF IDENTITY THEFT

1. Contact one of the three credit bureaus and ask that an extended fraud alert be put on your account. This will require all creditors to contact you directly before granting any new credit in your name. The bureau you contact will share this information with the two other bureaus. The fraud divisions can be reached at:
EQUIFAX: 800-525-6285

EXPERIAN: 888-397-3742

TRANSUNION: 800-680-7289
2. Contact your local police department and ask to file a criminal complaint. Some police departments aren’t too thrilled to do this, since it is a very difficult case to pursue. But be persistent; simply having the complaint document is going to help you deal with cleaning up your reputation with creditors.

3. Complete the Federal Trade Commission’s ID Fraud Affidavit and submit it to all creditors where you have an ID Theft dispute.

Your credit score is your ticket to many things in your life.  Whether or not you can buy a house, the level of your interest rate on your house which controls your mortgage payments, your car payments, your ability to get business loans, whether you get that new job, and even the amount of insurance coverage you can get can all be negatively affected by a low FICO score and bad credit.  Start today and get your credit in order.

Written By: Ryan C. Mack, President of Optimum Capital Management, LLC
For Questions and Comments Call 718-623-3423 or Email info@optimum-capital.com

How many times have you heard financial advisors, bankers and other “financial gurus” say that “You should have a diversified portfolio”? Well, they are correct. Diversification is the key in any portfolio and should reflect multiple investments. By choosing multiple asset types you protect yourself from the risk of declining value in one particular asset type thereby having a negative impact on your cash flow and net worth.

Typically the word “diversification” makes you think about having the right mix of stocks, bonds, and mutual funds in your 401k or 403b. These assets are extremely important when creating a diversified portfolio; however, they do not tell the whole story of diversification. There are actually four major asset classes that everyone should invest in to truly have a diversified portfolio:

1. YOU
2. Paper Assets
3. Real Estate
4. Business Development / Entrepreneurship

From a financial context when you increase the presence of these four asset classes in your portfolio, you also increase the ability of those assets to generate income and create wealth for you.

Of the four asset classes, YOU are the greatest and most important asset in your portfolio. When you begin to invest in yourself, you not only increase your value but you are positioned to increase your income as well. You can increase your value by:

• Returning to school for another degree
• Reading a book a month
• Meeting someone new every month
• Learning another language
• Learning to play an instrument
• Joining the gym
• Learning a new trade

When an employer takes note that you are well educated, speak three languages, have a Rolodex filled with valuable contacts and have great ideas, you become an invaluable asset to that employer giving you more bargaining power and leverage when it comes time to negotiate your salary and bonus.

The second asset class is paper assets. We are most familiar with these assets, such as stocks, bonds and mutual funds. Most invest in these assets through publicly traded companies with the purpose of increasing their value and producing income through dividends. Ultimately your net worth is increased as the company increases in value. Your paper asset portfolio can be increased by investing in quality assets, such as certain ETF’s and mutual funds representing the entire stock market.

Real estate investments is the third asset class and can increase your income through rental income and your net worth through the appreciation of the property. You can further increase the value of your real estate portfolio by making improvements and/or renovations to your property to enhance its value.

The fourth asset class is business development. Owning and investing in your business is a major endeavor with the potential to yield great income levels and increase your net worth over time. Studying the wealthiest people in the world, 99% of them own businesses and/or invest in other people who have their own businesses. You may not have an interest in starting your own company; however, you can still have an equity stake in someone else who has a privately held business.

True diversification is all about investing in all the major asset classes in order to protect your income and net worth from being negatively affected. If we have learned anything from the global financial crisis over the last year, we have learned that we cannot rely upon any one asset class, but we must invest in all of them to protect us against unforeseen events that may happen.

Ok, pop quiz. Have you ever made one or more the following statements in your lifetime?

1. “I promise to start my exercise plan tomorrow, seriously.”
2. “If I just lose 5 pounds, I won’t have to pray before trying to squeeze into those new jeans.”
3. “I really need to stop smoking.”
4. “Who cares if that Whopper with Cheese has 770 calories and The Cheesecake Factory’s Chocolate Oreo Mudslide cheesecake has 1,050 calories in just one slice…I’m worth it! Besides I’ll just work it off on the exercise plan I’m starting tomorrow.”

Sounds familiar, right? But did you know that each of these statements directly affects your ability to obtain adequate and affordable health and life insurance?

When applying for individual health and life insurance, underwriters evaluate your health based on several factors to ensure they are not taking any unusually high risks by insuring you. In other words, insurance companies want to reduce the probability of having to pay out a claim so if there are any health conditions that may increase those chances, they are more likely to decline coverage or charge higher premiums to cover the increased risk. Some of the health conditions affecting your insurance coverage include:
• Medical conditions such as High Blood Pressure, High Cholesterol, Diabetes
• Smoking
• Poor Diet/Lack of Exercise/Overweight
• Stress
• Family History of Chronic Illnesses

Don’t worry if you have one or more of these conditions – you still may be able to obtain coverage. The key is to show the insurance company you are taking tangible steps, with your physician’s assistance, to manage your condition properly. For example, with diabetes, insurance companies want to see that with diet, exercise and medication your blood sugar levels are within normal ranges. This demonstrates you are genuinely taking an interest in maintaining a healthy lifestyle and also that will not likely lead to more serious problems or death. Your commitment to change can be the deciding factor in not only whether you obtain coverage at all, but also your monthly premiums.

Likewise, by following basic physical fitness rules you can also significantly reduce your insurance premiums through preferred rates only offered to healthy individuals. Not only do you enjoy the health benefits of looking and feeling good, you save money. For example, a male nonsmoker may pay $88 in monthly premium, whereas a male smoker at the same age could pay at least $216 for the same face amount – that’s almost 40% paid more in premiums just because of smoking. Factors that lower premium rates include:
• Routine exercise and well balanced diet plans
• Getting enough sleep and effectively managing stress
• Stop smoking and limiting excessive alcohol use
• Routine annual physical exams
• Meeting target weight and body mass requirements for your height

We can’t ignore the foundational importance of health and life insurance to cover unexpected expenses due to illness or death. Let’s take the steps now to start our financial future today and as an added benefit we help our pocketbooks as well! Contact your Optimum representative today at 718-623-3423 if you have any questions about insurance products and how to increase your insurability.

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1 CalorieKing for Food Awareness. 24 March 2009. http://www.calorieking.com/foods.
2 First MetLife Investors Insurance Company. $500,000 10 year term. Male, Age 45. Standard Non-Smoker and Standard Smoker. State: NY