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Money health 2014: Keep Darth Vader from your paycheck

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Capital Region families need to conjur up a force field, a "deflector shield generator," for their 2014 paychecks. There are three enemies, all mysteriously controlled by Darth Vader (in theory).

To avoid financial doom, consumers need to work against:

  1. Taxation. Do you have a job? Then you have a tax problem! The harder you work to get ahead and build your income, the more taxes you pay. In order to have the maximum cash for today, for the kids' college education, and for retirement, you need to find a way to minimize taxes.
  2. Inflation. Currently running at 3%, inflation eats away at earnings and savings. Consider: Invest $10,000 in your local bank. Earn a super generous 4% rate of return ($400). Subtract $100 in taxes and your resulting balance is $10,300. But if inflation is at 3%, your buying power would be reduced to your original $10,000. You would have actually earned no gain.
  3. Market fluctuation. Like it or not, any money placed in a savings account is not wrapped up in a rubber band and placed in a vault. Your bank is taking it to the global economy (i.e., the stock market), in such vehicles as mutual funds, which give everyday families the chance to invest in the economy, minimizing risk with professional money management and diversification. The market goes up, and it goes down. However, over the past 30 years, the S&P 500 TR, a leading indicator, has average just under 11%.

Deploy your force field engine and protect your hard-earned money from evil-doers.

For a free e-book on money basics, write dbalog99@gmail.com. Call Dave at 646 667-4254.

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