Stacy’s Savvy Financial Advice

Stay Savvy with our founder Stacy Francis’ latest articles on financial planning, budgeting, debt management, investing, divorce, retirement planning, and more.

Stacy Francis founded Savvy Ladies® in 2003 with the mission to educate women about their finances and empower them to make proactive choices. Inspired by her grandmother who stayed in an abusive relationship due to financial reasons, Stacy has been determined to never let another woman become powerless by financial instability.

Get the resources, knowledge, and tools you need to make smart and informed decisions about your money and your life.

In addition to being the Founder and Board Chair of Savvy Ladies®, Stacy is the President, CEO of Francis Financial, Inc., a boutique wealth management and financial planning firm. A nationally recognized financial expert, she holds a CFP® from the New York University Center for Finance, Law, and Taxation, and is a Certified Divorce Financial Analyst® (CDFA®), a Divorce Financial Strategist™ as well as a Certified Estate & Trust Specialist (CES™).

Stacy has appeared on CNBC, NBC, PBS, CNN, Good Morning America, and many other TV & Financial News outlets. Stacy too is ofter sought out for her advice and can be found quoted in over 100 publications such as Investment News, The New York Times, The Wall Street Journal, USA Today.  She shares her wisdom and expert financial advice here for you to learn and get savvy about your finances.

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STACY’S $AVVY ADVICE

Living Together=Spending Together?

by Stacy Francis, CFP®, CDFA

My always-single girlfriend surprised me the other day at lunch, by informing me that she is moving in with her boyfriend. As this is a first for her, she had a million questions. Should she keep her apartment in case things don’t work out? Who decides whose stuff goes where? And then, an unbelievably important yet rarely asked one: what about money?

She was unsure if she should even bring the topic of money up. Money is still certainly a taboo topic but one of the most important to address if you want your relationship to be successful in the long run.

True, moving in with your partner is less of a financial commitment than walking down the aisle. But there are still tons of things that can make the relationship turn sour if left unattended. Here are my key pieces of advice.

  1. Communicate. Set an evening aside especially to talk about money, and take lots of notes. True, it’s about as much of a turn-on as cleaning the bathroom, but believe me, it will make all the difference in keeping the romance intact later.
  2. Share a bed, not a credit card. Work out who pays for what, in writing, then keep the rest separate. Have your own bank accounts, credit cards, investments, etc.
  3. Track major purchases. The fact that your partner lives with you does not make him your spouse, so there is no merger and protection of assets. Keep notes — and receipts — whenever you buy something expensive.

Shopping Triggers and How to Curb Them: Bargain Hunting

by Stacy Francis, CFP®, CDFA

The more I blog about shopping triggers, the more they seem to pop up all around me. Here’s another one I have encountered three different times – just today.

I saw that Gristedes has grapes on sale, so you can save over $2 per pound. Our new grocery store Whole Foods promises that you can save on beef tenderloin. A furniture store advertises savings of over 50% when you buy their lounge chairs and side tables.

What is wrong with this picture? Well, for starters, if you spend $5 on grapes, you have spent $5, not saved $2. Just as with stocks and funds, yesterday’s price is irrelevant. Neither your budget nor your cash flow cares that the lounge chair you bought for $200 would have been $400, had you bought it a week earlier.

The problem is, this logic lures many less informed consumers into spending large amounts of money. And so advertisers keep at it, making us think this makes perfect sense. But similar to credit card spending, you first need to consider your financial situation and your budget. If you cannot afford a $200 lounge chair, the fact that it is reduced from $400 does not make buying it any less of a problem. Keep this in mind, and you will have conquered yet another shopping trigger!

Check out the other articles in our series on Shopping Triggers.

Strengthen Your Investment Portfolio

by Stacy Francis, CFP®, CDFA

Even in a market like today’s, many people are making nice returns from their investments. Though the masses are mainly nervous, the latest issue of one of the newsletters I subscribe to featured interviews with six self-made investment millionaires. While their choices varied widely in terms of securities and industries, they had three important techniques in common – three techniques you, too, can use to strengthen your investment portfolio.

  1. Think international. With the US markets anything but rosy, it is tempting to give up and simply dump your money in a bank account. But if you widen your horizons, you will find that not all countries are headed into a recession. At least not right now.

  2. Think creative. Don’t dump all your capital into the financial version of Top 40 music. Instead, keep your ears and eyes open and for new ideas – or new twists to old ideas – that you believe in.

  3. Invest in what you know. Do you have a Ph. D. in molecular biology? That gives you an edge over most people if you choose to invest in for instance biotech. Perhaps you have strong reasons to believe that a certain product under development is going to work. Whatever your field is, knowledge is money and when you know more than the masses, you have better chances than they do to make money. Of course, you always have the option to hire an expert who can help you gain this advantage. What is it they say? In love and money, everything’s fair?

How Many Investments Are Too Many? Is More Better?

by Stacy Francis, CFP®, CDFA

Another question I get all the time is, how many investments should I go for? 2, 5 or 1,000? With a virtually unlimited number of securities available, and a limited budget (for most of us, anyway), how do you get the most out of your money? When it comes to investment positions, what’s the magic number?

Of this, the wise ones dispute. Of course, to a certain extent it should depend on the number of promising investments out there. At times, thirty different stocks, funds, or bonds can look promising, while at other times it can be as little as three or four. You may have a very specific idea of what kinds of industries and companies you’d like to trust with your cash, or you may want to diversify lots and lots to dilute risk and feel safe.

Another factor you need to consider is of course budget. If your total investment capital is, say, $5,000, a diversified mutual fund or ETF (Exchange Traded Fund) might be the better option. With only $5,000 it will be difficult to get exposure to the broad market. If, on the other hand, you have several million bucks to invest, you can create your own mutual fund by purchasing many different stocks and bonds. Fifty positions of $20K each may be the answer, or twenty positions of $50K. Or fifteen positions of various sizes depending on what securities you like the most.

It is true that if you own every fund out there, you will own all the winners. The problem is, you will own all the losers too. The key is to look at the fundamentals, identify your reasons and — together with your advisor — find the one, or two, or ten, or twenty, investments that work the best for you.

The Passion Test: Living Your Dream

by Stacy Francis, CFP®, CDFA

I spent last night with yet another inspirational book, and figured I should share the concept. In The Passion Test: The Effortless Path to Discovering Your Destiny, Janet and Chris Attwood make living your dream as accessible as, say, credit line increases from American Express. And it works for money too!

It all starts with intention. In the first portion of the book, the authors urge you to identify all the things that are important to you; all the hopes and dreams you have for the future, and all the things you would like to do with your life. Make a list of your overall life goals, or your financial goals!

Once you have all these settled, the next step is to rank them. Take the first thing you wrote down, and compare it to the second one. Which one is more important? Keep at these comparisons until you have found the one thing that matters the most to you. Then, go to work on identifying number two. Once you have found your five greatest passions, scribble them on little cards, and keep these cards everywhere. Ideally, you should look at them several times per day.

After that, it is all about what the authors refer to as intention, attention, and “no tension.” If you start to prioritize – really prioritize — these goals, things will start to happen. One of the authors’ firmest beliefs is that those things you focus on grow stronger in your life.

But as life is ever-changing, they recommend that you reevaluate your goals every six months or so, to take into consideration changes in priorities and circumstances. Another reason I love the idea of revisiting your goals is that you can see how much progress you have made. And what could possibly be more inspiring that that? So are you living your passion?

Investing in Real Estate

by Stacy Francis, CFP®, CDFA

A client just called me up to ask what my take was on the real estate market. She half-wanted to get into what mass media refers to as “flipping houses,” but was concerned that this may be the end of the real estate boom.

The truth is, of course, that the real estate boom ended quite a while back, in most places. What we are seeing now is a bit of a correction, along with the effects of a slowing economy. When two families in a neighborhood are trying to sell their homes, and a third one forecloses, the next buyer expects to pay less, throwing the area into a downward spiral of more worries and more foreclosures.

The good news is that if you are in good to excellent financial shape, and you are in no hurry to sell the houses you buy, this is not a bad time at all to get in. Historically, and with a few geographical exceptions, real estate prices have never kept dropping for very long. If you have the patience to keep placing bids well below market prices and hope someone gets desperate and accepts, you can score yourself some fantastic deals. And if you can wait long enough, chances are you will be able to sell the houses for significantly more. With these lower prices, I would actually say it is less risky to get into real estate now than, say, a year ago.

Keep in mind that while the above applies to most areas in the US, local exceptions apply, so make sure to take the pulse on your neighborhood before you hop to it.

Understanding the Business You’re Investing in – or Hiring Someone Who Does

by Stacy Francis, CFP®, CDFA

Flipping channels last night, I came across one of those corporate ads that are so vague and nondescript it had even me scratching my forehead, wondering what the company in question really did. Because the thing is, while some businesses are easy to understand (manufacturing comes to mind), in today’s world of service and high tech and diversity, many are so complex it is almost impossible to evaluate them. GM, for instance, has traditionally been a car manufacturer. But these days, they make more money off the financing side of their business than the car side. And how do you deal with software companies or biotech?

My point is not to try to explain every business out there, but rather to remind you that if you don’t understand the business you are investing in, you will have an extremely difficult time making rational choices, and even harder trying to sleep well at night. If you are a biotech guru and know all about Elan’s latest product, you may know whether it’s worth your money or not. Alternatively, if you are Bill Gates’s brother, you may know what works and doesn’t work in software. But if you want to venture into industries you do not grasp fully, you can lower your risk substantially by hiring someone to analyze it for you.

We all know it’s a bad idea for blind people to drive cars. Throwing your hard-earned money around you randomly can be just as perilous.

How to Benefit from Currency Fluctuations

by Stacy Francis, CFP®, CDFA

Walking from my office to my favorite lunch spot today, I heard four different languages spoken. The cameras, backpacks and maps made it difficult to take the people for immigrants – rather, I gather they were a few out of the countless individuals making pilgrimages to the US to take advantage of the frail dollar.

For many of us, this weakness is a major nuisance. Foreign travel is getting more expensive by the day, not to talk about imported groceries, cars, and electronics. So I wanted to make you aware of a few ways that you can use currency fluctuations to your advantage.

The first one is when you go on vacation. When the dollar is strong (think six or seven years ago), you can live like a queen pretty much wherever you go. Today, you need to get more creative. Looking at charts, I learned that only the Zimbabwean dollar has significantly underperformed the US dollar this year – hardly your dream vacation destination. Fortunately, plenty of countries are still fairly reasonable. Instead of France or Spain, next time consider Dominican Republic, or Sri Lanka, or Thailand. You will get much better value for your money.

Another way you can make money off currency fluctuations is by investing in foreign countries. If you are convinced that the Yen has nowhere to go but up, buy a fund focused in Japan. Even if the stocks remain flat, when the dollar falls, you make money. Plenty of people have expanded their capital over the past couple of years by putting their money to work no further away than Canada. When the exchange rate went from US $0.69 per Canadian dollar to a scenario where the Canadian dollar is actually worth more than its American counterpart, they were some happy campers.

Opportunity Cost

by Stacy Francis, CFP®, CDFA

Strolling through Tribeca, New York this weekend, I stumbled upon a gorgeous cashmere sweater at a designer sample sale. It fit me perfectly; the only problem was that it was a still little on the expensive side, and I loved it in black and in grey. Torn, I spent a good half hour going back and forth between the two, before eventually settling on the grey one. This really got me thinking about opportunity cost, and how this is present every moment of our lives, always.

Whether shopping for the perfect house, car, or sweater, when you choose one, unless your budget has no limits, you have to un-choose the others. When you buy yourself a Mini Cooper, you give up having, say, a Lexus or a Honda – even one of those yummy Porsche Boxters. Whenever you open one door, you also choose not to open the others.

In finance, the concept opportunity cost becomes even more urgent. Whenever you choose to bet your money on one fund, you choose not to buy others. What if they take off, and yours doesn’t?

And in everyday decisions, like whether to go on a vacation or renovate the kitchen, there will always be things that you do not choose. Always be clear over what your goals and priorities are, and use these as a guide when faced with tough, high-opportunity-cost decisions.

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