Simple Inspiration Interview with Phil Ash from Baton Investing

 

Phil Ashe

Hope you are enjoying the Simple Inspiration Interviews and that they are providing you with thoughts and ideas on how you can simplify your finances.  This week I am interviewing Phil Ash from Baton Investing.  He discusses how he has simplified his investment strategy so he can have better returns on his portfolio.

Baton Investing is a stock-picking system that has delivered 500% returns since 2003 while the S&P 500 has only delivered 170%. Its success is based on an algorithm designed by an M.I.T. engineer that mimics the investing strategies of Warren Buffett, Peter Lynch and eight more of the most successful investors of all time.

With the Baton app you, too, can gain access to that market-beating performance and manage your portfolio in just 30 seconds a month.

Eliminate all of your investing fears by joining a community of investors, including the Baton founders, who no longer settle for the 5-8% annual returns that most brokers and funds are lucky to achieve. The Baton system has delivered 16% average annual returns since 2003, and for many, it is the only way that they will actually achieve their retirement goal. Visit Barton Investing to see a completely transparent track record.

Let’s hear how Phil has simplified his finances:

What event lead you to realize you needed to improve your financial life?

In late 2013, about five years into a bull market, I calculated my average annual investment returns and determined that I was woefully under-performing the market. My portfolio was a mish-mash of income stocks, sector ETFs and high-risk bets that had no underlying strategy behind them. I would have been better off simply investing all my money in the SPY ETF that has returned 9% annually on average.

What area of your financial life needed the most work?

I needed to adopt an investing strategy that would deliver the necessary returns to hit my retirement goal. That required three steps: 1) figuring out what my historical average investment returns had been, 2) calculating what my retirement goal is and what average annual return I need to get there, and 3) identifying a proven strategy that would give me the necessary returns (because my current “strategy” was not.) Shockingly, with an online retirement calculator I created, I determined that my retirement goal was a minimum of $4 million and that my current returns were not going to get me anywhere close to that goal.

What was your biggest challenge or roadblock when it came to improving?

After identifying a strategy that had a successful, long-term track record, the hardest part was to put my emotions on the shelf and adopt the system wholeheartedly. With the 24/7 news cycle, it’s so easy to get caught up in the hype of a particular stock, or the fear that the market is about to crash again, or hundreds of other distractions that make people veer of course. All that noise is what causes people to make bad investing decisions, typically buying high and selling low, rather than just staying consistently invested for the long-term.

How did you overcome this challenge or roadblock?

After many months of research, I identified a stock-picking system developed by an M.I.T. engineer that mimics the investing calculations of the greatest investors of all time, including Warren Buffett, Peter Lynch, and eight more. The inventor, John P. Reese, began using it for himself and his high-net-worth clients in 2003, and it has delivered a 500% return since then while the S&P 500 has only delivered 170%. His system’s 16% average annual return over the span of both bull and bear markets was very reassuring. I knew it was the perfect emotion-free system to get my investing back on track, but it was more complicated and time-consuming to use than I wanted. So my brother and I worked with John to build an app (Baton Investing) and partner with a few brokerage firms to greatly simplify its use.

How has your life changed since you began to change your financial life?

It now takes me just 30-seconds a month to execute the system and manage my portfolio. And since I started using it in May 2014, I’ve earned a 24% return while the S&P has returned just 13%.

How long did it take you to make the changes?

It took us about six months to improve the process and launch the Baton system. Anyone else can now get setup in just a few minutes and reap the same benefits. We even offer a 60-day free trial for people to gain a better understanding of how it works and decide if it’s right for them. It’s only a good fit for less than half of the people who visit our site.

How much of your personal finances have you automated?

My investing is now semi-automatic. I like that I’m now forced to take a few minutes each month to do a quick check-in and set my portfolio for the next month. I know too many people with a set-and-forget approach that really have no clue how they’re performing and if any changes are needed. I’m a big fan of the two brokerage platforms that we run the Baton system on: Motif Investing and Folio Investing. Both allow for quick and cheap buying and selling of baskets of stocks in one transaction. To fund these accounts, I have automatic payroll deductions. Beyond investing, I have most of my bills setup with auto-pay, and I use Mint to keep track of everything.

What advice or tips would you give to others who want to improve their finances?

First, pay off any debt that has an interest rate above 9% (the market’s historical average.) Second, build your emergency cash fund of however many months you deem necessary. Then, amass enough money to start investing (about $5,000 minimum.) Either cut your expenses or find another income source somehow to get that first little pile of money together. If you have very little money, consider using Robinhood as your broker since they’re completely free. Begin by just investing in the SPY ETF, knowing that your emergency cash fund will keep you from having to panic and sell should the market head south. Continue adding funds to your account as often as possible. Initially, that will grow your money faster than any investment returns possibly can. As your account grows, then look to adopt other strategies that may give you higher returns. The return you need will be based upon the retirement goal you’ve calculated for yourself.

What app or tool helped you the most when it came to simplifying?

I like Mint for getting a quick take on my Net Worth and how I’m progressing towards my goal. And for my actual investing, I’m a huge fan of the MotifInvesting app. It takes me just 30 seconds once a month to re-balance my Baton portfolio.

What are your current financial goals?

As shocking as it sounds, I now know that my wife and I need $7 million to retire at age 65 and maintain our current lifestyle. $4 million is our bare minimum. There are lots of online retirement calculators to figure this out, but I prefer the assumptions we built into the Baton Retirement Calculator.

Are you on track to reach your financial goals you set for this year?

Yes, my wife and I are now on track to greatly exceed our retirement goal. Previously, we were not on track and we didn’t even know it. Regardless, we know there will be bumps in the road and we just need to stay committed to the revolutionary process we’ve now embraced.

What book, blog, or podcast would you suggest to someone who is looking to improve their finances?

The MoneyTree.com podcast does a good job of covering a wide array of introductory investing and personal finance topics.

If money was not a concern, what would you do for fun?

I have plenty of fun already, mostly outdoor athletic endeavors like running and biking. My hobby and dream job, however, would be as a furniture maker. It involves both the math/logic side of my brain and the creative side.

Any other thoughts you would like to share with others who are looking to simplify?

I’m certainly a fan of simplification, but I try not to let the tail wag the dog. Don’t simplify to the point that you’re not using the right tool for each job. With Baton, for example, the system works infinitely better if you open a brokerage account at Motif or Folio. Even though opening a new account only takes 10 minutes plus a bank transfer, many people will avoid that step and the value it brings in long-term simplicity. And with a tool like Mint, for example, it is now much easier to keep track of multiple accounts.

Thanks Phil.  Appreciate you sharing how you have simplified your finances.

To read previous interviews in the series click below


If you are interested in sharing how you have simplified your financial life, send me an email and I will follow up with you.  Enjoy the rest of your week. Til next time, take one step at a time to simplify.

How to Simplify in case you lose your wallet?

Wallet

 

If you lost your wallet or purse would you remember everything you had in it?  Misplacing your wallet or purse is a terrible feeling.  I know I would not remember every item in my wallet.   I do know I have carry a credit card or two as well as debit card and driver’s license.  But remembering what other cards are held in my wallet may take me some time to remember.  So why put myself through this stress of trying to remember everything.  Losing a wallet, you run the risk of not only losing your money, but also your personal identity.  Your wallet can hold many sources of your personal and financial information.  You want to take immediate action to make sure the information in your wallet is not used.

Here are a few tips to help easily remember what is in your wallet so you can take immediate action to prevent any fraud:

Make copy of all important contents such as credit cards, driver’s license, insurance cards, debit cards and any other card or identification.  I know I do not know my driver’s license number like I know my social security number.  This way if missed place you will have a copy of the information.

Make a list of all phone numbers needed to replace the information that was lost.  This way you will not have to go looking for old account statements.  The numbers should be keep with the copies of the contents so all information can quickly be obtained.

Contact your bank and credit card company to inform them that your cards have been misplaced.  They should be able to send out new cards with new accounts numbers.  If stolen you want to do this as soon as possible so that your cards and accounts can be closed.

Contact your health insurance company to inform them that your cards have been misplaced.  They should be able to send out new cards.

Pull your credit bureau several weeks after you misplace your wallet or purse.  You need to do this to make sure no one has tried to use your information to open new accounts.   Reviewing your credit bureau will enable you to see if any additional accounts were opened without your knowledge.

Minimize the information you carry in your purse or wallet.  Limiting the cards and information you carry will eliminate the need to contact every credit card company, bank, or other company you have accounts with.

Establish fraud alert on your credit.  In case someone tries to use your personal information found in your wallet.

File a police report if you believe your wallet or purchase has been stolen.

TAKE ACTION

Review the current contents you have in your wallet or purse.  Decide what you should carry everyday and what should not carry.  Then make copies of the information you believe should be held in your wallet or purse and put it in a file.  This way you can quick know what was in your wallet if you happen to misplace it.

Til next week take one step at a time to simplify your personal financial life.

 

Simple Inspiration Interview featuring Emma from Money Can Buy Me Happiness

Emma Money Can Buy

 

Welcome to this week’s Simple Inspiration Interview.  This week I have a chance to welcome Emma from Money Can Buy Me Happiness.

Emma is from New Zealand and married to an Irishman. The sheer distance between the two countries is her motivation for plotting early retirement so she can chase the summer around the world with her family. She plans on spending the best months of the year with families in both the Northern and Southern Hemispheres.

As she travels managing your personal finances can be a bit of a challenge as well as generating income.  Let’s hear how she has simplified her finances:

mcbmh_profile2What event lead you to realize you wanted to retire early?

I don’t think it was any one event, more a combination of a lot of factors. As a child my parents were always around. They didn’t work 9-5 (my mother is a nurse and chose to work night shift while us kids were young and my Dad worked from home as a mechanic) so I was never brought up to think that was normal. I was also lucky to be exposed to a lot of entrepreneurial adults as a kid. My fathers friends and family were always wheeling and dealing property, starting their own small businesses or buying vintage cars and motorbikes to fix up and sell on. I think having early exposure to more non-traditional ways of making a living helps me to think differently when it comes to the possibilities of earning my living and early retirement.

What is the biggest challenge you have to overcome to reach early retirement?

Over the past decade it has been getting free of bad debt. I am now free of all consumer debt excluding my student loan which is interest free. Repayments for that are taken directly from my paycheck so I just allow that to happen and don’t pay more than I have to. My funds can perform better elsewhere.
Now, after having a taste of long-term travel, the challenge will be returning to the traditional workforce.

How will you overcome this challenge or roadblock?

I’ve always done bits and bobs for small business owners so I’ve decided to ramp that up into a full virtual assistant business. I’m starting slowly with the clients I already have. I’m currently designing my website and getting my branding finalized. I’ve also enrolled in some specialized training courses to help build my body of knowledge. Until my business starts providing a regular income I’ll take a part time job and my husband will go back to full time work.

How long did it take you to save enough so you could begin traveling?

We made the decision to travel long term in the taxi to Nadi Airport after an amazing vacation in Fiji. That was June 2010. Our flight for Santiago, Chile departed late May 2011. It took just under one year to save the funds required to travel initially.

How did you feel once you reached your goal?

Free! But also incredibly proud of myself. I used to believe I couldn’t save!  It was beyond me that people had bulging savings accounts. I used to run up balances on credit cards or get personal loans for everything I needed. I lived paycheck to paycheck and never really planned what I was doing with my money. Once we decided we were going to travel I sat down and worked out how much money we would need and how long it would take us to save it. Running the figures I realized our necessary expenses were less than one of our paychecks. I showed my husband how much we would save if we put all of my earnings directly into savings. I thought he would laugh at me and say ‘No Way’ – but he said yes and the rest is history.

What systems did you use to save monthly?

Automate it or very disciplined about putting the funds in the appropriate buckets.

When we were saving for travel we lived off one income and saved the other. It was completely automatic – I gave my payroll department our joint savings account details and my fortnightly salary was deposited into that account. For irregular extras like overtime (my husband is a tradesman so he can earn extra if he works weekends, evenings, etc) or anything extra we could skim off the monthly budget I would transfer to the savings account through online banking.

How much of your personal finances have you automated?

Since our son was born we have lived on a self-enforced fixed budget. It’s completely unrelated to earnings.

Almost every expense we have runs through the credit card account so we receive frequent flyer points to boost our travel funds. I pay the credit card manually each month to ensure there is always enough in the account to cover the payment but also to ensure I don’t pay a cent of credit card interest.

Our storage bill is paid by direct debit each month and I have an automated deposit into my son’s savings account on the first business day of the month.

All of our rental properties are handled by professional property managers which means we have to do very little – other than check emails and answer any pressing requests for maintenance over $300. Under $300, the property managers are authorized to approve without consulting us. The rental income from our investment properties is deposited into our accounts each month, insurance and mortgage payments are debited from those same accounts. It’s painless. I can manage everything via internet banking.

What advice or tips would you give to others who are looking to live a similar lifestyle?

Before you even begin to look at your finances, sit down and work out your life goals. Define what it is you hope to achieve. Write it down and make it visible. Look at those goals everyday.

Whether you want to travel, buy a house, retire early or be a stay-at-home parent – you must have a goal. Then you can work out how to make your money work around your dream.

I write a blog called Money Can Buy Me Happiness  because I truly believe money, if handled right, can make your dreams come true.

What book, blog, or podcast would you suggest to someone who is looking to simplify or improve their finances?

I read a lot of PF blogs regularly and believe they are a great source of free information. My favorites are listed here: Blogs I love

Do you have an emergency fund established, if so how did you determine the amount needed to fund it?

We have a $10,000 in an on-call account. It’s not strictly an emergency account but I guess it could be if needed. That would be around five months living costs for us.

It may sound controversial but I don’t really believe in emergency funds. I think people should always have savings but I know in my case if my husband was out of work I would go back to work. Or we could both work part time. I’d have no problem taking a job below my usual pay scale in an emergency.

We both carry life insurance which also covers temporary and permanent disablement, meaning were a real disaster to occur we would have funds to carry us through the worst of it.

What app or tool helped you the most when it came to simplifying?

I used to be all about the pen and paper and I still am when it comes to planning but I love Excel for projecting and calculating. I’ve also recently started using YNAB (You Need A Budget) which has helped me to reign in the travel budget.

What percentage of your income are you saving?

Currently none, as we are traveling. But when we go back home in August we will be aiming to achieve a 50% savings rate by December.

Thanks Emma for sharing your journey.  She just announced some awesome news so be sure to check out her blog Money Can Buy Me Happiness to hear about it.   If you also would like to track her journey be sure to follow her on Twitter or Facebook.

To read previous interviews in the series click below


If you are interested in sharing how you have simplified your financial life, send me an email and I will follow up with you.  Enjoy the rest of your week. Til next time, take one step at a time to simplify.

 

 

Simple Inspiration Interview with Scott from I Love Compound Interest

I love compound Interest2

Welcome to this week’s Simple Inspiration.  I hope you are enjoying these interviews and they provide you with some inspiration to simplify your financial life.  This week I have the pleasure of interviewing Scott who loves compound interest if you can not tell from the name of his blog.

Scott’s site is called “I Love Compound Interest” and it is a collection of tips and stories from my experiences over the last 20 years of saving and investing.  He and his wife have been diligent and made some good and some bad choices over the years. He shares them with the readers so that those new to saving and investing can learn and also those that are experienced can share their successes and tips as well. He accumulated his wealth the long, slow and not-so-sexy way, which is week by week and month by month of steady saving and investing. He didn’t use any get-rich-quick schemes, didn’t win a lottery, didn’t sell a business, or inherit money. He just did it by saving and focusing on the long term goals he has.

On the blog, he discusses savings/frugality topics and also on some of the traditional financial products on the market right now. The site is not into giving stock tips or how to get rich quick, but helping folks get on track and do the right things with their finances that will help them gain some financial freedom.

Let’s hear how Scott has simplified his personal finances:

What event lead you to realize you needed to get your financial life in order?

For me, it was not really one life-changing event, but rather a knowledge that the alternative of not having my financial life in order was not desirable. I had good examples with my parents that kept their financial life in order and taught me well in that respect. I saw from an early age that it was not a good thing to have your finances a wreck and I wanted to make sure I didn’t end up like that.

What area of your financial life needed the most work?

Spending and entitlement are probably the toughest areas that need work still to this day with me. Whether it is wanting and buying nice clothes or a nice car, it can easily creep up and ruin your budget. Not only that, I’ve realized in the past couple years that the decisions I make with regard to my spending can have dramatic affects to my future savings/nest-egg. It’s been great to see some of that desire subside in me to have all the best things, even if I can “afford” it.

What did you do first to get your finances in order?

There was the spending that I mentioned in the previous question, but the first step I really did was to start saving at an early age. After a year at my first job when I was 16 years old, my father talked to me about an IRA. I can’t remember off hand how much I put in that year, but my parents agreed to match what I put in. I think it was maybe $250 each. That’s not a huge amount of money but back then, it was to me. I’ve been saving ever since then, so after 27 more years of doing that, it has definitely had a huge impact on my overall savings and investment balance. Of course the thing that I do differently now than I did then is that I do my saving along the way and it comes out of my account automatically, so it is less tempting to spend it.

What was your biggest challenge or roadblock you faced to get them in order?

The only roadblock was me, and getting my spending in check. It wasn’t out of control and I never had consumer debt, but there were some areas that we could throttle back our spending to be more in line with some other frugal ways my wife and I share. Fortunately my wife and I are very similar in our frugality and we discuss spending and saving regularly, which makes a huge difference in the success of our combined family finances and the health of our marriage.

How did you overcome this challenge or roadblock?

For the combined finances in our marriage, we had regular discussions about what our goals, dreams and aspirations were. As it turned out, many of them were long-term and would require regular saving at an early stage to start building and compounding the gains. This helped us shape the framework for what our budget would be and helped us both keep our spending in perspective.

How has getting your finances in order changed your life?

Having our finances in order has changed our life immensely. We’ve been fortunate to have steady employment over our marriage (almost 20 years) and we’ve gradually been saving more and more of our income to the point now where we save 37% of our gross income (48% of net income). Doing this aggressive saving has allowed our net worth to increase by 6 times just in the last 10 years. We are not business owners, never hit the lottery, or inherited money; we just did it by working normal jobs and saving aggressively. The 6x net worth increase was even through the down-turn of 2008. With all of this happening, my wife and I have been able to accelerate out financial independence goals and we’re thinking about making some major steps toward that goal very soon.

What was your reason for starting I love Compound Interest site?

While I know that the personal financial blogosphere is populated with many good quality sites that offer unique stories, great tips, and solid advice in all facets of personal finance, I still wanted to start my blog. I’ve enjoyed learning and teaching others about personal finance, saving and investing for a couple decades now and after some good urging from my wife, I decided to start the “I Love Compound Interest” blog. She would always tell me that I light up with excitement any time I start talking to people about their finances, so the blog seemed like a good outlet for that.

I’m still a newbie at blogging, but I enjoy sharing my stories of success and failure over the many years of saving and investing. I have a particular soft spot for Millennials since they have the advantage of time on their side. They can take some small steps now that will help them immensely in the future. I’m living proof of that and love to share about it.

I’ve also taken some steps to get my Series 65 license and will hopefully be able to professionally advice people in the near future. It would all be separate from my blog, but if I go that route, then the blog serves as a great indicator of who I am and my investment and savings philosophies for anyone that might seek my services.

How much of your personal finances have you automated?

I’ve automated the vast majority of our bills, salary inflow, and monthly investments. And then after all the bills and investment payments go out each month, we’ve been fortunate enough to have extra funds available on many months. Those funds I have to manually go in and invest, but that’s a small chore considering I’m paying myself.

What do you automate?

I’m old enough to remember when it was kind a unique for an institution to offer automatic payment for a bill. I’ve got almost all my bills being paid that way now. Sadly there are still a few utilities that I have to deal with that do not offer this service without a fee. I’m too thifty to pay to automate something that ultimately helps the company billing me in the long run, so on those bills I just go to my bank website and send them a check for the bill (for free of course).

All our monthly investments (retirement, 529, taxable accounts, etc.) are drawn out automatically as well.

What advice or tips would you give to others who want to simplify their finances?

First, you must track your expenses. It doesn’t matter if you use Quicken, Mint, or a paper tablet, but you have to have a grip on your inflows and outflows before you can really start simplifying things. Nothing would be worse than having overdraft charges for savings or bills you are automatically pulling out each month in the name of simplification. Once you have your monthly income and expenses set up, definitely set up your employer 401(k)/403(b)/457 plan to draw out a good portion of your salary prior to taxes so you can get the benefits of tax savings and any matching money they offer. Those withdrawals will be automatic and you’ll start to forget (in a good way) how much money you are saving. You can also automatically set up these plans to increase your savings percent each year so that the small incremental steps aren’t too painful for you.

I think another overlooked way to simplify your finances is simply to spend less money on purchases. If you are spending less money on dining, food, clothing, entertainment, furniture, etc. then there will be fewer bills to pay and fewer expenses to track. If there are less of these to track, that seems like it would be more simplified to me.

What’s your best savings tip?

One of the best ways that people can use to save money is to reduce the amount of times they eat out at restaurants. Like most things that are experienced in moderation, restaurants are great. My wife and I love a good meal out. The trick is that so many people eat out most lunches while working at an office and then they may eat out several evenings or weekend nights as well. That adds up really fast. Run the numbers and you may be shocked. Brown bagging it at work and cooking the majority of your meals at home will save you immensely over time and an added benefit is that the meals you cook or bring from home will typically be healthier for you. That’s a win-win!

What book, blog, or podcast would you suggest to someone who is looking to simplify or improve their finances?

The podcast that I really enjoy is called “Radical Personal Finance” by Joshua Sheats. I like to think I know a pretty good amount about personal finances, but there have been so many of his podcasts that dive into financial matters well beyond my knowledge or from an angle that I never considered. He’s really challenged me in several areas of my finances, how I think about money, and life in general. One caution is that he can get pretty deep into the weeds on some topics, so if that is not your style you can fast forward or skip those episodes.

Do you have an emergency fund established, if so how did you determine the amount needed to fund it?

Yes I have an emergency fund that amounts to about 3 months of expenses. I have a tiered system I use instead of the entire balance in one account. There is about a month of expenses in a quick access savings account tied to my checking account (which doesn’t really pay any interest). Then I have another month of expenses in an online bank savings account that pays better interest than the one at the bank. The rest is held in taxable accounts at Vanguard. With the speed at which we can transfer money in our economy, there seems to be less and less need for all of my emergency fund in one account that might not be paying me any interest.

What percentage of your income are saving?

37% of our gross income (48% of net income after taxes)

What are your current financial goals?

For the past 10 years we have wanted to retire early (under 55 yrs old). Since we have now realized we do not want to retire in the traditional sense of the word (never working again), we have modified that goal to be able to achieve financial independence very early and be able to purse meaningful work that doesn’t require working the traditional 9-5 job. We are now getting very close. We are getting ready to take our first step toward that goal with me leaving my job in my early 40’s and my wife may work until her early 50’s.

Are you on track to reach your financial goals you set for this year?

Yes, and we’re pretty excited about it!

Thanks for sharing your story with my readers.

Please check out I Love Compound Interest to learn more about Scott’s saving and investment ideas.

You can also follow him on twitter @Comp_Interest.

To read previous interviews in the series click below


If you are interested in sharing how you have simplified your financial life, send me an email and I will follow up with you.  Enjoy the rest of your week. Til next time, take one step at a time to simplify.