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It is increasingly apparent that the economic complexities of modern life must be addressed through some form of financial planning. A well-designed and comprehensive
financial plan considers a structure for savings and long-term investments. The risks of not having a financial plan can be catastrophic, exposing years of earnings and
accumulated capital to erosion and loss. This report focuses on one element of the financial plan matrix, savings and investing, and introduces a simple idea which can
help you save and invest more of your earnings.

We all know from experience how difficult it is to save. Impulse buying and personal expenses tend to increase directly with increases in income. Because savings is
difficult programs have been devised to help individuals set aside income before it can be spent. One such program, the voluntary payroll deduction, provides an
employee with automatic savings and investment subsidized by the employer.

Individuals who earn in excess of $40,000 annually should be able to allocate 10-20 percent of their earnings to a savings/investment program. A typical program requires
holding three months gross income in a high-yield money market account and investing the balance. With inflation having averaged 10% over the past ten years, taxes
likely to increase and fundamental changes anticipated in the Social Security system, the prudent individual should be building a viable long-range savings/investment
portfolio now.

Saving and investing on a regular basis becomes a habit over time. To help people develop a strong savings/investment habit financial planners have for years espoused the
message "Pay yourself first." Essentially this means funding a savings/investment program in installments. In practice "Pay yourself first" literally means writing a check to your
savings or investment account before paying your bills.

Most people would like to save and invest more of what they earn but impulse purchases and a "rising tide expenses" tends to undermine their plans and "drown" valuable
investment dollars. One defense against impulse spending is to implement a "Pay yourself first" savings/investment program. An installment savings/investment program is
both convenient and easy to implement; merely determine how much you wish to save or invest monthly and write a check for that amount to your money market fund.

The obvious benefit of installment savings and investing is that funds are set aside and the savings habit is reinforced painlessly. A hidden benefit of savings and investing in monthly installments is DOLLAR COST AVERAGING. Dollar cost averaging will lower the basis cost of an investment acquired over time. If the price of an investment fluctuates acquisitions at lower unit prices will dollar average investments at higher prices, thus lowering the net overall cost. For those familiar with the TRIAD PORTFOLIO, dollar cost averaging is the best way to build positions in recommended stocks over the years.

Saving and investing is a personal decision and responsibility and each individual must find a method that is both comfortable and practical. The "Pay yourself first" system is simply one way to save and invest; there are many others. Whatever method is utilized, I strongly recommend a savings and long-term investment program be established as the foundation of a total financial plan.


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