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Your money how your money story can help your finances


´╗┐Here is some personal finance advice you don't hear very often: forget the numbers. That is the advice of Sarah Newcomb, behavioral economist for Chicago-based research firm Morningstar Inc, whose new book "Loaded" is now hitting the shelves and Kindles. She preaches this because before you can get into the nitty-gritty, like monthly budgeting, you need to understand why you spend what you spend, earn what you earn and believe what you believe. Reuters sat down with Newcomb to talk about why your own personal "Money Story" is so important. Q: What is your 'Money Story'?A: I had a lot of debt, I overspent, and basically lived hand-to-mouth for years, with no savings at all. I had no money for college and had to pass up my dream school because the price tag was too high. Money had always been a barrier to my hopes and dreams, and as a result, I came to hate it. Eventually, I ended up taking a course on psychology and financial planning, which addressed how your personal relationship with money affects how you see yourself. At that point, a lightbulb really went on. I realized if I always saw money as an enemy, I was never going to be comfortable making a good living. My own 'Money Story' was that either you care about people or you care about money, and you have to choose sides. I chose people, which meant I ignored money, and made my financial life a mess.

Q: What are a few common money-related stories that many people tend to have?A: Some people believe that money is the root of all evil. Some believe that your net worth is connected to your personal worth. Some believe that money makes the world go round. Some believe that if you follow the money, you discover that everything in life is corrupt. Some believe that you have to achieve financial status in order to belong. Ultimately, though, everyone's Money Story is unique. Q: Once people unpack their own Money Story - then what?

A: This is where behavioral finance offers great hope, because there are really specific things you can do to change money behaviors. For instance, if you are focused too much on today and not saving enough, you can do visualizations about the future. Imagine yourself at 65, 70, 75, and how you want to be spending your time. The more detail you put into that picture, the more you trick your brain into believing that the picture is real. Q: Since we all want to earn more, how can behavioral finance help people do that?A: When people think about budgeting, they usually think about money coming in from somewhere else. Instead, start to think of yourself as the source of multiple income streams. For instance, I knew a guy who used to be a wrestler, and who played music on the side. So he started turning those things into real value: he offered a few guitar lessons a month, and taught wrestling to local kids.

Everyone has resources like that going unused. Maybe you just have an extra room in your home that you can rent out to a college student. If you are creative, you can create several new income streams in your life without much effort. Q: What about the spending side of the equation? How can people get that under control?A: Recognize that all expenses are serving a need. So instead of just slashing expenses and then feeling angry and deprived, figure out how to meet those same needs while spending less money. For example, many people spend a lot of money going out to bars and restaurants. They are meeting a social need - spending time with their friends - but they are paying money to do it. You can meet the same social need by doing something cheaper, like hosting a potluck. With simple life changes like that you can be just as satisfied, but spend way less. Q: So what is the happy ending of your Money Story?A: I care about people and I care about being financially healthy at the same time. I can earn a good living and not feel guilty about it.

Your money top stock picks split on generational lines


´╗┐(The writer is a Reuters contributor. The opinions expressed are his own.)By Chris TaylorNEW YORK, June 9 It seems America's youth have found a hero, and he is 84 years old. For those aged 34 or younger, their No. 2 favorite stock - behind only mighty Apple Inc - is none other than Warren Buffett's Berkshire Hathaway Inc. This is according to new data from the brokerage TD Ameritrade, which took a snapshot in May of the individual equity holdings of every one of its retail clients (not including mutual funds and exchange traded funds, which themselves hold baskets of different securities). When it came to picking individual stocks, the results showed a generational difference. Millennials, who are pegged as tech-obsessed upstarts, favored the stocks of their own time. Aging baby boomers, who are stereotyped as stubbornly set in their ways, and Generation X, which is stuck in the middle, mostly favored what they know best, that is, dividend stocks. Among the top picks for young adults aged 34 and younger: Apple, which accounts for a whopping 11.7 percent of their equity holdings; Facebook Inc, at 1.9 percent; electric carmaker Tesla Motors Inc (TSLA), at 1.1 percent; and Chinese e-commerce giant Alibaba Group Holding Ltd, at 1.1 percent. For all those aged 35 years and older, Apple reigns supreme in their portfolios as well, with a share of 9.4 percent. Other popular stocks include General Electric Co, at 1.7 percent; AT&T Inc, at 1.4 percent; and Exxon-Mobil Corp , at 1.4 percent. No mystery there: Follow the dividend.

"Older clients tend to search for higher yield," said Nicole Sherrod, TD Ameritrade's managing director of trading, since dividend-paying stocks provide a steady income stream as boomers start easing into retirement."So you see energy companies like Chevron, and healthcare names like Johnson & Johnson, and telecoms like Verizon, all of which they are very familiar with and have been investing in for years."For the youngest generation, however, it is all about what is hot now."It's a demographic that is very much into tech, so it's not shocking that it tends to skew much higher in their portfolios," said Sherrod.

"Take something like Tesla: It's something hot that millennials covet, and although they may not have the purchasing power to buy the car yet, they can certainly buy the stock."WHO HAS IT RIGHT? But the underlying question: Do America's respective generations have their equity mixes right? Or is some rebalancing in order?

To find out, Reuters took the trove of TD Ameritrade data to Patrick O'Shaughnessy, a portfolio manager with Stamford, Connecticut-based O'Shaughnessy Asset Management and author of the book "Millennial Money: How Young Investors Can Build a Fortune."His No. 1 concern for both generations: Back off on the Apple, guys. Not because of poor fundamentals, but because of serious overweighting."Those Apple percentages are crazy high," O'Shaughnessy said. "In comparison Apple is around 4 percent of the S&P 500, so that is a huge individual position for both age groups."O'Shaughnessy also warns millennials against loading up on the latest sizzling tech stock, say Alibaba, and advises them to look hard at underlying valuations. In many cases price-earnings ratios have shot sky-high, and just do not represent smart buys. If millennials remain determined to invest in the sector, they should instead look at stodgier tech names like Microsoft Corp, he said. With proven revenue streams, stock buyback programs, and growing dividends, tech's old guard should prove safer harbor if market storms hit. O'Shaughnessy's final tip for investors: Look abroad. Since the U.S. market has "killed every other market for five years," that likely means many investors are now overweight in American stocks. As a result, bulking up your portfolio with more international names would be wise. Whether it comes to millennials, or Gen Xers, or boomers, each generation seems to be investing in what it knows. Generally speaking, that is a good thing - and happens to be a favorite principle of Warren Buffett himself.