The Path to Becoming a Financial Analyst

So, you have decided to become a financial analyst.  As a financial analyst, there will be a plethora of opportunities for you that you simply cannot experience in other areas of the finance and accounting industry.  Whether you are about to enter college as a freshman, or you are looking to diversify your career prospects, becoming a financial analyst is a completely attainable goal.

Work on Your Soft Skills

As with any career, it is important to have certain inherent skills that you can refine to make you a better financial analyst.  Some of these include technical abilities such as computer and math skills.  Other talents that you need to be successful are more interaction-based and include developing your financial analyst personality, the ability to see the “big picture,” excellent organization, and strong communication skills.  Without these, it will be difficult to navigate the industry with math skills alone.  Identify what you may need to work on and use your education and internships to train these skills.

Get a Degree

It is a prerequisite for any job in finance to obtain a four-year degree.  Typically, financial analysts will earn a degree in accounting or finance, but many analysts will get a degree in statistics, mathematics, or engineering as well.  It is crucial to start your path in finance as soon as possible, lest you spend over four years bogged down in coursework.  In case you are gunning for some of the top universities in the country, New York University, Massachusetts Institute of Technology, and the University of Pennsylvania are some of the best and most competitive schools.  Although it is not entirely necessary, you will find that in this competitive industry you may want to get your master’s degree as well.  Do not hesitate to invest in your education.  Arming yourself with knowledge and expertise will make you an invaluable resource for potential employers.

Get a Job

Break into the industry as soon as possible.  The more experience you gain, the more prepared you can be to get one foot in the door.  While working an entry-level position, you can gather information to decide which path you prefer: the buy side or the sell side.  On the buy side, you can work with an investment bank, insurance company, mutual fund, or pension fund.  Working in the sell side includes working at a securities firm.  As you form more skills, you will be able to explore where you would like to create your niche.  Over time, opportunities will open up where you can specialize in a particular industry or product.  Perhaps you’ll want to become an economist for the government; in this case you want to network with your local government or mayoral office.  Getting your first job can be very competitive, but once you get in it is important to learn as much as you can and network with your peers.

Earn Your License

There are different licenses for different industries, and you will likely earn more than one during the length of your career.  The Financial Industry Regulatory Authority is in charge of dealing out licenses to professional financial analysts involved in securities.  If you move up within the company or firm you work for, they will likely pay for your license.   Keep in mind that if you work in stocks, bonds, insurance, or legal advising, you will likely be required to obtain a license to continue.

Obtain a Certification

While it is optional, if you want to stand out among your colleagues to employers, there is almost no better way than to gain a certification as  Chartered Financial Analyst.  The CFA Institute mandates at least four years of work experience and passing a CFA exam.  The CFA has a reputation for being incredibly difficult, so it is best to plan accordingly and study hard.  The exam itself consists of three parts and many do not have success the first time they take it.  Use various methods of studying in order to prepare, including taking a class and a CFA mock exam.

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8 Ways to Tell if You Need A Raise

Do you feel as though you’re properly compensated for your efforts at work? If not, when’s the last time you asked for a raise?

Typically, many workers receive salary increases once a year following their annual review. This, of course, is assuming they’ve worked hard all year, developed their skills and taken on more responsibility.

Then there are those who are luckier. They receive raises more frequently than once a year.

Finally, there are those poor saps who haven’t had a salary uptick in years.

Are You Due for a Raise? Here Are 8 Ways to Tell if You Need a Raise

No matter where you fall on the spectrum, you’re at least somewhat interested in boosting your salary. You’ll never get a raise if you don’t ask for one. With that in mind, let’s take a look at eight telltale signs that indicate it’s time to ask for a raise.

1. Your clients are extremely happy — and they’re vocal about it.

Are your clients enthusiastic about your work? Are they routinely buying additional assets and extending and expanding their contracts?

If so, it’s a clear indication that you’re in a prime position to ask for a raise. Your boss certainly wouldn’t want you to seek employment elsewhere and then have to tell thoroughly satisfied clients you’re being replaced.

2. Your boss is in the greatest mood of all time.

Is your boss grinning from ear to ear? You might want to use his or her great mood to your advantage. If everything is going well at the office and your boss seems to be in an approachable mood, why not ask if you can have a brief meeting to discuss your compensation?

It sure beats asking for a raise when your boss is angry.

3. It’s not uncommon for folks in your industry to get raises regularly.

If you wait tables, you might not be successful in asking your boss for a raise.

But if you work in other industries where folks get raises often — such as marketing or finance — you need to proactively ask your boss for a raise, assuming you haven’t had one in some time. If everyone else is getting a raise, there’s no reason why you shouldn’t be.

4. Your organization doesn’t have a strict policy on raises.

Does your company review every employee’s performance at the end of the year and then make corresponding salary adjustments? Or is there no rhyme or reason to how your company approaches compensation?

If your company doesn’t have a strict policy on when raises are given, ask your boss for a meeting when the time is right. A good time would be, for example, after you dominated a project and received excellent feedback.

5. You’re getting more and more work on your plate.

When you receive more and more work on a regular basis, it might be time to ask your boss for a raise, particularly if you’re salaried and your company isn’t too keen on overtime pay.

6. Your company is crushing it.

If your organization has been doing very well, you might want to strike while the iron is hot and ask your manager for a raise.

You work hard all week long, and partially because of your efforts, your company is thriving. Management should share the wealth, but you need to ask them to.

7. Another company expresses an interest in you.

Have you been doing so well at work that an organization is trying to poach you?

Let your boss know right away. Tell him or her that you love working for the organization, but you want to be compensated more. Give your boss the chance to offer you a number that’ll encourage you to stay put.

8. You got promoted.

There’s no sense in taking on more responsibility if you’re not going to get compensated additionally.

Believe it or not, some folks get promoted and don’t receive raises. This is probably due to the fact that they don’t ask for them. When you’re on the receiving end of a promotion, by all means ask your boss how much more money you’re going to make as a result.

Good luck!

Anum Yoon is a personal finance blogger and writer. She created and maintains her personal finance blog Current on Currency. You can subscribe to her blog newsletter right here for her weekly updates.

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Saving Money vs. Making Money

The age old tug of war – saving money vs. making money.  Which is more important?

There are a lot of websites out there that focus their content on just one side of the coin.  One famous website focused on saving money that I read is Mr. Money Mustache.  A great site that is focused on making money is Smart Passive Income.  Here, I’m trying to focus on all three factors to help us build wealth and get rich (saving money, making money, and investing money).

But for the discussion today, if you had to pick just one area to focus on first, would it be saving money or making money?

Return on Investment of Time – Saving Money vs. Making Money

Usually making money wins out in terms of the return you get on the investment of your time.  There are many times in our lives where a couple of minutes spent negotiating for more money can have a huge impact on our lives.  The most obvious point in time where you can earn literally thousands of dollars per hour for your time is when negotiating your salary or wage at a new job.  For all the jobs that I’ve taken so far in my life (seven total) , I’ve made the HUGE mistake of not even trying to negotiate for higher compensation.  This has definitely hurt me over years, but now that I fully understand how important salary negotiations are, I won’t make the same mistake in the future.

Another example where you can get a huge return on the investment of your time when making money is when you’re in the process of selling something that you own.  Whether its a home, used car, or some crap out of the closet, if you’re in a rush to sell something you will almost always leave money on the table.  “But, Derek” you might say, “I don’t have the time to haggle over prices.”  Please remember that everything is negotiable – especially when you’re selling your used stuff.  I’m trying to sell my 1997 Camry currently for ~$1,000.  I priced it at $1,500 on Craigslist knowing that folks would try to low-ball me.  I got a call literally 10 minutes after placing the ad from someone offering me $1,200 cash on the spot with no questions asked.  I still believe I can get a little more out of it.  This just goes to show that an extra couple of minutes can put 20% – 30% more money in your pocket with little to no effort!

My experience has been that saving money usually takes more discipline and takes a little bit more of an investment of your time.

Winner for Return on Investment of Time: Making Money

Bigger Impact on the Bottom Line – Saving Money vs. Making Money

So does saving money or making money have a bigger impact on the amount of money left over in your pocket at the end of the day?  Here is where I believe that saving money takes the lead.  Remember, we all pay about 20% – 35% taxes.  This means that when we save post-tax money, it goes straight to our wallet.  This is a pretty simple concept that my Dad and I were talking about the other day, but it took me a minute to understand what he was talking about.  Here’s a table to help illustrate the point:

So you see, even though saving money can be more difficult or take longer to sort out, you’ll get a 30% premium for your time!  Because you’ve already paid taxes on the money you spend, it goes straight to your wallet.  This is why living below you means can be the most important aspect of building real wealth!

Winner for Bigger Impact on the Bottom Line: Making Money

Final Thoughts – Saving Money vs. Making Money

Most people I’ve met have a preference or affinity for either saving money or making money.  It depends on where you are in life, how much you make currently, and where your current savings rate is.

If you couldn’t tell by now, I gravitate towards saving money.  If we can expand our skills and abilities in both areas of saving and making money, then we’ll really be on the path to success!  Which do you prefer, saving money or making more money?

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Are you ready to take the simple money quiz now???

Take the simple money quiz now to see how well you handle your money!  The whole process takes less than three minutes, and it will help you assess how good you are at making, saving, and investing your money.  With your grade in hand, you can develop a plan for how to improve your financial picture!

Have you ever wondered how or why some famous millionaire celebrities have lost it all?  Maybe you’re wondering just how Warren Buffet got to be the richest man in the world?

Take the simple three question money quiz now to find out where you stand!

Let’s Jump Right into the Simple Money Quiz

Without further ado, here is the simple money quiz.  Give yourself three grades using the simple table below.  You will be evaluating yourself in each of the money criteria –  making, saving, and investing:

How Did You Score?

So, how did you score on the simple money quiz?  For the average American, they fail in each of the three categories!  Hopefully the fact that you’re here reading this means you’re above average and you passed in at least one of the categories.  If not, that is still OK; we all have to start from somewhere!

Here’s how my household fares:

• Money Making: our combined household income is > $165,000.  So we get an A there.
• Money Saving: Our savings rate is above 40% of our gross income, so we get an A here as well.
• Investing: We get a big huge F in investing.  Like so many others in 2008, I pulled my 401K out of the market when the DOW was around 8,500 and parked it into a “stable value fund” where it has sit ever since.  Along with other losses in our individual trading account, my overall 10-year return is still negative!  Ouch!!!  I’m embarrassed to even admit such horrible performance, but hopefully writing this blog will help force me to get better at disciplined long-term investing.

So, overall our combined simple money quiz score is somewhere around a C.  Good, but not great.  What saves us is that we score good grades in two out of the three categories.  Let’s look at some specific examples to better understand what the simple money quiz can tell you about your finances.

Why Is It Important to Do Well In At Least Two Categories?

One of the most famous of examples that many folks are familiar with is M. C. Hammer.  According to Forbes, at one point Hammer had a net worth of over $33 million!  Obviously, we’ll give him an A+ in Money Making.  Now the kicker, what did Hammer in was that he had a negative savings rate.  This means that he spent more than he was making and accumulated large amounts of debt.  So, for savings we’ll give him an F.  With poor spending choices, Hammer had little planned in the arena of investments.  I cannot find any record that he used any of his money for investments, so we’ll give him a F here as well.  So, if M. C. Hammer took the simple money quiz, he would get A+, F, and F.  It’s no wonder that Hammer had to eventually file for bankruptcy when he “found” himself more that $13 million in debt.

Now, take someone like me.  I’ll probably never make millions of dollars, but I earn a good wage and am good at saving.  Even though, so far in my life, I’ve pretty much written the book on what not to do when investing, we’ve still come out in very good shape financially.  Because we’ve done a good job in two out of the three categories on the simple money quiz, we may have the option to retire quite early if we so desire.

Now, what happens if you can get good at all three facets of money (making, saving, and investing)?  Almost like magic your wealth will begin to sky-rocket!  Let’s look at two different examples:

• A great person that I’ve recently run across that has excelled at all three categories is Mr. Money Mustache.  Through hard work, he and his wife made $200,000+ per year and saved about 70% of their income each year over a number of years!  They were able to roll this into investments in market index funds.  So, if MMM took the money quiz he’d score A, A+, and B.  As a result, they are now financially independent after just seven years in the work force and are living a wonderful and fulfilling life with their young son!
• Another cliche example is none other than the famous Warren Buffett.  Warren gets A+’s across the board on his simple money quiz.  He is good at making money, saving money, and investing for the long term.  I won’t go into details here as I’m sure everyone knows quite a bit about him.  As a result, he was once named the richest man in the world before pledging to give away 99% of his wealth to charity.

Next Steps?

OK Derek, this is all great.  But, what does all of this mean for me?  Well, by honestly answering the questions on the simple money quiz above, you’ve been able to get a picture of where you stand with your money.  There are two strategies you can employ to improve your money situation to help reach your financial dreams:

1. Play to your strengths
2. Improve on your weaknesses

I prefer method #2 because, as I’ve shown above, you can be an ace in just one of the three categories and you really cannot get anywhere over the long term.  If you are able to make the commitment to yourself and put in the hard work to achieve B’s (or higher) across the board, you’ll be well on your way to achieving your financial dreams in very short order!

For me, the money quiz shows me that my biggest weakness is investing.  I didn’t really have any formal investing training or a mentor to learn from.  As a result, I’ve dug a pretty deep hole for myself over the past 10 years by trying to time and trade the market rather than employ diligent investing.  To improve my financial picture, I need to make the commitment to myself to stop trying to time or outsmart the market and force myself to invest in market index funds on a routine basis.

What about you?  How did you score on the simple money quiz, and what are you planning to change to achieve your financial dreams?

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