Eps 22: 9 Ridiculous Rules About FINANCIAL ADVICE
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Franklin Steward
Podcast Content
But from the point of view of an ivory millionaire, investing money aggressively if you have a small pile of it might be seen as the only way forward. Too many people spend too much time trying to figure out whether they have the right investments or looking for ways to boost their profitability a little - many would be better off to devote this energy to figuring out how to save more money.
Most people's attitude to daily business news should either be non-existent - ignore everything - or be something that gradually helps you understand how the world works, but rarely force you to act.
After all, it is obvious that many people do not know how to manage their personal finances. Most people need a financial adviser, but everyone needs a financial adviser or someone disappoints them before making a stupid decision. There are many "financial experts" who just conduct venture capital transactions. The worst money mistakes I have seen are also the most common; people who spend their pensions on things they can't really afford.
Unfortunately, some people do not make one major financial mistake, but two, three or four in their lives. The biggest expense most people spend is the interest that comes from living beyond their means but buying things they believe will impress others - which comes from insecurity. Too many people buy TOO MANY homes and at the end of each month there is little left to invest elsewhere.
For most people a home as a primary residence is a terrible investment unless you break into a home or flip it live. The more you spend on housing the less you can spend on real investments such as stocks, bonds and real estate.
It's important not only to think about the opportunity cost of investing a $ 60,000 down payment in a home rather than investing in shares... but it's also important to understand that a home can tie you financially and geographically... and therefore can limit your career.
In fact, according to John S. Bogle, the legendary founder and former CEO of Vanguard Mutual Fund Group, the best way to make money in the market is to invest in passive index funds. Excellent investment options range from tax-free savings tools such as 529 plans to low-cost investment tools such as index funds and exchange-traded funds .
The problem with advice like this is that you can spend a lot of time and effort trying to cut down small expenses like latte macchiato and not find some serious money to save when you're done. So, be sure to factor in the short and long term cost of big purchases with retirement accounts before running out of money. And if you find yourself in an unstable labor camp or the economy is in recession, consider saving eight or even 12 months of expenses.
Calculate the time it will take your investment to double, using Rule 72. - To use this rule, divide 72 by the expected growth rate of your investment, expressed as percentage.
Approximately 7.2 years to double your money if you plan on earning 10% per year. If you are more risk tolerant or plan to work and invest longer, you can increase this rate for example, most robotics advisers recommend keeping your investment for 3-4 years.
Then, by accumulating your money and savings forecasts, you can start a scheduled automatic recurring investment with every paycheck in your investment accounts, thus preventing attempts to catch the market. Stay up for a week and then follow through with the help of a trusted friend before taking action. There are two things you can do to become a better investor : increase the amount of time you invest and the humility you invest in your ideas.
Many common rules tell you to strive to live on a certain percentage of your current retirement income. If your employer offers a retirement investment, at least save enough to get it.
The Certified Financial Planner who founded Workable Wealth recommends limiting your spending to a high-yield savings account, when you have enough funds to cover expenses for 3-6 months.