You will be better than 99% of individuals even if you have no financial background if by mastering these financial concepts:
• Index funds
They are the simplest path to building wealth.
You don't need to pick individual stocks to invest for retirement.
Just buy an index fund and be patient.
Advantages:
* Low cost
* Great performance
* Diversification
* No research needed
* No expertise
They are the simplest path to building wealth.
You don't need to pick individual stocks to invest for retirement.
Just buy an index fund and be patient.
Advantages:
* Low cost
* Great performance
* Diversification
* No research needed
* No expertise
• Interest on purchases
When buying, many people only consider their monthly payments and fail to consider the overall cost.
Instead of paying $18k for the same item today, they would prefer to spend $20k on it gradually over several years.
When buying, many people only consider their monthly payments and fail to consider the overall cost.
Instead of paying $18k for the same item today, they would prefer to spend $20k on it gradually over several years.
• Compound interest
Many people would value their hard-earned dollars if they understood the power of compounding interest.
Compounding interest is the interest on your interest.
If you invest $1,000 for 10 years at 8%, you will have $14,487.
Many people would value their hard-earned dollars if they understood the power of compounding interest.
Compounding interest is the interest on your interest.
If you invest $1,000 for 10 years at 8%, you will have $14,487.
• Time value of money
The idea is that an amount of money is worth more now than it will be in the future due to its growth potential.
A $1,000 invested today will be more than $1,000 three years from now because, over time, you earn more interest on your money.
The idea is that an amount of money is worth more now than it will be in the future due to its growth potential.
A $1,000 invested today will be more than $1,000 three years from now because, over time, you earn more interest on your money.
• Emergency fund
The biggest risk is the one that everyone ignores. Always be prepared for the unexpected.
Setting aside three to six months' worth of spending is advised.
It serves as a safety net and stops you from borrowing money and getting into financial disaster.
The biggest risk is the one that everyone ignores. Always be prepared for the unexpected.
Setting aside three to six months' worth of spending is advised.
It serves as a safety net and stops you from borrowing money and getting into financial disaster.
• Investing in assets
Don't simply place cash in a bank account. Money loses value every year due to inflation.
The ideal way to invest money is to purchase assets that will increase in value, make more money for you, and secure your financial future.
Don't simply place cash in a bank account. Money loses value every year due to inflation.
The ideal way to invest money is to purchase assets that will increase in value, make more money for you, and secure your financial future.
• Learn to live within your means
There is no way to have financial stability if you cannot live on less than your income.
People have financial issues and tremendous debt as a result of their way of life.
There will always be material goods. Focus on what is most important.
There is no way to have financial stability if you cannot live on less than your income.
People have financial issues and tremendous debt as a result of their way of life.
There will always be material goods. Focus on what is most important.
• Retirement planning
The best way to plan for retirement is to diversify your money across many accounts.
Here are some accounts:
-Pre-tax: 401Ks, IRAs, HSAs, or other employer-sponsored retirement plans
-After-tax: Roth IRAs, Roth 401(k), etc.
The best way to plan for retirement is to diversify your money across many accounts.
Here are some accounts:
-Pre-tax: 401Ks, IRAs, HSAs, or other employer-sponsored retirement plans
-After-tax: Roth IRAs, Roth 401(k), etc.
• Budgeting
A budget is a documented plan of action that describes where how money should be used.
By taking a few deliberate actions with your money, you can easily understand where your expenses are going and how you might better organize your funds.
A budget is a documented plan of action that describes where how money should be used.
By taking a few deliberate actions with your money, you can easily understand where your expenses are going and how you might better organize your funds.
• Free match
Take advantage of your employer's sponsored plans.
Though the match may look insignificant now, it will eventually be worth more later.
If someone gave you a penny in cash, you wouldn't turn it down.
Do not let that money go to waste. Use it for your future.
Take advantage of your employer's sponsored plans.
Though the match may look insignificant now, it will eventually be worth more later.
If someone gave you a penny in cash, you wouldn't turn it down.
Do not let that money go to waste. Use it for your future.
• Instant gratification
There will always be a new device with greater features than the one before.
Businesses invest billions, so you may stay up to date with their latest items.
If you cannot wait and practice discipline, you will constantly spend money.
There will always be a new device with greater features than the one before.
Businesses invest billions, so you may stay up to date with their latest items.
If you cannot wait and practice discipline, you will constantly spend money.
• Net worth
Your net worth provides a snapshot of your financial health.
It differentiates what you own (assets) vs what you owe (liabilities).
It is useful as it tracks your progress year-over-year and determines financial stability.
Net worth = assets - liabilities
Your net worth provides a snapshot of your financial health.
It differentiates what you own (assets) vs what you owe (liabilities).
It is useful as it tracks your progress year-over-year and determines financial stability.
Net worth = assets - liabilities
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I write about
- Personal Finance
- Investing
- Wealth
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I write about
- Personal Finance
- Investing
- Wealth
Subscribe to receive a free guide on the top 5 ETFs to hold for life: bit.ly
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