Managing money is simple. But most of you consider it to be a herculean task. You need to learn to navigate out of the clutter of financial jargons, pontificating statements and of course, the technical stuffs. Doing so will automatically help you see the big picture all the more clearer.
To start with, you can use the personal finance hacks discussed in this article.
Creating a strong financial foundation for success
Here are some of the you should know for a strong financial health:
Pay no heed to financial and economic soothsayers
The purpose of this breed of people is to ensure a steady source of income for the financial/economic forecasters. Adding insult to injury is the fact, a lot of professional economists did not see the the Great Economic Recession of 2007 coming. The economic meltdown of this magnitude is said to be . Moreover, the same lot of economists were blindsided by the stock market's brilliant recovery from the losses suffered during the recession period.
Avoid stock picks promoted by the experts
Make this point very clear, no better than the ones they don't. In other words, all stocks, be it approved by the stock brokers and their agents' or the ones that were randomly chosen fare the same, with some rare exceptions. The same could happen in your case too. So, instead of solely relying upon these kind of financial honchos, why not make your own and brave the results, come what may?
Keep it simple
and are mostly and . A simple, diversified portfolio of low-cost index funds, rebalanced yearly, will do just fineÃ¢if not better. When you are trading in the financial markets, it is good to that are always designed to enrich the Wall Street financial professionals working in the ranks of managers or salesmen. It is always better to be safe than sorry. Initially, you would do just as fine by building up a simple, well-diversified portfolio of low-cost index funds. However, this investment portfolio should be rebalanced every calendar year.
Invest only on individual stocks
As far as buying stocks are concerned, then it is always advisable to settle for the standalone ones and not for the fashionables. Invest on stocks only when you've researched the market well and are confident of your decision. To double check your choice, you can . One of the best ways to play in the financial markets is to acquire as much knowledge about them as possible and always keep your investment portfolio regularly rebalanced and judiciously diversified. To make sure of that, you should move your investments to foreign shores as well and buy treasury bonds as they tend to hold value even amidst severe financial meltdown.
Invest for the long term gains
Though equities are inherently volatile, yet they are the ones that can provide you with the most lucrative long-term return on investment. The ROI could range from four percent to five percent per annum above inflation. However, learn stay put when the times are tough and as these would turn out to be best financial friends in the long run.
Raise emergency fund to defend against disasters
It is preferable to , be it through work or directly. Having a proper term life insurance will financially help your loved ones if you ever encounter a crisis or an accident. Apart from that, you should make it a lifelong habit to save a certain amount of paycheck every month. This is because time and patience are an investor's best friend. For instance, if you invest a dollar for a period of 10 years, then that'll earn you a return of four percent or $1.50, whereas, if you invest the same dollar for forty years, then that same amount will get you $5. This implies that , .