Investing, Saving, and Budgeting

Discussion in 'Self Improvement' started by TSoprano, Aug 5, 2017.

  1. TSoprano

    TSoprano Fapstronaut

    34
    38
    18
    Hi I was just wanted to share a few things I've learned over the years about finance. There is a lot of young people on these forums and investing as early as you can is probably the best thing you can do for yourself. I'm serious. Start NOW. Your 50 year old self will thank you to death for what you did in your 20s. You have the power of time on your side which is money's greatest ally. Look at the chart below as to why you should start as early as possible:

    1. [​IMG]

    A lot of people think its hard or you need to a lot of money to start investing and that's not true. I will go over some simple ways where you can start saving and investing TODAY. But first:

    Budgeting
    First thing first, stop what your doing and sign up to mint.com I've been using mint for years now and it might one of the best finance tools out there. Enter in your bank accounts, assets and debts and start planning finance goals for yourself. Mint will keep all your transactions and help you budget and keep your finances in check.

    Learn how to use mint and budget budget budget. Stop buying shit you don't need. And that includes $3 coffees at Starbucks. Need a new laptop? Search craigslist/ebay for used. Need clothes? Go to outlets and low-budget department stores. Every penny counts. Here is a quote from the book The Mind of a Millionaire:

    “I want you to practice going crazy with excitement and gratitude anytime you find or receive any money. It’s funny, when I was broke and I saw a penny on the ground, I would never stoop so low as to pick up a lowly penny. Now that I’m rich, however, I pick up anything that even looks like money. Then I give it a kiss for good luck and declare out loud, ‘I am a money magnet. Thank you, thank you, thank you.’ I don’t stand there judging the denomination. Money is money, and finding money is a blessing from the universe. Now that I’m fully willing to receive anything and everything that comes my way, I do!“

    Pay off your debts and create an emergency fund
    Once you start budgeting, you need to figure out how much of your income you need to set aside to pay off debts and start an emergency fund. Stop using your credit card and start paying off any debts and loans. You are getting killed on the interest and the finance fees. I have friends that are still paying student loan interest 10 years after they graduated college! They haven't dug into the principle yet! They are still paying for the privilege of having money lent to them. I know debt, especially student loans, might seem like an lifetime to pay off but you can do it. Pick at it every month and slowly but surely you will see your debt slowly disappear.

    Once your loans are paid off you need to start an high yield savings account. American Express has an account which offer 1.15% APY. You need to start saving at least 3 months worth of income. 3 months is a standard timeframe but this may be different for everyone.

    Stop keeping your money in your checking account. Use only your checking account for paying off debts and to allocate it to other funds and accounts.

    Investing
    Ok, finally the fun part. Investing. What is investing actually? Well, there are a few types of investment, debt and equity. A debt investment is where you become the loaner and someone else is going to give you interest for lending them money. Think of student loans. Now YOU are the person lending the money to the student and he/she has to pay YOU back plus interest. A debt investment is usually in the form of something called a Bond. Companies and governments can issue bonds where you lend them money and they will pay it back to you plus interest.

    An equity investment is simply where you become an owner of a company and get to either receive part of the profits (in the form of something called a dividend) or a chance to sell your investment if the value of the company goes up. Always wanted to own a company? Well you can! If you bought a share (stock) of Apple, you are now an owner of Apple! Congratulations. The problem with equity investments is that you are on their ship and if Apple goes out of business tomorrow, you will go down with the ship.

    But with higher risk comes higher rewards. Stocks usually having a better return on investment than Bonds. This is typically why the older you get the more you want your portfolio to be invested in bonds and less in stocks.

    But which company will you invest in? Imagine buying Blockbuster stock and the next day they go out of business and you lose your money. Luckily, there is something called funds which typically gathers a bunch of people's money and invests it for you. Money managers run the fund and will allocate where to put your money. You can enter in your goals and target dates to the money manager and they will manage your investments to fit your needs.

    So how do I get started? Well the easiest and simple way to start investing is a website called Acorns. I suggest you sign up and start exploring the site. Acorns is a great tool because they will round up your debit card/credit card purchase to a cent or dollar of your choosing and invest it for your based on your age/goals.

    Say I set a round-up to the nearest .50 cents and then go out and purchase a pack of gum for $1.30 on my debit card. Acorns will round up .20 cents and once my round ups hit $5 they will take the $5 out of my debit card and invest it into your portfolio. Its a great website that I wish I knew about earlier. It's a set it and forget it tool. Come back 10-20 years later and you will have a few extra grand sitting in there.

    Mutual Funds and Retirement Funds
    When your ready to dive deeper into investing I suggest you open up an Individual Retirement Account (IRA). I use Vanguard but there are others including your bank. Remember what I said earlier about the older you get, the less risk you should take. Well retirement funds are great because they do this automatically for you. The older you get the less your portfolio will be in stocks and the more they will allocate your money into bonds. It's safe, easy, and another set it and forget it tool.

    Check out Vanguards Retirement Fund 2055. Look at the 4 funds at the bottom. If I put in $5,000 into my Vanguard IRA. 54% of it will be invested in the total U.S. stock market. 36% of it in the international stock market. 7% of it in the U.S. bond market. And 3% of it in the international bond market. These percentages will change the older you get and the closer you are to your target retirement date.

    If you work for a company that offers a 401(k), it works the exact same way except your employee will usually match you. That's right, free money! If I take out 5% of my paycheck every month and invest it in my 401(k), my employer will also put in another 5%! I suggest if your company has a 401(k) plan to set an appointment with HR right away and learn about how you can maximize your 401(k).

    Once you have your retirement account squared away its time to move on to something a little more advanced mutual funds. It works the same way as an retirement fund except its a little bit more risky and the money manager will start charging fees but if done right, it will pay off.

    Advanced Options and Final Thoughts
    I just listed a few investment options but there are many many more out there. Others include:

    Real Estate - Buy property and become a landlord. You will receive rent every money and hopefully (knock on wood) the value of the property will increase over time.

    Gold and Silver - Tired of just viewing numbers on the computer and want to hold your investment in your hand? Buy gold and stick it in your safe or bank vault.

    Crypto-currencies - Bitcoin, Ethereum are the hot new investment now a days. Very very high risk but they say its the future of finance!

    Derivatives and Options - At this point, its legalized gambling. Think the stock market is going to gown down in the next few days? Well, short the stock market and reap the rewards while others lose. Remember, in gambling, there are always winners and losers. Just don't be a loser.

    Some final thoughts. Your not going to get rich tomorrow, or next week, or next year. Trading from one stock to the next every few months is a sure way to lose all your money. No one knows what the stock market is going to do. NO ONE. Short term investing is hard work and requires a lot of hours and research to get it right. Look at the graph below. You can't time the market but over the LONG RUN the waiting will pay off.
    [​IMG]

    The best thing to do is set up an automatic and safe account/fund and let it sit there till your ready to retire. The Vanguard retirement fund I mentioned is a sure way to meet your financial goals when your older. Like I said, time is on your side. Let your money work for you.

    Resources:
    www.investopedia.com - The best site to learn about finances

    www.bogleheads.org - The 4 fund retirement fund I mentioned is recommended by this site which has been one of the best investment communities on the internet for years. Named after Eric Bogle, founder of Vanguard.

    www.robinhood.com - Commission free broker. Very easy to use. Except the problem is that its almost too easy. You can fall into a gambling habit constantly moving your money around to find the next big stock. I used RH for a few years and when I was finally down a couple grand I moved my money out and uninstalled. Use with extreme caution.

    The finance section of your local newspaper - Start reading the finance section or subscribe to the Wall Street Journal. Or you can start reading Yahoo Finance. Learn what the Dow Jones, S&P500 is. Read about what Warren Buffet and Carl Ichan are doing. You'll be surprised how much about companies you use is being reported on (Whole Foods, Facebook, Snapchat...etc)


    Have fun! The market is currently at an all time high and there is money to be made! Hope you enjoyed the read and let me know if you have any questions.
     
    Last edited: Aug 5, 2017
  2. plant goodness

    plant goodness Fapstronaut

    522
    913
    93
    I appreciate the enthusiasm. But ya I prefer to research this stuff myself.

    I do like the idea of using Mint, but you started losing me when I saw 'buying a used laptop from Craigslist'. Hey if Craigslist is up your alley more power to you. I mean I get what you are saying about spending less and finding deals, but you started recommending things so specific you started losing me. Perhaps it is just your way of creating mental imagery.
     
  3. JaneWalters

    JaneWalters New Fapstronaut

    3
    8
    3
    Friends, please tell me the applications for stock trading. I would be very grateful for your help.
     
    Bladebringer likes this.
  4. Bladebringer

    Bladebringer Fapstronaut

    7
    2
    3
    Try apps called SigFig or Stash. From an aesthetic point of view, I like the Stash app more. But they are essentially the same in their functional content. https://thinkmobiles.com/blog/best-stock-trading-apps/ Here you can read more detailed information about these applications and many others.
     
    Last edited: Aug 22, 2019
  5. badbanana

    badbanana Fapstronaut

    17
    78
    13
    Extreme diversity is key, I have a stock account with an investment company, gold, crypto, a couple businesses, and rental properties. Plus don't be unwilling to hire professionals. Having a good tax specialist and a wealth manager pays serious dividends, they know how to keep uncle sam out of your wallet. Don't bother saving much until you hit 30, invest everything.
     
    recon117 and Emilysimmons99 like this.
  6. Informius

    Informius Fapstronaut

    Regarding your first graph: Keep in mind that they calculated that with 11%, which is basically god level. Usually you are, as an save investor, pretty happy about 4-5%.
     
    Emilysimmons99 likes this.
  7. Diana Rice

    Diana Rice New Fapstronaut

    4
    6
    3
    Thanks for sharing your experience!
     
    Emilysimmons99 likes this.
  8. Diana Rice

    Diana Rice New Fapstronaut

    4
    6
    3
    I have a point that before making a decision about investing in cryptocurrencies, we should analyze a lot of information.
     
    Emilysimmons99 likes this.
  9. fapequalsdeath

    fapequalsdeath Fapstronaut

    564
    392
    63
    Ah, I am looking to start invest, however, most of the literature is geared towards the US. Since i'm in Europe I still am wondering which broker to choose and how to invest. I was monitoring the forex market for years, but it's too volatile scary and liquid to make a constant profit. You must be watching the charts for the whole day. Latelty I'm looking into divident growth portfolio just like this dude here: https://www.youtube.com/channel/UCbta0n8i6Rljh0obO7HzG9A
    My goal is to have more than 3% return per year to battle inflation since the banks are screwing me over right now and each year my money loses its value. What do you think are the safest ways to start to invest for beginners? I hear index funds are deemed safe by most people and yet if a recession hits they suffer the most for obvious reasons. Thanks for the thread. I'm in my early 20's and can see the value of investing, but don't want to go into investing and lose all my money. In stocks' 70% of the traders lose their money in forex it's even worse 90%... So any advice for "safe" investing is appreciated
     
  10. Frenchcore_28

    Frenchcore_28 Fapstronaut

    6
    19
    3
    What are safe investment opportunities? I heard about stock websites, where you invest your money automatically and as soon as the share is loosing value, the website is going to sell it. I am a really investment noob but I see the value for my future if I invest now...Any good website / YT videos for learning about it? American have the great opportunity of cheap real estate, here in Europe (myself in Switzerland) those objects are too expensive...
     
    recon117 likes this.
  11. Frenchcore_28

    Frenchcore_28 Fapstronaut

    6
    19
    3
    My friend @recon117 started to invest in loans for eastern countries in europe. I give it a try because he is really passionate about it (and he is my best friend :) ). The return is around 10% annually - so a good investment. And its possible to invest in several credits. Check it out!

    Website: https://www.mintos.com/en/
     
    Emilysimmons99 and recon117 like this.
  12. fapequalsdeath

    fapequalsdeath Fapstronaut

    564
    392
    63
    What if the borrowers don't return the money? You don't have the power of the bank to take their house/sue them? So what you just lose your money?
     
  13. bken

    bken Fapstronaut

    995
    1,519
    123
    I sometimes look for bargains on eBay and sell them (antiques mostly) for double. The profits aren't insane but you can easily make a 100$ bill per sale if you know what to look for: vintage toys, advertising, clothing, instruments, etc.
     
  14. Frenchcore_28

    Frenchcore_28 Fapstronaut

    6
    19
    3
    You have the possibility to choose a guarantee over all of your investments. So if the borrowers doesn't return the money, you get your money back, but without interest. Without the guarantee the interests are higher (up to 16%), but also for you a bigger risk. So an example: you invest 1000 EUR for 10% in 20 credits for each 50 EUR with guarantee. Best outcome: You get 1100 EUR in one year back (100EUR interest).
    Scenario 2: two of those 20 credits didn't pay there money back. So you get your two times 50 EUR back without interest. Outcome after 1 year: 1090 EUR.
    Worst scenario: you get 1000 EUR back because ALL of the borrowers didn't pay the money back.

    logically there is the small chance, that MINTOS as a comany gets bankrupt, so there is always a small risk. But everybody is suggesting, not putting all your savings on one page.
    Hope I could help you a bit.

    Have a nice evening / day :)
     
    recon117 likes this.
  15. Diana Rice

    Diana Rice New Fapstronaut

    4
    6
    3
    But still, I think it requires some experience. I've analyzed a lot of articles whether it is worth it or not and I am not capable of answering this question properly yet.
     
    recon117 and Emilysimmons99 like this.
  16. Emilysimmons99

    Emilysimmons99 New Fapstronaut

    1
    1
    1
    Personally, I am not interested in cryptocurrency, I prefer app development, as it's more familiar for me. I understand it and it will be easier for me to master it.
     
    recon117 likes this.
  17. Get_It

    Get_It Fapstronaut

    539
    711
    93
    Money is only something you need if you don't die tomorrow.
     

Share This Page