Posted by Eric Twitty on January 15, 2009
Welcome back!
I found a great article on MSN Money about investing. As you may know, Warren Buffett is widely regarded as the world’s most successful investor. This article outlines the basics that Buffett follows in choosing which stocks to buy and managing his investment portfolio.
Anyone that actively invests their own money should keep these basics in mind. Here is a link to the article:
10 Investing Basics From Warren Buffett
I hope you find this article useful.
Posted by Eric Twitty on October 28, 2008
It is a well published fact that most Americans have very little or no savings. This, in my opinion, is a direct result of most people wanting to live well above their means. The problem is, over the long term this type of thinking leads to a reduction in your quality of life.
High credit card debt and living in a bigger house than you need is a sure way to continue living paycheck to paycheck. This leaves little money left over to build financial indepedence.
Stop Spending and Get Out of Debt
If you have to charge anything on your credit card, and you are not able to pay off the entire balance at the end of the month, then you are spending too much money. Stop using those credit cards and start paying down your debt.
The first thing you have to do is cut down on spending. Sit down and write out all of your bills and necessary living expenses. Whatever is left over you should use to pay off your credit card debt.
Start Saving and Investing
Once you are out of debt, then you can begin putting money in the various investment vehicles that have proven to appreciate in value over the long term.
Where should you invest your money? There are many choices out there. The best thing to do is talk to a licensed financial adviser if you are not educated on the various types of investments.
I think it is an absolute necessity to contribute the maximum amount to an IRA each year. An IRA is a tax-deferred investment which is an enormous advantage for long term capital growth. I think it is also important to have at least three month’s living expenses saved in a high yield savings account. Once you have enough in your savings account, and you have contributed the maximum amount to your IRA, you can then begin to put money in various investment vehicles that suit your return expectations and risk tolerance.
Develop a Disciplined Savings Approach
Think of your savings plan as a bill that you have to pay. If you have $500 left over to save, then make it a point to write a check for that amount at the end of the month to one of your investment accounts. Don’t miss a month.
Once you do this for awhile it gets kind of fun to watch your savings grow. You begin to feel better about your financial situation. Every month that you write that check, you take a positive step towards becoming financially independent.
Don’t Spend It
You must resist the urge to spend the money once you have a decent amount saved. Don’t spend your money on things you don’t need. Put that money to work for you so one day you can afford whatever you want!
Posted by Eric Twitty on October 10, 2008
With the financial crisis going on in today’s economy, there is a lot of fear and panic out there. I know it seems like the economy is getting worse every day.
Where is the bottom of the stock market? You can find many “expert” opinions but no one really knows. Picking bottoms and tops in the markets is impossible. Here are some helpful ideas to get you on the right track.
Look for Opportunities
Focusing on all the negative things going on in the world today is not productive thinking. You need to look for opportunities. Stock market prices are extremely depressed right now. Are there buying opportunities? There are some companies out there with solid balance sheets whose prices are discounted. If you liked a particular company a year ago and you still like it today you should buy some shares. They will probably be deeply discounted.
Most mutual funds have been deeply discounted also. This may be the way to go if you don’t have any knowledge or experience in picking stocks. Just look for a fund with a good track record and buy some shares. Don’t worry about their current performance. Most mutual funds have been forced out of some of their holdings by people redeeming their money. This has really hurt their performance through these rough times.
Take a Long Term Approach
You need to take a long term approach to the market. It could continue to go lower in the short term, but in the long run the market has historically performed very well. What we are seeing is panic across all financial markets. Once the panic dies down, people will realize that there are some good buys out there.
Investing in the stock market is about aquiring assets that appreciate in value over time, and hopefully earning some dividends in the mean time. Don’t worry about what happens in the short term. If there are companies out there that you wouldn’t mind owning a piece of, then buy some of their shares.
Have the Courage to Do What Most People Won’t
There are opportunities out there. Those who have the courage to buy in these bad economic times will be rewarded in the future. Remember to “buy when the man on the street is selling, and sell when the man on the street is buying.” Most people get in the stock market after it has performed well for a long period of time. Have the courage to do the opposite and you will be rewarded with solid returns.
