Personal Finance - 7 Things Everyone Should Know About Money

Hi All,

Summer vacation is over and back at office. The vacation went again way too fast but hopefully somewhere in future the vacation is much longer. 😀

But, now to the topic of the day. Today I want to highlight 7 things everyone should know about the money.

1. Don’t Lend Money to Friends or Family

It is very hard to get good interest rates for lending money to friends or family. It is easier and much more profitable for me to say just use your credit card or etc.

2. More Than One Income Source

Try to get as many as possible income sources. You can do this by owning things which put money on Your pocket, not taking it away.

3. Financial Destination or Plan

Create a budget! By doing this you are able to really know where your money is going and you can create a plan. Will it be traveling, house or etc, but you need to have a plan.

4. Don't Use Bad Dept

Never use dept for example from your credit card. The interest rates are very high and this kind of dept will put you on bad situation.

5. Try To Maximize Your Saving Rate

By saving more today you will have much more in the future due to compounding effect. 

6. Don't Try To Outsmart The System

If something sounds too good it probably is. There are no quick ways!

7. Don't Panic

Time is your friend! When you do investments 48% of the time you will see red figures. Buy & Hold is the best strategy for many of us.

The next topic will be monthly summary, so stay tuned!

Regards,

CVM

Personal Finance - Know Your Destination

" To get there you need to know your destination"

This is one of my favorite quote's and I use it a lot in work related tasks and with my personal goals. I really don't understand people who love to wonder around without destination and goals, but you see those quite often. Also, I heard time to time people saying; when I have more this and that, then I will do start to do this and that. To me this sounds like they are wondering around and soon they will be lost or at least they will not achieve their goals.

There is a popular quote in Finland; "money does not grow on trees" and you cannot avoid hearing it. Time to time it is use even by the middle class which should have money. But there is a trick, you just need to check they car and you probably understand why they don't have the money. Like Robert Kiyosaki has said, middle class buy liabilities and rick buy assets. Please check Rich Dad Poor Dad if you haven't.

So, how to avoid all these circumstances? You need to have a plan! Next time when you are starting to think; I cannot afford that one, stop it and turn the thinking around! How can I afford it and is this an asset or liability? And if it is a liability please think twice before buying it.

And how I use these thinking? For example, I have created a plan to my financial freedom. I know exactly how much money I need for retirement or freedom from work. At this stage and with current savings plan my freedom is 25 years away. My goal is to get portfolio to grew up to 600 000€ (~685 000 USD) and with 4% rule I think this is enough for me.

 

So, it took around 10 mins for me to create this plan you can see above. By doing this, it is much more understandable for me what I need to do and how much I need to save. This is only an one example, but you can use this ideology in many other topics and tasks when you think a little bit outside the box.

Happy Summer!

Regards,

CVM

Stock Investing For Dummies - Tips from Warren and how I use those

Hi All,

I have always been a big fan of Warren Buffett. Mainly because he can put investing strategies in simple and understandable form and his personal investing strategy is quite similar what I am looking after. Today I want to share some his tips and how I use those in my daily life.

  

1. Index Funds

This is to best way to investing for somebody who does not follow stocks daily or just want to invest with a low risk. I thinking also add some small cap indexes to my portfolio, but for now I haven’t. because there are some disadvantages what comes to tax planning (at least in Finland).

2. Compounding

One of my favorite quote from Warren is: “Someone's sitting in the shade today because someone planted a tree a long time ago".  Everybody should understand that there is no “quick money” what comes to stocks. The investing strategy should be close to hibernation. 
 

      3. Hold the stock

 
Only buy stocks which you can own for lifetime. The company needs to be dealing in business sector which is still alive in 30 years. Also, I have one personal rule here, only buy business which have several products. There is a change that the company is one hit wonder…

      4. Invest in yourself

      This was something I didn’t do let’s say five years ago, I just was happy in a situation what I was having. But for some reason I interested in investing and start to invest to myself as well. But this time I didn’t bought more gadgets but I bought books, started to watch educational videos and really started to think differently.  

       5. Trust yourselves

      In the early phase, I checked the value of stocks hourly and my heart beat increased when I saw red figures. But nowadays I know that 48% of time I see red figures and this is part of the game. Just stay cool and trust yourself! 

Hopefully these comments and ideas helps you understand a little bit better the game of investing and how the comments from Warren have helped me to get confidence when dealing with stocks. Also, it would be good if you find somebody who share the same ideology, because when you talk about these topics with somebody you will learn a lot of faster. 

Regards,

CVM