From a young age, I was always told that you have good grades, get a good job, your house is good, save for retirement, find a financial planner, diversify, and have bad debt. This council has always made sense because everyone I talked to said the same thing.
We all learned the same formula for investing, and sometimes it is difficult for many of us to be disciplined enough to stay on track with these tips. Here we cover brief information about investment and how to invest the right way.
It was not until I read the book by Robert Kiyosaki, Rich Dad, Poor Dads, that I began to consider investing from a completely different perspective.
This formula is ideal if you want to invest, as most investors do. The question is, can you get rich with this board? I’d say it’s possible, but it is more difficult if you follow the power of the majority.
Good grades –
High grades are required for admission into the best schools. Entering the best schools can open doors that are not available to the average Joe.
This can be done at a price. The school teaches our children that being far from perfect is a negative feature. If you get good grades, it is easy for the individual to learn to apply themselves.
When tackling difficult problems in school, they do not know how to handle anything less than perfect. Although many doctors and lawyers earn high incomes, many of them continue to struggle with finances because they consume too much.
Some people drink too simple to maintain a “status” in their community or do not know how to control their impulses. They may have a very high IQ, but perhaps they have not learned their emotional intelligence.
Good Job –
Everyone needs a good job to capture the experiences of life and, if you’re lucky, the excess cash to invest. The problem with a job is that you work for wages.
What happens if you lose your job, or, God forbid, you get sick and cannot work, and the money goes with the job? Instead of working for money, we must find a way for money to work for us. I know this is easier said than done.
You hear it all the time that our house is good. The best way to explain the difference between assets and liabilities is that an asset puts money in your pocket, and liabilities take money.
If mortgage costs, property taxes, and maintenance exceed the revenue generated by your house, your house is a liability. In reality, your home is good for your mortgage lender.
Saving is always the best way to consume material goods. The problem with saving money in a savings account is that you may lose money every day that you put in your account.
If inflation is higher than the interest you earn by putting your money in savings, you can buy with your money less the day it will withdraw from your savings account from the day you put the money in your account.
Financial advisors –
There are good financial advisors who can make your money work for you. The problem is that you do not know if you’ve chosen a good planner when you pick up your money or retire. Most investors use financial advisors; why not take the time to learn how to invest their money? or because they are too busy working for wages?
If you choose to use a financial planner, just use a planner who puts their money where their mouths. If a planner does not invest their money in investments they recommend to you, then you probably missed the financial planner. I decided to take possession of my investments. I do not want to not invest because I’ll learn from my mistakes.
Investors who diversify to try to limit the risk or reduce their losses. Warren Buffett is very short, “wide diversification is only required when investors do not understand what they do.”
I thought everything was bad debt. There is a difference between good debts and credit. Bad debt is the debt that you pay for, and good debt is the debt that someone else is paying for.
For example, if you get a loan to buy a house and live in the house, the debt is bad because you pay the loan in your account. If you rent the house to a tenant, your tenant is to pay the debt.
I just started my journey towards financial freedom. I work on reading, learning and building my experience on investment. I speak of my passive income more so I will not have to work for wages. Although there are many vehicles to achieve financial freedom, I will focus on rental properties and houses for rent.