Here in the Midwest, it is a gorgeous Sunday afternoon, and I would completely understand if you have better things to do with your time than read this article, so I’ll boil it down for you in one sentence: If you want to smarter than almost anyone you encounter on the street, and more importantly, put yourself in the position to build wealth for the long haul by thinking in terms of purchasing power rather than superficial dollar amount changes.
Now for the five-minute version.
If you read Yahoo News headlines today (actually, right now), you will see an article titled “Bad News For Social Security.”
The article is generally a complaint that the cost-of-living adjustment for the upcoming year of Social Security checks is only 1.5%. The article includes the obligatory quotes from Social Security recipients that remember previously receiving 3% or even 4% cost-of-living increases. The … Read the rest of this article!
As investors, we do not put together successful investing lives by getting world events to happen that we desire. Rather, we put together successful investing lives by reacting intelligently to the events that do happen.
Although I personally regard it as a low probability event, the upcoming issue that is dominating the global financial newswaves is the prospect of a potential United States government default on its debt.
The real issue there is that the United States will not be able to pay interest rates on its debt to creditors (this means both foreign entities like China’s vast stockpile of US government debt, as well as American corporations and individual investors that held US bonds), and this will conceivably lead to: a (temporary) crash in the United States dollar as it loses its historical credibility to meet its debt obligations in all instances, the dollar loses its status as the … Read the rest of this article!
Before I launch into the substantive part of this article, read this almost Aesopian tale first:
One day, a scorpion looked around at the mountain where he lived and decided that he wanted a change. So he set out on a journey through the forests and hills. He climbed over rocks and under vines and kept going until he reached a river.
The river was wide and swift, and the scorpion stopped to reconsider the situation. He couldn’t see any way across. So he ran upriver and then checked downriver, all the while thinking that he might have to turn back.
Suddenly, he saw a frog sitting in the rushes by the bank of the stream on the other side of the river. He decided to ask the frog for help getting across the stream.
“Hellooo Mr. Frog!” called the scorpion across the water, “Would you be so kind as
… Read the rest of this article!
Since I’ve been on a Charles Dickens kick of late, I thought I would share with you some of my five favorite Charles Dickens quotes that have an economic angle, and share with you what they mean to me:
“Although Oliver had been brought up by philosophers, he was not theoretically acquainted with the beautiful axiom that self-preservation is the first law of nature.” –Dickens, Oliver Twist
The first law of charity is that we need to make sure that we ourselves become self-sufficient. Obligations should be viewed in ascending order: your first obligation is to your immediate nuclear family, your secondary obligation is to your extended family and close friends, then your local community, then your town, state, country, and so on. You don’t want to be one of those people who feels good about donating to the celebrity cause blasting on the television while ignoring the local hardships … Read the rest of this article!
One of the potential pitfalls of reading about any activity is that the act of reading could potentially replace the much more important act of doing the activity. This is a concern that primarily crops up in the field of health and fitness—the act of regularly reading about dieting, lifting weights, and running could actually displace the act of dieting, lifting weights, and running because the fulfillment created by reading about something can actually occupy some of the mental space that would otherwise receive fulfillment by performing the act itself.
That concern could extend to finances as well—if you read about stocks and bonds all day, that could replace the act of actually generating the capital you need to make successful investments.
This brings me to one of the most important truths about investing: your savings rate is almost assuredly more important than the rate you earn on stocks.
Allow … Read the rest of this article!