Save 10 percent of your money.
The bank reposses homes, so pay it off quick. Fear reduces the wealth accumulation effect. The depression symbolized a massive reshuffling of home ownership and loss of ownership. People who lost their jobs could not pay for their homes. In the 1950s a home cost between 2500-5000 dollars. Original mortgages were designed to be paid off within 10 to 15 years. The 30 year mortgage forced homeowners to pay up to three times the values of the original purchase price. The more equity the home acquired the less money paid in interest. Eventually after thirty years the home was paid for and the title delivered. In the 1990s, the wealth accumulation was equity in the home. Home owners were using the equity to borrow and invest in other homes or improve their existing homes. Money shifted from savings accounts to real estate as low interest fed policies inticed money to move from the bank into the market.
The power of interest compounding works for the mortgage companies through significant gains in long term growth from investments. A mortgage can be used as a tax shelter. Don't fear owning a home. The first principle is to buy a home you can afford and divert the maximum amount of money to pay of your home.
Getting rich is a process of consistent saving program/investing program and keeping a job long term. There are three share price patterns: high to low, high to low to high, low to high.
Lets look at the high to low pattern. Suppose an individual invests 100 dollars a pay period in the high to low scenerio; what would be the break even point? Total invested/number of shares is the break even price with the point being that the break even price is significantly lower that the average share price.
Long term investing and dollar cost averaging allows the investor to buy cheap shares and profit handsomely as the price swings to higher prices.
Focus on accumulating wealth through saving and investing. Analyze how to divert as much money as possible to your 401k: live cheap, don't eat out, buy real assets that can be sold later, and reduce recreation. Accumulate your wealth through sacrifice and then live off your money.
Start saving now. Start investing while your young. Invest the maximum amount your 401k will allow. Be care not to overinvest in a company stock. Don't invest all your money in a single stock, instead result risk by diversification.
What is the likelihood of finding three stocks with this potential and aggressively investing the complete fund into each investment opportunity? There are so many pitfalls: seeing financial patterns where no pattern exists, following hot tips that turn out to be error, economic predications that become errorenous, and compartimentalizing thinking that cause error. Investing can be complex process of selection.
Index funds can swing from top position to bottom position and bottom position index funds can rise to the top. The constant shifting of index position over time producing a complex matrix with very little pattern to predict which type of index that will be on top. Maintain a healthy cross section of indexes, money markets, bonds and treasuries, and precious metals and buying precious metals during a time period of war makes sense
Market time is impossible. Investors can be disillused by what they feel and sell when they should be buying, buying when they should be selling. Investors lacking expertise to time the market and understand accurately company fundamentals (retain earnings, earnings per share, consumer demand).
Think more about finance and return back to the basics: 1. invest now 2. invest consistently 3. invest longterm 4. leave your money alone. Dont get caught up in rebalancing strategies because it is similar to market timing. Instead diverse and accumulate wealth.