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Worried About Inflation? Think About Purchasing Power.

Tue, 31 Jan 2012 06:06:37 +0000

A constant risk I see new investors take is their unwitting belief that wealth should be measured in nominal currency, such as United States dollars or British pounds sterling, instead of purchasing power. In the end, purchasing power is the only thing that matters. It is the only thing that counts - how much stuff you can buy or give away to help others.

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Successful Investing Comes In Bursts and Sputters

Tue, 31 Jan 2012 04:52:42 +0000

Those of you who are new to investing need to know that your journey to wealth is not going to happen as one gradual, gently sloping incline. It's not comparable to getting an education, where you enroll in kindergarten and follow your way through the various grade levels until you are handed a piece of paper and a congratulations. You can toil away for years, spending less than you generate in income, investing the surplus in stocks, bonds, real estate, mutual funds, private businesses, or whichever other asset classes interest you, and suddenly find a big payoff or, alternatively, wake up one day and realize just how much money you've amassed.

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What Is The Buffett Rule President Obama Proposed?

Tue, 31 Jan 2012 04:10:57 +0000

The Buffett Rule, as the media has taken to calling President Obama's tax proposal, is simply a way to say that anyone who earns over $1,000,000 per year must pay a personal income tax rate of at least 30%. It is designed to make sure a hedge fund manager or other financially savvy earner that knows the tax code can't dodge paying the same rate a successful baseball player or television personality would on their paycheck. It should come as no surprise that The Buffett Rule was named after legendary value investor Warren Buffett, who has been a proponent of the concept.

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How the Average American Family Spends Its Money

Tue, 31 Jan 2012 03:02:52 +0000

The Consumer Expenditure Survey from the U.S Department of Labor and U.S. Bureau of Labor Statistics has released the 2010 report, which pulls from 2009 data, and here are some highlights of how the average American family lives.

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What, Exactly, Do Economists Mean When They Say There Is No Such Thing As a Free Lunch?

Tue, 31 Jan 2012 02:42:53 +0000

For more than a century, the phrase, "There is no such thing as a free lunch" has been a regular part of the American experience. Popularized more than 40 years ago by famed Nobel-prize-winning economist Milton Friedman, the adage is a way of expressing the ever-present existence of opportunity cost.

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A Real Life Example at How I Use Opportunity Cost to Manage My Own Money

Tue, 31 Jan 2012 02:31:00 +0000

Many of you have written to ask me about opportunity cost and, specifically, how I use it to evaluate my own personal financial decisions. Several years ago, I gave you one of the basic time value of money formulas in an article called Know Your Opportunity Cost, but last week, I found myself in a situation that provided a perfect example of how I measure the trade-off between what I want today, and what I'd like to have tomorrow. I chronicled the math and decision process in a new article, Opportunity Cost: How I Spent $2,385,600 to $24,074,400 in Future Wealth.

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The 3 Types of Opportunity Cost That Matter To You

Tue, 31 Jan 2012 02:24:15 +0000

Although opportunity cost is a broad topic, there are three, specific types of opportunity cost that matter a great deal to your pocketbook! You should learn about each of them if you want a chance at living off your dividends, interest, and rents each month. In my newest article, 3 Types of Opportunity Cost That Influence Your Investment Portfolio, I walk you through each, explaining why they are so vital.

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What Is Opportunity Cost?

Tue, 31 Jan 2012 01:18:39 +0000

Over the next few days, I am going to publish several new articles about an important economic concept that often gets overlooked by new investors. It is called opportunity cost. The first place to begin is by answering the question, "What is opportunity cost?", and go over both implicit and explicit examples. If you can't define it instantly, and with conviction, I want you to click that article link and take a few minutes to educate yourself.

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Don't Fool Yourself Into Thinking You Are a Long-Term Investor If You Aren't

Sat, 31 Dec 2011 22:12:26 +0000

Just as everyone likes to fancy themselves middle class (the facts: unless you make between $2,894.83 and $4,335.75 per month, the middle quintile for the American population, you are not middle class), everyone likes to talk about how they are long-term investors. Unfortunately, the facts don't show that to be the case. While the average American stays in their home for seven years before selling it, many investors think displaying the same patience and horizon with a partial ownership stake in a company such as Pepsi or Johnson & Johnson is unfathomable. To them, six months is a long-term investment!

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Investing In Individual Stocks Is Not the Only Game In Town

Sat, 31 Dec 2011 20:39:43 +0000

We need to have a talk. Some of you? Yeah. I hate to break it to you but some of you will never have the emotional temperament to invest in stocks. Many financial planners and professionals seem to refuse to accept or believe this basic fact, hoping that rational arguments will win those of you who make up this minority over to their side by using historical proof, statistical evidence, and logical, well-documented cases. In some instances they are correct. In the end, some of you are a lost cause.

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