Top 5 finance tips that school should have taught you : investingforbeginners

Top 5 finance tips that school should have taught you : investingforbeginners

Hi,

I run a small finance channel to educate people on Investing; I thought it would be a good idea to lay out 5 essential tips which Schools, in general, miss (at least in America). I def do wish that I learned this instead of cramming chemistry formulas which I’ll never use. If you wanna learn more come Join me

If you’d like to see this post in video format instead, you can do that here

Here we go!

#1

Buy real estate early and don’t worry so much about putting down 20%. When you put less than 20% down, the lender adds ‘PMI’ or (Private Mortgage Insurance) on top of your monthly payment; so, you might be thinking that you must avoid that at all costs; however, most people don’t have much money when they are younger; so, instead of waiting 5-10 years to buy your house, buy it sooner…accept the PMI and put down 10% (5%) – whatever you can afford and what your lender will allow you to do. At first glance, this may look like a mistake…as if this is something that is going to be a waste of money; however, real estate prices tend to move up in 5 – 10 year time frame, so, you will be chasing higher and higher prices trying to collect 20% together. I once bought a house with only 10% down for 325k…and 11 years later, that house is now around 900k and I couldn’t have bought it if I had to pay 20%. I just did not have the money. The market right now is a sellers’ market and a correction is expected in the next 1-3 years…so, start saving now and plan to have about 10% at least when you are ready to buy some real estate as the market corrects. I have a detailed video about how exactly you can prep for this correction; here it is

Read about:   Accelerated Mortgage Payment Calculator With Extra Payments

#2

Have a very high investment rate. People tend to think that putting away a few percentages in their 401k is good enough, as long as they are putting away enough to catch the employer match; however, they couldn’t be further from the truth. Savings have to be aggressive. I would recommend that you aim to save, at least, 30-40% minimum…and aim to save higher if you’d like financial freedom early in life. You should also try to work some side hustles to increase your savings rate. You have to find ways to cut back on unnecessary things to make sure that your savings rate is very high. Starting early and saving big will allow you to retire a millionaire or even a multi-millionaire, if you just keep saving at a very high rate. Invest in broad based index funds – use a simple ‘Target retirement fund’ to correctly allocate your money in the stock and bond market. If you want a bit more control, buy the SP500 or the Total Stock Market Fund (domestic and International) and put some money in the Total bond market. Indexes may seem meek compared to popular stocks; however, it’s important that you understand how compound interest works and why you need to own the entire market rather than the current winners. I’ll link a playlist below which can explain to you exactly how to get started with investing: here it is

#3

Watch your cashflow: I’m not going to tell you to create a formal budget; but, you need to be aware of your cash flow: how much money goes in and how much goes out. This is easily done with an app like Personal Capital. All you need to do is to get all of your accounts together and put them into the Personal Capital app and it will actually show you exactly how much you are spending per month. Seeing this figure is important because things add up faster than we realize and we wanna make sure that we know exactly how much is coming in and how much is going out.

Read about:   Hot Tips For Getting The Best Mortgage Loans

#4

Build your credit (and get paid to do it!). It’s super important to build your credit history as it makes your life much easier if you can show that you are a good borrower. The easy way to do this is to get a credit card and put some small amounts on it and zero out the credit card each month. Don’t spend so much that you have to carry balances. To get paid to create your own credit history, make sure that you choose a credit card that has points…when you make any purchases, you’ll be earning points that you can cash out. I’m able to get paid quite a bit doing this using credit cards. Of course, don’t over spend or spend frivolously too much. Remember that the idea here is to BUILD your credit. If you’re not able to get a traditional credit card, then, get a Secured Credit card. This is a credit card where you have to deposit some money first before the bank will issue you a card. But, even with this card, make sure you are paying it off (or ‘zeroing it out’ each month).

#5

Gain a positive mindset/positive association with money. Growing up, you’ve probably heard that “money is the root of all evil”. You have to realize that money itself is not evil; the deeds people do are evil (for money or otherwise). You have to realize that we all carry quite a bit of limiting life beliefs which tell us that being poor is virtuous and being rich is evil; however, this is far from the truth. Most likely, you and I will not be one of the 1% billionaires of this world; so, having a negative association with money will actually push you towards not having it. You must understand that money is a tool and it can help you achieve your goals. Maybe you wanna travel the world like I do…well, money will help you do just that as it is helping me. I know it can hard to give up these types of negative/limiting beliefs, but you need to do that so that you can move past your mental blocks around money.

Read about:   High 8 Components To Think about Earlier than Taking Out a Reverse Mortgage

Final note:

I know it may seem like ‘meh – my situation is different’ but, you really need to focus on these basic but powerful financial tips. If all you did were these things above, you could lead a very healthy financial lifestyle rather than always be paycheck to paycheck. I wish you luck with your financial journey.

-Aman

CrushTheWealthGap.com | YouTube | Podcast