investing

Seven Words on How to Invest Well

6:20AM Gina Trapani | New York Times personal finance columnist Ron Lieber offers a seven-word guide to choosing how you invest your money. Lieber writes: The author Michael Pollan offered an elegant seven-word mantra in his best-selling book “In Defence of Food” that provides clarity amid the bounty of choices on supermarket shelves: “Eat food. Not too much. Mostly plants.” Boiling down investing is a similar exercise: Index (mostly). Save a ton. Reallocate infrequently. More »

Warren Buffett: Prioritise Career Building Over Market Studying

1:30AM Kevin Purdy | Fortune magazine drops in on a Q&A Warren Buffett offered to 150 business students, and the advice dispensed by the Oracle of Omaha on investing and money in general is elegantly simple. When one student asked Buffett how to best spend his free time to further his investing knowledge, Buffett avoided generalised advice and told him to stick to what he knows. Fortune paraphrases: For most people, the bulk of their income is going to come from earning power in their chosen profession. Therefore, from the standpoint of building wealth, free time is better spent sharpening one’s professional skills rather than studying investing. More »

Get Started with Stock Investing

6:30AM Kevin Purdy | The Simple Dollar personal finance blog posts a helpful primer for those thinking about getting started with stocks, or even just mutual funds and other market investments. Getting debt under control and keeping a reserve fund is the first priority, of course, but once you’re comfortable in your financial skin, Trent recommends performing a risk inventory on yourself before even looking at a stock chart: Spend some time thinking about this. Would you not worry if you woke up and found out that you had lost 5% of your investment if you knew in the long run it would build up in value? How about 20%? If you had $10,000 in stocks, and then over a very bearish month, $2,000 of that vanished, how would you honestly react? Would you take your money out? Sage advice, and the rest of the post should be familiar to those who have met with financial counsellors before. For more beginners’ guidance, check out Moolanamy’s 35 common sense rules for investing. Six Steps for a Beginning Stock Investor [The Simple Dollar] More »

Invest Wisely

7:00AM Tamar Weinberg | Looking to invest in 2008? If you’re a beginner investor, it’s important to follow some guidelines when studying the myriad of financial options available to you. Before you invest, it’s important to pay off any debts. Once you’re ready to roll, do your homework and analyse the market. Have an investment strategy and stick to it. Be patient, as investments take time. Even if you make a profit, don’t sell right away: Avoid taking small profits and big losses. Do not sell your rising star just because it doubled in a few days. Do your research. If it is still a good investment, keep it. Additionally, diversify your finances. Go for mutual funds, stocks, and bonds. Don’t panic. Above all, learn from your mistakes—keep an investment log—and use the experience to improve in the future. 35 Common Sense Rules for Investing [Moolanomy] More »

Why Renting Might Be Better Than Buying a Home

1:39AM Gina Trapani | Conventional wisdom says that buying a home is a sound investment, and renting is throwing money out the window every month. But finance blogger Millionaire Mommy Next Door says that renting resulted in significant savings over buying a home: I calculated the total cost of living in our [purchased] home. Due to our sweat equity, our mortgage balance was very low … but once I added property taxes, insurance, maintenance and, especially, lost opportunity costs (home equity not available to earn money), it became very clear that our shelter “need” was costing us too much in life energy. Of course your situation depends on location, income, credit score, and real estate market, but this is an interesting look at an argument for renting you don’t often hear. Photo by Lil Erna. Rent, Grow Rich, Be Free [Millionaire Mommy Next Door] I Get Richer as a Renter [Millionaire Mommy Next Door] More »