Education:
Take full
advantage of the public school system. Study hard, aim for good
grades, persevere, behave in school, and graduate high school.
Parents – it is your job to monitor their school work and
discipline your children as required so that they achieve these
goals.
Next, continue
your education with either college or skills training for good,
non-college jobs.
Family:
Only 10% of
married parents with children live in poverty while roughly 50% of
single parents live in poverty. Easy to understand – two potential
household workers and two child care takers have more potential for
income than one. So do not have children unless you are married.
Children with fathers, especially teenage boys, are more likely to
finish their education and less likely to get in trouble.
Live within
your means:
Never use
credit cards unless you can pay them off entirely each month. Credit
card interest rates are so steep that, in time, they can double or
triple the actual price you initially paid to purchase goods and
services with credit cards. Same is true with the Pay Day Loan
services. Don't use them. Homes and cars are normally people's
largest expenses. Buy what you need and can afford, not what you
dream. Especially cars, buy much cheaper used cars with warranties
over more expensive new cars. Doubly true if your annual miles driven
is low.
Go to
Colleges that you can actually afford:
College costs
can be astronomical at some schools. If you or your parents can't
afford them without borrowing huge sums of money, then go to a more
affordable college such as Community Colleges, some State
Universities, and online colleges. Live at home if at all possible to
save room and board college costs. Work part time when taking classes
and full time during summer recess.
Persevere
hard at your job:
Whether college
educated or not, you are in competition with your peers for
promotions and raises. Strive to be the best that you can be at your
job. Also, strive to learn and gain the skills needed for higher paid
positions. Never quit your current job until you have been hired for
your next job.
Save and
invest at least 10% of your income:
Avoid as best
you can living paycheck to paycheck with no savings. Read again the
Live within your means section if necessary. You need savings for
emergency living expenses that will come up, eventually buying a
house if that is your goal, vacations (only take vacations you can
afford without borrowing), retirement (you will have a lot more money
for retirement if you start young in your early 20s with 401Ks and
IRAS than if you wait until your 40s or later), and peace of mind.
Favor Roth IRAs and 401Ks over Traditional ones. Better to pay a
small tax now instead of a large one later. Learn how to invest in
the stock market.
Tips for the
Novice Investor:
Here
are some tips to help the novice investor. Never buy individual
stocks - they can go to zero or just stagnate far longer than any
stock market, plus you are not smart enough to know when to get in or
out. Buy pooled assets such as mutual funds, ETFs, and index funds
and hold onto them for decades without selling. Only have a small
amount to invest - The S&P 500 ETF index (SPY) is all you need.
It reflects the stock market trend which over the past long run has
averaged 10 to 11% average annual growth or a doubling "average"
every 7 years. SPY is composed of 500 of the largest stocks (
virtually no risk of all 500 going to zero), is cheap to buy (about
$5 to $7 at most brokerage houses) and has the added value of being
able to buy or sell it instantly during open market hours (as do all
ETFs; mutual funds buy and sell prices are calculated after the
market closes and if you buy them after the market closes, then your
price is determine after the next day's stock market close which is
why it is better to buy these within the last hour the market is open
but not too close to the end). Want a technical stock market play
also - buy the ETF - QQQ, which reflects the top Nasdaq 100 stocks
(heavily weighted toward technical companies, but not only technical
companies).
As
your wealth and experience increases, to attain more investment
diversity – try the ETFs – MDY (S&P 400 Mid-Caps) and SLY
(S&P 600 small caps). For additional diversity and balance, there
are also “growth” and “value” versions of the S&P 500
indices - just put a “G” for growth, or a “V” for value at
the end of them (SPYG, SPYV, SLYG, SLYV, MDYG, and MDYV). Note that
growth and value funds over the long run achieve about the same
results. In the short run, growth outperforms value funds when the
general stock market rises, but value funds outperform growth funds
when the general stock market falls.
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