personal finance 101, personal finance basics, and fundamentals

this video will outline a way of thinking beyond the Paycheck that enables some more productive and less fearful approach to money we all work for multiple reasons making an impact in the world following our passions expressing creativity and of course earning a living interestingly many people are willing to talk about their weight their love lives or their deeper secrets but find it very difficult to talk about their income the goal in this video is to unlock your reservations we'll review three ideas that can help you think differently about your income and conclude with the golden rule of earning more the first thing to consider is that even if you're on a salary stop thinking of your income as a fixed number but as a number that grows as you grow my personal goal when I first started working was to always earn more next year it wasn't a specific number or tied to a promotion it was an expectation of myself that I took responsibility for remember salary increases are rarely given they're earned and even more importantly they're asked for over the years I've done performance reviews with hundreds of people all over the world and one thing I've learned is that the people who asked for more money were generally not the people who really deserved it they were just more confident so make sure you ask second consider how you spend your time time is truly a finite resource once you spend it it's gone if you're actively looking to grow your income start looking and how you invest your time spend time expanding your skills or finding a mentor or taking classes or invest time in figuring out where else your income can come from or what to other companies in your industry pay into my previous point how can this all help you earn more next year third follow the money this is a recurring theme in this series when you're paid to do something where does that money really come from go upstream and figure out who is paying your salary and how you are creating value for them rethink about who your boss really is maybe it's not your supervisor or the owner of the company the customer or the client who writes the checks understanding this leads directly to the golden rule know you're worth your worth is not what you're paid but the value that you bring when you know your worth you can negotiate you can confidently present your value to your employers or your customers your worth is also relative what do other people make for doing the same thing have you taken on additional tasks that has saved your company money then quantify it and protip don't wait until performance review time make your case now later on in this course I'll share with you advice on how to ask for what you're worth but for now remember you worked hard for your money make it work hard for you when we use the word income the white-collar world thinks salary and if they're lucky there's a bonus or stock options and if they're very lucky a pension or retirement plan but the world has changed and fast faster than the vocabulary to describe work an income can move in this session I'll cover a different way to think about your income including a more contemporary view of income sources and your role in making sure that you're getting paid in more ways than one the biggest positive change for this generation of workers is that there's much more transparency into how you're paid in many countries the government has led the way into this new transparency with government workers assigned rankings and levels and the salary bans within those levels are published and clear you know where you are and you know where you're going in this situation which is very different to companies where opacity around salaries works in favor of the employer which brings us to a big negative change the onus is now on the employee to investigate their worth and to make the case for increments and a big part of taking charge versus leaving your income in the hands of your employer is to be more creative or even more aggressive with the types of income that you can consider an easy way to put this into context for where you are and where you're going is to ask this question who pays you let's look at the possibilities there's the companies you work for there's companies you've invested in there's people who buy things from you there's people who pay for your time or services and then there's people who rent things from you spend a moment and list out who's paying you now and how you think you can be paid a few years from now and I do hope that investment is on your list during the signup process for clients at my business we have a two minute financial consultation that tells you whether you're ready to start investing the general rule of thumb is that your expenses should be less than all your income the key thought here is that however much money you have you should be looking into investing as a key to growing your money over time remember in the US and in many countries investment income is taxed at a much lower percentage than salary which is why the one-percenters probably pay a lower tax rate than you the higher percentage of your income that's investment income the lower percentage of tax that you pay and a further thought on investment income I go into more details in Chapter four but the key thing to remember is that if the value of your portfolio goes up that's not income not unless you sell some or all of it and you realize the gain income is in the form of dividends from companies and interest from bonds so let's say you have a $500,000 nest egg by the time your salary job goes away and you expect to live off the income from that nest egg at a conservative four percent return that's only twenty thousand dollars a year I believe that the future is coming fast we're to have a side hustle will be the rule and not the exception salaries are becoming less predictable as companies benefit from a flexible workforce putting the money you have to work through investing is a side hustle that you can do while you're working hard at your job or jobs as one of my mentors told me no one ever got rich through their salary his point was at equity in real estate or in your investment portfolio or in businesses equity is the key to long-term financial success empowerment comes with multiple income streams even if they're a trickle at first it's better than nothing longer-term multiple income streams buy you options in life investing your time attention and money in more avenues than just your primary career is a great way to ensure that your income can grow long term there is so much anxiety wrapped up in our relationship to money we all work so hard to get it and it's so easy to spend it and every day we're bearish with messages about what we should be doing which for many people just makes you feel bad but it doesn't have to be that way in this video I'm going to share a practical perspective on tax time as well as ways to keep more of your hard-earned money the first thing to consider is that tax shouldn't be a surprise it happens every year and it certainly shouldn't bring an unpleasant surprise where you have to write a big check as an aside you should know that the tax rates on wages are generally higher than tax rates on investments so if you're in a high tax bracket your earnings from actual labor can be taxed at over 30% on the other hand your earnings on an apple star can be taxed as low as 15 the US tax system definitely looks more favorably on money earned through investments my goal as an investment advisor is to get people out of the day-to-day money in money out cycle and stop thinking of themselves as investors the sooner that happens the sooner benefits like tax advantages can start to pay off for you so let's start with how to reduce taxes again with the goal of saving money not to spend but to start investing or to contribute to existing investments there's three ways to reduce taxes first are the income reductions you can lower the income that taxes assessed on a number of ways contributions to IRAs and interest on student loans can generally be used to reduce your income subject to earning limits employer-based flex spending accounts for expenses such as transit parking education and childcare some can sometimes be used to reduce your taxable income these lower your taxable income thereby lowering the amount of earnings that you're taxed on second use credits to reduce your taxes make sure you check if you can get the Earned Income Credit on your tax return the Earned Income Tax Credit sometimes called a ITC is a tax credit to help you keep more of what you've earned to qualify you must meet certain requirements and file a tax return even if you don't owe any tax or you're not required to file an estimated 25 percent of people who qualify for the EITC do not apply for it and you can get it credited even if you missed it for the last three years make sure you check there's also credits available for education childcare and for savings they're geared to people earning under fifty thousand per year but check to see if you qualify for these last deductions these are things you can claim to lower your taxable income it isn't a dollar-for-dollar benefit but it reduces your tax by essentially showing you have less income to tax here's a list of things that can be used as deductions interest on mortgages property taxes state and local taxes charitable donations and some medical expenses if you add up these deductions see if they're greater than the standard deductions if they are greater you shouldn't itemize your deductions in your tax return it will save you money also be aware of other miscellaneous deductions if they amount to over 2% of your adjusted gross income you can claim them – these include tuition dependent care tools for work magazine subscriptions fees you pay to get your taxes prepared and expenses incurred looking for a job confused absolutely this is confusing if you qualify for a lot of the deductions and credits I've just talked about it may be a good idea to get some help there's a lot of tax preparation services online that are good and cheap many have free tools to help guide you through some of the process and file some if not all your tax return for free take advantage of them but if things look super complicated get a professional to help and get a quote up front for you begin your goal should be to make sure the cost of the professional is less than the extra money you'll get back tax is an inevitable part of life if you're just starting out on your working life now's a good time to form good habits and if you've been doing it for many years and dread it there's no time like the present to look at it with fresh eyes the new year is a time when traditionally people reassess where they are financially and set goals for the year to come in this video we're going to discuss a method of goal-setting that's less about vague numbers that you beat yourself up for later and more about practical steps to make new habits that stick so forget the New Year and think tax time regardless of whether you're doing your tax return yourself or you have someone doing it for you take this time once a year to reassess where you are as much as this time is about reviewing the past year and literally paying your dues it can also be a time for planning and setting goals tax return times a great deadline to make a commitment to yourself out of all the money you expect to earn in the next year what are you gonna pay yourself two things you need to do to figure that out are one pick a percentage of your post tax income that you're gonna save and set in place a plan I recommend between 10 and 30% which sounds like a lot but remember you're paying a lot of people before you pay yourself so let's flip that thinking to maximize your pre-tax dollars and invest as much as possible from that pool it's critically important to consider your pre-tax dollars as well as your post tax take-home pay the more pre-tax dollars you use the better off you'll be let's say you're paying 20 cents on the dollar in tax if you invest after tax dollars you have to get a 25 percent return just to get you back up to that dollar well it can take years to get a 25 percent return on a dollar which is why it's a total no-brainer to maximize whatever pre-tax advantages you can get if your employer has a tax free plan in place your goal is to get as many pre-tax dollars into these plans as possible and contribute whatever will get you the highest match also known as free money unfortunately one in three people who have this option never take their employers up on it it's by no means a perfect system but it's way better than doing nothing so take a moment and consider the coming year whether you like it or not you're paying for your housing you car your food your doctor's visits your utilities your clothes and much more now instead of making them the priority make you the priority I'm not saying don't pay your bills I'm saying pay yourself first and then look at how you can pay your bills every little bit helps what's important is making that commitment to yourself in the meanwhile try to ignore the many fear-based messages leading up to tax time it's a great time of year to reset your financial goals it's impossible to watch viii for more than 30 minutes and not have a big financial institution ask you do you have enough money to retire their goal is to have people move their nest eggs to them with a promise that they will work with you to ensure that you too can spend your glory years watching the Sun go down from a beach chair these ads touch on a very core human fear who will take care of me when I'm old but they're also based on a flawed premise that work is something that starts and stops on a predictable schedule in this video we're going to cover two things you can do now to set yourself up for income when you're no longer at a traditional job but first a thought to set the stage we need to reframe retirement or whatever we're going to call it when the boomers are done that life doesn't stop at 65 so why should your income first think of people for whom retirement is irrelevant writers artists musicians designers even religious instructors it's interesting that careers that are callings don't have an expiry date my point is not to become a writer but to think of the things that you love to do that will pay you beyond the age of 65 and that you can start to build beyond your current scope of work for me I love to talk and I love to teach my goal is that I can share the benefits of my experience and be paid for it well past the age of 65 I'm also a long-term investor which certainly doesn't have a use by day my hope for myself is that I'll have enough assets to have a great lifestyle with income to cover day-to-day expenses that's how I've tamed my personal retirement monster the second thing to do is to get smart about investing if only to be able to ask the right questions of the people who manage your money the world is filled with experts who are paid handsomely for their expertise on how to manage your money but they get paid first remember the idea of follow the money follow yours understand what you're paying for and what you're getting in return just to have that knowledge will help you a lot in figuring out what to do now and what to do later a hint for now is to roll over any old 401ks into I Ras will you have a lot more flexibility over what you can invest in the bottom line is that money can be overwhelming at the best of times and combining it with the fear of what happens to you when you're older can create a retirement monster that seems untamable let's start with the premise that the current view of retirement is a historical aberration for millennia older people have worked whether it's in the home looking after grandkids growing their own food or practicing their craft my grandparents generation certainly didn't have the idea that at 65 they could put their feet up this is very much a personal view of mine but I use it to illustrate a point we all spend money till the day we die now that there's no jobs for life and pensions are going away fast where's that money going to come from a happy and functional third phase of your life is not something that'll just happen as with all good things in life you have to make it happen and don't just rely on a big financial institution who says trust a professional invest your time yourself to really explore where you are and where you're going I talk a lot about following the money and knowing your worth but these things do nothing to help you increase your income if you don't ask in this video we'll cover the practical advice on how to ask for more money first of all your starting point is critically important if you're looking to break into a new job you have to make sure that your initial salary is adequate razors come in small increments and when you move jobs it's unusual to get more than a 10 to 20 percent jump so you need to make sure you start as high as you possibly can otherwise you'll always be working just to catch up next it's vital that you understand the context of your ask and what is happening behind the scenes at your company specifically ask yourself these questions question 1 how's the company doing are you expanding and hiring new people or shrinking via layouts if the company is shrinking you can still be paid more in fact during tough times it's even more important for companies to keep their high-value team members so never let that put you off asking question – how does a company see you are you high profile respected and seen to be contributing or do you keep your head down and hope that someone will notice question 3 do you have a skill that pays a premium sometimes it's not the bosses that make the most money but the people who do the specialized work that's hard to hire for question 4 who makes the decisions about salaries in many companies it's not the boss who has a final say but the finance team their job is to keep to budget so at least understand why you're getting a know if that's what happens question 5 what time of year is it asking for a raise when the business is close to the end of the financial year when every dollar counts is really tricky question 6 is there a formal review cycle do you know when conversations will happen or is it ad hoc either way don't wait until your review to bring up your requests most businesses have budgets and people's salaries are forecast usually at least a year in advance well-organized companies also have a pool of money that's forecaster cover raisers but consider this if you expect to get a 15% raise but the company only forecast 3% per person that means that you took the equivalent of five people's razors find out when your company does budget allocations and have your conversations well before that day it was a surprise in my early years of being a manager that I had to get many layers of approval before I could give people raises and it always came back to the same issue was there room in the budget and whether other people who also needed significant raises so how do you go about ensuring that you're being considered for an increment first do your homework on your scope of work what were you hired to do and what are you doing now the most powerful tool you have is a record of the value that you add to the business if you're saving the company the need to hire another person it's easier to justify an increment use online tools such as Gaston command pay scale calm to find competitive and comparative positions gather data on what other people within your scope of work and experience are being paid and go a step further ask your colleagues what they're being paid but be warned that can be a conversation that can change your view of your job a colleague once found that someone who was more junior than her was earning fifty thousand a year more for a similar scope of work that knowledge although valuable had a very negative impact on her view of her company if you're lucky enough to work for an organization that publishes salary data make sure you're clear that what you're asking for is in line with what's published next figure out who is best to talk to the first conversation you have should be with someone who's empowered and in your corner if you have a good relationship with your boss or supervisor they can negotiate with HR and Finance on your behalf if you don't have a good relationship you'll need to work much harder to show your value and your boss's word can undermine all the hard work you've put in interestingly a friend of mine who's a chief talent officer for a large global company says that every day she has people complaining about their compensation but rarely do the complainers propose what it should be don't be that person next have the conversation remember this is a negotiation and one big rule of negotiations is that you shouldn't take a No from someone who isn't empowered to say yes don't be like Oliver Twist asking for more gruel this is not a favor to be doled out but a business case to be made the top four points for you to present are your scope of work and the increased value that you bring comparative data from your own company or your industry your commitment to the company and your intention to continue to expand your role to bring increase value and your number first think of what you think is fair then add 10 to 20 percent to that number and that'll give you some room to negotiate down next practice your conversation your pitch should be no more than 60 seconds to cover those four points but have an extra few points ready should the person you're talking to want more detail make the ask then stop talking don't leave the conversation open-ended and clearly ask what the next steps are and how you can help make them happen even if you get a no persist with requests for performance for a few dates and insights into why you've got the no remember there's always a lot going on behind the curtain it's often not even about you last even if you get a no or you aren't able to secure the money you want there are other ways for you to benefit from your loyalty and contribution to your employer instead of money you can ask for extra time off or have the company pay for courses or continued education or perhaps ask for a flexible work arrangement or a more challenging assignment or even a transfer to a different location all of these things can help you increase your long term earning potential there's a lot of anxiety around asking for more money at work it's tied so closely to our self-worth that it can be far more comfortable to wait but you are your own champion if you have a sponsor or mentor in the organization recruit them into but the most important thing is that you ask you it's not how much money you earn but how much you keep that is the key to your financial success and the Delta between those two numbers is how much you spend in this video I'll cover the idea of conscious consumption and how being more objective about what you spend can help you long-term according to eMarketer advertisers around the world spent over half a trillion dollars last year marketing their wares a third of that a hundred and eighty billion dollars is in the US and of that thirty six companies all of whom you know well spent over a billion dollars in media it's no wonder you want a shiny new car the way that you feel about certain companies and brands and products it's no accident there are brilliant people all over the world that spend their whole careers figuring out exactly how their shampoo will make you feel energized or their gum will empower your day or their car will make you feel like a rock star but it's not all advertisings full humans are hard-wired to compare themselves to others it helped us survive during much tougher times when the weak ones of the tribe had to be left behind this hardwiring manifests itself now into the syndrome known as keeping up with the Joneses in the words of Will Rogers too many people spend the money that they earn to buy things they don't want to impress people they don't like in this chapter I cover tips on budgeting and managing your credit cards there the practical manifestations of controlling your spend in this video I'd like to explore the idea of conscious consumption my goal with my business is to turn consumers into investors and step one of that transformation is for people to be more aware of what they're spending their money on conventional wisdom says to pause before you make a purchase research the options wait a few days comparison shop you can do all those things but if they worked the average debt of a household with credit card debt would not be fifteen thousand as it is now my view is different I'm a big believer in the idea of follow the money in both your career and in having a better understanding of where your money goes you work hard for your MA everyone does and then you give your money to companies for the things that you want to need those companies work hard for your business but their primary responsibility is their shareholders those brands that empower and energize and make you feel like a rockstar they're working for the people who've invested in them or to put it differently the outcome of your hard work and the hard work of these companies is making mr.

Connecticut hedge fund manager richer so who owns the companies that you spend money with and who's getting paid they're much more powerful ways to be conscious of your consumption habits than just pausing or price checking before you buy now do one more thing look around at all of the stuff that's made it into your home and into your closet how much of it do you truly value how much is functionally important and how much is just stuff you could have done just fine without or perhaps it's things that you wish were better quality remember this mini order the next time you're shopping every dollar you spend is a vote for the companies that you're buying from are they companies that you trust and believe in or you're just buying out of habit your money is enormous ly powerful use your votes well my favorite quote about budgeting is it a budget can tell you what you can't afford but it can't stop you from buying it anyway in the previous video on why we spend we covered a few tricks for how to resist the lure of the latest shiny object the next step in conscious consumption is understanding how money flows in and out of your household and making a budget to set goals and track your progress against them the four main reasons to set a budget are to live within your means to get out of debt to have money to invest and to pay for bigger things like cars or vacation or education or the latest must-have design a bag the entertainment world is filled with Scrooge McDuck stories penny-pinching millionaires who are seen as an aberration but the reality may be closer than you think the conscious decisions that you make about how you spend your money have a far bigger impact on your long-term financial success one of the most powerful things you can do before committing to larger items that need to go into your budget is shop around for example a mortgage is probably the biggest financial decision you'll make in your lifetime but only 25% of people shop around before making that decision the impact of a few percentage points in interest can be tens of thousands of dollars that would otherwise be available for your budget there are many free apps and browser-based budgeting tools available it's well worth your time investigating how some of these could help provide some structure to the way that money flows through your households but not all households are the same so here's different budgeting tools for different types if you're sharing a home with roommates or a family where you all contribute to the bills then you might want to check out bucks for this site specializes in group budgeting and shares expenses between friends or roommates and tracks shared bills couples could check out better halves for individuals there are many paid and free solutions one that's very user friendly is level money there are a few other noteworthy tools out there like mint which is a very widely used tool that can auto categorize her fences and money strands which allows you to link all your accounts and create a 12-month spending plan to get started I recommend you try a free service first and get to know whether this will work for you or whether you need to pay many of the free tools mentioned are based on the envelope system a tried-and-true method from the days when cash was king where households would have different envelopes for different expenses food entertainment bill savings and once the envelope was empty you knew you'd reach a lemon for the technologically challenged envelopes are still a great solution but now with credit cards in our pockets it's a lot harder to face the reality of empty envelopes so once again it comes back to you a budget won't change your behavior only you can do that step one to making a budget work for you is to have a budget that you're comfortable with building in wiggle room for emergencies and extra shoes if you can step two is not just stick to it as many advisors would have you think but to be much more conscious with your spending decisions both the little ones like your daily latte and the really big ones like which neighborhood you live in or public versus private education for your kids if you really want to dig into the psychology behind the myth that is if you skipped your daily latte you'd be rich I found the book pound-foolish by Helen Oren to be extremely useful the best part of having a budget is that once you're saving money and have some investments underway it's a great feeling to see your numbers go up on a monthly basis there's nothing fun about paying down debts or trimming costs but it is essential to provide the foundation for future growth and buying yourself better options in life I'll leave you with this thought that is very applicable to budgeting from the great Eleanor Rissa film it takes as much energy to wish as it does to plan you're in the money now one if you ask old-school investment advisors what keeps them up at night it's the concept of wealth transfer the generation that was able to buy a home for $10,000 and sell it 30 years later from million they're retiring and they're starting to pass on the wealth that they've accumulated over their lives is being inherited by their children and their grandchildren which is something that gives these old-school investment advisors nightmares you see this next generation is far less financially literate than perhaps they could be but they're spectacular consumers what does a sudden big check from a recently deceased relative let's say $100,000 mean to the average person if this was a game show these would probably be the top five answers new-car vacation pay off debts new house help out family and friends nowhere in that list is invested and certainly there's no sense of let's give it back to the financial advisor that helped aren't moored with her money so you see where this is going how you spend a windfall big or small will speak volumes about your financial muscles the first thing to do is make a plan I know it sounds terribly boring compared with the idea of running to a jewelry store or telling your boss that you're quit but bear with me set aside an amount that feels too small like you're cheating yourself as someone it could be 10 to 20 percent of the amount now prioritize what you're going to do with that money perhaps set a budget of the 20% of the windfall you plan to spend where will that go be clear about what you want to need and take some time before you start writing checks in the meanwhile invest the rest and before you stop this video right here consider this if you were to win the lottery jackpot tomorrow you have a 90% chance of spending it all within five years and then being back at work and if that happens to people who win unimaginable wealth what will happen to your windfall without some active management of your behavior if you were to invest the majority of your windfall especially for larger win Falls it's possible you could live off the interest and income that your investment generates maybe not by your own plane lifestyle but one way your options are far broader than if you did buy the plane and end up broke in five years anyway the second thing to consider is that if you're eyeing the assets of your relatives as your own retirement plan don't things change and they can change quickly think of your inheritance as a bonus versus your call plan unless of course you're Malcolm Forbes who famously said I made my money the old-fashioned way I was very nice to a wealthy relative right before he died if you're holding credit card debt use your windfall to pay down as much as you can it's such a terribly boring way to spend money but as we highlight in a credit card video the impact of getting rid of your credit card debt is the inverse equivalent of having an investment that's paying 15 to 20 plus percent planning for a windfall is different to wishful thinking our instincts has finally trained consumers as to spend to upgrade to enjoy ourselves should you be fortunate enough to have money come to you keep your present self on the path that you're on unless of course you're in dire financial straits and pay your future self far more handsomely than your present self the last thing to consider is that if you're handing over your windfall to someone else to manage you must be in a position to ask the right questions as an investor it's your responsibility to know how much your money is earning for someone else the first question to ask is how much in fees will I be paying you the second question is how does my return on investment after fees compared to the rest of the market asking these two questions and acting responsibly on the answers will do more to protect and grow your windfall than anything else you can do and you don't even need to be Malcolm Forbes to do it let's start with this credit can be a great thing credit in the form of consumer credit or credit cards allow you to borrow money in order to finance the purchase of something that may normally be out of reach it's a great thing if you need to buy a refrigerator or a couch the downside of credit cards is that they charge an exceptionally high interest rate when I say exceptionally high as an investment advisor I mean you're flushing your money down the toilet hi in this video I'll be talking about credit cards their benefits and pitfalls and how to make sure you manage them correctly and if you're like fifty percent of American households that have credit card debt I'll share some tips and tricks to help you manage that debt currently the average interest rate on credit card debt in the u.s.

Is fifteen percent when you charge that against the average debt on a US credit card which is about fifteen thousand dollars the average American with credit card debt ends up paying two thousand two hundred and fifty dollars in interest every year and if you miss a payment and your interest rate is raised to the penalty rate of twenty nine percent you'll be paying four thousand three hundred and fifty dollars per year in interest that makes for some really expensive fridges and couches credit card debt can be debilitating so here's some hard truths first if you can't save money you really shouldn't be using a credit card how are you going to pay off your debt if you don't have money to pay it off next pay as much as you can if you're only paying your minimum every month try to find a way to pay more every month it will pay huge dividends in the long run third if you use a credit card try only to use it for big purchases and have a plan to pay it off as quickly as you can finally your goal should be to pay off your credit card in full every month that means you'd pay no interest and wouldn't that be great so it's tough medicine I know but I'm not a big fan of credit card debt so here's six tips to help you first set up an auto-pay it will ensure you don't miss a payment and have your interest rate shoot up I Auto pay my credit card once a week by paying more frequently you can keep your average balance lower it doesn't lower the interest you owe but it will help your credit rating a fact that not many people know the US credit agencies only want you to use 10% of your available credit it's crazy but true keeping your balance as low as possible will make you look better to credit agencies so when the time comes to take out a mortgage or another big loan you'll get much better interest rates and pay less for that loan second transfer your balance to a low-interest card sometimes these low-interest cards are hard to get if you don't have a good credit rating but if you can shop around for lower rates if you can find a 0% introductory rate for a 3% transfer fee it's a great way to pay your balance down and if you do transfer to a new card do not cancel your old card your credit score drops when you cancel a credit card I learned that the hard way so keep the card but stop using it third consolidate your debt banks will sometimes give you loans at a much lower interest rate to consolidate all your credit card debt unfortunately they may ask you to cut up your credit cards when you take the loan but it may not be a bad idea if you're swimming in there fourth use all the benefits your card offers use the price matching the cashback car rental insurance extended warranties and loss protection that your card offers spend some time reading the benefit summary of your card you may find interesting benefits you didn't even know about fifth if you're close to paying your balance off pay it all off if you have a thousand dollar balance and pay off only 999 dollars you'll be charged interest on the full thousand not the one dollar of remaining debt finally know the triggers for fees and penalties missing payments going over your credit limit and not paying your minimum will all trigger penalties the most severe of these is a higher interest rate this can happen if you miss even one payment and it's automatic after – the good news is is that there's remedies to lower your rate which your bank must tell you about if you don't know the penalty triggers for your card talk to your bank it's better to know early than too late all of this is enough to make your head swim but the convenience of a credit card comes at a high cost and now with your card on file at your favorite sites and payment through your phone it's easier than ever to get into trouble a last thought to leave you with imagine a scenario where you actually come out ahead by using credit cards it is possible by choosing cards at payee rewards especially cashback and paying in full each month you can make a small return on your spend but unless you're paying in full each month the benefit of points programs are nowhere near the cost that you're paying in interest so if you're not paying off your full amount each month see my video on budgeting for free online tools to help you manage the way your money flows through your household and pay down that credit card debt as soon as you can you you work hard for your money and once you run it there's four places your money can go you can spend it save it give it away or invested in this session we're going to talk about savings and the three steps that will enable you to think differently about the value of savings in your life first let's put your money into context why should you save consider this every dollar you make an spend is part of the bigger picture of the economy it's your spending and people just like you that generates the value in the economy not the banks or the factories or Wall Street it's you how much you keep of what you earn and what you do with it is your own personal economy it's one that you have control over there's so much competition for your attention and for your dollars and unless you have a specific strategy or plan it's all too easy for your savings to become your vacation budget or the way you pay for your car repairs so to get that plan together consider the second step which is how you save the way many people manage their money is to have separate savings and checking accounts checking accounts of your day-to-day spending the money you need feel life to run it's your food car clothes home insurance entertainment savings account are used to store what money is left over they're promoted by the banks as a safe place to save now they are safe but they're not strategic to think strategically consider three separate goals to have for savings emergency savings short-term goals and long-term savings for emergencies it's important to have money accessible the rule of thumb is to have three to six months of savings should you lose your income and you don't want to go into debt and if you're already in debt like 75% of Americans it's still important to save so that in times of emergency you don't go deeper into then short-term goals are the things that you should not go into debt for taking a trip upgrading your computer or holiday gifts these are higher cost items that you should pay for by setting aside savings and long-term savings is the money that you need to build the future you want consider these investment funds by separating these three goals you can manage yourself and reduce the temptation to dip in to emergency or investment funds for your short-term goals the third step is where you save remember your money is powerful but when it's sitting in a bank account your money doesn't do much for you conversely for your bank your money does a lot your bank lends your savings out to others and charges them interest if they lend it to someone to use on their credit card for example they can earn up to twenty five percent interest or twenty five cents on the dollar for that privilege your bank pays you less than one percent or a fraction of a penny so using your money your bank can make hundreds of times more than what they pay you for using it your money clearly has tremendous value and living it in the bank beyond what's necessary for emergencies is actually costing you money now as a cost of living goes up your money should be working to gain interest and not lose value the good news is is that there's instruments like certificates of deposit government bonds and corporate bonds that are relatively liquid but pay far greater interest than savings account they may be a bit more complicated to set up but they're far more powerful and profitable uses for your savings getting smart about savings is a fundamental pillar in long-term financial success you can change your financial future if you start to think beyond the bank and put your money to work for you in the next video I'll reviews better ways to save that a low risk and pay much better returns with similar liquidity and safety to your trustee savings account until then remember your grandparents were right when they tell you you have to save your money we just need to think beyond the bank for the why how and where of savings in this video we'll explore options beyond savings accounts where your money can grow before we look at these options consider the three FS of growing your money the first is FDIC which in the u.s.

Is the government body that stands for Federal Deposit Insurance Corporation most banks and credit unions are FDIC insured which means that even if the bank goes out of business the federal government will refund the money in that Bank to you most countries have an equivalent to the FDIC most investment accounts however are not FDIC insured or backed by government agencies hence investing is riskier than savings but it has higher returns the next F and bear with me is fiduciary it's a fancy word for an investment professional that has your best interests at the core of what they do fiduciaries are bound by regulations to get you the best price and recommend investments or savings products that are appropriate for your age your financial status and your risk level it's an important word that you can use defensively from now on if your bank is telling you to buy a long term savings product ask the person if they're a fiduciary and are they acting in your best interest or are they just trying to sell you something this question brilliantly deflects most of the confusing pictures from your banker the last F is of course ease most options for where to save have fees attached to them it's your job to figure out how much these fees will eat into your savings before you move money into any savings option ask for a full list of fees is there a fee to open the account is there a monthly maintenance fee is there an annual paperwork fee is there a fee because it's Friday fee with this in mind let's look at where your savings can go while still being FDIC insured I recommend that you keep your emergency savings fund in a place that's easily accessible in case of emergency first up there's online savings plans like Capital One 360 they have no fees no minimums and they're linked to your checking account for direct deposit but they only pay at this point in time 0.75 percent interest so let's say you put in a thousand dollars today in one year's time you've only earned an extra seven dollars fifty and in ten years time compound interest builds it up to seventy seven dollars but consider this the regular savings account at one of the top three banks starts at 0.01% and tops out at less than 0.1% so you're earning less than $10 on your one thousand dollar deposit in ten years so the safe option is only slightly more lucrative than leaving it in a regular savings account banks also sell CDs or certificates of deposit the interest rates on these are locked in when you get them they're a good way to put money away where you can't touch it but they're also priced right now with interest rates that are still very low government bonds and corporate bonds pay higher returns have variable timeframes such as one year five year or ten years and they generally have higher returns these can be purchased through a trading account and they do require more research they're not FDIC insured but a bond is like a loan that the government or the company is legally responsible to pay back to you except of course if they go bankrupt and even then you're likely to get some of your money back there are also new kids on the block like Lending Club com an online marketplace where you can deposit your money for other people to borrow clearly this is on the riskier end of the saving spectrum your deposits are not insured and there's no recourse in case of default so look carefully at where you're saving your money it goes without saying that a checking account is not the right place to organize your savings having savings on hand is a critical part of financial health but it's not the best thing you can do for your financial future my recommendation is to have enough savings to see you through three to six months in case of emergency and then get busy with investing the rest keeping your credit score healthy is probably more important than you may think when you apply for a job or fill out a rental application or you apply for a credit card or by a car or apply for a mortgage your credit score will most likely be checked bad credit can keep you from landing a job from getting an apartment and it may penalize you with higher interest payments on loans to pay the least amount possible in interest should be one of your lifelong financial goals and to do that you need to make sure that your credit score is as high as possible in this video I'll cover how you can track your credit score as well as how to improve it over time first thing you need to look at your credit history every year you're allowed to go to all three credit agencies to look at your credit history go to this is the only place for a free credit history make sure everything is correct one big thing to look for are errors that may indicate identity theft when an organization that you have not had dealings with in the past year has looked at your credit it may be that someone's trying to get credit in your name for this reason alone you should carefully review your history and if you see any errors make sure you get them fixed there's a process on the side to remedy any errors once everything looks clean then find out your actual credit score pick one of the three credit agencies and by a single score do not buy the monthly credit watch they're not worth the expense Experian offers the FICO score which is the most common score you can buy your FICO score as part of the free annual report it's about twenty dollars or some banks or cards may offer your score for free so the next time you're on the phone with your bank or in a branch ask them and make sure you ask if they do it for free there are also services like that in exchange for you sharing your bank details with them they will give you your credit score free now that you know your score you can track it over time and make sure you track it from the same company then you can work to improve it so this is how you do it these are the things that credit rating agencies like to see first never miss a payment missing payments will significantly reduce your score set up a direct debit and pay something every month second have different types of credit if you have different types of credit this looks good so car loans mortgages credit cards and store credit cards are considered different credit the easiest way to improve your score is to get a store card and not using third use only a small amount of available credit the best scores go to people who only use 10% of their available credit and who does that but there's tricks to it one is to never cancel a card reducing your available credit looks terrible also try to make payments multiple times a month this keeps your balance a little lower than it would be if you kept piling charges on until the end of the month also ask to raise your credit limit it won't hurt your rating if they say no and then don't use the extra credit fourth watch for spikes in your credit if you hit your credit limit this looks bad so if you have a huge item hitting your bill like a plane ticket move money onto your card before the charge hits it'll keep your balance from spiking fifth remember your credit history starts early credit agencies like you having a long credit history there's not much you can do about this just make sure you don't cancel a card sixth try to limit inquiries if you apply for a lot of credit but don't get it it may affect your credit score so apply for credit carefully finally put money down one last thing you can do to raise a bad credit score quickly is to get a secured credit card if you have spare cash you can put it down as security against the credit on the card so if you give your bank $1,000 they'll hold the money and give you $1,000 credit limit on a card to the credit agencies it looks like you just landed new credit it's a great way to boost your credit score if you take the time to work on how you use credit you can boost your score regardless of where you are now the difference between the lowest scores and the highest scores can be as much as three times the interest rates which for things like a mortgage a lower interest rate adds up to tremendous savings over your lifetime and like all good things in life it's worth the hard work it's a question that comes up without fail at every event where money is the topic what should I do if I'm in debt should I pay it down and start saving and investing or should I do both at the same time now if there was an easy answer the whole financial event industry would probably collapse in this video we're going to cover a few different strategies of how to reduce debt while building your investments and we're starting with the premise that you probably have debt and you probably don't have investments beyond what your work may provide for you to start consider what rungs on the debt ladder you are this is a scale of bad to good debt in accordance with the highest to lowest interest rates most likely you'll have some debt on a few rungs of this ladder there's mortgage federal student loans home equity loans private student loans car loans and credit card debt a good rule of thumb is the lower on the ladder your debt is the faster you should work to clear it the top half of the ladder is considered good debt has lower interest rates with long-term benefits as you move down the ladder the interest rates are costing you real money a factor that can change things considerably for you is whether your debt has fixed interest or variable interest with fixed interest you can rest assured that your repayment amount is predictable with variable the rate will change and your repayments are less predictable the next thing to consider is your savings are you living paycheck to paycheck do you have a small amount in your savings or do you have your emergency fund put away if you're in debt it's important to have emergency savings at the very least because if something happens to your income you don't want to go deeper into debt as you secure your next job the next thing to consider is the effective compound interest it's the basic idea that you earn money on your money compound interest works against you when you're in debt and it works for you when you invest so let's explore that thought if you have dead where you're only paying them in Jew you're being charged interest on the interest and if you have investments where you've made money you'll earn interest on the money made the last thing to consider before I talk about the three strategies is that your life doesn't always go according to plan take into consideration your job prospects your health your family situation as you decide how to tackle the debt reduction and savings plan for you strategy number one is the balanced strategy as long as you can afford it pay down an acceptable amount of debt while putting money into savings first your emergency savings and then start investing to make it happen set yourself up with direct deposits remember smaller weekly payments to your credit card via direct debit both help your credit score and avoid the big monthly fluctuations in your bank account this strategy reflects the mantra of pay yourself first strategy number two is the focus on debt strategy reprioritize your spending in the short-term to pay down bad debt as quickly as possible while putting aside enough money to cover at least a few months of expenses this may involve taking on an extra job or an extra roommate or significantly cutting your expenses but the reality is that the interest on your credit card keeps on mounting up and it takes real focus to become one of those households that pace their credit card bill in full each month your number one job is to pay down the bad debts before moving on – for more focused saving and investing strategy number three is the focus on growth strategy if you have debt but it's mostly good dirt then incorporate it as an expense in your life and get busy with building your investment base yes you can save money by paying down your mortgage faster for example but the earlier you start investing the greater the returns over your lifetime so the short answer for most people on whether to pay down debts or to save and invest is to do both be mindful of how money flows in and out of your household and optimize that flow to pay down your debt and increase the savings and investing buckets how much goes to debt reduction in your household can only be two determined by looking at the big picture of your financial life be ruthless about how you spend money and be creative about how you generate more and then create a plan that works for you to check all the boxes of paying down your debts creating an emergency fund creating savings and investing to grow your savings you so you have some money saved terrific that's a huge first step so what should you do with them in this video we'll talk about investment options with each I'll talk about the associated risks I'll start with bank accounts then move on to bonds stocks and funds so let's start with bank accounts right now banks pay less than 1% interest on deposits and with fees your money could actually lose value while sitting in the bank not a good deal at all and we won't even talk about how much money banks make off your deposits so let's look at some alternatives banks are also offer certificates of deposits also known as CDs these offer better rates of interests in standard checking or savings accounts CDs all have fixed time lengths ranging from one month to several years the only problem with the CD is that you must keep the money in the CD for the duration if you withdraw it early you'll get penalized many people find CDs too inflexible and the interest too low if you can handle a bit more risk you should look at bonds bonds are basically alone that you the bond holder make to either a government or a company for this privilege the bond issuer will pay you interest the nice thing about bonds is that independent agencies give every bond a rating based on how likely you are to get your money back so you can gauge risk very easily bonds pay a wide range of interest and have various due dates which is the dates when the principal is paid back the highest quality bonds are called investment grade bonds and they pay lower interest rates but even these lower interest rates can be attractive especially for the low risk that they offer the lower quality bonds funnily enough called junk bonds pay the highest interest but have much higher risk levels the nice thing about bonds is that you can easily buy and sell them you don't actually have to wait until they mature you can buy and sell them at any time for a small fee the one drawback to a bond is that the value of the bond itself can change in the worst case scenario the company that issued the bond runs into financial trouble if that happens the chances of you getting your money back for the bond decrease if you now try to sell the bond early you may not get the full value for the bond but that's the risk to reward of bonds they can pay higher interest than banks but you take the added risk of not getting as much back as you initially thought now if you're okay with more risk then stocks might be a good option stocks are actual ownership stakes in companies as an owner you get to share in the profits through dividends and share in the growth of the company through an increase in the value of the stock the price of a stock is the amount of money that someone will pay for that stock at this moment in time based on all the currently known information about a company but the future is always unknowable so the true value of a stock is unknown the true value of stock is the current value plus the untapped hidden potential that the company holds the goal of buying stocks is to find the stocks that are undervalued and avoid the ones that are overvalued this may seem like a very subjective exercise but everybody has the skills to pick an undervalued stock we'll talk more about how to value stocks in our next video but taken carefully investing in stocks offers the best year-over-year returns of any financial instrument finally there are funds there are lots of funds from mutual funds to exchange-traded funds there are prepackaged pulls of bonds and stocks they can be either actively managed where a manager works day and night to improve the return of the fund or they can be passively managed funds where the manager sets the fund up and lets it run making a few changes along the way because active funds are managed by an expert it's assumed that they offer better returns this assumption is debatable but what is true is that actively managed funds are more expensive than passive funds index funds are a subset of passive funds where the manager tries to mimic the performance of the market itself so for example if you read the paper and hear that the Dow was up 1% add our index fund will also have at 1% these funds have become very popular because they don't try to outperform the market they try to mimic the market and there really is a sense of ease that comes from no longer trying to beat the market thus the popularity in our next video I'll talk about risk value and confidence three fundamental concepts in putting your money to work before we get started it's important to understand right away that anybody can be a good investor if you have confidence and manage your risk well you can increase the value of your savings and you already have the tools to do this you already make the same critical judgments that investors make when you buy something you compare prices and values you do your research you talk to friends you make judgments investing is the same you look at prices values and risks and decide whether it's a good investment or not a lot of very smart people work on Wall Street making wealthy people and companies wealthier the interesting thing is that nobody gets it right a hundred percent of the time investors who beat the market for five years can miss the boat completely for the next few years in this video I'll go into more detail on the basics of investing explaining three key concepts you need to understand risk value and confidence the single most important concept that any investor must understand is risk the higher the risk the higher the potential return and the potential losses and the inverse is true the lower the risk the lower the potential return or the potential losses when you sign up for a brokerage account or with an investment advisor they must determine your risk profile which is where you sit on the risk scale this is a measure that's determined in part by your financial status your age as well as your self-reported openness to risk you should know your risk and invest accordingly so let's move on to value the value for any investment is not the price and investor pays the price is just the amount that an investor pays at any given time value on the other hand is an intrinsic measure that every investor places on an investment if the investor sees tremendous value the current price will seem like a bargain if little value is seen the price will be seen as expensive value is therefore a measure of potential so for any investment there'll be a wide range of values and only in hindsight will anybody know the true value of an basemen in order to invest every investor needs to weigh risk against value this is the key to investing well and it's the essence of what every investor does doing this over time is what builds confidence if you're confident about your decisions you stand a much better chance of making successful decisions if you're committed to learning and you know your limits you gauge your tolerance for risk and then you make strong decisions and stand by them that is what will make you a confident investor so instead of speculation investment becomes an educated decision and you stand a much better chance of making good returns on your investments now one thing to remember is that even the experts get it wrong and with many aspects of money there's enormous emotion involved one of the best conversations to have with people who claim to have expert knowledge about investing is to ask them their experiences did they grow up with money have they personally gained or lost are they qualified or are they just investing themselves on the side these are all important things to know before you take their opinion on investing as fact and a bonus you get to learn more about someone from their money story and within that their approach to risk now an important thing to remember about risk value and confidence is that none of these are static factors your confidence will build as you gain insight into how you value your investments and with that your risk profile will change investing is a lifelong journey the more you understand about yourself and the market the better in the world of investment opportunities there are many many ways to invest one important consideration is how to invest instead of open an accountant talk to a guy as a first step spend some time considering a strategy for yourself in this video I'm gonna cover both how to build your own investment strategy and in the next video I explore the different ways to make it happen now first as I've said I believe that with the right tools anybody can be a confident investor as long as you manage your risk and you're learning from your decisions you can be a confident investor once you're ready you need to develop an investment strategy and to do that you need to do three things first you need to decide how much you can invest this is not about saving a big number and getting busy investing then rather consider what percentage of your gross income you can invest a good rule of thumb is 8 percent of your gross income but if you can put away 15% over your lifetime that would make a huge difference the value of every extra dollar you save now will compound and will be worth far more than the dollar you started with even more importantly make a commitment to yourself that when you do make some extra money or get a raise increase your percentage contribution to your investment second be very clear about how much of that money you want to put away for retirement and when I say retirement I mean the period of your life when you're no longer on a salary or you're moving into a different phase luckily there's still systems in place for most people in many countries that encourage you to put money away for later and an easy task you can take on in the meanwhile is looking into the funds that have been allocated for you in your retirement accounts now you must be sure you won't touch it until you retire or you'll be penalized a terrifying 25% of Americans dip into their retirement funds and they pay an enormous penalty to do so now this is important if you've maxed out what you can contribute to tax friendly programs you can still invest on your own or through an advisor this is where you can really learn and grow your portfolio third decide how much risk you're comfortable with many people new to investing are much more comfortable with not losing than winning your risk tolerance will determine your investment profile more tolerance for risk means more stocks and funds and less tolerance means more investment grade bonds and remember your risk tolerance will probably change over time as you gain confidence and knowledge these are the four options that will be presented to you if you were to open an account with an advisor or broker do you want to earn more than what you get with your savings account but you don't want to risk what you have if so that means your goal is capital preservation do you want to grow your investments but get some income along the way your goal then is income generation do you want the value of your investments to increase and dividends are less important to you if so this means your goal is growth do you want to take on higher risk at making more money but know that you could lose some of your savings if so your goal is speculation this is a foundation of how you build your diversified portfolio it's not that complicated remember this course is about growing your money I believe that the public markets which are stocks and bonds and funds are a great way to put your money to work while keeping it liquid in the next video I'll explore how to put this strategy into practice now that you have an idea of how you want to invest where do you go that depends on how much help you need in this video I'll cover the three basic options of how you can invest whether you do it yourself use a traditional adviser or use a more modern online adviser option one is a traditional adviser if you want to have someone make decisions for you you need to find what's known as a traditional financial adviser personal references are a great way to find a financial adviser and don't just trust your accountant with this job a good adviser must take a gauge of your financial profile your financial goals and your risk profile to come up with a financial plan Advisors are great if you need a lot of help they'll invest your money for you and here's two questions to ask your advisor every year one how is my portfolio performing versus the market performance and two how much in fees have I paid you and then find out if the performance number includes or excludes fees when an advisors only source of income as people like you it's good to know what outsourcing is really costing you now option two if you're confident in your strategy then you can be a self-directed investor you can open a trading account with a reputable broker and initiate your own trades it really isn't as complicated as you might think most brokers have reams of information about companies bonds and funds and if you're ok with rolling up your sleeves and doing your own research a self-directed account at a broker may be the best option for you the biggest advantage of doing this is that it's the least expensive option available especially with brokers like Scottrade or TradeKing who are at the lower end of the cost per trade the industry average is around nine to ten dollars cost per trade at companies like e Trade and Schwab option 3 is digital advisors or what the finance industry calls Robo advisors they're an inexpensive way to get started with a portfolio these are digital platforms that use an algorithm and other data to generate a portfolio for you the last option are brokers who offer wealth management services these usually are for people with wealth to invest so in the hundreds of thousands of dollars and upwards even with this sort of money to invest the only caveat for working with these kinds of brokers is the fact that unlike a registered investment advisor a broker is not bound by the requirement that he or she must act in her clients best interest most brokers do act in their clients best interest but you do have to be a little careful to track what your broker does for example selling funds that have a lot of fees attached whichever option you choose remember that there's many wonderful online resources where you can go to research and educate yourself is a great unbiased place to learn about investing and it also has a terrific virtual portfolio feature where you compete against your friends or colleagues virtual portfolios are a great way to learn and gain confidence is a good place to get ratings for funds and Yahoo Finance is a great resource to see all the financial data and news on companies and stocks in the meanwhile remember whatever you choose now will have an impact on how you invest moving forward but it's not set in stone many seasoned investors have multiple accounts some with advisers some with wealth managers and then some one their own it's – the never-ending frustration of advisers everywhere when their clients won't share the wider details of their financial life but instead hold the advisor accountable to the performance of the money that they're handling now that's the sign of an empowered investor and proof that it's not either DIY or outsourcing that's the right answer but selecting whatever method or mix works for you now you're ready to invest we need to talk about fees the goal of this video is simple you worked hard for your money don't just give it away the simplest way to understand fees is to understand the more control you give to someone else the more you pay the assumption is is that if you let an expert choose your investments and manage your portfolio you'll earn greater returns which justify higher fees now whether this assumption is true or not is up for debate this certainly is no guarantee that experts will give you a better return than the overall market they even state this in their agreements when they say past performance is no indication of future returns there's a number of papers that back disbelief the Center for Applied Research found that only 1% of mutual funds between 1976 and 2006 beat the market after fees a working paper from the University of Maryland found that in 2006 only 0.6 of equity mutual funds beat the market after fees to better understand this let's look at the fees charged for mutual funds which are portfolios of stocks that are actively managed which means professionals buy and sell the holding within the fund the average management fee in the u.s.

Is 1.25 percent on top of that there's also sales charges 12 b1 fees and sometimes redemption fees does this sound like a foreign language yes does it mean that you should ignore them no compare mutual funds to an exchange-traded fund these are funds that are traded on an exchange like a stock and like a mutual thumb they're generally set up by experts but they're not actively managed they're usually adjusted infrequently and for these funds the average fee is 0.53 percent but for some of the most popular funds the fees can be below 0.1% now how does this impact you let's put some numbers against these let's assume you invest $100,000 in the most popular ETF right now the spyder S&P 500 for this you'll pay 0.09 percent fee if you assume an 8% return which is the overall average turn from stocks recently after 30 years you'll end up with nine hundred and seventy nine thousand dollars but if you assume the same eight percent return for a mutual fund that charges one point two five percent annually you'll be left with only six hundred and eighty-nine thousand dollars after fees the compounding impact of that small fee will cost you more than a quarter of a million dollars over 30 years it's a staggering cost one point two five percent may not seem like much but it certainly adds up over time now let's move on to the fees charged by registered investment advisors for many advisors they charge an annual fee based on account size the smaller the account the higher the charge it can range from 1.5% down to under 1% of your assets under management the benefit of this fee is that your advisor will constantly tailor your investments to your profile over time which can be beneficial as you can earn more money as your financial situation changes you can also find be based advisers who charge per hour of service a basic assessment and portfolio will cost between five hundred and fifteen hundred dollars but any extra advice over time will cost additional per hour fees in our last video we talked about digital advisors where you get advice and portfolio management through an algorithm versus a person these so called Robo advisors of which I'm one charge much less most charge less than 1% of assets under management some like my business charge a subscription fee or a flat fee these offer flexible services for a very small fee if you want to do all the work yourself a self-directed trading account at a broker should cost nothing to set up and will cost from $5 to $20 per online trade these offerings are very inexpensive flexible and empowering but if you're not careful and you trade frequently these fees can add up and more than the trading fees living large on the high end of the risk scale can end up costing you far more than the fees that you're trying to avoid in my mind a buy and hold strategy is usually the best policy for investments that you're confident will you to grow to make your portfolio grow over time try to add to your investments with new deposits every month it also makes sense to balance your portfolio every three months or so so if one stock has substantially increased in value you sell some of it so it doesn't take up too much of your portfolio the full definition of rebalancing is more about keeping the ratio of different levels of risk constant so for example if your individual stocks have grown a lot you can sell some and buy into lower risk bonds one of the stars of the financial community Jack Bogle created his company Vanguard out of frustration with phase his math on active fund management is simple and brilliant and he expressed it as the magic of compound returns is overwhelmed by the tyranny of compounding cost or in more practical terms do you really want to invest in a system where you put up 100% of the capital and you the mutual fund shareholder take 100% of the risk and you only get 30% of the returns his advice as is mine is to be aware of what phase you're paying and wherever possible move your money out of the hyphy low-performing funds if you're careful and you're conscious of fees you can keep most of the gains that you earn from your portfolio's you

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