Money is very important. I have some but like most people, I want more. This entry, the first of many on personal finance that I will write about, will be on how to have more money. What you will do with more money is your business. What I will do if I have more money is retire early. I want out of the day to day drudgery of work. Granted I have not worked many years compared to my peers. Still I rather not work if I have the option.
Now, back to the topic of this entry, money. Do you know the old cliche, "it takes money to make money"? I am sure you have heard it sometime somewhere and thought what a stupid saying. If I had money, I would not need to make money. But again, it always helps to have even more money. And while the phrase might be a cliche, there is a lot of truth in the phrase. So how does money make money? Do they reproduce like people? I would hope not because a disturbing image pops into my head of two bills consummating their relationship. Or two coins for that matter. Ewww.
Money makes more money by the magic of compound interest, the most powerful force in finance. According to wikipedia, compound interest is the concept of adding accumulated interest back to the principal, so that interest is earned on interest from that moment on. You can read more about the magic of compound interest here. So the old cliche is true. Your money will make more money through the power of compound interest. And the more money you have, the more money you can make. Beautiful, it almost brings a tear to my eyes.
What does this information about compound interest mean? It means that you should start saving and investing now. I do not mean later, I mean now. Go online and open a bank account that pays you interest if you do not already have one. Go online and open a brokerage account if you do not already have one. Start an IRA or a ROTH IRA. Talk with you employer about joining the company 401(K) plan. Do it. It is very important that you start saving as soon as possible. The more time you have compound interest working for you, the more money you will have when you decide to hang it up and enjoy life.
I will discuss other topics on personal finance in future entries. If anyone has suggestions, I will be more than open to them. Preparing for early retirement is one of them. Among others will be: the type of accounts should I have, what type of financial instruments should I invest in, what stocks should I buy, etc...
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2 comments:
i have to wait till 80 now tot retire since i missed the boat on fxi. was waiting it to "drop" a year ago.
Time in the market is more important and beneficial than timing the market. For now, just put your money in a mutual fund or an ETF that will follow the broad stock market like the Vangard Total Stock Market Index. Again, the most important move is to start saving for the future now.
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