What you don’t know about your finances that may be hurting you

scaredI want to talk to you about why I write financial articles that, hopefully, are easy to understand. The people in your life forgot to teach you some key facts about money and investing. I’m not blaming anybody but it’s a crime that we find it more important to teach our young people algebra or European history than financial literacy.

The big thinkers of our world blame you and I for not managing our money and our financial affairs wisely but nobody is teaching us how so with that in mind, I want to give you some free financial advice. It’s free but the only payment is that you have to pass it along to everybody else.

Fact #1- You can’t spend more than you have!

Credit is everywhere but the reason so many Americans have serious financial problems is because they spend more than they have. Plain and simple! There is a lot of enticing stuff to buy in the world. Every want and need can be bought but that doesn’t mean that you should. Debt equals financial pain and worry. Debt means throwing your hard earned money away. Try this: Go to the bank and withdrawal some cash. How about 12 $50 dollar bills. On the first day of each month for 12 months I want you to rip one of those bills in to pieces. That would be painful, wouldn’t it? That’s what many people do with credit card interest each month! It’s not as painful when we pay interest because we don’t see the money. Total up your interest each month and ask yourself how it would feel to withdrawal that cash and rip it up. That’s exactly what you’re doing.

Fact #2- Mutual Funds probably aren’t helping your financial future!

OK, that might be a little bit of shock value but did you know that only about 20% of all mutual funds actually perform better than the market? You’re paying people to manage your money and they aren’t beating the market. There are other, less expensive and equally safe ways of getting more out of your money.

Fact #3- The fact that you don’t know what “beating the market” is costing you money!

We look at the quality of our investments and we look at one number: the amount of money we are making or losing. Of course if you’re going to be retiring next week, that’s the number you want to look at but if not, you want to gauge the return against the market. If the market (the Dow Jones Industrial Average or S&P 500) are up 20% this year, your portfolio should be up at least that amount. If it isn’t, then there is a problem. If the market is down 20%, if your portfolio is down any less than 20%, then it’s doing good. Always measure your portfolio against the market rather than if it’s up or down.

I have more to tell you. Look for more free financial advice tomorrow.<–>

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