Bill Poulos is president and co-founder of Profits Run. He was born and raised in Detroit and still resides in Michigan. Bill gives back to the community in various ways, supporting causes that are dear to him.
With the importance of finances in our lives, it is interesting that we have not been better educated on how to handle our financial situation. This lack of education has caused many people to run into financial crisis throughout their lives. It becomes an even bigger issue as we approach our retirement years. If we are not prepared, financially, we may find ourselves running out of money when we need it most.
From elementary school, to high school and even in our college years, very little time, if any is spent on teaching us how to handle money, especially how to invest for the future. This lack of education has made it difficult, if not impossible, for the average person to prosper financially.
This is even more disturbing knowing that we live in a land where the free markets are the primary way we do business. Even if you have not been trained how to manage your finances properly, it’s actually not that hard.
If you have not begun the practice of saving money, that is the place to start. Everyone who is making money should be saving a portion of it. Start by saving 10% of your money by putting it into a saving account. While this seems like a simple idea, it is something that goes a long way in putting yourself in the correct mindset to taking control of your financial prosperity.
Once you have paid yourself your 10%, you then know what you can live off of — the other 90%. If you need more to live on, the answer is to improve yourself through obtaining more education. If you are in school, stay there and complete whatever education level you are currently in. If you never finished high school, complete your GED or if you never finished college, consider returning and obtain your degree. If you didn’t go to college, consider a trade — mechanic, plumber or carpenter. Finish your education with a skill that can be useful and profitable for you in the future.
While getting an education will move you forward financially, you need to be careful that you don’t do it through obtaining more debt. Coming out of school with a student loan debt in excess of $100K in not unheard of these days. This is generally not a good idea. Rather, get a job and work your way through school. Live frugal and even if it takes you a year or two longer, it will be worth it to come out debt free.
Saving 10% and improving yourself through education are simple things that you can control.
The final thing you want to consider is when, where and how to invest your money. In order to truly prosper financially, you will want to have a plan for investing in the stock market. The markets will move up and down and there is no guarantee that you will become rich quickly. As the markets cycle over time, you will find that learning how to invest and investing early you can prosper over time.
Until you learn how to actively trade, you should be focusing on creating a balanced portfolio using different assets classes that are not correlated with each other. By having a non-correlated portfolio you will be mitigating the risk that comes with investing.
As an example, you may want to begin with a combination of small and large cap stocks, short and longer term bonds, international and domestic stocks, maybe even some currencies and commodity related stocks or ETFs. These days, you might even consider investing a very small portion into cryptocurrency. The goal is to spread your risk out among the various type of investments available. In other words, don’t put all your eggs in one basket.
As you develop your portfolio, you will want to make sure your allocations remain consistent by re-adjusting annually to make sure you don’t become too heavily weighed in one area or another. This might mean you need to sell some stocks or buy more bonds to make sure you are at the correct allocation. Over the years, as you buy low and sell high you will be able to build a significant portfolio.
By saving, educating and investing, you will be able to prosper in your financial life and when it is time to retire, you will be happy you took the time to prepare.