First off I would like to say Happy Father's Day!
Today I'm going to briefly talk about the importance of investing, saving, and staying out of debt. This is somewhat off topic from stocks, but will be beneficial to your investing future. Over the past couple of years you may have read about and seen people who are in financial trouble. People who have lost their jobs, homes, and financially cannot support themselves. The economy was crushed and the financial system has failed us. This was and still is an ongoing disaster! For many including myself this was a perfect wake up call. Many of us live on the edge week in and week out. We are a week out from financial disaster. The saying living pay check to pay check is sad but true. It doesn't have to be like this!
The one thing to realize is that the only person that can help you is yourself. I'm sorry to say at least for those people that are in there 20's and 30's that the government will not be there to help. Social Security isn't properly funded and in my opinion will not be around by the time I retire. This is another reason why investing for your future is so important. You have to want to be financially stable. If this isn't that important to you then it won't happen.
The first step is to get out of debt. Many of us have debt that include student loans, car loans, credit cards, and a mortgage to name a few. Basically, were making other people rich by borrowing money and paying interest to them every month. To me it's more of a headache than anything. It's hard to get ahead financially when your trying to invest and at the same time you are paying interest to the banks. You would have to have some pretty lucrative investments to generate a return that could cover the amount of interest you are paying on your loans and grow your investments. So please pay off that debt. You are robbing yourself of the good life! I'm being robbed right now as well, but I have made it a priority to pay off the debt that I have so I can invest more money for my future.
Next would be saving money. Having a savings account or what some people may call an emergency fund (For all those Dave Ramsey's Fans) is important to protect yourself from life's unexpected problems. If you have built up a decent amount of savings say 3 to 6 months of your living expenses life wouldn't be as stressful. If your car needed repairs, or your hot water heater decided to fail and ruin your floor in your utility room (this happened to me!) having savings would make these situations be more of a headache than a financial disaster. Having cash on hand will protect you from having to go into debt to pay for what could easily be covered with a little savings.
Lastly, you need to invest your money overtime for the future. Invest for your age and risk tolerance. Invest as much as you can. If its $5 a week or $100 its something. Take advantage of your employer's 401K program and invest up to what your employer will match. Usually the match is a percentage of your income, once you have met the full match put the rest in a Roth IRA or into a taxable investment account. If your employer doesn't offer a 401K program open up a Roth IRA.
I can't stress enough that just starting to improve these 3 key areas of your finances will help you drastically down the road. Reduce debt, save money for an emergency, and invest like crazy! When it's all said and done you should have a large amount invested and should be able to live comfortably off the interest your money generates for you. Your hard earned money is working for you and your not giving it away to make others rich! Plus who knows what the future will bring. Our taxes may rise, health care costs will be higher as we get older, and of course there is inflation. Start early and continue to play defense with your money and retirement should be a delight.
Thank You,
Clay-
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