Finance and Stock Investing with Your Money

Find Good Stocks to Invest In

stocksYou should think like a finance person when you are thinking about your own money.  That means think in pure numbers first and then move on to other abstract concepts and ideas.  So before you try to find good stocks to invest in, make sure you have thought through the numbers of your personal financial situation.

Most normal people don’t think through the numbers before they start investing their money in the stock market.  If you get good investment advice, they should have talked through this with you already.  If not, I would consider finding another adviser.

Let me give you an example.  Let’s say that you have $500 to invest for your retirement.  At best, you should be expecting an annual return of 8-10% a year.  With compounding interest involved, this will become a substantial amount by the end of your career depending on how long you have before retirement.

Now let’s say that you also have a bunch of high interest debt.  Say you have a credit card debt of $20,000, which is not unheard of today in the United States.  Even with a relatively small interest rate at 11%, you would break even if you got 11% a year in the stock market.

The correct strategy for this scenario would be to pay off your credit card debt before you start investing.  It’s just a numbers game and most people don’t talk or think about this beforehand.  They just dive into stocks without considering the financial impact of that.

If you have a good financial adviser, he will go over this for you.  But this requires that you are completely honest about your high interest rate and let him give you a comprehensive strategy to grow your money over the long term.  Make sure to crunch the numbers before diving in with an investment strategy.

2,550 thoughts on “Finance and Stock Investing with Your Money