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INTERVIEW: Kevin O’Leary On How To Survive A Market Downturn

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Market downturns are inevitable. Just as the boom drives home the big bucks, recession can plunge many into despair with low employment, weak wages and dwindling upbeat market sentiments.

In this video, Shark Tank host, Kevin O’Leary talks about how you can win during the market downturn.

Personal Finance

VIDEO: 3 Things You MUST Know About Your Credit Score

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We all know what a credit score is. Sort of. But what really goes into your credit score? In this video, Investopedia breaks it down. Here are the top 3 factors that affect your credit score — and what you can do about it.

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How To Invest Your Way To Your First $1M (In 8 Steps)

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While being a millionaire most certainly offers a sense of privilege and extravagance, it also provides comfort.

Despite the idea that many of life’s luxuries can cost you your bank (plus a large chunk of your future earnings), achieving comfortable wealth is possible—if you’ve got a solid investment plan you’ll follow religiously.

Here are eight investment strategies to work your way to your first million dollars.

1. Say No To Fees (Of Any Sort!)

Investing comes packed with hidden and some obvious fees – broker fees, distributor fees, exit and entry fees, maintenance fees, and a string of other service-based fees. If you can manage your own investments and money, you can save hundreds of thousands in fees over the lifetime of your investment.

2.  Don’t Try To Time The Market

This can be one of the biggest blunders one can make—simply because it’s impossible, speculative and you’re gambling with your savings. While there are indicators that show market trends, this does not promise that your investment will most certainly move up or down.

3. Think Long Term And Diversify

If you put all your investments into one asset class, your investment will tank the minute the asset class goes into free fall. How do you beat this? Plan and diversify your investment – it could be debt, treasury bills, equity, real estate, startups, business ideas – anything, as long as you think long-term. This can pay off in the long run.

4. Think Like An Owner

When you buy your stocks or make your investments, think and act like it’s yours – you’ll be doubly careful to make the right checks and invest smart. When you invest in solid, robust companies with this in mind, the returns would also be equally strong. Good companies can pay you high dividends that can up your total income.

5. Invest In Yourself First

Be it education or investing for your retirement, put yourself first and then try to budget for the other frills in life.

6. Borrow If You Can, Don’t Buy

With a growing shared economy, you now have plenty to choose from – co-working spaces, ride-hailing and ride-sharing services, shared rentals and accommodation, and the list goes on. Here’s where you can really cut costs – be it while running your business or as a regular looking to channel the savings elsewhere.

7. Set Goals (And Stick To Them)

Make sure you start saving as early as possible and invest it – even a dollar can compound over time. As time goes, set bigger goals and get excited about them! Once bonuses and income increases come your way, bump up your investments – it can soon touch a quarter of a million.

8. Max Out Early

Your 401K can be one of your biggest retirement funds and maxing out your annual contribution by the end of June can be a great way to boost your retirement savings. How does this help? It gives your money an additional six months to compound.

 

 

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7 Money Facts Every Millennial Should Know

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I didn’t know much about money when I was in my 20’s.

I knew how to work, I knew how to buy stuff, and I was smart enough not to run up my credit cards.

Other than that, I didn’t really know much. The fact is money and finance is a subject which you either love or you hate.

Most of us try to avoid the subject of finance because most of our parents avoided the subject.

However, I believe now that it’s something every parent should teach their children and it’s a subject every adult should be interested in.

If I could go back in time and teach myself a few things when I turned 20, here’s what it would be.

Time Value of Money

The time value of money is a concept which states money in your pocket today is worth more than that same money in the future. Another way of looking at it is that if you have $10 in your pocket today, tomorrow it will be worth less than it was today.

That’s because money can be invested and multiplied. So, $10 today could be $11 next year if you invested it. So, getting $10 next is worth less than getting $10 today because of your ability to invest.

This applies to all of your money, including debts. So, paying off a debt today is worth more than paying it off next year.

If I understood how much my student loans would accumulate (because I deferred them) over my years of college, I would have worked harder to pay them down before leaving college. Or, at the minimum, I would have paid the interest every year.

Inflation

Inflation is closely related to the time value of money. It is another reason that every day your money is worth less.

50 years ago, $10 was worth a lot, however, these days it can barely buy you anything at all. Inflation is an important thing to consider because you will need to think about your future.

If you are saving a retirement fund for yourself, you may need to save a lot more due to the increasing costs of goods as time goes on.

So, not only is investing early important to make your money worth more, you need to pay attention to inflation so it isn’t worth less!

Sunk Costs

I did learn about this in college, so I can’t say that I’d have taught myself something I actually was taught. But, it was so important that I want to reiterate it.

A sunk cost is any money you’ve spent that you can’t get back. The idea is that sunk costs should not influence future behavior.

The classic example is if you spend $20 to get into a movie, sit there for 30 minutes, and realize it is an absolutely horrible movie. But, there is 2 hours left.

Do you sit and finish it since you already paid?

The answer is no. You can use those 2 hours to do something more fun. There is no reason to suffer through the rest because those sunk costs should not influence your behavior.

Asset allocation

Asset allocation simply means how you allocate your investments. Traditionally, it is suggested to spread your investments out across different investments. The idea is to lower your risk of losing the money you put into it.

But on the flip size, the more diverse you are, the lower your potential returns. That’s because the more investments you have, the more likely one of them will be a failure.

Think about it this way, if you invest in one thing, it could be a crazy success or a total failure. If it’s a huge success you make a ton of money.

But, if you got it wrong, you could lose your investment.

Diversifying makes it so you’ll probably get one or two awesome investments but you’ll also get one or two failures. So, you’re potential returns go down, but your potential losses decrease as well.

Net worth

Net worth is something I only started tracking in the last couple years.

Your net worth is the total value of your assets minus all of your obligations.

Net worth is important because it represents how well you are financially. If your net worth goes down, you are making some bad decisions while if it continually goes up, you are making good decisions.

It’s important to track this, even at a young age. Every month look to see if you go up or down in value and make adjustments accordingly.

Cash Flow

The only thing more important than your net worth is your cash flow.

Every investment you make should create some sort of cash flow (unless you earn so much that your income just doesn’t matter anymore).

In theory, it doesn’t matter what the investment is worth, as long as it provides the cash flow you need to support yourself.

So, if all of my properties lost half of their value, as long as the cash flow is the same then I’m happy.

Here are a bunch of ways to create $10,000 per month in cash flow.

Five C’s of credit

When a lender evaluates you for a loan they will look at several different factors: character, capacity, collateral, capital, and conditions. All of these are the parameters which you will be measured against for a loan.

You can also think about your credit rating and whether you are deemed financially stable enough to take on a large sum of money and pay it back on time.

Bad credit can be very smashing to your future and you can change it by using a bad credit loan to prove you are trustworthy enough to take on a new loan.

This article originally appeared on IdealREI.  Follow them on FacebookInstagram and Twitter.

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