Learn Investing Secrets

'You can be poor when you're young, but you can't be poor when you're old.' That was the tag line used some years ago in a financial services television commercial.

Truer words were never spoken.

I was relatively poor when I was young. Not on your life!

Now I'm anything but a financial genius but there are five basic principles that I've learned and used to secure our financial future. A major part of your family's financial program is to insure against major financial loss. Consider paying off your credit card immediately if you have money in a savings account'as with the mortgage, the interest earned on the savings is certain to be lower than what's charged by the credit card company.

“You can be poor when you’re young, but you can’t be poor when you’re old.” That was the tag line used some years ago in a financial services television commercial.

Truer words were never spoken.

I was relatively poor when I was young. Just hereabout everybody I knew was and it was kind of fun. We lived an concurring lifestyle, sharing money, accommodation, food, beer, dope and other essentials of post-pubescent life. Would it be as much fun if I had to do it two times today? Could I do it again? Not on your life!

Now I’m some but a financial genius but there are five focal principles that I’ve learned and used to secure our financial future. And while far from wealthy, I have every confidence that I will not have to live in a refrigerator box whenever I quit working and that my wife will be able to handily mainstay on in the event of my premature demise. (You should know I’m at an age where I think eighty-five is a premature death!)

Is mixture a secure financial future akin to rocket surgery? faithfully not— you need to do five key things to get started:

1. Determine your short and long-term financial goals. Start by taking a comprehensive snapshot of your current situation—your assets, net income, debts and living expenses. Once you’ve done this you can start setting long and short-term financial goals. Decide what lifestyle you want to enjoy among now and when you retire; what retirement lifestyle do you expect to have and what sort of education do you expect to provide for your children.

2. After you've metered where you are now and where you want to be in the future take steps to protect your ripeness to get there--and stay there once you’ve arrived. A major part of your family’s financial program is to insure on route to major financial loss. There are simply no guarantees toward serious illness, accidents or untimely death. So take the steps necessary to insure in preparation for loss of life, loss of income and loss of physical assets.

3. Pay yourself first. Save at least 10% of pre-tax income – more if possible. Pay down your mortgage as quickly as possible, especially in times of low interest. In the short term, you'll be divergent off reducing a mortgage that costs you 6% than earning in circles a taxable 1.5% (or less) in a savings account.

Maximize your RSP/401K contribution every year and make the contribution at the dawning rather than at the end of the year. Simply doing that will substantially increase the size of your retirement nest egg when you’re ready to cash out.

4. Avoid credit traps. If you use credit cards, unwaveringly pay any money owing erst interest is due. Consider paying off your credit card immediately if you have money in a savings account—as with the mortgage, the interest earned on the savings is sure as fate to be lower than what’s exciting by the credit card company. cringe using credit pack for cash advances. Usually the interest expense are higher for these and the brokerage set to immediately. If you do portage a kitty on your deuce try to negotiate a lower rate with the credit card company. If you need money urgently, it's usually cheaper to negotiate a personal loan with your bank or credit union.

5. Finally, protect your family in the event of your death. Make a Will. If you die without leaving a Will in all likelihood the only thing you’ll really leave your loved ones is a pussy mess—one that could take many years and a whole rendezvous of money to sort out.

Without a Will, the court/government will decide how your property and possessions will be divided. I would expect there are two probability of them occupation in a way consistent with what your wishes might have been—slim and none!

Making a Will doesn't mean the Grim Reaper is carelessly to pay you a visit. It simply means that your state of affairs will be sorted out in the ways you want and, as a result, you can go relative to your life with a peaceful mind seeing that your loved ones are protected.

These five principles are only a starting point—a few suggestions that any financial management professional can improve and expand on. If I have one regret in regard to how I’ve handled my financial affiliation over time it is not enlisting enough professional help. When we were starting, the financial management slapstick was neither as big nor as sophisticated as it is today. Who knows, with straighten out help, I might be writing this from some warm Caribbean tax haven rather a cold Calgary office!

“Don’t try this alone—use a trained professional,” is sure thing the best news service I’m really qualified to give.

Someone who reads the blog wrote me this email:

In your recent article you wrote:

"Intrinsic value is a guess. Buying is the belief. You don’t need to
use a lot of math to prove exactly what something is worth. You just
need to present a convincing case for buying it."

Interesting observation. I've seen a few YouTube vids with Bill Ackman
in them. The interviewers have sometimes pressed him for what he
thinks a stock is worth. He never gives a numerical answer. I get the
distinct impression that he never has a definite intrinsic value X
when he buys a stock; only that a stock is "clearly undervalued" at a
current price. As Ben Graham would say: you don't have to know a man's
weight to know that he is fat.

All the best,
Mark

I think there are really 4 questions you answer before buying any stock:

1. Is it safe?
2. Is it a great business?
3. Am I getting a great price?
4. Can I hold this stock for as long as it takes?

The ideal stock would get 4 “yes” answers.

The 5 Japanese net-nets I own do not get 4 “yes” answers. But I made sure they passed questions #1, #3, and #4.

A lot of differences in style come down to how you answer these 4 questions. Someone emailed me saying he thought Mohnish Pabrai was more of a Ben Graham investor than a Warren Buffett investor.

Not really. Graham was obsessed with question #1. He wanted to know a stock was safe. Pabrai cares less about #1 and more about #3. Pabrai’s overwhelming focus is on getting a great price.

Graham wanted a great price. But safety always came first.

There are stocks Pabrai has owned that Graham wouldn’t. Nothing wrong with that. Different people invest differently.

We all rank these 4 questions a little differently. We obsess about one. And our standards are a little too loose on one of the others.

But I think most stock decisions come down to these four questions.

If you can answer those questions – you don’t need an exact estimate of intrinsic value.

Talk to Geoff About The 4 Questions to Ask Before Buying a Stock

More Articles: