Money Advice Guide

Compounding is one of few wonders in the world. Albert Einstein said it himself. I tend to agree. It is so powerful that it doesn’t take much to accumulate vast amount of wealth. Yet, so many people complained that they did not have enough money to invest.

Quick questions. How much does it take to be a millionaire? That depends. If you are in your early 20s, all it take is $ 2 a day and 10.5 % annual return on your investment. Hey, stock market can gives you that. The stock market indices has given that to investors since world war II. When you are 30 years old and you expect to retire by the time you are seventies, you need to invest $ 5 per day with 10.5 % annual return. How about when you are forty? You need roughly $15 per day or $ 450 per month. This is a little heavy for some.

However, as you can see, time is your friend. If you just graduate from college, you can be a millionaire with a mere $ 2 a day. The minimum wage for most state is $ 7 per hour. You think you can set aside $ 2 each and every day? Sure, you can! But still, how many people has to depend on their family when they can’t work?

No matter how old you are, you can still add considerable amount of money by investing a dollar a day. If you are twenty years away from retirement, one dollar a day will give you an extra $ 22,000 when you retire. That is about six months in living expenses for normal folks!

Do you need ideas on how to raise $ 1 a day? Oh, come on. Don’t make me come and get you. Just take that $ 1 bill from your wallet and put it someplace away from you.

Get your free investing idea by visiting our commentary section at http://www.noviceinvesting.com

Tags: Annual Report, finance, investing, Sample Portfolio, StockAnnual Report, finance, investing, Sample Portfolio, Stock

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Have you ever wondered why investors behave the way they do? For example, why do people invest in bonds or stocks or not at all? Since I am an advocate of stock investing, let me make the case for stock investing.

So, why invest in stocks? No, I won’t just invest in any kind of stocks. There are goals associated with investing in stocks. For starter, stock investors would want to be compensated more than if they put their money in the bank. Anything else? Yes. Stock investors would want to be compensated more than the risk free interest rate which currently yield around 4.7%. For your information, risk free interest rate here is the 10 year Treasury bond which is backed by the United States Government. These bonds are deemed to be free from the risk of default.

Therefore, when we invest in stocks, we would want a return in excess of 4.7%. How much more? That varies within individuals. Some wants a 5% return. Others are satisfied with 6% return. Personally, I would want at least 7% return for my stock investment. There are reasons for this. Stock investing is relatively volatile and full of uncertainty. Interest rate goes up and down which will hamper our return as stock investors. For example if interest rate rises to 8%, would aiming a 7% return for your stock investment worth the risk? Probably not. In this case, most people prefer to put their money in the bank and enjoy the higher return.

Having said that, we need to know how much stocks have given investors historically. For the US stock market, the return for the last century has been in the neighborhood of 10%. That, my friend, is the sole reason to invest in stocks. Not because you want to own a piece of corporate America. You invest in stocks because historically it gives you a better return that other investing alternatives. No other investments boast that high of a return over the last century, not even real estate.

Get your free investing idea by visiting our commentary section at http://www.noviceinvesting.com

Tags: Annual Report, finance, investing, Portfolio, StockAnnual Report, finance, investing, Portfolio, Stock

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