An Asset is an item of value owned by an individual or corporation, especially something that has the potential to make a profit while you own it or when you sell it. An asset can be real estate property, a business, or securities such as stocks and bonds, etc.
A Liability is a debt, financial obligation, or item that loses value or creates an expense while owned, and often a loss is made when its sold. Liabilities can be credit card balances, lines of credit, car loans or other loans, payment plans for purchased items, etc
If you truly want to become financially free or rich, you have to buy more assets than liabilities. You want your personal balance sheet to look like this :
Personal balance sheet
Assets Liabilities
Stocks Loans on which interest has to be paid Mutualfunds Car loan
Bonds Credit card debt
Gold & silver
Money market account
Franchise
Business
Bonds
You can become financially free or even rich with a balance sheet like this because your income is greater then your output (expenses). Building a personal balance sheet like this won't happen over night. But with patience, self-discipline, and a plan, someday you can have a balance sheet that looks just like this or even better!!
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What is Diversification?
In the investment world, diversification means to invest your money into a variety of investments to help reduce risk. Which means you should never place all of your eggs (money) in one basket (investment) because if something negative happens to that basket (investment) then you'll lose everything (all your money). Instead you should diversify your investment portfolio by investing in a variety of investments such as stocks, real estate, bonds, etc. Unfortunately the average person don't have enough money to invest into a variety of investments. However, this is why mutual funds were created. A mutual fund will give an average person with a small amount of money an opportunity to invest into a diversified investment portfolio. If you would like to create a diversified investment portfolio but you don't have a lot of money, please visit Make Money Work for You (Investing in Mutual Funds) to learn more about Mutual Funds and how investing in them can benefit you.
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In order to retire from work at an early age, you have to have an early retirement plan. I know some of you all's early retirement plan is to win the lottery and live happily ever after. I'm not saying you won't, but just in case you don't. You might want to have another early retirement plan in place. Putting some money into a 401k, an IRA, or some other high interest savings account every month is a great way to start setting yourself up to retire someday. Would doing that and that alone guarantee you an early retirement? Probably not, but its still a good decision. Just having a traditional saving account with money in it for retirement is better then not having a savings at all. "So what do I have to do to retire early?" You have to create another source of income outside of what you are already earning as a worker. "And how do I do that?" First you'll need to start a savings account in which you'll put a % of your monthly income. Make sure this % isn't putting to much of a strain on you or your family's happiness. If it is then its probably too much so save less. Then you'll want to start researching investments to put this money into, such as real estate, a franchise, a small business, etc. Once you choose an investment, you want to learn everything you can about it. If you really don't have the time to learn everything, then seek out the advice of people who are already succeeding at whatever it is you want to do. Once you feel comfortable with your investment, and you have enough money in your savings to invest, then invest. Ok. Sweet. Your investment is doing good. You have extra money Rollin in every month. What are you gonna do with all that new money? "Blow it on a lot of things I've been wanting to buy but couldn't afford too, up until now." I have to admit that does sound like a lot of fun. But instead of blowin it, you could reinvest it and make more money off of that money. Which would increase your secondary income, and the possibility that your dream of retiring early will eventually become a reality.
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Good debt is when money is borrowed to pay for something that has the potential to increase in value or produce short or long-term income. Taking out a loan to start a business, buy real estate, to invest in stocks, bonds, etc, or to pay for your education (which can increase your income as an employee) is consider to be good debt.
Bad debt is when money is borrowed to purchase things that will immediately decrease in value, nor do those things have the potential to produce long or short-term income.
Borrowing money to buy things such as cars, clothes, etc. which quickly loses its value is consider to be bad debt. The average person doesn't make enough money to buy everything with cash, which is why people borrow money. However, if you pay for things with cash instead of credit you can save yourself a lot of money. By paying with cash you avoid paying interest on borrowed money. If you are considering taking out a loan to buy something that has the potential to increase in value or produce income, research it carefully to determine whether or not the rewards are worth the risks and if you still think it's a good investment then go for it. Remember that even though an investment may appear to be a really great idea, sometimes even the best ideas don't always unfold as planned.
Edited by Reginald Forest
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A 401k is a retirement savings plan which allows you to put a percentage of your earned income into it before paying taxes. Your employer will normally contribute to your 401k by matching a percentage of whatever you put into it (that's free money). You can then invest this saving into different types of investments such as stock, bonds, and mutual funds. If you start saving for retirement early in life, you will increase your chances of having enough money to provide for yourself during your retirement years. Below is a list of pro and cons to help you decide whether or not investing in a 401k is right for you.
Pros
- You can contribute up to $17,500 to your 401k annually if your 49 years old or younger, and up to $23,000 annually if your 50 or older
- Your contributions nor your investment earnings will be taxed until you withdraw them from your 401k.
- Most employers will match up to 6% of your yearly salary (that is free money).
- In the event of a financial crisis or an emergency, you can borrow from your 401k without having to pay an early withdrawal fee.
Cons
- When you begin withdrawing your money from your 401k, it will be taxed plus you will have to pay a 10% penalty if you withdraw before age 59 1/2.
Edited by Reginald Forest
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Export (v.) means to send (goods or services) to another country for sale.
Import (v.) means to bring (goods or services) into a country from abroad for sale.
The U.S. government has announced that throughout 2012 the United States imported more goods and services from foreign countries than it exported. The more goods and services we import the less we produce, not only throughout the U.S. but abroad as well. U.S. corporations are steadily sending jobs overseas to take advantage of the inexpensive labour prices offered by other countries. This causes the unemployment rate to rise here in the U.S. because more and more Americans are being laid off daily and many more are struggling to find employment. This is why I encourage you to learn as much as you can about the world of investing, so that you can create another source of income as an investor or entrepreneur, just in case the company you work for decides to shut down or reduce its labour forces here in the U.S. as well.
Edited by Reginald Forest
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On the list of most valuable currencies in the world the dollar came in at # 11. This is due to our high national deficit, a decrease in demand for US treasury notes, currency exchange rates, etc. The dollar is still one of the most popular and most trusted currencies in the world. The decline in the dollars value is a problem, because it has affected the dollar's buying power. Which has caused the cost of buying imported goods to increase. However, businesses have chosen to shift this expense over to you the consumer by raising their product prices. Which will affect you at the pump, grocery store, and any other place of business that buy and sell imported goods. Some experts want the dollar to decline, because they think it will help the U.S. economy. These experts believe that a weak dollar will lower the price of our exports, which will make our products more competitive in foreign markets around the world.
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What is a Money Market Account?
A Money market account is a saving account offered by banks and credit unions. It's similar to a traditional saving account because its safe and will pay you interest on your money. However, a money market account will normally pay you more interest then a traditional savings account. Also unlike a traditional savings account, money market accounts usually offer check-writing privileges. Money market accounts tend to require you to maintain a minimum monthly balance and have initial opening deposit anywhere from $1,000 to $25,000, which is higher then the average traditional savings account. Interest rates on money market accounts and saving accounts differ from area to area. My advice is to shop around and compare rates so that you can make an informed decision on whether or not placing your money in a money market account is the right choice for you. Below I have included a list of pros and cons : Pros
-Funds in money market accounts are easy to liquidate and can be withdrawn as cash or transferred to other accounts.
-Money market accounts are a safe investment because they are insured by the FDIC up to $250,000.
-Money market accounts earn higher interest than savings accounts.
-Money market accounts are a good option for retirees or investors who prefer to earn a high interest on their money with the least possible risk, while maintaining direct access to their funds and being insured against loss Cons
-Money market accounts allow only a few withdrawals per month.
-If the money market account falls below the minimum required balance, or it exceeds the limited number of transactions, you'll have to pay a fee.
-A money market account typically requires a higher minimum balance than a savings account, and will penalize you if it drops below the minimum.
-some MMA pay a monthly fee
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The United States budget, or National deficit, is expected to be $744 billion for the fiscal year 2014. However when compared to 2009's 1.4 trillion dollar budget deficit, you'll agree that the U.S. government has made a tremendous amount of improvement. A Budget, or National, deficit is the result of a government putting out or spending more money than it pulled in or made, which will lead it to borrow money to pay off its remanding expenses. Governments normally borrow money from people, businesses, and foreign countries. They do this by issuing IOU's such as Treasury bills, notes, and bonds, ultimately increasing its national debt. The U.S. national debt is now more than $16 trillion. Fiscal conservatives feel that the only way to keep our national debt from rising any higher is to create a balanced budget policy, that will curb or cut spending, which could eventually lead to a U.S. budget surplus instead of a deficit at the end of future fiscal years.
Edited by Reginald Forest
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Why is it that credit, which is affecting people all across the world, one of the least talked about subjects inside our circles of discussion today? Most of us don't learn about the importance of maintaining a good credit score until our credit has been ruined. At this point, instead of coming up wit a plan to pay off our overdue bills, most of us just set our bad credit reports to the side. Hoping that one day we come across enough money to pay off everything at one time. Unfortunately for most that day may never come. Instead we can start to take action towards cleaning up our credit history today. With the right plan, some patience, and self-discipline you can turn your credit report into something you could be proud of.
Here's a few ideas to help get you started. First you should order a free credit report. Your credit report will give you a list of everyone you've borrowed from and how much you currently owe them. With this info you can start to create a plan of action that will eventually lead to you having a good credit report. Ok now that you know exactly who you owe and how much you owe them. You can contact them to set up a monthly payment plan. Or you can ask if they'll be willing to accept a one time settlement payment, which is normally a lot less then the balance that's being reported. If neither of these seem like they'll work for you, you could start saving a percentage of your income every month. Then at the end of every year take that savings and go pay something off. Until every delinquent account on your report is paid off.
Of course the choice is yours. You are the only one that truly knows which plan will work best for you. Just don't allow bad credit to linger in your life any longer without at least trying to repair it.
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There are several types of IRA's, but in this post I will focus on the two most popular ones, the traditional and the Roth IRA. So what is an IRA? IRA is an abbreviation for Individual Retirement Account. It is similar to a savings account, but unlike a regular savings account, an IRA provides huge tax benefits. You can open an IRA at a bank, brokerage firm or any financial institution. Anyone under age 50 can put up to $5000 per person into an IRA every year. If you are 50 or older you can contribute up to $6,000 per person every year due to a catch-up provision.
A Traditional IRA will allow you to put before-taxed (or tax-free) money into it for retirement. If you decide to invest the money that's saved in your IRA into stocks, bonds, or a mutual fund you will not be taxed on your earnings from those investments either. However, upon withdrawal you'll have to pay taxes on both the money you deposited and your investment earnings.
A Roth IRA allows you to put after tax money into it for retirement and you can also invest the money inside your IRA into stocks, bonds, mutual funds, etc. However, unlike a traditional IRA, your investment earnings will never be taxed as long as you leave your investment earning in your IRA until age 59 1/2. Also, once you've deposited your money into any IRA, if you try to pull out your money or your investment earnings before age 59 1/2 you will pay a 10% early withdrawal fee. Below is a list of pros and cons to help you decide wether or not placing your money in an IRA will benefit you.
ROTH IRA
Pros
- You can withdraw your investment earnings tax
-free when you are at least 59 ½ yrs. of age or your beneficiary can after your death.
- Unlike the traditional IRA, you are not required to make withdrawals even after the age of 70½. You can keep the money in your account for as long as you like.
- You can withdraw all the money you deposited tax
-free because you pay taxes on that money before you put it In
- A Roth IRA can be inherited. Your beneficiaries can make withdrawals after your death.
- There is no age limit to be able to contribute to Roth IRA.
Cons
- You have to pay taxes on your money before putting in a Roth IRA, which gives you less money to invest with.
- The annual maximum deposit limit is $5000 for those below 50 yrs. old and $6000 for those above 50
-You will have to pay a 10% fee if you are going to make withdrawals before you are 59½ yrs. old.
TRADITIONAL IRA
Pros
- You can put money into this IRA before you pay taxes on It.
Cons
- Withdrawals of your deposits and investment earnings are considered as income and will be taxed.
-You will have to pay a 10% fee if you are going to make withdrawals before you are 59½ yrs. old.
-The annual maximum deposit limit is $5000 for those below 50 yrs. old and $6000 for those above 50.
-You are required to start making withdrawals whether you want to or not at the age of 70 1/2.
-No more deposits can be made after age 70 1/2.
Edited by Reginald Forest
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Are you financially free?
If you were suddenly laid-off or stop working today, would you still be able to provide for you and your family for the rest of your life? If you answered yes, then congratulations you're financially free. If you answered no, then this blog was created for you. So don't get all sad and depressed on me just yet, because by reading this you are taking a gigantic step towards attaining your financial freedom.
Through over a decade of research and experience, I have learned that by saving and investing wisely, anyone can achieve financial freedom. My goal is to teach you what I've learned, and hopefully all of you will one day join that elite group of individuals who are truly financially free.
If you would like to learn more about becoming Financially Free please click one of the links or home button below!
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Financial Planning is a systematic way of organizing your resources (money, time, etc.) in order to accomplish your financial goals in life.
Creating a financial plan will lead you to assess your current financial situation, set long and short term financial goals, as well as create a budget which might require you to eliminate or reduce unnecessary expenses. It will also lead you to create an emergency fund in order to protect you and your family against unforseen dangers, such as a lost of income or good health, or even death. Planning for retirement is also very important when creating a personal financial plan. Its also one of the most important steps you can take towards attaining your financial freedom, so if you have not created one for your life, I highly recommend that you do.
Edited by Reginald Forest
Have you ever created a financial plan before? If not
LEARN HOW TO CREATE A GREAT FINANCIAL PLAN FROM ONE THESE PUBLISHED EXPERTS
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A mutual fund pools together the money of people (investors), and then its manager will invest that money on behalf of those people (investors) in stocks, bonds, or other securities. Buying into a mutual fund will allow you to become a part of a group of investors that's investing on a much larger scale than you could as an individual investor. For example, a mutual fund can take in millions of dollars and buy up stock in Apple and Google; which would make each investor, including you, an investor in those companies. However, as an individual investor you would need to have millions of dollars at your disposal in order to buy the same kind and amount of stocks. Also if you are new to investing and lack the financial know-how to manage your own investment portfolio, mutual funds are professionally managed by a registered investment advisor. There are also different types and styles of mutual funds, such as money market funds, bond funds, stock funds, hybrid funds, etc. Each one of these mutual funds has different risks and rewards. Which is why I encourage you to thoroughly research each one of them before making a decision on which one is best for you. Below is a list of the advantages and disadvantages of investing in a mutual fund. Hopefully this list will assist you in making a decision on whether or not investing in Mutual funds is a right for you.
Advantages
- Diversification: using mutual funds can help an investor diversify their portfolio with a small investment. Diversification also help to reduce risk.
- Mutual funds are managed and supervised by investment professionals
- With most mutual funds buying and selling shares and obtaining information can be done conveniently by telephone, by mail, or online
- Mutual fund shares can be bought and sold easily during market hours
- Most mutual funds require a minimum initial investment of $2500 but some are as low as $1000
Disadvantages
-Risks and Costs: Changing market conditions can create fluctuations in the value of your mutual fund investment.
There are also fees and expenses associated with investing in mutual funds that do not usually occur when purchasing individual stocks, bonds, etc. directly.
As with any type of investment, there are drawbacks associated with mutual funds.
- The value of your mutual fund investment, unlike a bank deposit, could fall and be worth less than the principle initially invested. And, while a money market fund seeks a stable share price, its returns fluctuates, unlike a certificate of deposit (CD). In addition, mutual funds are not insured or guaranteed by an agency of the U.S. government. Bond funds, unlike purchasing a bond directly, will not re-pay the principle at a set point in time.
- Having a diversified portfolio can help to reduce your risk but it will not protect you from an overall decline in the market.
- Less control over your investments
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In order to become financially free, you have to start saving a percentage of your income every month, so you could invest that savings into something that will eventually start to put money back into your pocket. To help increase your chances of success as a new investor, I have put together a list of some of the most popular and profitable investments I could find for under $10,000. Everyday I will post an investment from this list with a brief description of each, along with a list of pros and cons which I hope will help assist you on your quest towards becoming financially free.
Investment # 2. Buying a Franchise
Buying a franchise has very little risk when compared to starting an independent business from scratch. When you buy a franchise you're buying into an already established and successful business system that has been tired and proven to work. Your product or service has been promoted to where its almost guaranteed to sell. Training will also be provided by the parent company(franchisor), which will also help to increase your chances of success . I know you're probably wondering, If its such a great investment then why doesn't everyone with dreams of starting their own business buy a franchise. Mostly because buying a franchise can be really expensive. However, on certain websites you can find some for under ten thousand dollars, which is why I added buying a franchise to this list. In the section below, I have included a list of pros & cons to help you through this very important decision making process.
Pros:
- a franchisor is selling you a business system that has been proven to work for operating a business and generating profits.
- the franchisor is suppose to provide you with a team of experience people to support and help you every step of the way, so that even though you're in business for yourself, you're not by yourself
- you're buying into an already established brand name
Cons:
- less freedom(as a franchisee, you have to conform to the uniform operating procedures of a franchisor vs as an independent business owner you can run your business however you see fit).
- you will have to pay royalty payments every year in return for support in operations and advertising.
- in most cases, its more expensive to buy a brand name franchise -vs- starting an independent business.
- even though the franchisor will promise to be there every step of the way, sometimes the franchisee is left with the responsibility of solving their problems on their own.
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What is a bond?
A bond is a loan , in which you are the lender and the borrower of your money is normally a company or the government. You can think of a bond as an IOU given by a borrower (a company or the government) to a lender (you the investor). That company or government will promise to pay you your money back in full on a specified date. You'll also receive interest payments from that company or government as long as your money is in their possession.
Companies and governments usually offer bonds to the public, in exchange for their money, in order to fund certain operations, like building bridges, financing long-term investments, or paying off debts. In the investment world, buying a bond is considered to be a safe long-term investment, however, certain bonds can be really risky. Below I explain the different types of bonds and how investing in them can benefit you.
-Treasury Bonds are issued by the U.S. Treasury. These bonds are backed by the full faith and credit of the U.S. government, and are considered to be the safest bonds you can buy. Due to this, they tend to offer you lower interest payments than other bonds.
- Agency Bonds are issued by government-sponsored enterprises, such as Fannie Mae, Freddie Mac, and the Tennessee Valley Authority. These bonds have a higher level of risk than Treasury Bonds. Which is why they'll offer you a higher return on your investment.
- Municipal Bonds are issued by states, cities, counties, and towns. Most municipal bonds are exempt from federal, state, and local income taxes. As a result, their interest payments to you will be lower than other taxable bonds.
- Corporations issue Corporate Bonds, which are generally riskier and more profitable than government and municipal bonds.
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Saving to invest is one of the biggest steps a person can take towards attaining their financial freedom in life. If you start consistently saving money every pay period, even if its a small amount, you will eventually accumulate enough money to start investing. It is also best to learn as much as you can about the different investments that interest you. So that you could make the best decision on which investment is right for you, to help increase your chances of success as a new investor. I have put together a list of some of the most popular and profitable investments for under $10,000. Everyday I will post an investment from this list, with a brief description. I've also included a list of pros and cons which I hope will help assist you on your quest towards becoming financially free.
Investment #3 Investing in Stocks Online
Online stock investors are making a ton of money everyday. Your initial investment as an online investor can be as little as a hundred dollars on some sites. If as an investor, you take the time to throughly research every company you're considering buying into you will increase your chances of success. There are also some really good books written on stock investing for beginners, which I encourage you to read. You can save yourself a lot of money by learning everything you can about stock investing. After doing all of this, If you still don't feel comfortable investing online, you can always go to a traditional land based brokerage and work with someone who has experience. History has taught us that the stock market can be extremely unpredictable. You should consider the risk involved before investing in anything, especially the stock market. Below is a list of pros and cons to help you determine if being an online investor is something you truly want to be.
Pros:
-the average online brokerage only requires a minimum of 500 dollars to open an investment account
- you can invest anytime of the day through an online brokerage rather then having to wait until a traditional brokerage open up to put in a request to buy stock
- its cheaper to invest through an online brokerage than a traditional one
- you can make a lot of money in a short period of time buying and selling stocks
Cons:
- online investment brokerages don't offer investment professional's to help guide you in your investment decisions
- being able to buy and sell stock soo easily online can cause you to sell stock before it reaches its fullest potential causing you to lose potential earnings
- just as you can gain a ton of money in a short period, you can also loss a lot of money in the same amount of time
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A Budget is a detailed plan for the management of one's income and expenses.
Creating a budget will help you better manage your income and expenses, it will also lead to a more balanced and prosperous financial future. The average person doesn't take the time to monitor their spending, causing them to save only a little if any money at all. If you truly want to take control of your finances, remove the burden of living from paycheck to paycheck, and make your first million dollars, I encourage you to come up with a plan to help you recognize and cut back on unnecessary expenses. This will enable you to free up more money to save and invest in the near future. This is just one step you can take towards becoming financially free.
Edited by Reginald Forest
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Efficiency is when something or some one is performing or functioning in the best possible manner reducing the waste of time, effort, and money.
If you really want to succeed in life, you have to learn to manage your time, efforts, and money wisely. Wasting time, efforts, and money is what normally keep people from accomplishing their goals in life. Being efficient will not only benefit individuals but businesses as well. History has taught us that if a business does not manage its resources properly, it is doomed to fail. In order to be successful, both individuals and businesses need to be as efficient as possible.
Edited by Reginald Forest
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An Asset is an item of value owned by an individual or corporation, especially something that has the potential to make a profit while you own it or when you sell it. An asset can be real estate property, a business, or securities such as stocks and bonds, etc. 
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