Financial literacy is the foundation
of sound financial decision making.
Investments come in a wide variety of forms, each with its own characteristics, risks, and potential returns.
(Note: listed investments may or not be offered and are provided for educational purposes and are not considered recommendations.)
Types of Investments:
1. Stocks (Equities)
- Common Stocks: Shares that represent ownership in a company, giving shareholders voting rights and a share in profits through dividends.
- Preferred Stocks: Shares that provide a fixed dividend but usually don’t come with voting rights.
2. Bonds (Fixed Income)
- Government Bonds: Issued by governments; considered low-risk.
- Corporate Bonds: Issued by companies; higher risk than government bonds.
- Municipal Bonds: Issued by local governments; often tax-exempt.
- Treasury Bonds: Long-term bonds issued by the U.S. government.
- Junk Bonds: High-yield, high-risk bonds from companies with lower credit ratings.
3. Mutual Funds
- Equity Funds: Invest in stocks.
- Bond Funds: Invest in bonds.
- Index Funds: Track specific market indexes.
- Balanced Funds: Invest in a mix of stocks and bonds.
4. Exchange-Traded Funds (ETFs)
- Stock ETFs: Track a stock index.
- Bond ETFs: Track a bond index.
- Sector ETFs: Focus on specific sectors like technology or healthcare.
5. Real Estate
- Direct Real Estate Investment: Buying physical properties.
- Real Estate Investment Trusts (REITs): Companies that own and operate income-producing real estate.
6. Commodities
- Precious Metals: Gold, silver, platinum.
- Energy: Oil, natural gas.
- Agricultural Products: Wheat, corn, soybeans.
7. Derivatives
- Options: Contracts that give the right, but not the obligation, to buy or sell an asset at a set price.
- Futures: Contracts to buy or sell an asset at a future date for a predetermined price.
- Swaps: Contracts to exchange cash flows or other financial instruments
8. Cryptocurrencies
- Bitcoin: The first and most widely known cryptocurrency.
- Ethereum: A cryptocurrency with smart contract functionality.
- Altcoins: Other cryptocurrencies like Ripple, Litecoin, and Cardano.
9. Certificates of Deposit (CDs)
- Short-term CDs: Typically mature in less than a year.
- Long-term CDs: Maturities can range from one year to several years.
10. Savings Accounts
- High-Yield Savings Accounts: Offer higher interest rates than traditional savings accounts.
11. Annuities
- Fixed Annuities: Provide regular, guaranteed payments.
- Variable Annuities: Payments depend on the performance of investment options chosen by the holder.
12. Collectibles and Alternative Investments
- Art: Paintings, sculptures.
- Antiques: Furniture, historical artifacts.
- Wine: Investment-grade wines.
- Other Collectibles: Coins, stamps, sports memorabilia.
13. Private Equity and Venture Capital
- Private Equity: Investing in private companies.
- Venture Capital: Investing in early-stage, high-potential companies.
14. Hedge Funds
- Market-Neutral Funds: Aim to offset market risk by taking long and short positions.
- Event-Driven Funds: Invest based on corporate events like mergers and acquisitions.
15. Money Market Instruments
- Treasury Bills (T-Bills): Short-term government securities.
- Commercial Paper: Short-term unsecured promissory notes issued by corporations.
- Certificates of Deposit (CDs): Short-term CDs issued by banks.
Each type of investment has its own set of characteristics and is suitable for different investor needs and risk tolerance levels. Diversifying across multiple types can help manage risk and improve the potential for returns, but it is important to understand the risk factors of each investment before entering any investment.
Financial Literacy encompasses the knowledge and skills
necessary to manage money effectively,
including budgeting, saving, investing, and understanding risks.
Major Investments Risk Spectrum
The higher the risk, the higher chance for potential gains, but so is the risk of loss!
Finding the right solution or balance can be challenging, so make sure that you increase your knowledge through financial education & find a trusted advisor to get the proper guidance and education.
By improving your financial literacy, you can better navigate the
complexities of personal finance, avoid common pitfalls,
and work towards achieving your financial goals.
Compound Interest is the 8th Wonder of the World
Those who understand it, EARN IT, Those who don’t, PAY IT !!
- Albert Einstein
In the Rule of 72 we can see how long it will take to double our investments, depending on the interest rate.
Now let’s see if you get the concept.
If you were given the choice of:
1.) One million dollars in silver
or
2.) One penny that you would double every day for a month (30 days) and keep all the change after day 30……
Which would you pick??
Here's an illustration of how just one penny grows over the course of 30 days:
Day 1: $0.01
Day 2: $0.02
Day 3: $0.04
Day 4: $0.08
Day 5: $0.16
Day 6: $0.32
Day 7: $0.64
Day 8: $1.28
Day 9: $2.56
Day 10: $5.12
Day 11: $10.24
Day 12: $20.48
Day 13: $40.96
Day 14: $81.92
Day 15: $163.84
Day 16: $327.68
Day 17: $655.36
Day 18: $1,310.72
Day 19: $2,621.44
Day 20: $5,242.88
Day 21: $10,485.76
Day 22: $20,971.52
Day 23: $41,943.04
Day 24: $83,886.08
Day 25: $167,772.16
Day 26: $335,544.32
Day 27: $671,088.64
Day 28: $1,342,177.28
Day 29: $2,684,354.56
Day 30: $5,368,709.12
As you can see, the amount grows exponentially, reaching over $5 million in just 30 days, starting from a single penny. This illustrates the power of compounding and exponential growth in investments.
Now you understand how money compounds. Let’s see if it’s better to start early or to wait and put back twice as much later.
Curley was an early adopter to investing and started putting away $200 a month at age 30,
Nate put off his retirement, but figured he could accelerate his savings by putting away $500 a month at age 50.
By the time they both get to Age 65, who will have more?…
A.) be close to the same
B.) Curley (age 30)
C.) Nate (age 50)
The following graph illustrates the investment growth comparison at the different returned interest rates of 6%, 8%, & 10% .
By the time they both get to Age 65 who has more?…
A.) be close to the same
B.) Curley (age 30)
C.) Nate (age 50)
Curley will come out much better as the rate of return or interest increases.
As we learned in the Rule of 72, the longer time you have, the more time your money has to double/compound.
As we get older, we simply run out of time. So, it’s better to start Early like Curley, Instead of Late like Nate!!
How do you view money? Do you see it as …
GOOD (Money Talks)
Good
BAD (the Root of All Evil)
Evil
Or NEITHER ?
Good
Overall, money is simply an instrument or tool.
It’s not good or evil, but how it is used.
The more favorable you view money, the better you will become with money.
“Get Wisdom.”
“Get Understanding.”
Therefore, it is crucial that we condition ourselves to see money as favorable, rather than terrible.
The last part of this section, we show a few ways to have fun with money.
So, to allow you to start warming up to the idea of money……
Here are just a couple of the catchphrases which mention “money” :
- A penny saved is a penny earned.
- Money talks.
- Time is money.
- Cash is king.
- Money doesn’t grow on trees.
- Money makes the world go round.
- Pay the piper.
- Money to burn.
- Easy come, easy go.
- Filthy rich.
- Deep pockets.
- Worth your weight in gold.
- In the black.
- In the red.
- Breaking the bank.
- Living paycheck to paycheck.
- Money can’t buy happiness.
- For love or money.
- Put your money where your mouth is.
- Throw money at a problem.
More fun catch phrases with mention of money :
- Rolling in dough.
- Money changes everything.
- Money talks, BS walks.
- Making a mint.
- Money pit.
- Money for old rope.
- Money doesn’t buy class.
- Money can’t buy time.
- Cash on the barrel head.
- Money under the table.
- A fool and his money are soon parted.
- Money is the root of all evil.
- Follow the money.
- Money is power.
- Cash and carry.
- Money down the drain.
- Put your money to work.
- To the penny.
- Big bucks
- Cash Cow
What’s the Stupidest Question?
…The One Not Asked.
There are no Stupid Questions, but how about fun and silly ?
- Money Matters Movie Night: If you could cast your financial journey as a Hollywood movie, which actor would play you, and what would the movie title be?
- Financial Feud: If you had to choose between receiving $1,000 every day for a month or $100,000 upfront, which option would you pick and why?
- Budget Bonanza: If your financial life had a theme song that played every time you checked your budget, what song would it be?
- Financial Fantasy Island: If you won the lottery tomorrow, what’s the first outrageous purchase you’d make, and why?
- Money Mind Meld: If you could swap financial skills with any fictional character (from books, movies, or TV shows), who would it be and why?
- Coin Conundrum: If you could create your own cryptocurrency, what would you name it and what unique feature would it have to stand out from the rest?
- Financial Flashback: What was the most memorable lesson about money you learned as a child, and how has it influenced your financial decisions today?
- Investment Idol: If you had the chance to pitch a business idea to Warren Buffett or Elon Musk, what would your idea be, and who would you choose to pitch it to?
- Financial Fortune Cookie: If your bank statement came with a fortune cookie message, what would you hope it says?
- Money Milestone Mania: What financial milestone are you most looking forward to achieving, and how do you plan to celebrate when you reach it?
The important thing is that you are now thinking about your finances.
Whether silly or not, it is important to give your finances more than a second thought.
The more you understand and educate yourself, the better your relationship with money will be.
People don’t PLAN to FAIL
They, simply, FAIL PLAN !
It won’t always be fun, but those who plan will be happier, live longer, and have a much better and enjoyable life, as well as retirement !
Money, You hear it everywhere, over and over again. So, it must be important, right?
Here are just a couple of the catchphrases with mention of money.
- A penny saved is a penny earned.
- Money talks.
- Time is money.
- Cash is king.
- Money doesn’t grow on trees.
- Money makes the world go round.
- Pay the piper.
- Money to burn.
- Easy come, easy go.
- Filthy rich.
- Deep pockets
- Worth your weight in gold
- In the black
- In the red
- Breaking the bank
- Living paycheck to paycheck
- Money can’t buy happiness
- For love or money
- Put your money where your mouth is
- Throw money at a problem
- Rolling in dough.
- Money changes everything.
- Money talks, BS walks.
- Making a mint.
- Money pit.
- Money for old rope.
- Money doesn’t buy class.
- Money can’t buy time.
- Cash on the barrel head.
- Money makes the mare go.
- A fool and his money are soon parted.
- Money is the root of all evil.
- Follow the money.
- Money is power.
- Cash and carry.
- Money down the drain.
- Put your money to work.
- To the penny.
- Big bucks.
- Cash cow.
Obviously, money is important, but how do you view money??
Do you view money as ………
GOOD (Pleasant), BAD (the Root of All Evil), or NEITHER ?
Chances are, how you feel about money is how it will impact your life. If you think of it negatively, then it may always be an obstacle in your life. If you see as positive, you will tend to have a better relationship with money.
Overall, money is simply an instrument or tool. It’s not good or evil, but how it is used.
What’s the Stupidest Question?
… The One Not Asked.
There are no Stupid Questions, but how about fun and silly ?
Here are ten entertaining and fun questions about finances and financial literacy:
- Money Matters Movie Night: If you could cast your financial journey as a Hollywood movie, which actor would play you, and what would the movie title be?
- Financial Feud: If you had to choose between receiving $1,000 every day for a month or $100,000 upfront, which option would you pick and why?
- Budget Bonanza: If your financial life had a theme song that played every time you checked your budget, what song would it be?
- Financial Fantasy Island: If you won the lottery tomorrow, what’s the first outrageous purchase you’d make, and why?
- Money Mind Meld: If you could swap financial skills with any fictional character (from books, movies, or TV shows), who would it be and why?
Coin Conundrum: If I were to create my own cryptocurrency, I would name it “EcoCoin.” Its unique feature would be its tie-in with environmental initiatives. For every transaction made using EcoCoin, a percentage of the transaction fee would be allocated to environmental conservation projects worldwide. This feature would set EcoCoin apart by not only providing a digital currency but also contributing to global sustainability efforts.
Financial Flashback: The most memorable lesson about money I learned as a child was the importance of saving. My parents encouraged me to save a portion of any money I received, whether it was from allowances, gifts, or odd jobs. This lesson instilled in me the habit of saving from a young age, which has greatly influenced my financial decisions today. I prioritize saving and investing for the future, understanding the value of financial security and long-term planning.
Investment Idol: If given the chance to pitch a business idea, I would choose to pitch it to Warren Buffett. My idea would revolve around a sustainable energy venture focused on developing innovative renewable energy solutions. The pitch would emphasize the potential for long-term growth and profitability while also addressing environmental concerns. Warren Buffett’s expertise in investment and his interest in sustainable businesses make him an ideal choice to present such an idea.
Financial Fortune Cookie: If my bank statement came with a fortune cookie message, I would hope it says, “Your financial discipline will pave the way for prosperity and fulfillment.” This message would reaffirm the importance of prudent financial management and serve as a reminder to stay focused on my financial goals.
Money Milestone Mania: The financial milestone I am most looking forward to achieving is financial independence. This milestone represents the point where I have accumulated enough wealth and passive income streams to sustain my desired lifestyle without relying on traditional employment. When I reach this milestone, I plan to celebrate by taking a well-deserved vacation with my loved ones, enjoying the freedom and security that financial independence brings.
The important thing is that you are now thinking about your finances. Whether silly or not, it is important to give your finances more than a second thought. The more you focus on and educate yourself, the better your relationship with money will be.
It’s not always going to be fun, but those who plan will have a much better retirement, a healthier lifestyle and outlook in life, will be happier, and live longer.
