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Book Review: The Millionaire Next Door

I was unimpressed with this book.  It's main point is just because you make a lot of money doesn't mean you are rich.  Those who invest in assets rather than save are more wealthy.  Being frugal is a huge part of becoming a millionaire.  Status symbols like expensive cars and nice houses will only make you spend more and save less.  People tend to spend more the more they make.  Teach your children about money, but don't tell them how much you have.  Children of wealthy parents tend to not be as frugal as their parents and then require help throughout their lives.  Don't live your life with a paycheck as your only source of income.  All in all not very helpful and if a solution isn't offered other than be frugal then I don't think too many people will see a benefit from this.      

Also the book doesn't focus on how to really make a million or how someone who makes 40k a year can make a million.

There are better books out there like Rich Dad Poor Dad if you want better theories and for personal finance Suze Orman Young Fabulous and Broke.

Pay yourself first

Just so everyone understands this concept in finance.  The term pay yourself first means to put money away in investments before anything else.  After bills and expenses are paid put in your investments and then whats left can be used for fun/other.

Try to increase what you put away and if you get a raise or a bonus put most or all into investments.  Act like nothing changed because you want your money to grow overtime.  If you spend it then it's gone and your enjoyment with whatever you bought will fade quickly.




Most people neglect to pay themselves first, you don't have to be like most people.  You can control your future with your actions today.

Automatic Investing

Automatic Investing or Auto increasing your contributions are good options to consider.

Just don't use them as your only option.  That is way to passive to really see the full value of investing.  You can learn this subject and do so in a short time.  I will constantly try to write about ideas and concepts that bring you the best information possible so that you don't have to search around.

Blackrock is a great company check out their full website and videos.

Blackrock automatic investing

Halloween Strategy

Coincides with sell in may and go away.  The idea is to maximize capital gains by getting out of the market between May-Oct.  Historically those are the most volatile times.

Halloween Strategy - Investopedia

Play the stock market game to learn how to do everything without the risk

I've played this game and I'll be honest I lost interest pretty quickly but I started trading for real around the same time.  Hopefully you can practice and learn without the risk.  Here's a suggestion

Create 3 accounts

1 - A trading account so you can see what that's like

2- An investing account to get an idea how much more you can make with investing rather than a savings account ( keep in mind investment accounts and strategies are long term and can take years to really pay off well.  Great results can occur in the short term but the main idea for creating an investing account in this game is to see in a couple months what 100,000 would make if invested in good dividend/strong companies.

3- Practice options account this can also be your trading account but if you want to separate results at first its up to you.





The Stock Market Game

Correction

Corrections are drops in a market index of 5-10%.  Investopedia says 10%, but 5% can still be considered a correction.  Also if you are always waiting to get in after a 10% decline and the index doesn't decline that much, then you are less likely to maximize your gains and miss a good entry point.

Correction - Investopedia

Sell in May and Go Away

Basically May - Oct is very volatile typically so sell in may and buy back in Nov to create the most gains for yourself (according to this saying anyway).

This isn't always true but right now the news media outlets seem to think that we are going to have a very volatile May and for once I agree with them on something.  No one knows for sure so read up (link below) and make up your mind on this concept.





Sell in May and go Away - Investopedia


News media has been calling for a correction for some time now and they have been wrong for some time.  The top links are all about the subject.

Sell in May Google Links

To live a life determined by boss's and paychecks isn't really living a life

Just ask yourself if you want your worth to be determined by anyone else other than yourself.  Also do you want your life to be scheduled around what others want or what you want?

The point of this blog is to make you question these ideas and yourself so that you can really take control of your life.  You don't have to live by the status quo, but you do have to think to live outside the norm. If you continue to read I know you will generate an idea that works for you and can change everything about your future.

Quote of the Day: Robert Louis Stevenson

"Don't judge each day by the harvest you reap, but by the seeds that you plant."

Much like finance don't judge each day by gains and losses it will just drive you crazy.

Make investments today that will become much more in the future.