This will be short, sweet, and might just make you a millionaire. 752 - the magic number that is going to change the way you look at money and spending. When you think about your spending how do you frame it? Most people might frame it on a weekly basis, some a monthly, the odd …
So if you're new to all of this you may have noticed me and a lot of other finance bloggers talking about FIRE. But what is it and why do I want to achieve it? FIRE stands for Financial Independence Retire Early, it is the concept of building up enough in investments that you are paid a passive income through dividends or returns thus enabling yourself to live without working.
Emotion - it's a savvy investors worst enemy, let it seep into your decision making and you're going to end up hurt. Emotion and misplaced faith in a company are what lost me 100% of my investment. So far my worst investment yet. It was about a year into my dabbling in the stock market, so far I had purchased only large NZX50 companies such as Summerset, Air New Zealand, and Chorus. They all turned out to be solid investments and reasonably safe.
Brace yourselves this isn't one of my shorter pieces, but it's a must-read. Investing, it can be pretty daunting for first timers there is a lot to sift through and a lot to learn. So I thought I'd cover some of the basics for when you've got some spare moolah to throw around. If you're not sure how to find some spare cash start here and here.
Let's have a quick chat about fees. You slave away like a minion 40 hours a week diligently contributing your hard-earned moolah to your KiwiSaver (if you're not contributing, here's why you should be) so hopefully one day in the hopefully near future you might be able to join in the craze of purchasing some brick and mortar. And in the hopefully not too near future, you can enjoy a nice game of bingo with the other pensioners without having to worry about who's paying the power.
The other morning I came across this article about borrowers seeking loans from non-traditional sources, one such source being Peer-to-Peer lending. I had read about peer to peer lending previously and was familiar with the concept although had never gone much more into it than that. This article perked my interest, so I went and explored a New Zealand based peer-to-peer lending platform, Harmoney. Harmoney works by connecting those who are looking to borrow money with those who are willing to lend it. It does a lot of middleman man work like credit ranking borrowers and rating them based on their risk profile.
The in your face answer to this is to of course pay down expensive high-interest debt first, credit cards and personal loans spring to mind. These can sit racking up 20%+ interest, a rate of return you will be hard-pressed to beat through investing. Therefore it makes sense to get rid of these as fast as possible.
This will probably be the only time I wholly endorse sinking yourself into more debt. But this is the best debt you could possibly ask for. Interest-free money! I wish I would have thought of this earlier on. In my second year at university it hit me, why wasn't I taking everything I could from my student loan. I had a part-time job which covered the majority of my expenses and in an effort to remain as debt free as possible was drawing only a small amount of my living costs per week. Oh, the missed gains.
It's a new year so its time to get your finances sorted out, here are a few things that can quickly and dramatically help you get your finances into shape. If you are an employee make sure you are a member of KiwiSaver and are contributing the minimum of 3%, your employer is legally obligated to match you dollar for dollar, meaning a risk-free guaranteed 100% return on your money.
Plastic fantastic - credit cards, to some they are a path to financial ruin buried under unsurmountable interest accumulation. To others, they are a gravy train of juicy free rewards. In order to get your ticket on the gravy train you need to follow a few golden rules: