Money Cents

[moneycentsthatmatters]

It's a Waiting Game

   We have discussed the basic fundamentals of the money game. Currently, there is a high degree of government tampering and the market place is nervous and volatile. Computer trading makes investing even more volatile.

   So what's the average person to do? Be patient and stay the course. Keep saving. This can be frustrating because when the government prints excess paper currency it devalues the paper currency in our wallets and in our bank.

   The big variables working right now are a very large national debt and a U.S. currency that is no longer pegged to a real commodity (like gold). What this means currently is a yearly loss in dollar purchasing power. How much loss? Well, on food and gasoline purchases alone it probably exceeds 6 percent per year. Our savings must then exceed 6 % per year to make any money on investments. This is a tough goal right now.

 Here is one strategy. Whatever commodity is going up in price and is in demand is a focal point for investing. For example, if gasoline prices are rising then put some money in a mutual fund that buys a mixture of petroleum producing companies. If food keeps going up in price then buy some food companies. Yes, the same companies that make cereal and bread. Again the easy way is to ask your investment company rep or broker to recommend a mutual fund of food companies.

     Here is the basic principle. As the dollar goes down in value, everything purchased in the marketplace goes up to compensate. So, invest in the marketplace items and not in the devaluing U.S. dollar. In other words keep very little in U.S. dollars and most of your money in real goods or real companies. If you have a large amount of savings then think global and do the same thing but buy companies in foreign countries that have a stronger currency and smaller national debt.

    Finally, keep going, be patient and the rewards will arrive.

[moneycentsthatmatters]

Pausing to look around.

The environment for investing is different than when I grew up. It is wise to pause and observe the differences:

Saving "always" had an incentive of return (interest). This was almost always 4 to 5% and sometimes more. Not now.

Banks in general were more conservatively managed. Not now

The Federal government kept a minimal role in debt and printing money. (less was better) Not now.

Because of these differences, saving and even investing will not have the same consequences. (for now)

However, do not let that be a  discouragement. It simply means there are different variables in the game. Let's look at some of those variables.

The Congress (House and Senate) are spending a lot more than they have to manage.

The "Fed" must pay for this spending and make up the shortfall difference by either borrowing or printing new paper money. The Fed has no other choices so they do a mixture of both.

Printing excessive amounts of paper money began earnestly in 1972. That is when U.S. paper currency was taken "off" the gold standard. Until then, no printing was permitted unless the gold (backing the currency) was in the  "Fort Knox" vault. This created some monetary discipline. 

How does this affect the average American trying to get ahead by working and saving and investing? The current government behavior patterns creates disincentives. For example: If I get nearly 0% interest at my bank...why save? If simple investing is so volatile why invest? If my government is going to take a large portion of my paycheck...why work?

Although I empathize with these kind of thoughts I still encourage everyone to use the tried and true way of working hard, slowly saving, educate yourself,  and then invest.

WE have to believe that current economic obstacles and challenges will be addressed and fixed. When that happens then those who have not given up will prosper.

So, let's not give up. Stay the course. Have faith. Use your vote in an informed, educated way and invest it in qualified candidates.

[moneycentsthatmatters]

"Read the manual before attempting to fly the aircraft"

[moneycentsthatmatters]

Using Money instead of money using You

There are times when we have to pause on our journey and look far out into the distance and try to assess what is on the horizon. This is one of those times.

The original money system was bartering real goods. Example given: A farmer would trade a bushel of corn with the lumberjack for a load of wood. This became cumbersome so a trading medium like gold and silver was used and proved to be universally accepted.

[moneycentsthatmatters]

Start slow, the turtle wins more often than the hare

The approach to build prosperity can be a  "slow and steady" process or a "mad dash". It's a simple truth that slow and steady is a more sure way to finish than an all out risk everything approach.

You may have some living examples around you. The "wildcatters" that risk everything are gamblers. There are far fewer of them than the steady goers. Gamblers play a role in society, but not here. If you are a gambler by nature, good luck, this blog will not help you much. For those inclined to go slow and steady take note.

How do we know "slow and steady" is a more sure way? Math. Simple numbers. Here they are.

Saving 20 dollars every week for 40 years at 10 percent interest gives you 506,300 dollars.

Saving 75 dollars every week for 40 years at 5 percent interest gives you 494,675 dollars.

Online "savings calculators" can figure all the variables!

In either case, if you start at 20 years old and retire at 70 you will have well over a million dollars. If you retire earlier at 60 you will have a half million.

Here is another simple math calculator for saving. Your savings doubles every so many years. I use the simple rule of "72" compounding formula. It's easy to remember, just take your interest and divide "72" by that number. This new number will be the amount of years for your savings to double! An example using this formula is if I am getting 12 percent interest then my savings are doubling every 6 years. (72 divided by 12 equals 6 years)

I was taught this in my later teens and have used it ever since as an encourager along the way.

The most important point is just save consistently. The interest will vary but the  saver must not! Keep at it!

[moneycentsthatmatters]

Money basics

Money can be owned (equity) or money can own you (debt). Here is another way to look at it, you can own or you can owe.

We might as well not go any further until we agree on which is better. I mean FAR better. I mean way, way better.

[moneycentsthatmatters]

It starts with a goal.

Goals are the everyday way to turn dreams to reality.

If you have a dream you have the beginnings of a goal. I hope everyone dreams. It's fun. However a dream without action remains a dream. I am living proof you can turn a dream into a more prosperous life.

Goals are the everyday way to turn dreams to reality.

Everyone can turn a dream into reality. You must get motivated to do it. Just like the NIKE slogan ("Just do it") acting today is where it begins.

This is the Bad news: If you are unwilling and/or unmotivated, nothing can help you. No one can help you. No institution can help you.

The Good news: Once you get motivated, no person or institution can stop you.

[moneycentsthatmatters]

Money, it's for everyone.

Money is the goal for some people. For others Money is simply a tool to get elsewhere. Whatever your attitude towards money, one thing is common to all people, everyone can benefit from having money. The more the tool of money is used the greater the benefit.

Money. It's for everyone. It's a tool.

Problem before us: Few can use a tool without understanding how it works and how to make it work.

Our solution: Find out about money and how to use it to build your prosperity.

This blog will be dedicated to that and to all who are motivated.