Investments – The Big Words Blog Site

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Hello. Thank you for clicking on this link, and I hope you enjoy this essay. Writing a book was the genesis of my blogging and becoming a video content creator. I have published part one of my book project entitled, The Engineers: A Western New York Basketball Story. It is currently available on Amazon in eBook, hardcover, and paperback formats. Shortly I will be selling signed hardcover and paperback copies on my online store entitled Big Words Authors. You can place an order now if you want a signed copy. There is also a page discussing the book. Please consider visiting it to learn more about the project and see promotional content I’ve created surrounding the project. And now on to our feature presentation.

Recalling Jenny’s Words of Encouragement

“I’ve seen some of the financial writings you post on Facebook, Anwar, and I don’t like them!” I described the scathing words of an acquaintance I’ll anonymously call Jenny in my previous piece addressing whether wealth building is supposed to be boring. Jenny was a lawyer who I had known for years. We weren’t what I would consider close personally, but her words surprised me and were worth capturing.

I knew Jenny well enough to know why my financial writings caused her angst. At the time, my writings encouraged smart money management and planning, and some would consider it all frugal. Frugal is a word often confused with being cheap. I wrote a piece about misconceptions surrounding frugality and am linking it here. Jenny’s words inspired this piece, in addition to those of my mentor.

My Mentor’s Words After a Recent Discussion

“You should get to a point where you feel joy watching your investments grow. Saving for the sake of saving is just suffering after a while.” My anonymous mentor shared these words towards the end of one of our financial discussions. We discussed my retirement account, which was on track, and also a discretionary stock portfolio that he and his son helped me build.

By the way, if you don’t have mastery of the stock market and the time to watch the gazillion companies/positions you can buy, it’s best to leverage the knowledge and wisdom of an expert. I don’t have the expertise or time to do it myself, but I have benefited from the expertise of others.

Spending, Needs, and Wants

“You should get to a point where you feel joy watching your investments grow. Saving for the sake of saving is just suffering after a while.” My mentor’s words were powerful. There should be some enjoyment after diligently saving, controlling credit card debt, and making financial investments. This is obvious for savvy investors. However, for a person not used to spending, there is a bit of a paradigm shift there.

Does it sound strange that a person is not used to spending? It should not because some people don’t have lofty and vast wants. I’ve often pondered that some people from humble beginnings retain the thought patterns that they grew up with. Others move entirely in the other direction and spend to their heart’s content, sometimes uncontrollably. One of the key lessons in money management is knowing the difference between needs and wants. Many people today don’t know the difference between the two, nor how to defer gratification. If you are wise with your finances, you should eventually find some enjoyment, and it shouldn’t be just suffering.

What’s Next? What’s Enjoyment for You?

So what do you do after you’ve saved up a sizable emergency fund, stock portfolio, and retirement savings, which are also clicking on all cylinders? Do you go sailing around the world? Do you buy a new car? Do you start frequenting five-star restaurants? Do you start a family if you haven’t yet started one? The answer is different for everyone. I would say to be mindful of what got you there first and not depart entirely from it, especially if it wasn’t handed to you and you built it yourself from nothing.

The latter point is significant because it suggests that money management is essential. Some people are handed inheritances and never have to build anything. Some people inherit wealth and squander it. Others likewise have to make everything themselves. Management is likewise a critical component if you are building wealth yourself or if it was given to you and you need to maintain it. The take-home message is to experience some enjoyment once you’ve practiced being wise with your financial resources.

Can You Afford a $400 Expense?

“I don’t know where Anwar will go on his dollar budget!” Jenny took another verbal jab at me during an impromptu lunch years after declaring that she disapproved of my financial writings. I was surprised but not surprised when she said what she said. I didn’t get angry. Instead, I was amused.

In hindsight, financial and investment plans are like college and professional football offenses. Some offenses are designed to score points quickly in flashy ways. It looks impressive, though this strategy has disadvantages for the entire team. Other offenses are designed to methodically work the ball down the field while grinding down the clock. They’re not as flashy as the former, but they have many advantages for the offense and defense of a particular team.

My offense was the latter, designed to put various safety measures in place before indulging myself a little bit more. An important article was published in the Washington Post years ago. It was entitled, The Shocking Number of Americans Who Can’t Afford a $400 Expense. The article highlighted a bar chart breaking down various ethnic groups by income bracket. Surprisingly, roughly 20% of people making six figures or more couldn’t afford a $400 expense. That doesn’t make sense. I’ll leave you with a question. How do you, the reader, explain such a phenomenon?

Closing Thoughts

“You want to reach a point where you should enjoy watching your investments grow. Saving for the sake of saving is just suffering after a while.” I’m closing this piece with my financial team’s profound words. They are similar to Dave Ramsey’s famous slogan, “We’re going to live like no one else so that we later can live like no one else!”

I think this is a valuable message for multiple groups. For the financially responsible persons out there, know that at some point you should be able to enjoy yourself a little bit more, but again, don’t forget what got you to where you are, as you can easily slide back to where you came from. For those looking suspiciously at people who are frugal and not reckless with their finances, think about whether those people are building and trying to go somewhere in particular. Also, look at yourselves. Are you financing your lifestyle using credit cards and revolving balances? Also, will you have money for your later years?

I wanted to make these latter points and highlight those from my acquaintance Jenny’s scathing choice words for a specific reason. I have a hunch that others like her judged me over the years over my careful spending and lack of consumption. To dig myself out of a massive debt hole, I went without a car starting in 2012 up through the beginning of the Covid-19 pandemic. In addition to being encouraged to be hyper-consumers, many people don’t have a long-term perspective or the ability to ask where a person is going and what they are building toward. All that matters is the here and now. Thank you for reading this. Please leave any comments or thoughts below.

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A key focus of my blog is Financial Literacy/Money. There are several aspects to money. There is basic money management and then there is the world of investing. There are a lot of things to consider when entering this realm. The following contributed post is entitled, 5 Diversified Investments For Beginners.

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Image Credit: AbsolutVision from Pixabay.

Finding a way to increase how much money you make is something everyone’s thought of, but finding something that fits is difficult. You mightn’t be able to get a raise or promotion at work, and it could be impossible to work more hours. You mightn’t even have the time for a proper side hustle.

You’re not out of options, however. Investing can be a great option. It doesn’t take much upfront cost, and you wouldn’t need to spend hours on it every day. You could still be nervous, as it can seem like a risky and stressful experience.

With the right investments for beginners, it doesn’t have to be too large of a problem. Focusing on certain investments and knowing what you’re doing could be enough to make you a decent side income.

Five diversified investments could be worth starting out with.

What To Consider As A New Investor

Before diving into the best investments for beginners, it’s worth knowing what to consider before you start investing. You’ll need to know as much as possible so you can actually do it right, and so you can make a profit. Some of the more notable factors to consider as a new investor include:

● Financial Goals – By knowing your financial goals, such as how much of a return on investment you want, you can much better define which investments will help you get there.
● Risk Tolerance – Every investment comes with some degree of risk, but not all of them are the same. Some will be much riskier than others. By knowing your risk level, you can rule out anything that’s too risky for you.
● Taxes – Investments always affect your taxes, but they can do so in different ways. Make sure you’re informed about this before investing in anything.

Once you’ve considered these, you shouldn’t have a problem figuring out the right investments for you. Five options stand out with this, and are more than worth considering.

Investments For Beginners: 5 Diversified Options

1. IRA

An individual retirement account (IRA) is quite popular, as it lets you save up to $6,000 a year. If you’re over 50, that jumps to $7,000. There are two types of IRA to choose from, both of which can be appealing. These are:

● A traditional IRA, which lets you put pre-tax funds into your account, which are then taxed when you withdraw them.
● A roth IRA, where your money grows tax-free, and you wouldn’t have to pay any taxes on them.

The main difference between these two is the tax. While there’ll be different mechanics and processes at play with both, you’ll only really notice how it’ll affect your tax status.

2. Cryptocurrency

Cryptocurrency is seen as one of the more volatile investments for beginners, but it can lead to a great profit if you know what you’re doing. Knowing the top crypto coins is one of the more notable of these areas, but you should also focus on choosing the right digital wallets, platforms, and similar areas.

With a bit of research and effort, however, it can reap dividends. It’s better off starting small with this before building your way up as you feel more and more comfortable. Since you can invest in crypto from your phone, there shouldn’t be a problem looking after this quickly and easily.

3. Health Savings Account

Health savings accounts (HSAs) can be a much more appropriate investment than you’d think. It not only puts money aside for any health emergencies that come up, but it boasts quite a few tax benefits. You can add money to the HSA pre-tax, and any growth in the account is tax-free.

Any eligible funds you spend from this can also be tax-free. You’ll have to be eligible for a HSA before you can open one, with there being three main criteria:

Having a high deductible health care plan without any other coverage
You’re not someone else’s dependent
You’re not a Medicare recipient

If you meet each of these, it’s well worth considering opening a HSA.

4. Emergency Fund

Not all investments are stocks, bonds, and similar accounts. Sometimes, it’s worth investing in yourself in case something comes up. An emergency fund is one of the more notable ways you can do this. While nobody expects something to come up, they can be an unfortunate part of life.

These will almost always come with a wealth of surprise costs, many of which you mightn’t be able to afford. It can be more than enough to throw your finances out of whack. There are many of these you might want to be prepared for, including:

● Health emergencies
● Car breakdown
● Losing your job

By having an emergency fund, you can make sure you’re prepared for these. Starting small and putting a certain amount away for emergencies every month could be enough to get this done.

5. Brokerage Account

When many people think of investing in stocks and bonds, they picture taking part in the stock market. As natural as that is, you don’t need to be as hands-on as you could expect. With a brokerage account, you can make it much easier. These are accounts with your bank, which then buys and sells investments on your behalf.

You don’t even need to do this through your bank, as there are more than a few online platforms that let you do this. While you’ll have to pay a fee for this, it’ll usually come in the form of a commission. It’ll be tied to how much profit or trading volume takes part. That gives brokers an incentive to do well with your account.

Investments For Beginners: Wrapping Up

With the right investments for beginners, you could be making more of a consistent return than you’d think. Knowing what to consider before investing and focusing on the right areas before doing anything is all you’d need to minimize the risk and increase your ROI.

You wouldn’t even need to consider risky stocks when you’re doing this. A health savings account, emergency fund, brokerage account, and similar options can all be great options for this. While they could take some time for you to see a profit, they should be relatively risk-free investments.

Tag: Investments

The Joy of Watching Your Investments Grow