That’s why I’m bothered by the fact that it seems like most Americans spend more time selecting a new appliance for their home than planning for their retirement and selecting investments. No matter how many times I’ve heard the story, it astounds me that the same men and women who will protest if a retail clerk accidentally overcharges them $20 will throw $100,000 of their life savings at a scheme promising 40% or more annual compounding without understanding the risks (for rates that high, you can be virtually assured there is either a high amount of leverage at work or it’s outright fraud – the long-term historical rate of return on stocks in the United States is 11%. At that rate, your money increases 283.94% every decade.) The cause? I suspect that it’s a result of the fact that the average person knows what they are looking for in a refrigerator – energy efficiency, storage capacity, ice settings, and price range – whereas a 10K is a nothing more than a confusing pile of hundreds of pages filled with esoteric rantings about the proper rate of depreciation for fixed assets or revenue recognition rules.
There’s great news: It doesn’t have to be this hard! I’ve rounded up some of the best resources that we’ve featured on the site over the years. Click them, print them, and understand them. With an investment of only a few hours a month, you can literally start walking in the direction of your dream life. All it takes is discipline, time, capital, and knowledge.
Build a Complete Portfolio
The first step is to stop by our 10-part step-by-step article that explains how you can systematically get your financial life in order. Here, you'll learn about developing an emergency reserve, contributing to your retirement accounts, opening an IRA, paying off your credit card debt, and much more.
7 Rules of Wealth Building
Want to know the seven secrets that can help build your net worth while making your life more enjoyable? These helpful hints can make a big difference in the quality of your life.
Control Your Expenses!
No matter what else you do right, excessive costs can cost you massive amounts of lost wealth! Learn how to fight against rising execution and trading expenses, and using deferred taxes to your advantage by holding on to positions longer.
If You Don't Know Anything About Investing ... Asset Allocation is Your Friend
Don't have a clue how to invest and don't really care to learn? Asset allocation might be the right choice for you. By parking predetermined percentages of your money into different categories such as a mid-cap value stocks, real estate investment trusts, bonds, and international investments, you can essentially buy a basket of cash generating assets that over time should be relatively non-correlated and provide good returns.
Know a Few Basic Financial Ratios
For the new investor, there is nothing - and I mean nothing - that can help you gain your footing faster than knowing a few key financial ratios. They aren't very hard to understand and they are perhaps most useful for helping you know when something is out of the ordinary - a high price to earnings ratio, or debt to equity ratio, for example.
