Ideas on Personal Finance
Everyone talks about investing in the next Amazon or Google. However, identifying innovative products and companies is surprisingly difficult. Alexander Bell, inventor of the telephone, tried to sell his invention to Western Union – a big telegraph company. Western Union was not interested and stated, “This telephone has too many shortcomings to be seriously considered … Read more
People prepare for the future based on their past experience. Armies learn from the last war and use that knowledge to plan for the next war. However, by the time the next war comes along, things have inevitably changed. So the strategies from the last war do not work. The most famous example is the … Read more
It may seem strange that the government and federal reserve want to purposefully cause a recession. During a recession, the economy shrinks, companies lay off workers, and things get miserable all around. So why then would they want to start a recession? In a previous article, I talked about what was causing inflation last year. … Read more
The ups and downs of the stock market affect all of us. Even if you don’t buy or sell stocks, you still own stocks through your retirement accounts (like 401K). I had written earlier about why one should not panic during a market downturn. However, as the market continues to go down further, it isn’t … Read more
A house is the biggest purchase people make in their lifetime. From a financial perspective, a house is a terrible investment (one should instead rent). But there are non-financial reasons that make buying a home worthwhile. Why buying a house is the worst investment? If you list out all the criteria you would want from … Read more
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When I started investing, I made the common beginner’s mistake – I started by buying and selling stocks. Over the years, I have learned that buying stocks / mutual funds / real estate / etc., should be the last step in investing. Below, I have highlighted three steps to take before investing. Hopefully, it will … Read more
The last few months have been painful for investors. Some of my stocks are down 50% or more! I know the stock market goes up over the long term. But, in times like these, it is tempting to just sell everything. Two things help me overcome this temptation and allow me to stay invested. 1. … Read more
I used to think that Warren Buffett is one of the world’s wealthiest people because he is a great investor. Well, he is a great investor. But there is something else that has made him super-rich. Look at the graph below that shows his net worth by age: Buffett did not become a billionaire until … Read more
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Nowadays, it is impossible to visit any online finance forum without reading how someone lost 40% in Bitcoin, 60% on an NFT, 80% in a SPAC, etc. I am not sure why people take such risks with their hard-earned money. When someone wants a root canal procedure, they go to a dentist. But when it … Read more
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“My Gamestop shares are down 50%! What should I do?” I was recently asked this question at a pizza party. I gave the only answer a consultant ever gives, “It depends.” “Depends on what?!” the host asked. “On whether you bought Gamestop as an Investment or for Gambling?” Seeing the quizzical look, I decided to … Read more