[cardinalfire]

I've recently been reading a lot about different aspects of finance, including savings, investments, interest rates etc. I also want to learn more about stocks and shares, how they work and how to make money from them.

Out of curiosity, what do the members of PerC feel are some good financial decisions to make? Or what do you recommend or would you avoid? I guess this is mainly for older members with a bit of experience on their side.

I heard a good one is to start saving for a pension before the age of twenty five, which seems sensible in today's world.

 

[Jojo]

If at all possible avoid credit cards. I say avoid lease cars and right now used cars you can find deals. I say avoid the market. Invest in tangibles things you can see. The best thing you can do is budget and don't stray.

 

[cardinalfire]

btw love your avatar! Potato head = Legend.

 

[GiGi]

Always save for the future, but the BIGGEST thing to do financially is to learn to live within your means and stay that way as you earn more money. Later, you will need to learn to live on a lot less then your means so that retirement will not be such a shock financially.

 

[Agile]

Always save for the future, but the BIGGEST thing to do financially is to learn to live within your means and stay that way as you earn more money. Later, you will need to learn to live on a lot less then your means so that retirement will not be such a shock financially.

The key is to save in what form. Even when you save cash in the old savings account (ie US dollars), you are making a bet that the US dollar will not significantly decrease in value. These are interesting times that are bringing these savings into question. I think it's wise to have a small percentage of savings in hard assets like gold, silver, agriculture, and minerals as a protection of wealth.

 

[GiGi]

The key is to save in what form. Even when you save cash in the old savings account (ie US dollars), you are making a bet that the US dollar will not significantly decrease in value. These are interesting times that are bringing these savings into question. I think it's wise to have a small percentage of savings in hard assets like gold, silver, agriculture, and minerals as a protection of wealth.

Great question. I really can't say that I'm the smartest source of information on this or I would have a bigger nest egg. I think it is wise to spread the savings out. The hard assets that you noted are great, but even the gold market has gone bust in the past. From what I understand well off people tend to buy items that retain their value well over the years. Certain paintings, jewelry, antiques, etc.

Like I said, I'm not the person to give advise for diversifying your savings.

 

[reyesaaronringo]

i would say opening a roth ira. let the power of compounding interest work for you.

 

[cardinalfire]

i would say opening a roth ira. let the power of compounding interest work for you.

What is a roth ira? Bear in mind i'm a UK citizen, so if this is a product offered state side, I won't know what you are talking about.

I am aware of what compound interest is, and I do look around for high interest rates here.

 

[Jojo]

The one thing that is also hit and miss is cheap or foreclosed land. Land will be valuable always. Timing makes the difference.

 

[Filigeedreamer]

The one thing that is also hit and miss is cheap or foreclosed land. Land will be valuable always. Timing makes the difference.

I was going to say exactly the same thing...people will always need land, and there is a limited amount, with a population which is expanding and living longer, land will roughly hold it's value for the foreseeable future, though in all markets there a peaks and troughs.

While only in my early 20's myself, I'd also avoide seeing my home as a finacial asset or investment.

I'd also say investment wise, you probably need to be in things for the long term, not short.

I also intend to have my savings both invested in tangible comodities, and spread between several different banks. Then if anything goes wrong with one, I would not lose everything.

Always have an emergency fund for unexpected expenses, and start a pension or saving plan as early as possible.

Avoide too much debt, do not take on just what you can afford to repay now, but what you should be able to repay if things went wrong. Work at paying off debt and not living on credit.

These are my personal aims and advise as a young adult, just starting out in life.

 

[viva]

I think a really important thing is developing good credit. When you're in your early 20s, it's likely you're going to be paying off student loans, probably attempting to get your own place or car for the first time, etc. and you will have a very difficult time doing that if you have no credit history.

 

[Black Rabbit]

Learning to follow the stock market wouldn't be a bad idea. I'm starting to learn how to read stock charts and it's been paying off nicely so far. Of course, trading stocks is a riskier investment decision. But remember, the greater the risk, the greater potential return. Typically it's better to take riskier investment decisions early in life rather than when you're approaching retirement age.

 

[Agile]

I personally like to sell puts with stocks that I am interested in. If the price dips to below the strike price, then whatever.... I can buy a stock that I believe in for the cheaper price. If the price stays or continues to rise than you just keep collecting the put premiums and using those returns to sell more puts and this snowballs.

However, ALWAYS, ALWAYS, ALWAYS be aware of your reserves and margin requirements. When trading on margin, always make sure to be conservative and never be in a position to get a margin call or overextend your reserves with too many bets. High frequency trading algorithms leaves the market incredibly susceptible to volatile price swings.

 

[cardinalfire]

I personally like to sell puts with stocks that I am interested in. If the price dips to below the strike price, then whatever.... I can buy a stock that I believe in for the cheaper price. If the price stays or continues to rise than you just keep collecting the put premiums and using those returns to sell more puts and this snowballs.

However, ALWAYS, ALWAYS, ALWAYS be aware of your reserves and margin requirements. When trading on margin, always make sure to be conservative and never be in a position to get a margin call or overextend your reserves with too many bets. High frequency trading algorithms leaves the market incredibly susceptible to volatile price swings.

what do you mean 'puts', were you meant to say stock? lol.

 

[RedFairy]

If it's at all within your grasp, buy property!

 

[perennialurker]

Here is by far the BEST financial decision you can possibly make before 25: Get a degree that will help you to be gainfully employed.These days one of the biggest problems facing people our age is unemployment. Saving is much easier if you have a source of income.

 

[perennialurker]

what do you mean 'puts', were you meant to say stock? lol.

Also if you have to ask, I wouldn't recommend attempting Bass' suggestion. Too many people who don't know what they're doing try options and margin and always end up getting burnt. A basic retirement savings plan would probably be best.

 

[Agile]

I wouldn't recommend it either unless you know what you are doing. I've had family members lose everything because they they didn't realize the risks they were taking. The key component is understanding what value is - whether a stock is overvalued or undervalued. This took a lot of education and knowing how to read a balance sheet, and having a contrarian view.

On that note: here is some info on put options. The opposite is a Call option. Again, to reiterate I don't recommend it unless you know what you are doing. However I think its important to know what these instruments are and how they work.

Put option - Wikipedia, the free encyclopedia
Call option - Wikipedia, the free encyclopedia

 

[Diphenhydramine]

Never ever, ever, under any circumstances ever, never ever ever get an overdraft.

 

[calmgreen]

-Spend less than you earn.
-Pay off any debts (except don't pay off student loan at more than minimum repayments), then start your private/company pension.
-When you have your non-student loan debts paid off, save/invest at least 10% of your earnings.
-Don't get a mortgage. Rent. Buy property only if you can buy outright. In other words, never borrow money unless the repayment is interest fee.
-As for what to save/invest in, it depends how much of a risk taker you are.
-Give a little of your time and/or money.
-Make sure you develop a valuable skill/ service to offer