The Complete Guide For How To Focus On Yourself (Part 5)
The basics of budgeting to learning the art of speculating.
This is the fifth part in a seven-part series on how to focus on yourself.
Recommended:
Part 6: Money
One of the most vital things you can learn to manage is your money and finances. However, society does not want to teach people how to manage and grow their money over time. This is especially true in a society based on consumerism, debt, and credit.
According to the Corporate Finance Institute, there are five different financial asset classes. The first financial asset class is stock or equities. The second financial asset class is bonds or other fixed-income investments. The third financial asset class is cash or cash equivalents, such as a money market fund. The fourth economic asset class is tangible assets or real estate. The fifth financial asset class is forex, futures, and other derivatives.
You can work to diversify your portfolio over time to include each of these five types of financial asset classes. While it is vital to understand the five different financial asset classes, you can start by learning the basics of finance and managing your money.
Basic of Finance
There are some basics of financial education, but you can always continue to educate yourself about money and finance. I was only taught the basic things about money, such as budgeting, the bare minimum about saving, and investing. However, there is much to learn about finance connected to understanding the monetary system, economics, and the best places to get a return on investment. Below is an overview of some of the core financial terms you may come across if you are new to finance and investing. It is by no means a complete list.
Budgeting
It is vital to have a budget. A popular budgeting strategy is the 50/30/20 budget. Fifty percent of your income goes towards necessities. Thirty percent of your income is for anything you may want. The final twenty percent you save.
A budget teaches you self-discipline. You learn the basics of money management by following a budget. You can also track where your money is going in your bank accounts. You can budget using the envelop method or with budgeting apps. You Need A Budget (YNAB) is one budgeting app you can use to sync your bank accounts. Once you manage your money, you can work to spend less than you make and put the extra into your savings accounts.
Savings
A savings account is the second checking account you will likely have alongside your checking account. Your savings account is where you can put your money to start accumulating capital in your own life. While savings accounts have low-interest rates, you can put your money there until you decide how to invest it. Your goal should be to spend less than you make, then put the extra into your savings. This is a way to begin building capital that you invest in different areas to continue growing your wealth over your lifetime.
Investing
As you grow your savings account, you can then start to invest. Investing is a broad term for making money, and there are many ways to do it. But it is generally used to invest in the stock market, bonds, and fixed-income investments. You can also invest in tangible assets like real estate, giving you consistent passive income if you have a tenant renting. You can invest in different asset classes. Your risk tolerance and financial goals can help determine what assets to invest in. Generally, the more risk something has, the higher the return on the investment will be.
Speculating
While investing is necessary, you can learn to speculate. You will take more risk speculating than investing, but if you are correct, your reward will be higher than playing it safe by investing in a safe stock. According to Doug Casey of International Man, there are nine secrets for successful speculation.
The first secret is that “contrarianism takes courage.” The second secret is that “success takes discipline.” The third secret is “analysis over emotion.” The fourth secret is to “trust your gut.” The secret step is to “assume bullshytt.” Bullshytt means anything that may be misleading or empty of meaning. The sixth step is to know that “the trend is your friend.” The seventh secret is “only speculate with money you can afford to lose.” The eighth secret is “stack the odds in your favor.” The final secret is “you can’t kiss all the girls,” which means you will always find another speculative opportunity if you miss one. Just as the soulmate theory, or oneitis, is a myth, there will always be another opportunity.
Real Assets
Once you reach a certain point of financial stability, you can start to invest in real assets. These are tangible assets you own, not just digits on a screen. They exist in real life, so you have control over them. Most of these tangible assets have a higher cost of entry, although you can get a physical asset such as silver which is currently undervalued compared to most other assets in a bubble. Tangible assets include commodities, real estate, physical or online business, and products you can sell through a business. Real assets, such as a business or real estate, will generate cash flow, while tangible assets, such as a commodity, will not.
Secure Single’s Algorithm recommends:
Work To Achieve Your Financial Goals
The bottom line is that you must find a way to achieve your financial goals. You are responsible for your situation. It will require you to learn to budget, manage your money, and get more sophisticated in your investment strategies. A financial goal could be buying your own house, investing a certain amount of money each month in the stock market or cryptocurrencies, or saving in precious metals instead of keeping the money you want to save in the bank.
This is the end of the fifth post of a seven-part series on how to focus on yourself. If you want to receive the following posts in your inbox, subscribe to Secure Single’s Substack.