Anything that causes money to flow out of your pocket is a liability. Even people—your family for example, can be liabilities.

You love your family, yes, but if you are a provider, taking care of your loved ones is not cheap.

Two-legged liabilities are much more expensive than buying a big TV, or a brand-new car. Two-legged liabilities are arguably the #1 way for most people to burn their cash reserves. And the only way to offset all of this financial loss is by having plenty of insurance + investments.

Your family, should be investing. Your kids, should be investing. Yes, Everyone should be investing! Because if they’re not, you’ll soon find yourself rekt.

When a situation is within your control, take action. When a situation is outside your control, make preparations.

James Clear

Make preparations

Lets face it—there are things coming which you cannot control.

• Your health, will deteriorate.
• Your parents, will die.
• Your kids, will grow up.

This is not me just being negative or making pessimistic comments. This is reality. Now you can either bury your head in the sand and act like this won’t happen, or you can prepare for these inevitable outcomes.

Don’t find yourself in a situation where you say, “I wish I had bought more insurance/investments.” Get that stuff ready.

Teach your family members to buy and hold assets, so they can be self-sufficient. Make sure mom and dad have sufficient life insurance, and (if they let you) health insurance too. Always have auto insurance, and renters insurance too if you need it.

Being single is not a curse

If you have no boyfriend/no girlfriend, no spouse and no kids, then you have NO REASON to not have money. You are 100% in control of your money, minus taxes. That gives you no legitimate excuses for having debt.

Now I’m not saying don’t have kids, or don’t date/marry. What I’m saying is that this money trap exists and you should prepare for it. Your loved ones can do a pretty good job of keeping you broke. So it’s wise to always have some cash set aside in case of emergencies. Have cash, and have investments that are always growing.

But what if you are single and just barely getting by? In that case, what you lack is either 1) sufficient financial literacy, 2) self-control/discipline or 3) a financial plan.

Here are some things to remember:

1. Saving money won’t make you rich
2. Inflation steals your wealth, so invest
3. Buy assets, not liabilities
4. Never spend more than you make
5. Pay yourself first, always
6. Compound interest works wonders

So yes, people can be liabilities, but people should never be assets. This means don’t be a user—using other people to pay for your debts. That’s shameful. And embarrassing.

Follow a process, not the money

It’s much easier to set financial goals and stick to them if you have no other family obligations. And that’s not an excuse, its the truth.

It’s also easier to grow wealth if you are focused on the process rather than counting every dollar you make. For example, would you rather have $2000 dollars worth of Amazon stock, or 2000 shares of Amazon stock? (approximate worth over $4 million dollars). Focusing solely upon the value of your assets will be a needless distraction for you. Focus on the fundamentals.

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Disclaimer: This article was written for educational and entertainment purposes only. This is NOT financial advice. Always do your own research and please consult with a licensed attorney before making any serious investment. We are not responsible for any investment decisions that you choose to make.

Knowledge is power. And the world today (including financial markets) is constructed in such a way that those with greater intelligence generally have a greater advantage (than those without the knowledge or education) to succeed. The more you learn, the better you can position yourself in life due to your increased awareness.

World-renowned physicist Albert Einstein also knew this. He knew that you need more knowledge before you can get more money. And one of the most profound aspects of money is compound interest.

Einstein once said,

Compound interest is the the eighth wonder of the world. He who understands it, earns it; he who doesn’t, pays it.

Unfortunately, most people today don’t understand the power of compound interest.

If you accumulated (saved) money, lets say at a rate of $50/week, after 6 months you would have over $1,000 dollars in your bank account. Now imagine if you both accumulated money and it compounded, meaning a small percentage (relative to the total size) was added each month. Then it would grow much faster.

Let’s consider an example.

Which of the two options would you rather have?

A) $1 million dollars right now, or
B) $0.01 cent that doubles every day, for 30 days

Many people would quickly choose option A and run. But option B is actually a better choice.

After just 30 days, option B = $5,368,709.12 !

Clearly, more money comes to those who are patient.

You might be wondering, How can that be? Well the fact is that things which compound, also grow exponentially. Let’s define this to better understand it.

Definition: ex·po·nen·tial growth (noun).
growth whose rate becomes ever more rapid in proportion to the growing total number or size.

Basically, as you begin to accumulate more and more, the size of your investment will keep growing faster and faster if it has any element that compounds. This behavior is actually a mathematical constant.

A mathematical formula

Math is nature’s way of saying, “this is truth.” And this is the mathematical formula used to express exponential growth.

You can choose to be on either side of the equation. Either someone who’s earning interest yourself, or someone who’s paying interest to others. But the choice is entirely yours, and it all depends upon how you choose to manage your money.

Most people don’t even bother to try to understand any of this, and it’s no surprise why they are always broke.

What banks do

Banks, credit card companies and money lenders are very aware of compound interest, and they use it every day to make millions of dollars. They call it an Annual Percentage Rate (APR) and this rate is basically a small percentage (in interest) that you pay them every month for buying something today, which you intend to pay off in the future.

APR is very small amounts of money, but when compounded over months and years it adds up to a substantial amount. And when you factor in thousands/millions of customers paying those interest payments, it’s enough to make the banker rich. And this is just one item in their bag of tricks.

So what is the point of all this? If you can understand compound interest, you can use it to your advantage. Instead of always paying interest to your credit cards and loans, you can earn it from them if you never carry a balance.

Take advantage of any opportunity you have to gain compound interest. Learn as much as you can about annual percentage yields, capital gains and dividends. Because if you don’t increase your financial intelligence, someone else who knows more about money will find a way to transfer it from your hand to theirs.

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Disclaimer: This article was written for educational and entertainment purposes only. This is NOT financial advice. Always do your own research and please consult with a licensed attorney before making any serious investment. We are not responsible for any investment decisions that you choose to make.

There are many types of investors. Stock investors, real estate investors, crypto investors, and the list goes on. But in this article we will discuss a particular type of stock investor: the kind who focuses on dividends.

Lets say for example, you decide to purchase some shares of the Nike stock. When Michael Jordan releases a new pair of shoes, the sales from the shoe takes off. Nike makes profit from the sale. They turn around and re-invest the profit into the business. Then they pay a portion of the profit as a dividend to shareholders (you).

The more shares of a stock you buy, the more dividends you will earn. Not all stocks pay dividends, but some pay dividends yearly, others quarterly, and others monthly.

A dividend is a payment made by a corporation to its shareholders, usually as a distribution of profits.

Wikipedia

Reaching financial independence

Financial independence is when your assets (investments) are large enough that they yield returns (dividends) to cover all of your expenses. Many investors view the point of earning $1000 in dividends each month as the first step towards financial independence.

Lets do some math, to figure out what it would take to get there with a relatively small stock. So lets take for example, Office Depot (ODP).

As of writing this blog, ODP costed about $3 per share. It returns a dividend payout of about $0.10 cents. So $1000 ÷ $0.10 = 10,000. And $3 x 10,000 = $30,000. So you will need 10,000 shares (approx $30,000) of ODP in order to see a dividend return of $1000 quarterly.*

You might be wondering why you should even care. What’s the advantage here? Here are a few things to consider.

1) Cash flow

If you gain enough cash flow from dividends you could reach financial independence. What this means is no more trading hours for a paycheck. You’ll have your money working for you, to generate more money.

On dividend.com there is a long list of dividend stocks that will pay you every month. You can use these stocks to start to generate cash flow. If you invest in enough of these kinds of stocks, you can earn dividends almost every day.

2) Lower taxes

There is a Much lower tax liability. Your federal income taxes for those dividends is MUCH lower than your taxes from earned (job) income.

Dividends are taxed at 20%, 15%, or 0% rate, depending on your tax bracket. This means that the amount of taxes you pay on dividends will depend upon your earned income, and this of course may vary.

If you never purchased stocks or earned dividends before, don’t worry. It’s better to start at the bottom than not at all. And its also getting much easier to do so with apps like Robinhood and M1 Finance.

* (ODP pays quarterly, but many dividends pay monthly)

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Disclaimer: This article was written for educational and entertainment purposes only. This is NOT financial advice. Always do your own research and please consult with a licensed attorney before making any serious investment. We are not responsible for any investment decisions that you choose to make.