We often forget that in our financial journey that it is important first to define the destination and outline the path designed to help take us there. Along the way, there will be bumps, but clearly outlined goals at the end can help us track the steps that we need to take now. There has been a lot of talk recently about new ideas and strategies when it comes to finance and investing, but good advice still lies in the wisdom of old. Here are three old adages to keep fresh in your mind:
1) “Buy low, and sell high.” People are wired to avoid losing, and the pain of loss is often felt stronger than the joy of a gain. If you were looking at something that was $10 and it drops to $5 but is still fundamentally sound, you can get twice what you wanted. Similarly, if you reach a particular point or goal, pushing for a little extra on the top adds a layer of risk and uncertainty. Markets go up and down, but if you establish clear objectives, you can limit regrets.
2) “A penny saved is a penny earned.” Regardless of the success in investments, if you do not save for the future, the chances of success diminish rapidly. Especially when you are younger but even as the years pass, contribute to employee 401(k) plans and IRAs and limit lavish, wasteful spending. These forced savings may add up to large amounts over time.
3) “A fool and his money are soon parted.” Don’t think that smart people never make bad choices when you read that proverb. Regardless of how financially savvy we are, we should always try to get as much information as possible. Money and finance are important, so take the time to educate yourself before rushing into any impulsive decisions. Sometimes, seeking out unbiased counsel can help you avoid some irreparable consequences.
Did you know? According to Bankrate.com, a $1,000 charge on an average credit card will take almost 22 years to pay, and will cost more than $2,300 in interest ($3,300 total) — if only 2 percent minimum payments are made.