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Showing posts from January, 2021

How to pick your investing strategy based on risk and returns

How you should invest depends on your situation in life. If you are young and don't need the money in the next 30 years you should be investing differently compared to if you are saving for a house down payment in 2 years or if you are planning to retire soon. The two most important factors to consider are the risk and the return. Another thing to consider is the liquidity of the investment, but let's assume in this post that we are only investing in liquid assets (ones that are easy to sell). Ideally, everyone would like the highest return with no risk. However, the risk free investments typically have very small yields and will give you poor returns. See an example of Irish bonds , the rates are terrible, but the risk is very small if the inflation is low. The rates on the savings accounts are similarly poor. There is one exception to that, which is paying off debt. Some people say "why should I pay off my debt, while I can make xx% in the stock market". Paying off

What is net worth and how to track it?

I started tracking my net worth at the end of 2018 and since then I updated it about 28 times. It has been very useful to me and in this post I would like to encourage to start doing it too. What is net worth? Net worth can be defined as your assets minus liabilities. Here are some examples of assets: cash stocks house expensive items, e.g. a car, a horse, a boat debts other people have to you And now some examples of liabilities: car loan student debt mortgage Net worth shows your overall financial picture and the changes in the net worth show you if you are on the right track. For example you could see that you accumulating wealth or getting deeper in debt. Why track it? If you start measuring something regularly, you will  instinctively try to make that number go up. You might end up thinking twice before blowing money on an impulsive purchase or tweaking your budgets so you can save and invest more. And since to track your net worth you need to log into all of your