I wrote this article for anyone between the ages of five to thirty about saving and investing money. Young people, especially should learn to adopt frugal habits that will become a way of life. Many people do not know enough about maintaining a financially rewarding lifestyle based on frugality – saving and investing more money than you spend, rather than spending more money than you earn, over a long period of time.
However, you don’t have to be a certified financial adviser to save and invest your own money. I was fortunate enough to have parents who were my greatest role models in dealing with financial matters; they taught me by example and teaching me unforgettable lessons about money that have served me well my entire life.
Mom and Dad were born before the Great Depression of 1930. It hit the U.S. economy which brought almost complete financial ruin to our country. Although my folks were just children at the time, they knew that money was scarce. Most people lost everything during this time. So, saving and using what they already had become a way of life.
At that time, my mother’s father was the vice president of Caldwell Securities Inc., one of the largest financial corporations in the American South which managed money for a thousand clients. He taught my curious young mother much of what he knew about money management and advice that was just as valuable then as it is today. In 1957 he passed away. That same year my mother met my father- a patent attorney who was starting his own law office. Like Mom, he had also been schooled by his parents to live a thrifty way of life.
When I was young, my parents didn’t spoil me. We were neither poor nor rich, but we lived like paupers. My dad taught me the concept of thrifty spending. Forty years ago, when I was eight years old, my allowance was a whole 10 cents per week. When I turned twelve, I was getting 25 cents per week, which I guess led me to respect the value of a dollar, and probably kept me honest.
They only bought what we needed. Most of what we owned were hand-me-down items. The largest asset they shared was my mother’s parents’ old home, which included all of its antique furniture and appliances. We didn’t have a tv set until I was old enough to watch. They rarely used air conditioning, unless the temperature inside was either extremely hot or cold. I got my first car as a high school graduation gift. Of course, it was a used vehicle.
My parents didn’t read much for pleasure, nor did they watch much tv. My father and mother read the “Wall Street Journal”, “Forbes”, and “Consumer’s Digest.” We watched “Wall Street Week” every Friday night. Mom usually took notes as they listened to the host, Louis Rukeyser and his panel of financial experts. This show introduced me to learning about all types of investments. The show reviewed how well or bad the financial markets performed during the week and what the outlook might look like for those markets next week and in the long run.
Dad carefully bought stocks from large, well-known companies and followed several families of company stocks: the Dow Jones, Nasdaq, and S & P 500. Mom taught me about all of the other financial vehicles: money markets, mutual funds, stocks and CDs (Certificates of Deposit).
In 1991 my father passed away, leaving my mom to keep a family trust fund he and she owned. My mother was left to financially maintain the cost of the trust. She used what she learned from her own investment research and understanding of what her father taught her. She always left the tv on CNBC on a daily basis to vigilantly watch as the stock market rose or fell.
Mom died in 2004. She left me well prepared to invest carefully and logically for myself. Ever since, I have followed in my parents’ financial footsteps for me and my own family. I was blessed to have parents who cared enough about using money properly and teaching me the value of a dollar.
While ‘bitcoin’ is a very commonly heard term, there are few who really know what it is. While it is a trading system, it is the most different from others for two major reasons. For one, it involves a form of digital currency that can be transferred easily. What makes it more unique, however, is the fact that it does not involve any banks or other official financial institutions. It is merely a peer-to-peer system that is independent and unaccountable. Following are some of the most important recent bitcoin news and highlights:
Anonymity – If you want to carry out simple transactions without using your personal identity and bank account details, bitcoins make it possible. All transactions that are carried out are anonymous, unless you choose otherwise, and cannot be tracked back to you. For every transaction, there is an address created that is unique and will never be repeated.
Receiver’s privileges – Unlike most other forms of trading, bitcoins are irreversible and you cannot cancel a payment once you have sent it. If you must reverse the transaction, you will need the receiver’s consent. Also, the transactions take about 10 minutes to complete, unlike other financial transactions that are processed almost immediately.
Purchasing luxury items – One of the major reasons bitcoins became popular was the fact that they are ideal for purchasing foreign luxury items. These are the ones that are heavily taxed by the governments of these countries, and the final cost becomes very high. Since bitcoins do not involve any governmental institution, there are zero taxes that you have to pay. This, along with the already minimal transaction cost, makes it ideal to use them to purchase items from foreign countries.
Mobile wallet – Among the most popular bitcoin news was the fact that there was a mobile version introduced in addition to a computer version. This means that you can install an application on your smartphone, and manage your bitcoins through it. It also makes it easier to exchange your coins for dollars at any time you like.
Limited acceptance – Despite the growing use of bitcoins, you must check whether or not they are accepted at the store you want to use them at. There are still several places that do not accept them as a valid, usable form of currency. However, this is expected to change soon, with digital currency readily becoming more popular.
The passive management industry has done an incredible job of projecting their mantra into the investing zeitgeist, and each year we are subjected to claims like “74% of active managers underperformed their index.” Like all good cons, this is not an untrue statement. It is however, an excellent use of misdirection – making implications about passive strategies that are untrue.
“If that many active managers underperform, I guess I’ll just go passive.” This is the inference that the passive industry seeks from the world, and sadly one that the uncritical investor has fallen prey to. The following is not a rejection of passive strategies, but a few thoughts on how to more accurately consider the active vs. passive debate.
Let’s start with an obvious point. It may be the case that 74% of active managers underperform their index in a given year, but what is left unsaid is that if all passive managers are doing their best to follow their investment policy, 100% of them will underperform! Why? Investment strategy returns can be reduced to a reasonably simple equation:
Strategy Return = Market Exposure + Alpha – Fees
So if your alpha is 0% (all passive strategies), and your fees are > $0 (all businesses), then your returns are lower than what pure market exposure would produce. 100% of passive strategies should underperform their indices. 74% isn’t great, but it’s better than 100%.
Passive managers are well aware that active managers’ returns are a product of their market exposure (Beta), and their skill (Alpha). The fact that the passive industry continues with the ruse of comparing all active managers to a non-risk-adjusted performance figure is deplorable, because it confuses most investors.
Most active managers run less risky portfolios than their index or benchmark. Asset management is risk management, and prudent risk reduction should not be penalized. When sophisticated investors compare managers, they compare risk-adjusted returns. The only way we should be determining an active manager’s value is by measuring alpha generation.
ZERO SUM GAME
Alpha does not exist in nature. If alpha is created in one manager’s portfolio, it necessarily means that another manager has generated negative alpha. Picking the manager that can generate long-term alpha isn’t a trivial exercise, but it is certainly worth the effort considering the impact that the power of compounding over decades has. Even if there is no alpha on average, there are many managers who generate it.
You wouldn’t stop watching the NFL and say, “Another terrible year, on average the league was just.500, again.”
So when is an active manager worthy? Don’t compare returns to an index, compare alpha to expenses. If an active manager generates more alpha than they charge in fees, they are worthwhile. In fact, it is a little easier than that, because the next best alternative to a good manager, indexing, has some costs. So a manager is worthwhile in practice as long as their alpha, less their expenses, is greater than the -10bps associated with passive management fees.
Are you willing to invest in a more long-term and reliable organic traffic source for your website? Then let’s look at a search engine that can assist you in increasing your traffic.
Interview an Influencer or Get Interviewed by a High-traffic Website
Have you heard of Tim Ferriss, the author of the Four-Hour Work Week?
His podcast is nowadays a staple content type that he provides to his viewers. Tim’s show has world-class performers who share their insights on a variety of topics, and he is well-liked on social media. Do Tim’s fans enjoy the show? So far, the show has received over 50 million downloads. On most days, it’s the most popular business podcast on iTunes.
Interviews, whether on video or audio, are inherently conversational, lively, and engaging. The great aspect is that it’s a win-win situation for both sides. The interviewer is exposed to a new audience, while the interviewee is able to provide his website visitors with new fascinating and authoritative information. You can ask an industry influencer to share your interview with their followers on social media if you interview them. Consider the organic traffic you’ll get from their social media followers, which number in the hundreds of thousands. Consider the level of interest generated by a prior Derek Sivers interview on the Tim Ferriss Show. Derek shared the show’s URL with his 283K followers on Twitter. It won’t hurt if you establish a relationship with the influencer as a result of the interview.
Similarly, being interviewed by a high-ranking website can result in a significant increase in search engine traffic. Harsh Agrawal’s blog, Shoutmeloud, received 35,000+ views in a single day after he was profiled by YourStory. That was the blog’s most popular search engine traffic source (with 600,000+ monthly visitors). Because interviews provide consolidated value, they can be used as a long-term lead generating source for your company. Consider how many bloggers you’ve learned about through interviews on YouTube and other high-authority websites.
You may also conduct a Reddit AMA if you have a very compelling storey to tell. Mateen’s AMA got about generating $85,000 in profit by selling TeeSpring shirts/hoodies received 2000 page views. He also boosted the number of visitors to his website on a daily basis.
By registering as a source with HARO, you can also answer queries from journalists. On HARO, Christopher from Snappa came across this question from Inc Magazine about the future of content marketing. He swiftly responded with a thorough response. He was mentioned in Inc a few weeks later as a result of this. HARO is an excellent strategy to have your brand mentioned on authoritative news sites such as Entrepreneur and Inc. Those backlinks will enhance your search engine traffic and increase your marketing strategy by improving your reputation in Google’s eyes. Contact an SEO agency to find out how you can do this and how they can manage it for you while you work on the bottom line of your business.