Category Archives: Investing Articles

Not all Mexican food is created equal and neither are investors. Before you pull the trigger on investing your hard earned cash, you need to know what type of person you are. We’re not talking about what gender you identify with as you can figure this out on your own in the shower. You may, however, need help to figure out what kind of investor you are.

Figuring out what kind of investor you are will not only help you decide the best route to take to reach your goal but it will also make your days a lot more peaceful and stress free. Trust me there will come a day when it gets pretty ugly in the economy and you need to make sure you can handle those nasty days.

I usually break down the types of investors into 3 General categories:

  1. Aggressive Investor

    This type of investor can handle more risk to get a high reward. They live by the motto “Go big or go home”. Needless to say they know what they’re doing and they can afford to take higher risks. So what does high risk mean? Does it mean take all your cash and head to Vegas?! Oh no boss! It just means that their portfolio would have more equity than debt. In other words, stocks would make up a higher percentage of their portfolio than bonds, or they may not have any bonds at all.

  2. Conservative investor

    You guessed it right. They are the opposite of an aggressive investor and their portfolio tends to have more bonds than stocks. When they buy stocks they like to stick with the ETFs and also buy into more stable and solid sectors in the market.

  3. On the Edge investor

    Those are the people who are smart enough to know that keeping their money in a savings account would hurt them in the long run because of inflation but they are also afraid to lose their money in the market. There’s nothing wrong with being the wannabe investor because it’s your money and only you should care. Those investors usually lean towards putting their money into CDs, Money Market funds, long term Bonds and if they want to go a little wild they start looking into rental properties as real estate usually appreciates over a long period of time.

What kind of investor should you be?

The only person who can answer that is you as you know yourself best and you’re also the only person who is fully aware of your financial situation. But here are some questions you can ask yourself.

Am I going to be able to sleep at night regardless of what happens in the market?
If you answer No then there’s no need for more questions as you are an on the edge investor. If you answer yes, then you’re either an aggressive or conservative investor.

There are a few ways to get wealthy: be part of the Mexican cartel, sponsor a Ponzi scheme or start investing your money as early as you can so that your money can work for you even when you are sitting on the toilet. Since I don’t speak much Spanish then I don’t think I can help with how to be part of the Mexican cartel. I also don’t think I can brain wash you to fall into a Ponzi scheme since you are smart enough to be friends with FinanceRite but I sure can help you find out how to get wealthy by making your money work for you.

First of all let’s define wealthy because most people think of being wealthy as having as much money as Walter White in Breaking Bad or maybe you think of being wealthy as having a lifestyle like Leonardo DeCaprio Wolf of Wall Street. I don’t really blame you my friend for thinking this way; it’s the Hollywood effect baby. Who wouldn’t like to have barrels of money or spend time sniffing powder from a woman’s booty? But let me introduce you to how we define wealthy. When you save “X” amount of money on a regular basis and invest it on a regular basis, you my friend are now getting wealthier every single day as your money is working for you to make you more money.

Investing could be complicated if you want it to be or it can be very easy if you follow simple steps.

Here are 3 lazy ways to get wealthy:

  • Compound interest — Compound interest is interest calculated on the initial principal and also on the accumulated interest of previous periods of a deposit. Or in different words interest on interest.
  • Example: Imagine saving and investing $100 from every paycheck (twice a month) for the next 30 years on an annual return of 7% on your investment (which is below the average return of the S&P 500). After 30 years you would have an average of $250,000 from only saving and investing $100 from your bi-weekly paycheck.

  • Automatic Saving Apps — those apps offer you a pain free way to save and invest without you even noticing it. Apps like Digit and Acrons will help you save and invest money that you probably wouldn’t notice got taken from your account.
  • Don’t Forget about the Cash Back — Cash back credit cards are in everyone’s wallet nowadays because of the free cash they offer for simply using the card for your daily transactions. Over time those cash back will accumulate and over many years when you simply forget about the cash back you will realize that you are sitting on thousands of dollars.
  • Earn More — Earning more doesn’t necessarily means yelling at your boss and ask for a raise because that’s how you lose the job not earn more. There many ways now that you can earn more cash on the side Driving with Uber, renting an extra room in your house on Airbnb doesn’t require any NASA expertise, in other words there are many applications that can put extra money in your pocket every month.
The Bottom Line:

Getting wealthy isn’t usually and easy thing and it usually require a lot of effort, patience and expertise but stile there are few things that doesn’t require much and can make you more wealthy than you are now.

Okay so you are finally coming to terms with the fact putting your hard earned cash in a savings account will not make you wealthy or help you retire comfortably. Regardless of your age you know that investing is the way to make your money work for you. It’s like Shark Tank investor Kevin O’Leary says, “My money are like my soldiers, I send them to war so they can capture more money”. In other words, his money works for him not the other way around. Like anything you are new to, investing takes preparation. Before jumping in, you need to make sure to establish a good foundation. You need a good financial foundation before you even consider investing.

Here are our top 5 things anyone, regardless of age, income or investing knowledge needs to do before jumping in the ring with the Market.

Pay off your Credit Card Debt

The top notch hedge fund managers make an average of 15-20% return on their money and that is when they are having a pretty good year. If you carry a balance on your Credit Cards then you are paying an average of 15-20% in interest and fees. So let’s say you pulled the trigger on some investment products and you were lucky enough to get 7-10% return on your investment but on the other side you also paid 15-20% in interest to the bank. The bottom line is that a return on your investment is not guaranteed however; paying interest on the balance you are carrying is something you cannot avoid.

Emergency Funds

Our economy is unpredictable and can end up in the toilet in the blink of an eye. It’s also important to remember that the economy usually takes your job down with it. For these reasons most people know how important it is to stash 6 to 9 months of living expenses aside in case of job loss. Doing this would also definitely help many of us sleep better at night knowing that no matter what happens tomorrow, you and your family will still be able to buy 3 different kinds of cereal not just the cheap one!!

With all that being said you can’t invest without establishing at least 6 to 9 months of living expenses on the side.

Get “Free Money” From Your Employer

This is a no brainer. If your employer matches some or all of your contributions into a retirement account and you are not taking advantage of this free money, then you are leaving money on the table. C’mon we both know your employer doesn’t pay you enough already, so please take advantage of his free money.

Know What You Are Getting Yourself Into

The investing world is by all means a beast, sometimes an ugly one. You could say it’s the beast from the Beauty and the Beast movie. He is ugly and scary but once you get to know him, he can be rewarding and kind. Before cuddling with this beast, consider learning as much as you can by doing your homework. Know your options and what suites your plan and risk tolerance. You can check our Investing 101 for details.

Know Your Risk Tolerance

How much risk a person can tolerate can differ greatly. To find out your risk tolerance you should consider many factors such as your income and expenses and whether you are single or married with a family. The main elephant in the room is your age.

For example, if you are 5 years away from retirement you might think twice before being an aggressive investor. If you are in your 20s then it doesn’t make any sense to put all of your money in bonds and CDs.

If you will not be able to sleep at night when the market takes a hit then you should consider a very conservative portfolio.