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Copyright 2019 Teaching Kids to Buy Stocks

The information on this website is for information and education only and is NOT advice.

Investing 101

Before you invest your money, there are things you need to understand. For one, money invested is money at risk of being lost forever, or at the very least, being lost temporarily. 

For this reason, you need to make sure your financial house is in order first. If you are investing because you need to make a quick buck to get you out of a bad financial situation - DON"T DO IT. That's now how it works. That's how you get yourself into a WORSE financial situation.

If you are new to investing, or you are teaching your kids about financial literacy and investing, hooray for you! You are taking the right steps to change your life, as long as you take the steps in the right order.

Even if you know what you are doing, there are things you should to do to prepare yourself before you start buying stocks or investing.

 

First, you need to have a plan for what you are trying to accomplish, and you need to take care of some basic financial fundamentals.

Think about your financial goals for your life and seek to develop a comprehensive financial plan to guide you to them. A financial plan is your road map for how you want to accomplish your financial goals in the most efficient manner possible, taking into consideration your personal life story.

FINANCIAL PLANNING

Think about your financial goals for your life and seek to develop a comprehensive financial plan to guide you to them. A financial plan is your road map for how you want to accomplish your financial goals in the most efficient manner possible, taking into consideration your personal life story.

The profession of Financial Planning exists to help you to build that plan. A financial planner can help you decide when and if you should incorporate stocks into that plan. When you start to seek professional financial advice, it gets confusing quickly. You will see many different titles, financial planner, financial advisor and more. The differences are not well defined. Generally speaking, a financial planner helps you build a road map or financial plan to help you meet your long-term goals. A financial advisor is someone who helps you with any number of investment types, and may or may not consider how that investment fits into your overall situation.

The professional designation for financial planners is the CFP® for Certified Financial Planner®, although not all financial planners have this designation. To use the CFP® designation, an individual must pass an additional educational and testing requirement, as well as maintain 30 hours per year of continuing education.

TO LEARN MORE ABOUT THE BASIC COMPONENTS OF A FINANCIAL PLAN,

READ OUR BLOG POST LINKED BELOW:

 

FINANCIAL PLANNING: THE THING YOU DO BEFORE YOU BUY STOCKS

Before you start buying stocks, you need to develop a comprehensive financial plan, which includes an investment plan among other things.

Learn more about financial planning in this BLOG POST.

COMPOUND INTEREST

NERD WORD ALERT

Compound Interest:  Earning interest on interest, over time.

“Compound Interest is The Most Powerful Force in The Universe.”

This famous quote from Albert Einstein speaks to the significance of compound interest as a financial concept. Those are strong words from someone who most people consider a credible source on math-type stuff.

Compound Interest is one of the most important financial concepts to understand. Once you understand what compound interest means, it can change your perspective on money and investing.

What is Compound Interest?

Interest: Money paid or received as compensation for depositing or loaning money.

Compound Interest: Earning interest on both your initial investment, but also your previously earned interest, over time. If an investment is left alone and continues to “compound” – it will earn a little more each year.

We have a blog post dedicated to compound interest here: Compound Interest: Taking Einstein for Granted.

You can also check out our Compound Interest Page for more, including a COMPOUND INTEREST CALCULATOR, an example, and links to download a spreadsheet with examples built in for you to use.

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