Accumulating Wealth and The Big Picture

Accumulating Wealth and The Big Picture

The thing I find fascinating is when people rush into things financially, without thinking of the big picture. The big picture is something I always think about. I always ask myself questions before making decisions, do I have enough money? Will I ever have enough? When will I need it by? Will I ever be able to afford this or that? How will I even accumulate the cash?

When people my age tell me about the next cool materialistic thing they have, it amazes me. The materialistic world has brainwashed a generation (my generation especially) into thinking that having those things defines success, and that you need to have them in order to be respected. I beg to differ. To me, wealth is more than having money, it is having family, friends, girlfriend or wife, kids, and of course having a sufficient amount of funds to take care off all of that. The way I think about it is the big picture, as I stated above. When people first get married, early 20s, fresh out of college, hardly even having a stable job or accumulated any money, how do you support yourself? Then before you know it you are having kids, buying a house, and obviously going to need a car. All these debts you will have, where will the money come from? This is why people head into some serious debt, living paycheck to paycheck. Rushing into things is never a good sign, especially things that can put you in a hole with the credit companies. 

In my opinion, this is why people struggle to get on their feet and never be able to fully live their life. Living paycheck to paycheck can be a struggle, never being able to save money and always having to pay people back. Take it one step at a time. When you first get out of college, or even high school for that matter, start saving money no matter what percentage of your paycheck it is. Pay yourself first philosophy is the one code I live by. Set up a few different types of accounts, Roth IRA, Joint WROS or  Individual, IRA, 401(K) with the company you work with, and always try to max out your retirement funds. I will go more in depth on different types of bank accounts on another post. Live below your means, meaning, if you know you can't afford it don't bother wasting your time and money on it. Example, instead of buying a nice luxury car like a Lexus, Infiniti, Acura, right out of college, buy a Honda Civic, Nissan, or Mazda. Don't let materialistic items and your ego get in the way of not being able to be financially stable. Insurance and leasing price (unless you buy full) on a Honda will be much cheaper than a luxury car, once again, live below your means until your wealth has accumulated. Another example, the average price to raise a kid is around $200,000 the last time I checked, so unless you know you can 100 percent afford to raise a kid during your early 20s. Until you can fully sustain yourself, you should not be worrying about raising a child of your own.

Restrain yourself from buying unnecessary items, instead of spending your first bonus paycheck on a boat, vacation, or car, invest it into a long-term mutual fund or stock pick and diversify a portfolio if you have not started investing already, and do not forget to max out your tax-exempt accounts as much as possible too. This way your bonus money can grow and produce more money without even touching it. Investing is a powerful tool when used with caution, intelligence, and research. Living paycheck to paycheck can also put a burden on emotional stress, always having to worry about how you're going to pay the next cell phone bill, mortgage payment, car payment, or any bill in general. This is why I want to urge people to live below their means and I will keep repeating myself until it is embedded into your brains.

My next post will focus on how to read a company summary on Yahoo! Finance, and understand the key terms labeled on it.

Remember, live below your means, and do not let your ego and materialistic items flood your thinking for a better life. Do not be a big hat, no cattle type of person!

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Chris Barto

Basic Stock Market Tips

Basic Stock Market Tips

I do not want sound bias about anything I say, most of it is just my opinion and what has worked for me. Everything that has worked for me may not work for everyone else, but it is always worth a shot, or taking what I say and breaking it down into your own thing and take advantage of it in a way that will function for the best.

I will go over five basic market tips, especially for beginners, that I find useful.

1. The classic "don't put all your eggs in one basket". Pretty easy to interpret, don't put all your hard earned cash into one investment. Example, if you have $10,000 and you decide to put all of it into the energy sector or an energy stock, you probably would have been losing a ton of money the past few months.You need diversification in your portfolio in order to build, and secure a sustainable flow of income. Now, an example of a little diversification would be spending that $10,000 and splitting it between the energy sector with $2000, technology sector $2000, consumer goods sector $3000, and if you're interested in real estate you put $3000 into a REIT or Real Estate Investment Trust. 

2. Do not base off a hot tip you get from a friend. "hey man buy ABC stock tomorrow morning they are suppose to crush earnings". Makes sense? When a stock beats its earnings it usually increases in price, in some cases it may not. So you decide to buy ABC in the morning, but you bought it after the earnings and then the price starts to drop because the volume starts to decrease. Unfortunate isn't it. There are many more reasons why you should never base a stock pick from a hot tip you received from a friend. Do your own thorough research, understand what you are putting your money into, check out how the sector is doing, do fundamental and technical analysis before coming to conclusions (will go more in depth on those in future posts). Always go with your gut and invest in what you understand. Never invest in what you don't understand.

3. Set long-term goals for yourself. We all want to achieve success, in order to achieve this I believe you must set goals for yourself, not just for your own self-prosperity, but goals so that you enjoy your life and live it to the fullest without any regrets. Financially, long-term goals should be surrounding your retirement, future kids college education, saving for a house, saving enough capital so you do not have to worry about how you will come up with the money when the time comes around, especially for emergencies. Retirement calculators exist, and you can use them to gauge how much you want to save and how much you will have by and certain year. Bankrate.com has a retirement calculator. 

4. Do not let your emotions get in the way. I mean, I may have only been investing for about two and a half years, but I have seen plenty of people let emotions get in the way of buying and selling investments. To say the least, it is erroneous. You invest in ABC stock, and all of a sudden the stock dips 10%, you just lost 10% of your initial investment being whatever you put in. You owned the stock for a week. When investing in stocks in my opinion, you should be in it for the long-run, someone might get scared and have fear about the stock just because it dropped 10%. Here is a tip to help get your fear out of the way, buy the stock and do not look at it everyday. Do not look at your investing account everyday, every minute, diminutive gains mean nothing. You make more money holding investments for years at a time, accumulating dividends and having them reinvest back into your investment to buy more shares. Have confidence, I mean, you would not have invested in the company if you didn't have faith in them in the first place, right? Simple as that, a small dip should not impact your decision. I know that I have purchase stocks before and they have gone down more than 10%, but in the long-run the return was much greater, it rebounded back and shot up to over a 12% return. Fear will not create money, but confidence will. Be confident about every penny you put into an investment. I guarantee in the long-run, you will have no regrets. 

5. Always sit on cash. My number five rule, and my favorite rule, I think you should always sit on cash, how much? That is up to you to decide, but personally at such a young age, I prefer to put about 50% to almost 60% of my paychecks into a Roth IRA, Individual account, or Joint WROS account with my bank and invest it in equity so it grows. As I get older I am going to have to pay more and more bills, so save as much as possible while you're young so you have more to work with in the future. Back to sitting on cash. Sitting on cash is always a good thing, I read in an article one time on how "cash is king". I would have to agree with this, once you have the cash, you can do anything you want with it. Most investors tend to hold approximately 10 percent of the total portfolio in cash, this information I read from a few articles on Yahoo! Finance. That is ideal. Always be ready for the next investment opportunity, you do not want to liquidate your other investments just to invest in something else. As possible as that is, I personally would not do it. I would always try to find new ways to come up with cash for my next venture, and as I get older, I hope my ventures increase in size. 

Terminology (10)

Ten definitions that I think are a good starting point. 

1. Diversification: allocating capital in a way that will reduce exposure to any one asset or risk, reducing risk or volatility. 

2. Fundamental Analysis: examination of forces that affect the economy, industry groups, and companies, derive a forecast and profit from future price movements. 

3. Technical Analysis: forecasting the direction of prices through studying the past market data, mainly price and volume.

4. Volume: number of shares or contracts traded in a security or market during a given period of time, amount of shares that trade hands from sellers to buyers.

5. Bull Market: when the stock market as a whole is in a prolonged period of increasing stock prices.

6. Bear Market: when the stock market is being in a down trend, or period of falling stock prices.

7. Dividend: portion of a company's earnings that is paid to shareholders (people who own stock in the company) on a quarterly or annual basis, not every companies give dividends.

8. Portfolio: collection of investments owned by an investor. anywhere from one to infinite amount of stocks.

9. Volatility: price movements of a stock or market as a whole. 

10. Sector: a group of stocks that are in the same business.

Stocks to Research 

Here are five stock picks that you could research and comment below whether you think it would be a good investment or not, some may be good, some may not be good. Keep in mind what I think is good you may think is bad, vice versa! Remember, think about the long-term!

1. Starbucks (SBUX)

2. Cogent Communications (CCOI)

3. IPG Photonics (IPGP)

4. Salesforce (CRM)

5. ResMed (RMD)

Take a look at them, comment your opinions, and I hope you enjoyed todays post. The next post will be about how to accumulate wealth, and not living paycheck to paycheck. 

Invest at your own risk.

Chris Barto

What I Will Talk About + Rich and Wealthy?

What Will I Talk About?

What am I going to talk about on an investing blog? Mainly just my two cents. I could talk about my opinion on the stock market, whether it is a bull or bear, I could mention what I think of stock picks, I could give simple financial advice that I find helpful and pass it on for free. I could mention some personal opinions on random stuff. I may post weekly, daily, probably not monthly because I want to create a following and be able to help financial desires and daily living standards, without making readers wait a month.

What does it mean to be self-sustained financially? Well, in my opinion, it means to be able to support yourself, on your own, without help and accrue enough capital to be well off and take care of yourself. It pesters me when I hear people say they do not care about money, I'm sure you don't. 

Now, we all know money cannot buy happiness, but it sure can help you live a better life. It is the sad truth, a piece of paper determines whether we live or not, better yet, a piece of paper determines how you live. That is how the world works. 

Difference Between Rich and Wealthy

Being rich is having every materialistic item in the world, from cars to technology to clothes and jewelry, and bloating about it on social media and spending money freely without worries. Honestly, it is the mindset of the person that differs the rich from the wealthy. Lets take this comparison for example, Justin Bieber, with a net worth of around 200 million USD. That is a lot, right? The Biebs may have a ton of money, but following him on social media and seeing what he does with it, you wonder when he will run out. The mindset of the rich is by far different. I am sure egos get in the way of things too, having to have the nicest car, best restaurants, slickest clothing. All I'm saying is the mindset is not frugal, like a wealthy person. "Big hat, no cattle" 

The person I am going to compare Bieber to is Warren Buffet, one of my personal favorite investors and one of the greatest investors in my opinion. The mindset of the wealthy is frugality, they don't throw hundred dollar bills at the local strip club, or throw bands out and expect a 30 year old semi-attracitve exotic dancer to dance. To be wealthy, I think it is more of a frugal mindset, a mindset that puts your money out there to make more money. By that I mean investing. In my few years of experience and talking to people, along with reading books, I feel as if the wealthy are more humble than you think. Warren Buffet is worth about 67.7 billion USD. That number is hard to come by, for the average joe. 

An example of what I feel like a wealthy person would do is pay off a mortgage before they buy a nice exotic car, or buy a boat. As for the rich, they might get a huge paycheck and blow it on both, then what do they do when they get unemployed? Bankruptcy is an embarrassing thing. Another example could be, when receiving a large paycheck, the wealthy may take most of it and invest it in equity, to make more money off their earned money. I'm not saying the rich wouldn't do that, but I don't hear about Biebers investment portfolio doing anything lately and having great returns. 


I apologize if there are typing errors or mistakes in the first blog. Hope you enjoyed the short read. These are opinions and unless stated facts, do not get too salty over what I think. My next post will be on some basic stock market tips/terminology, and a few stocks to do some research of your own on. I do not plan on telling anyone what to buy, just what I come across and see in my research. 

Chris Barto