Personal Finance

Learn how to make and manage money.

As you start making money or thinking about debt starting with student loans it is important to manage your money. You will learn how to manage both money coming in and going out.

Exponential Growth

Exponents and exponential growth is one of the most important concepts you will learn about in your life. It could transform your life!

There are different ways you will likely (we are going to look at things you can immediately do) have money come in now or the near future:

Job or Develop your own business

  • Besides a job as a teacher I have had my own businesses (catering and technology) since I was 17 years old. Having worked for others and myself I suggest you find work in something you are passionate about whether it is as an owner or working for someone else. Then get very good and continually educate yourself. As a middle schooler, you may not have many options about job choices and that is okay. The more experiences you gain the more valuable you will become. Find something that suits you.

Investments. Before you look at investments you need to understand some basic economic principles that you can learn better by studying Personal Finance by Khan Academy . We will study Financial Assets in Khan Academy's AP Economics.

Now, lets look at some of the different types of investments more closely below


Cash

I started saving money as a middle schooler by putting my cash in the bank. If I were starting over again I would not make the same mistake.

Stocks.

The best investment for any young person is the stock market because of the exponential growth possibilities. It gives you the opportunity to buy and sell investments (usually stocks, which are shares of ownership in a public company). An easy way to become a business owner

Bonds

Most people invest in bonds for safety and a predictable income stream. Bonds are a good investment provided we are not in inflationary times We are currently in inflationary times. Does that mean you should not buy bonds? No. Consider bonds that adjust for inflation.

Real Estate

I flipped the first of many houses 6 months after I graduated from college. When paying the mortgage on my house I would pay down the house earlier by paying more money to principal to reduce the interest I paid the mortgage company. Play with the amortization spreadsheet to discover how much money can be saved by putting more money to principal.


There are so many people who give advice about investing. Much of the advice is bad. and I have made many financial mistakes. I am sharing information about people who have influenced and guided my investing decisions. Their focus is on value investing based off investment principles

Diversified Portfolio.Ray Dalio

Ray Dalio is the founder of the world's biggest hedge fund firm, Bridgewater Associates, which manages about $154 billion mid 2022. He make decisions using principles which are established around clear goals. Diversification into different investment buckets is a key part of his strategy


  • Michael Burry. Contrarian investor whose advice should be heeded.

  • Sven Carlin. Practical advice geared around philosophies espoused by Buffet, Dalio and others.


Value Investing.Warren Buffet

Warren Buffet is one of the most successful investors of all time. His focus is value investing. Which means his goal is to buy a good business at values that allow him to maximize his profit

Other investors like Buffet but with investment philosophies geared to generate greater profits.

Commodities

Commodities are basic goods and materials that are widely used and can be bought and sold. They are grouped in three major categories: agriculture, energy and metals. Commodities are primarily traded using "futures contracts," where a seller agrees to deliver a commodity to a buyer at a set time and price in the future in exchange for a premium. The two major U.S. futures exchanges are found in the Chicago Mercantile Exchange (CME) Group and the Intercontinental Exchange (ICE).

Commodities are more difficult to understand than stocks and have other risks which is why fewer investors trade them. I buy commodities for two reasons: as a hedge against inflation and to diversify my portfolio of investments. I trade a combination of commodity contracts focused on both agriculture and metal and ETF's focused on clean energy such as ICLN .

Options

A stock option gives an investor the right, but not the obligation, to buy or sell a stock at an agreed-upon price and date. There are two types of options: puts, which is a bet that a stock will fall, or calls, which is a bet that a stock will rise.

There are many different ways to apply puts and calls. I am only going to address those that I use.