In the previous two articles, I discussed concepts related to financial education, including saving and budgeting. In this article, I will delve into the fundamentals of investing: paying yourself first, finding your financial independence number (FIN), liquidity, return, diversification, and the effect of inflation. These are a few general concepts to explore.
Paying yourself first involves prioritizing by setting aside a portion of your income before addressing other expenses. By treating savings and investments as a non-negotiable expense, you build financial security and ensure consistent progress toward your financial goals.
Knowing your Financial Independence Number (FIN) is essential for planning your retirement. This number, calculated using our advanced software, represents the amount of savings and investments you need to generate enough monthly income to cover your living expenses after retirement. It marks the point where your investment returns, dividends, or interest are sufficient to sustain your lifestyle without needing additional income. Understanding your FIN helps you set and consistently work toward your financial goals.
Liquidity refers to how quickly and easily an asset can be converted into cash without significantly affecting its value. High liquidity means an asset can be sold rapidly, like stocks, while low liquidity assets, like real estate, take longer to sell.
Diversification involves spreading your investments across various asset classes, such as stocks, bonds, and real estate, to mitigate risk. By not putting all your money into a single investment, you reduce the impact of any asset’s poor performance on your overall portfolio, thereby enhancing stability and potentially improving returns and risk tolerance.
I encourage you to request a copy of Primerica’s free “The Real How Money Works” publication and schedule a complimentary Financial Needs Assessment (FNA). This assessment will provide your FIN. If you’re ready to get serious about your family’s future and getting started, schedule an appointment through the link below.
By Mahalia Boyd,
UniteNews Contributing Writer
Request your FREE copy: https://therealhowmoneyworks.com/us/mahaliaboyd
Schedule an appointment: livemore.net/mahaliaboyd
Follow me on Instagram: @mahaliaboyd
