Before a bank lends you cash, your banker will want to know that you're trustworthy with the money. One of the ways the banker will feel comfortable lending you that much money is if you have clean professional financial records, in the form of a financial statement. Also, repetition is how we learn, and by repeatedly going over your monthly records, not only do you establish a good habit, you gain more insights into your spending patterns, you make corrections earlier, and you ultimately take control over your financial life.
The poor and middle class invest in mutual funds and the rich in hedge funds. Mutual funds tend to be far riskier, simply because they only do well when markets go up. Atleast with some hedge funds, you can make money in an up market as well as in a down market. The rule of 72 is another measure of money's velocity. This rule measures the interest or annual percentage growth of something. For example, if you recieve 10% interest on your savings, your money will double in 7.2 years. If your stock is appreciating in value by 5%, that means it will take 14.4 years to double your money. If it appreciates by 20% per year, then it'll take 3.6 years to double in value. The Rule of 72 is simply dividing the number 72 by the interest or the percentage of gain in value to give the relative speed your money will double. When buying property, it should be a good investment in a good and bad economy i.e. your profit is made when you buy, not when you sell.
In conclusion, your brain is still your most underused asset. The point is, if you want to retire rich and young, and you don't have much money, education, or experience, begin using your brain. In reality, it doesn't take money to become rich; all it takes is mental and emotional power. Always remember that your future is determined by what you do today, not tomorrow.
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