Quotes About Finance

In 80 percent or more of cases, people have three goals in common: first, a financial and career goal; second, a family or personal relationship goal; and third, a health or a fitness goal. And this is as it should be. These are the three most important areas of life. If you give yourself a grade on a scale of one to ten in each of these three areas, you can immediately identify where you are doing well in life and where you need some improvement.

With the miracle of compounding, an investment of $100 per month

your investments have to produce a rate of return equal to inflation.

has become increasingly clear to me that one's capacity for risk-bearing depends importantly upon one's age and ability to earn income from noninvestment sources. It

In fact, the most profitable investments you will ever make are precisely at the times when pessimism is the most rampant.

Investment advisory services, earnings forecasts, and chart patterns are useless.

Tax-Exempt Money-Market Funds

the public realized that an excess of paper currency creates no real wealth, only inflation.

In addition, your psychological makeup will influence the degree of risk you should assume. One investment adviser suggests that you consider what kind of Monopoly player you once were (or still are). Were you a plunger? Did you construct hotels on Boardwalk and Park Place? True, the other players seldom landed on your property, but

when they did, you could win the whole game in one fell swoop. Or did you prefer the steadier but moderate income from the orange monopoly of St. James Place, Tennessee Avenue, and New York Avenue? The answers to these questions may give you some insight into your psychological makeup with respect to investing.

These very sad stories make all too clear the cardinal rule of investing: Broad diversification is essential.

Protect yourself: Every investor should always diversify.

Lynch calculated each potential stock's P/E-to-growth ratio (or PEG ratio) and would buy for his portfolio only those stocks with high growth relative to their P/Es. This was not simply a low P/E strategy, because a stock with a 50 percent growth rate and a P/E of 25 (PEG ratio of ½) was deemed far better than a stock with 20 percent growth and a P/E of 20 (PEG ratio of

One asset class that belongs in most portfolios is bonds. Bonds are basically IOUs issued by corporations and government units. (The government units might be foreign, state and local, or government-sponsored enterprises such as the Federal National Mortgage Association, popularly known as Fannie Mae.) And just as you should diversify by holding a broadly diversified stock fund, so should you hold a broadly diversified bond fund.

You should diversify over time. Don't make all your investments at a single time. If

The stock market as a whole has delivered an average rate of return of about 9½ percent over long periods of time. But that return only measures what a buy-and-hold investor would earn by putting money in at the start of the period and keeping her money invested through thick and thin. In

Only those who will be sellers of equities in the near future should be happy at seeing stocks rise. Prospective purchasers should much prefer sinking prices.

Another lesson that cries out for attention is that investors should be very wary of purchasing today's hot "new issue." Most initial public offerings underperform the stock market as a whole. And if you buy the new issue after it begins trading, usually at a higher price, you are even more certain to lose.

Rebalancing will not always increase returns. But it will always reduce the riskiness of the portfolio and it will always ensure that your actual allocation stays consistent with the right allocation for your needs and temperament.

In David Copperfield, Charles Dickens's character Wilkins Micawber pronounced a now-famous law: Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

You, far more than the market or the economy, are the most important factor in your long-term investment success.

Avoiding serious trouble, particularly troubles that come from incurring unnecessary risks, is one of the great secrets to investment success. Investors all too often beat themselves by making serious—and completely unnecessary—investment mistakes. In

There are few, if any, absolute rules in saving and investing, but here's ours: Never, never, never take on credit card debt. This rule comes as close as any to being an inviolable commandment. Scott

It is the nature of an average that some investors will beat it.