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Tag: Personal Finance

  • Start investing early even on limited income

    In this post, I want to convince people in their early 20s to start investing, even if they have a limited income. I will highlight the power of compounding, the accessibility of small investments, and long-term wealth growth backed by historical data to support my argument.

    1. The Power of Compounding


    If a 22-year-old invests just $100/month into an index fund with an average annual return of 8%, they’ll have over $383,000 by age 62.
    In contrast, if they start investing at 32 and contribute the same amount, they’ll only have $174,000 by age 62.
    Takeaway: Starting 10 years earlier results in $209,000 more, even with the same contributions.

    So, as we saw compounding works better with time, the earlier they start, the longer their money grows exponentially. Also, it doesn’t matter how little you start with, even a small amount invested early often beats larger amounts invested later.

    2. Investing Doesn’t Require Huge Income

    A common belief people have is that they need to earn 100k or more to start investing. This is far from being true. Many brokerage apps like Robinhood, Fidelity, or Vanguard allow people to invest with as little as $1. ETFs like Vanguard’s VOO (S&P 500 tracker) have no minimum investment if purchased fractionally.

    One of the ways to do that is by reallocating small expenses like $5 daily coffee runs:

    • $5/day × 30 days = $150/month.
    • Investing this monthly could grow to $575,000 in 40 years (assuming an 8% annual return).
      So, as we saw, even tiny sacrifices can snowball into a significant nest egg.

    3. Opportunity Cost of Waiting

    The economist in me has to bring this up – opportunity cost, which means the best use sacrificed. Do you know that if you wait 10 years to invest, you would have to contribute 3x more monthly to catch up?

    When you Invest at 22, $100/month for 40 years, you get $383,000.

    However, if you wait and start investing at 32, $300/month for 30 years, you will only get $379,000

    Skipping investing early means people can lose the “free growth” from compounding during their 20s.

    4. Risk Appetite in Their 20s

    Another big reason to start early is that most young investors can afford to take risks because they have decades to recover from market downturns. This is the best time to invest in higher-growth assets like stocks, as opposed to bonds or savings accounts, which pay less returns.

    Historically, the S&P 500 has returned 10% annually on average. Even with the short-term volatility, long-term investors consistently benefit as seen from the upward slope of the S&P 500 index from its inception till date. If you look at any 8-year window picking any two data points, it has always gone up.

    In the following section I will give you a step-by-step breakdown of how to start investing in your early 20s:

    Step 1: Open an Investment Account

    First, you need a platform to start investing. The two most beginner-friendly options are:

    1. Roth IRA: A retirement account with tax-free growth and withdrawals (best if you qualify based on income).
    2. Brokerage Account: A general investment account without restrictions on withdrawals.
    • How to do it:
      1. Research platforms like Vanguard, Fidelity, or apps like Robinhood or M1 Finance.
      2. Sign up online, which would take 10-15 minutes.
      3. Link your bank account to transfer money.
    • Pro Tip: Choose platforms with no account minimums and low fees.

    Step 2: Start Small (Even $10 a Week)

    Small, consistent contributions add up over time due to compounding. You don’t need a lot of money to begin.

    • How to do it:
      1. Determine an amount you can comfortably set aside. For Example, you can start with $10/week or $50/month.
      2. Use the platform’s fractional investing option to buy partial shares of ETFs or index funds (like Vanguard’s VOO or SPY).
    • Pro Tip: Here is a real-life example, if you spend $10 weekly on streaming services, consider cutting back slightly to reallocate this toward investing.

    Step 3: Invest in Low-Cost Index Funds or ETFs

    These funds spread your money across many companies, lowering risk and giving reliable long-term growth.

    • How to do it:
      1. Search for funds like S&P 500 ETFs (e.g., VOO, SPY) or Total Stock Market Index Funds (e.g., VTI).
      2. Click “Buy” on your app and input the amount you want to invest (e.g., $10).
      3. Confirm your purchase.
    • Pro Tip: Look for funds with low expense ratios (fees below 0.1% are good options).

    Step 4: Automate Your Investments

    Automation ensures consistency, making investing a habit without needing effort.

    • How to do it:
      1. Set up recurring deposits from your bank to your investment account (e.g., $50/month).
      2. Enable auto-invest for specific funds to keep investing the same amount regularly.
    • Example: You won’t even notice $10 disappearing each week, but your portfolio will grow quietly over time. Dollar-cost averaging is an investing technique, where you invest a fixed amount every week or month without worrying about market movements.

    Step 5: Track Progress & Stay Consistent

    Seeing growth (even small) will motivate you to stick with investing. But remember, it is investing and is done for the long term. Don’t let the short-term market fluctuations affect you emotionally.

    • How to do it:
      1. Check your account monthly or quarterly—not daily! Markets fluctuate over the short term and some months or years you will see a dip in your investments. But if you have invested in a diversified group of companies, significant growth starts happening after 5 years of investing consistently. The longer the better.
      2. Increase contributions as your income grows. For example, you can gradually contribute more. Go from $50/month to $100/month when you get a raise.

    Final Note:

    If you follow these steps:

    • Investing $10 a week with an 8% annual return can grow to $87,000 in 30 years.
    • But gradually increasing your contributions will multiply this amount significantly.

    The key is starting now—every year you wait, you lose out on making compound interest work in your maximum favor. Time in the market makes a big difference!

  • How to build an emergency fund, even if you’re on a tight budget?

    I know saving money can feel impossible when you’re living paycheck to paycheck, but trust me, it’s doable. I will show you how to save money fast, even if you’re working with a low income.  So read till the end!

    First things first—why do you need an emergency fund? Life is unpredictable. Whether it’s a sudden car repair or a medical bill, having some money set aside can save you from stress and debt. An emergency fund is your financial safety net.

    You don’t need to save thousands overnight. Start small! Even $5 a week adds up. The key is consistency. Make it a habit to put aside whatever you can, whenever you can. It’s the small steps that lead to big changes.”

    Set a realistic goal based on your income. For many, $500 is a good starting point. Eventually, aim for 3-6 months’ worth of living expenses. But don’t overwhelm yourself—focus on reaching that first milestone. Set small, achievable savings goals. Instead of trying to save a huge amount all at once, aim for something like $10 a week. It might not sound like much, but over a year, that’s over $500 saved! Every little bit adds up, and hitting those small goals keeps you motivated.

    One of the easiest ways to save is to automate it. Set up automatic transfers to a separate savings account every payday. This way, you won’t even miss the money, and your fund will grow on its own. Automating your savings can make it easier to stick to your plan. Set up an automatic transfer from your checking account to your savings account each time you get paid. This way, you’re paying yourself first, and you won’t even miss the money

    Take a close look at your spending: Are there things you can cut out?

    Make a list of your monthly expenses and separate them into ‘Needs’ and ‘Wants.’ Your rent, utilities, and groceries fall into the ‘Needs’ category, while things like dining out or streaming subscriptions go under ‘Wants.’ Focus on covering your needs first and see where you can cut back on the wants.

    Next, track every dollar you spend. You can use a simple notebook or a budgeting app—whatever works best for you. This will help you see where your money is going and identify areas where you can save. For example, you might notice you’re spending $50 a month on coffee—cutting back to making coffee at home could save you a lot!

    Maybe make coffee at home instead of buying it, or pack lunch instead of eating out. Redirect those savings into your emergency fund.

    You don’t have to cut all pleasures from your life, but if you don’t have an emergency fund and are trying to save money for that, it makes sense to give up a few things for some time until you build enough savings to handle at least 3 months of your living expenses.

    Reducing your utility bills is another quick way to save. Simple things like turning off lights when you leave a room, unplugging electronics when they’re not in use, and setting your thermostat a few degrees lower in the winter or higher in the summer can really add up.

    When it comes to groceries, shop smarter. Always make a list before you go, and stick to it. Look for sales, buy in bulk when it makes sense, and try store brands—they’re often just as good as the name brands but cheaper. Also, avoid shopping when you’re hungry—you’ll be less tempted to make impulse buys.”

    Use Bonus to boost your savings

    Did you get a tax refund or a bonus at work? Instead of splurging, put a chunk of it into your emergency fund. Windfalls are a great way to give your savings a boost.

    Make sure your emergency fund is in a separate account—preferably one that’s not too easy to access. This will help you avoid the temptation to dip into it for non-emergencies.

    If you can, find ways to bring in a little extra income. This could be anything from picking up a side gig, selling items you no longer need, or even freelancing. The extra cash can go directly into your savings, helping you reach your goals faster.”

    Lastly, keep yourself accountable. Share your goals with a friend or family member who can check in with you, or use social media to track your progress. Knowing someone else is rooting for you can make a big difference!

    Building an emergency fund takes time, so be patient. Stay committed, and adjust your savings plan as your income changes. Remember, the goal is to be prepared, not perfect.

    Start small, stay consistent, and before you know it, you’ll have a financial cushion that brings you peace of mind. Remember, every dollar counts, and the effort you put in now will pay off in the future.

  • Do you have FOMO when you invest?

    Everyone experiences FOMO, which is the Fear of Missing Out on various aspects of life, but it’s crucial to resist it when making investment decisions. In today’s post, we will learn why I made that statement.

    FOMO stands for “Fear of Missing Out.” It’s when people feel anxious or worried about missing out on something exciting or profitable.

    Imagine you’re on a road trip. You have a map that guides you to your destination. Sure, you might see some cool attractions along the way, but if you keep changing your route every time you see something shiny, you’ll never reach your destination!

    Similarly, in investing, your long-term plan is like your map. It helps you stay on track and reach your financial goals. While it’s tempting to jump into investments just because everyone else is doing it, you need to stick to your plan.

    When we make decisions solely based on FOMO, it can lead to impulsive choices that might not align with our goals. So, remember, while it’s okay to feel FOMO, it’s essential to have strong willpower and stick to your long-term plans.

    You can do that by practicing this phrase called “NO GO to FOMO”.

    “NO GO to FOMO” means saying no to impulsive decisions driven by FOMO.

    Instead of making quick decisions because everyone else is doing it, this phrase reminds investors to think carefully before acting. If your friends are all buying a certain stock because they think it will make them rich quickly. But you’re not sure if it’s a good investment for you, so you don’t blindly follow everyone.

    “NO GO to FOMO” reminds you to take your time, do your research, and only invest when you’re confident that it’s the right choice for you.

    Various investment opportunities like digital assets, meme stocks, and NFTs are gaining popularity because many influencers often promote these. The SEC emphasizes caution against FOMO, reminding investors not to follow others blindly.

    Investors should not base their decisions solely on recommendations from influencers and should resist the temptation to follow trends blindly.         

    Do you react to market swings?

    Reacting to market swings due to FOMO can be harmful to financial stability due to these reasons:

    1. When people react to market swings because of FOMO, they often make decisions without thinking them through. They might buy stock or sell them just because everyone else is doing it and they get afraid of missing out on profits.
    2. But the truth is, reacting impulsively like this can actually hurt your financial stability in the long run. Market swings are normal, and they don’t always reflect the true value of investments. Reacting to them based on FOMO can lead to buying high and selling low, which is the opposite of what you want to do as an investor.
    3. It can also cause you to miss out on real opportunities because you’re too focused on what everyone else is doing.


    Building a diversified investment portfolio can lessen risks that come with market volatility

    Diversification means spreading your investments across different types of assets, like stocks (which are like shares of companies), bonds (which are like loans you give to companies or governments), real estate (which is a property like a house or land), cash in checking and savings account and commodities (like gold, silver, oil, etc).

    Diversification within asset classes and avoiding timing the market are essential strategies to protect your investments. You can diversify within each type of investment too. For example, if you’re investing in stocks, you might choose different companies and industries. This you can easily do by buying ETFs or Index funds.  I have made several posts on that so you can check those out by searching these two terms.

    Also, it’s important not to try to time the market (which means predicting when to buy and sell investments based on what you think the market will do). Instead, focus on the long-term and stay diversified.

    What Should You Fear Missing Out On? **

    The first thing should be not planning for your future and setting Long-Term Goals

    You need to start prioritizing financial planning if you haven’t done already. This means setting long-term goals, like buying a house, saving for your children’s education, or planning for retirement. Having a clear plan helps you stay focused and make smart decisions with your money.

    The second thing is Not Paying Off High-Interest Debt like credit card loans

    Paying off high-interest debt should also be a priority. It’s like getting a guaranteed return on your investment because you’re saving money on those high-interest payments. So, please include paying off credit card debt or other high-interest loans in your financial plan.

    3rd is Not taking advantage of the Power of Compounding

    Start saving early and consistently. The power of compounding means your money grows over time, and the earlier you start, the more you benefit. Even small, regular contributions can add up significantly over the years and I will show you this through this calculator. Where you can see how by just investing $100 every month, you can make a lot of money in the future, if I just change the time horizon, see how exponentially your money can grow, with interest payments becoming the biggest factor of your total returns, as the years pass.

    The fourth mistake or what you should FOMO is Not taking advantage of free money through Employer-Sponsored Retirement Plans

    Don’t miss out on participating in employer-sponsored retirement plans like a 401(k), especially if your employer offers matching contributions. This is like free money and can lead to significant returns over time. This will ensure you have a secure retirement financially.

    So, remember to prioritize financial planning, pay off high-interest debt, start saving early, and take advantage of employer-sponsored retirement plans to ensure a brighter financial future.

    Successful investing requires discipline, patience, and a long-term perspective, not reacting impulsively because of FOMO.

  • The easiest way to earn passive income

    The easiest way to earn some passive income without doing any work is when you move your savings into a high-yield savings account from your traditional savings account at some big banks.

    A high-yield savings account also known as a high-interest savings account gives you a much higher interest rate compared to a traditional bank savings account.

    Because these banks are mostly online, they save on overhead expenses and pass that savings to their customers. Most HYSAs are online, but you can find high-yield options in some regular banks too like Barclays, Marcus by Goldman Sachs, Amex, etc. We will go over these in a moment.

    Why you shouldn’t save at traditional savings accounts?

    Traditional big banks like Bank of America, Chase, Wells Fargo, and Citibank pay AMLOST 0% interest on your savings, which means you lose money by keeping your savings there.

    Their annual percentage yield or APY or interest rate is as low as 0.01%. This rate is so low compared to the inflation rate, that you end up losing money instead of gaining any return by keeping your money in a traditional savings account.

    How is HYSA better?

    So, the best way to have a guaranteed return that can match the inflation rate is to put your money in a high-yield savings account.

    When we get a higher interest rate on our savings, our savings grow faster with time. It’s the ultimate set-it-and-forget-it way to make your money work for you, without any risk.

    Most of these banks are FDIC insured, which means you will have protection by the US government for deposits up to $250, 000. If you save more than that, you should go with more than one bank as the insurance covers up to 250,000 from each bank failure.

    The best part about savings in high-yield accounts is that they are not risky, like stocks or other business-like investments. they are a safe and steady way to watch your money grow.

    Since the rate hikes by the Federal Reserve rate, APYs of high-yield savings accounts have been going on the rise, so this is a great time to put your savings in a high-yield savings account. Even though their rates can change a bit, based on the Fed’s decision about overall interest rates in the economy,  their rates are still much higher compared to traditional savings accounts.

    The options I am going to share have annual percentage yields, or APYs, from 4.3%-5.3%, which is way more than the national average rate of 0.47% at traditional savings accounts and in particular, at large national banks, which give you rates as low as 0.01%

    Currently, rates at the best high-yield accounts earn around 5.5% APY. This information is current as of Jan. 28, 2024.

    Here’s a list of some of the top FDIC-insured High-Yield Savings Accounts (HYSA) for January 2024. The table includes information on fees, APY (Annual Percentage Yield), and minimum balance requirements. Each of these has a user-friendly app and Easy-to-use online and mobile banking features.

    Please note that the specific fees and APY can change, so make sure to check the respective bank’s website for the most accurate and up-to-date information. All this information I compiled is latest as of Jan 28, 2024.

    What to look for when picking a High-Yield Savings Account?

    1. Interest Rate (APY): Aim for the highest APY – it’s the key to growing your savings quickly.
    2. Fees: Choose an account with no monthly fees or extra charges. We want all that money in your pocket!
    3. Minimum Balance: Look for accounts with no minimum balance requirement. Whether your savings are big or small, you start earning interest right away.
    4. Security: Make sure the bank is FDIC-insured to keep your money safe. Check out online reviews for that extra peace of mind.
    5. Perks: Some HYSAs come with cool perks like welcome bonuses or nifty budgeting tools. Keep an eye out for those extra goodies!
    6. Accessibility: Easy-to-use online and mobile banking features are a must. We want you to stay in control without any hassle. I have most of my savings in Ally Bank and I will show you exactly how much difference if I were to keep my savings in a big brick-and-mortar bank like Bank of America or Chase. You can go to their website and see how it compares to leading banks when you deposit money there. So if I have $12000 saved there, after one year I will get $522 at 4.35% interest. The good thing about this is that they have savings buckets. Like digital envelopes, where you keep your cash for whatever you want to do). You can use them to track your progress. Ally Bank has become sort of the gold standard of online banks, and for good reason. It has consistently high-interest rates and is easy to use. Ally also offers checking accounts, money market accounts, and CDs.

    Which bank am I using?

    I have most of my savings in Ally Bank and I will show you exactly how much difference if I were to keep my savings in a big brick-and-mortar bank like Bank of America or Chase. You can go to their website and see how it compares to leading banks when you deposit money there. So if I have $12000 saved there, after one year I will get $522 at 4.35% interest. The good thing about this is that they have savings buckets. Like digital envelopes, where you keep your cash for whatever you want to do). You can use them to track your progress. Ally Bank has become sort of the gold standard of online banks, and for good reason. It has consistently high-interest rates and is easy to use. Ally also offers checking accounts, money market accounts, and CDs.

    So I think I gave you enough options and reasons to convince your mind. So don’t wait any further and grow your money securely and easily, so you can get to your savings goals faster than you thought. Whether you are saving for a vacation, a wedding, a down payment for your house, or buying a car, you will not regret this decision.

  • Get rich with these secrets

    Have you ever wondered how some people become incredibly wealthy?

    Well, in this post, I’m going to share with you some habits that I have adopted that are helping me achieve financial freedom earlier than I thought possible.

    But don’t worry, this won’t be your typical boring financial advice because we’re going to have some fun with my real-life examples.

    Before we get into it, I want to say that it is never too late to adopt these habits to become financially free. Even with a Master’s degree in economics and having worked in financial litigation for many years, I never learned about money management. I got married early and my husband handled our household finances and I never really cared to learn.

    But in recent years, I started learning about personal finance and this field fascinated me so much that I decided to start my YouTube channel around it.

    Secret #1: Live below your means and create an emergency fund

    First off, the most important habit that I have followed for many years is to live below my means. I always try to cut unnecessary expenses and understand the difference between needs and wants.

    After creating an emergency fund account in a high-yield savings account that will easily cover 12 months of my family’s expenditure, I started investing my extra savings in various types of assets. I use Ally Bank, but this is another post where you can see other high-yield savings account options. High-yield savings accounts give more interest rates than traditional banks.

    What I do is I follow something called paying yourself first. So as soon as I get my paycheck, I put 20% of it directly into my savings account or investment account. You can create an automatic transfer so that 20% is already taken out and it doesn’t go into your checking account where you can spend it.

    Secret #2: Start investing as soon as possible

    Once you have created enough savings to cover 6-12 months of expenditure, start focusing on growing your wealth.

    So yes, you need to prioritize investing your money wisely. This is the easiest way to grow your wealth. Because when we leave our money invested for a long term in something like an ETF OR index fund or real estate, it grows many folds as time passes. If you don’t have the money to invest in real estate, you can start with REITs.

    Secret #3: Set clear financial goals and divide them so they are achievable

    Now I want to talk about the power of setting clear financial goals. By knowing exactly what you want to achieve, you can focus your efforts and make smarter decisions.

    I make a habit of setting my goals every year. I create a list of the important things I really want to achieve. To make it manageable, I focus on only 2 or 3 goals every three months. I find that having too many goals at once can be distracting.

    I write down my goals in a place I see every day, like one app that I use is called Asana (it is a productivity app), but you can use whatever tool you like. The key is to take control of your time and find a system that suits you.

    Every morning, I check my Asana tasks and ask myself which ones bring me closer to my goals. I prioritize and tackle those tasks first. It might seem odd, but it’s about planning your time around your goals, not just fitting in time to work on them. After handling daily tasks and chores, I focus on connecting my daily activities to my goals. This helps me turn big goals into small, achievable steps each day.

    So if you have a job and earn x amount of money yearly, you can calculate how long it will take you to achieve financial freedom where you don’t have to work actively and can enjoy your life, and live comfortably off of passive income.

    So if you are still in your 20s, you will probably start by working for a company. Now you have to think about how do you get promoted faster. Will this involve working harder or do you have to learn a new skill to get a promotion fast?

    At the same time, you should start thinking about more ways to earn money. You need to think of ways to build passive income, like investment income and through side hustles or starting your own business. Write these somewhere.

    When you are young and don’t have family or kids, you have more time to devote to your career.

    If you have a particular skill, you can monetize it using YouTube, selling a course online, or using platforms like Etsy to sell digital products. This may take a lot of initial effort but is so worth it

    For most self-made wealthy people, there is more than one source of income AND they monetize the skill they are good at.

    Secret #4: Manage your money wisely

    This is a BIG habit that sets millionaire apart from others, they know how to manage their money wisely. We have to limit unnecessary expenses that we can’t afford yet. So From budgeting to investing, it’s crucial to have a firm grip on your finances. I use an app called Mint which lets me track my expenses in different categories. I know what are the essentials in my life, my needs that I can’t live without, then I have to keep track of how much money I am spending on my different wants and how much I am saving and investing

    When we don’t give priority to budgeting and investing, and keep spending money, we tend to suffer later. When we start saving early and invest our money and make regular contributions to it, because of the power of compounding returns, our initial investment becomes so much more in the future years which we can’t even imagine.

    I wrote another post on this with examples, so that should give you some idea of why it is crucial to save and invest from an early age to achieve that financial freedom and your dream life.

    Secret #5: Surround yourself with like-minded people

    Additionally, what I do is I surround myself with like-minded individuals who inspire and motivate me.

    So, try and network and meet with like-minded individuals to build relationships. You can find these groups online. Sometimes, we meet people who can help us achieve our dreams fast.

    Secret #6: Work hard

    Next, I want to talk about the habit of relentless hard work and patience.

    Success doesn’t come overnight, and it certainly doesn’t come without putting in the effort.

    Many times we feel SOME people just got lucky, but everyone has a long journey and the amount of hard work successful people have to put in is not easily visible to others.

    I have degrees from very prestigious universities. When I was still a student in high school, I had a clear vision, that I needed to get good grades to get into a good college. From there, I consistently worked hard because I knew how competitive it was.

    I grew up in a middle-class family in India and getting good education was the only way for us to move ahead in life. Both my parents had government jobs and I saw how they prioritized savings over spending.

    From the beginning, I had a mindset that if I didn’t work hard, I wouldn’t be successful in my life. In India there are a lot of people and limited jobs, so everything becomes more competitive.

    After marriage, I moved to LA where my husband lived and my parents had to take A HUGE loan, so I could study at USC in LA, which is a private institution and has a big tuition cost.

    So for me, it was obvious, that I needed to find a good-paying job as soon as I graduated so I could pay off my student loans and earn a comfortable salary that could support me and my husband to fulfill OUR American dream.

    To get my first consulting job in LA, I worked hard to get a high GPA in economics (3.9) so I could get an interview opportunity. I was an international student and not many companies wanted to sponsor my visa.

    I knew had to stand out. So I put in a lot of hard work to get good grades and applied to different companies to get an internship. Even at my full-time consulting job, I continuously had to learn and improve my skills to stay valuable to the company. I learned programming and I got better at MS Excel, report writing, and presentation skills.

    Now with two kids, two YouTube channels, and another full-time job, I still have to work very hard, but at the end of the day, it is very rewarding. We have so much we can achieve, we just have to keep working towards it.

    Secret #7: Don’t be afraid of initial setbacks

    Also, don’t be scared of initial setbacks, It is very important to be persistent and don’t get discouraged by failure in the beginning.

    Even if you do not achieve success first, you will still learn from your efforts. In my case, if some of my videos don’t do well, they still teach me what didn’t resonate with my viewers. Even if I get some hate comments, I don’t give up and instead focus on how to get better at my videos and provide better content to my viewers.  

    I have faith that If I keep putting in the hard work and I continue to make small improvements in making quality videos, people will ultimately start relating to the message I want to convey. So yes, what I want to say is that even with initial setbacks,  there’s learning and your efforts will not get wasted.

    It is very important to stay focused on your vision and to believe in yourself. Success often comes to those who keep pushing forward, no matter what challenges they encounter.

    There was a time when my kids were young and I had to take a break from my job. But I never left learning and continued to find other opportunities to earn a side income even when I couldn’t get back to full-time job, I started working part-time with my in-laws on their clothing business. Even to date, I work on that.  I created an Etsy channel and learned so much about the fashion industry in America and the ethics of business and marketing, which was not part of my background.

    Another important habit that makes people rich is when they understand the importance of being proactive and start taking initiative.

    Please don’t wait for opportunities to come to you, actively seek them out and make things happen. We are living in the informational technology world and there are so many free resources out there for you to learn and get better at anything you want to.

    Now it is only up to you to take advantage of it. Sometimes we spend too much time planning and keep gathering information and don’t take action. You need to change that.

    Each one of us has some talent and we need to find that unfair advantage that sets us apart from many other people. and in the current times, it is much easier to make money using your talent where you can provide some unique value to benefit many other people.

    Right now I am working on creating an online economics course that will be for high school and college students. It is taking a lot of my time but when you work on your passions, it doesn’t feel like work anymore because you are enjoying it every single minute. So yes please take initiative and don’t wait for the perfect opportunity. It is better to start somewhere and learn along the way. If you keep watching inspirational videos but don’t take action, then there is no gain.

    Secret #8: Continous self-improvement and growth

    Another habit that’s helped me achieve financial freedom is continuous learning and personal growth.

    I have been continuously learning something new, whether it is for my job, for my clothing business, or my YouTube channel.

    From my job, I got really good in Excel, basic programming skills in understanding companies’ financials and report writing. This helped me start an economics and personal finance blog which ultimately led to me starting this YouTube channel.

    To make videos, I had to learn video editing skills. So Investing in yourself is just as important as investing in your financial portfolio.

    While a lot of information is free, sometimes you have to pay a small amount to learn a specific skill. Don’t be afraid to invest in yourself because in the long run, it will pay off.

    #Secret #9: Take calculated risks and invest in broad-based funds

    And speaking of investments, let’s discuss the habit of taking calculated risks. Most people think that investing in the stock market is a gamble, but actually, if you look at the data throughout history stock market in the form of SP500 has not performed badly over any 16 years. So one easy way to get rich that I follow is to leave my money invested in broad based index funds along with the 401k retirement account. Both me and my husband have our employer-sponsored retirement accounts along with other investments in index funds. The earlier you start the better it is for you.

    For investing in the stock market, you can start by investing in a broad-based ETF or index fund. I have a separate post, where I talked about 3 good index funds to invest in, so you can read it for all the information. Index funds and ETFs give you diversification and over the long term they have given an average yearly rate of return of 10%.

    Secret #10: Follow the law of attraction

    The law of attraction is a powerful principle that states that like attracts like.

    When it comes to money, the law of attraction teaches us that our thoughts and beliefs directly influence our financial reality.

    By aligning our thoughts with abundance and wealth, we can attract more money into our lives.

    Start by visualizing yourself already having the money you desire, and living a life of financial freedom and abundance.

    Believe with conviction that you deserve to be wealthy and that money flows easily and effortlessly to you.

    Practice gratitude for the money you already have and celebrate even the small financial wins in your life.

    To manifest money using the Law of Attraction, it’s also important to take inspired action.

    Be open to opportunities, be proactive in seeking financial knowledge, and take steps towards your financial goals.

    Avoid dwelling on lack or scarcity, as this will only attract more of it into your life. Instead, focus on abundance, wealth, and financial success, and trust that the universe will provide.

    Remember that the Law of Attraction is not a magical solution overnight, but a powerful tool for shifting your mindset and beliefs. Consistency and perseverance are key to truly harnessing the power of the Law of Attraction when it comes to money.

    Stay committed to your financial goals, believe in your ability to achieve them, and keep taking steps forward. As you continue to align your thoughts, feelings, and actions with abundance, you’ll start to notice positive shifts in your financial reality.

    Recap:

    To recap, to become a millionaire, I started living below my means at the start. I prioritize wise investments, educated myself about finance, set clear goals, and built multiple streams of income.

    I like to surround myself with successful individuals because as I said your peers influence you. I like to stay disciplined and avoid impulsive buying.

    I also understand that success doesn’t come easy and there is a lot of hard work that goes behind it, so work hard, be patient, stay motivated, and take calculated risks and once you achieve that financial freedom don’t forget to give back to the needy who can benefit from your little financial help.

    I think you truly feel rich when you give back to society. Remembering to appreciate what you have and helping others along the way is very enriching.

    Doing only things that only “serve you” is a bit selfish. I believe if we are capable, we should help others who would benefit from our financial support. If god has blessed us with wealth, we should be grateful and help other hard-working people. I like to do charities and sponsor underprivileged children’s education so they can have a better future. This gives me a purpose and I feel truly happy doing that.

    So, these are some habits that have truly made me rich, and I know they can do the same for you!

  • Money Mistakes to avoid in your 20s

    In this post, we’re going to talk about the top 5 money mistakes you should avoid in your 20s, and I will also share what you should do instead😁. So, let’s dive right in.

    1. Not saving enough. It’s important to start building an emergency fund as early as possible. many people in their 20s would rather spend all their income, and take loans than save for an emergency fund.

    2. Overspending on unnecessary luxuries. A lot of people, especially those in their 20s try to keep up with their rich peers and end up spending beyond their capacity on designer handbags, luxury cars, etc, more than what they can afford. So Try to prioritize your expenses and avoid going into debt for non-essential items. add data

    3. Not investing in your future. At the very least, you should contribute to a retirement account or start an investment portfolio. This can be done through your employer if they provide 401 K, I have a separate video explaining this so that you can check it out here.

    4. Neglecting to budget. Creating a budget will help you track your expenses and ensure you’re living within your means. There are many apps you can use to budget, I personally use Mint and I made another video where I give several other options, so feel free to download one of those Apps and see how this helps you stick to a budget.

    But, If you don’t like to do that through an app, you can also track your expenses using a spreadsheet. The basic idea is not to neglect to budget.

    5. Relying too heavily on credit cards. While credit cards can be convenient, make sure you pay off your balance in full each month to avoid high interest charges. As of the second quarter of 2023, The U.S. credit card debt has exceeded $1 trillion, marking an all-time high. In 2021, approximately 60% of people had credit card debt.

    Remember, it’s essential to learn from these mistakes to set yourself up for financial success.

    So, what should you do instead?

    Start by setting specific financial goals, such as saving a certain amount each month or paying off your student loans early.

    Educate yourself about personal finance through books, podcasts, or my YouTube videos, 😀 there are so many online resources available free of cost.

    You can even consider seeking advice from a financial advisor if you are interested in developing a personalized plan for your financial future.

    Another very useful tip is to automate your savings by setting up automatic transfers from your checking to your savings account each month.

    Cut back on unnecessary expenses, such as eating out or subscribing to multiple streaming services.

    I can’t emphasize enough, that if you are carrying any credit card debt, please pay off that high-interest debt first, so you can save money in the long run.

    I will totally recommend opening a high-yield savings account to earn more interest on your money. Capital One and Ally Bank are the two online banks I use. As of today, Ally Bank gives you a 4.5% to 5% interest rate on a CD, much higher than traditional banks. Also, CapitalOne is paying a 4.3% interest rate. These can change with the Fed’s decisions so don’t delay and open a high-yield savings account to earn more interest.

    Increase your income through side hustles or by pursuing professional growth opportunities.

    Finally, surround yourself with like-minded individuals who share your financial goals and can provide support and accountability.

    That’s a wrap for today’s post! Don’t forget to hit that like button and subscribe to my YouTube channel for more money-saving tips. Don’t wait to take control of your financial future, start taking action now!

  • The power of investing – time and regular contributions

    In my previous post, I mentioned how the time duration of your investment and regular contributions are the two main reasons for your investment growth. In this post, I will explain this point with the help of a simple example.

    Scenario 1

    Let’s assume person A invests $1000 at age 20 and contributes $100 a month until she is 60. When we do the math, she will have over $763,000 at age 60, assuming the annual return is 11% and annual compounding. On average, the stock market gives you a 10-11% return over a long period.

    I calculated the numbers using this excellent investment growth calculator here. You can see how your investment will change by playing with different number combinations. It is fun, try it.

    In the chart below, you can see her total contributions (in green) are less than $60K, while her future value of the investment has grown to over $760K. Her investment grew by a whopping 12.7 times!!! Isn’t this just awesome?

    See how the red line goes way above the green line, esp. towards the end. This shows the power of compounding or exponential growth as the time duration increases.

    Scenario 2: Changing the time duration of Scenario 1

    Now, let’s assume she starts investing at age 40, and not at 20 but still contributes $100 monthly with the same 11% return. At 60, she will only have around $85,000 and her total contributions would be around $24000. So her total investment grew by 3.5 times compared to 12.7 times in the first scenario. You see the difference!

    Scenario 3: Changing the monthly contribution amount of Scenario 1

    If I change her monthly contribution to $200 (leaving everything else the same as in scenario 1), the total investment will grow to $1.4 million after 40 years. Isn’t this even more awesome?

    Scenario 4: Changing the initial investment amount and reducing the time of Scenario 1

    But what if she starts with a bigger initial investment of $50,000? In 20 years, with monthly contributions of $100, the money will grow to $480 K, which is still less than $760 K above.

    This simple example teaches a fundamental concept in investing. Time and regular contribution are the two most important factors in making your investment grow!

    In all the charts above, you will notice a steep increase towards the latter years.

    Just keep in mind that these numbers are in nominal dollars, not adjusted for inflation. Since money loses its value over time due to inflation. Your real return is always less than the nominal return, by the inflation rate. On average after adjusting for inflation, the return in the stock market has been close to 7-8%.

    So guys, hopefully, this post convinced you enough, so you can start investing for your future without further delay. Small contributions done regularly and starting early can make your investment grow to an astounding number.

    Disclaimer: The information presented here is for educational purposes only. I am not a financial advisor and do not provide investment advice individually. 

  • How to Legally Reduce Taxes: Tips and Strategies

    Taxes are a fact of life, but there are ways to reduce your tax liability without breaking the law. In this post, I’ll cover several strategies that you can use to minimize your taxes and keep more of your hard-earned money.

    • Contributing to tax-deferred retirement accounts: One of the most effective ways to reduce your taxes is by contributing to tax-deferred retirement accounts. For example, if you have a 401(k) (in the United States) plan through your employer, you can contribute up to $19,500 per year. These contributions are made on a pre-tax basis, which means that they reduce your taxable income. For example, if you earn $50,000 per year and contribute $5,000 to your 401(k), your taxable income would be reduced to $45,000. This can result in significant tax savings.
    • Claiming deductions and credits: Another way to reduce your taxes is by claiming deductions and credits. For example, if you donate money to a charity, you can deduct the amount of your donation from your taxable income. Let’s say you donated $1,000 to a qualified charity and your marginal tax rate is 22%. You would save $220 on your taxes.
    • Utilizing tax-advantaged investment accounts: Investing in tax-advantaged accounts like Health Savings Accounts (HSAs) or 529 college savings plans can also provide tax benefits. For example, if you have an HSA, you can contribute up to $3,650 per year if you have individual coverage or $7,300 per year if you have family coverage. These contributions are tax-deductible and can be used to pay for qualified medical expenses tax-free.
    • Timing capital gains and losses: If you have investments that have appreciated in value, consider selling them at a time when you have losses to offset the gains. For example, let’s say you bought a stock for $1,000 and it has increased in value to $1,500. If you sell the stock, you would realize a capital gain of $500. However, if you also have another investment that has lost $500, you could sell that investment to offset the gain, resulting in no tax liability.
    • Starting a business: Owning a business can provide tax deductions for expenses such as home office space, travel, and equipment. For example, if you work from home, you may be able to deduct a portion of your home expenses, such as rent or mortgage interest, property taxes, and utilities, as a business expense.
    • Taking advantage of tax-efficient investments: Some investments, like municipal bonds or index funds, are more tax-efficient and can help reduce your overall tax liability. For example, if you invest in a municipal bond, the interest you earn is generally tax-free at the federal level, and may also be tax-free at the state level if you live in the state where the bond was issued. Also, index funds are also more tax-efficient compared to mutual funds. This is because index funds tend to have lower portfolio turnover, which can result in lower capital gains distributions and tax liabilities.
    • Hiring a tax professional: Finally, it’s always a good idea to consult a tax professional who can help you identify additional tax-saving opportunities and ensure that you are taking advantage of all available deductions and credits.

    Conclusion: In conclusion, reducing your taxes can help you keep more of your hard-earned money. By using strategies like contributing to tax-deferred retirement accounts, claiming deductions and credits, and taking advantage of tax-efficient investments, you can minimize your tax liability and maximize your savings.

  • Key investment questions you need to ask

    As an investor, there are various topics and questions that you might find yourself searching for. Here are some of the most common and searchable issues and questions:

    1. Stock Market Basics:
    • How does the stock market work?
    • What is a stock?
    • How to buy and sell stocks?
    • What are stock market indices?
    1. Investment Strategies:
    • What is the best investment strategy for beginners?
    • How to diversify an investment portfolio?
    • What is dollar-cost averaging?
    • What are the pros and cons of active vs. passive investing?
    1. Risk Management:
    • How to assess and manage investment risk?
    • What are the different types of investment risks?
    • How to protect investments during market downturns?
    1. Investment Analysis:
    • How to evaluate a company’s financial statements?
    • What are key financial ratios for investment analysis?
    • How to perform the fundamental analysis?
    • How to analyze stocks for value investing?
    1. Investment Vehicles:
    • What is the difference between stocks and bonds?
    • How do mutual funds and exchange-traded funds (ETFs) work?
    • What are the benefits of real estate investing?
    • How to invest in cryptocurrencies?
    1. Retirement Planning:
    • How much money do I need to retire?
    • What are the best retirement savings accounts?
    • How to plan for retirement income?
    • What are the different types of retirement plans?
    1. Taxation and Investment:
    • How are investment gains and dividends taxed?
    • What are the tax implications of different investment vehicles?
    • How to minimize taxes on investments?
    1. Market Analysis and Trends:
    • What are the current market trends and forecasts?
    • How to analyze technical indicators in stock trading?
    • What are the factors that impact the stock market?
    1. Investment Psychology and Emotional Intelligence:
    • How to control emotions when investing?
    • What are common investment biases to be aware of?
    • How to maintain discipline in investment decision-making?
    1. Investment Tools and Resources:
    • What are the best online brokerage platforms?
    • Are there reliable investment research websites or apps?
    • How to use investment calculators and portfolio trackers?

    I plan to cover these topics in my future posts, some I have already covered, so you can check those on my blog. Also, follow my youtube channel if you prefer listening to or watching the same content.

    Remember, the investment landscape is vast and ever-evolving, so it’s essential to conduct thorough research and stay updated on relevant topics and trends in order to make informed investment decisions.

  • My top picks for passive income ideas

    Are you tired of trading your time for money? Then it’s time to explore the world of passive income! It can be a great addition to your active earned income.

    But first, let’s understand what it takes to generate passive income and what passive income really means.

    Passive income is the money you earn with little ongoing effort or active involvement. It’s like having your money work for you while you sleep or enjoy your life. In other words, it is income that continues to be earned even when a person is not actively working or trading their time for money.

    Today, I’ll cover my list of passive income sources that can earn you money while you sleep. From rental properties to affiliate marketing, we’ll take a deep dive into these opportunities and give you the tools to start generating passive income for yourself.

    But before we look into these different options, I want to tell you that what may work for one person may not work for another depending on their skills, interests, and financial situation.

    The ideas I am going to share have varying degrees of passivity. Some may require more upfront money than your time commitment, while others may require more of your time than money. However, all of these options will provide you with passive income in the coming years after the initial few months of time, effort, and investment. So let’s dive in.

    1. Dividend-paying stocks:

    Dividend-paying stocks are a type of investment that pay you a portion of the company’s earnings as dividends on a regular basis. For example, if you own 100 shares of a company that pays a $1 per share dividend each year, you’ll earn $100 per year in passive income.

    Graph Growth Development Improvement Profit Success Concept

    Of course, investing in the stock market always carries some risk, so it’s important to do your research and diversify your portfolio. One way to do that is to invest in index funds or ETFs: Index funds are investments that track a market index, such as the S&P 500.

    Investing in an index fund can earn passive income from the dividends paid by the companies in the index. How much money you make from dividends, obviously depends on the amount you invest and which type of index funds you chose.

    Many index funds and ETFs track dividend indexes, which are comprised of stocks that pay dividends. For example, the iShares Select Dividend ETF (DVY) tracks the Dow Jones U.S. Select Dividend Index, which is made up of 100 high dividend-paying stocks.

    On their website, it says “The iShares Select Dividend ETF seeks to track the investment results of an index composed of relatively high dividend paying U.S. equities.”

    By investing in an index fund or ETF, you can get exposure to a diversified portfolio of dividend-paying stocks with lower risk than investing in individual stocks. Additionally, many index funds and ETFs offer relatively low expenses, making them a cost-effective way to invest in dividend-paying stocks.

    I have written several posts explaining what index funds are, so you can check those out here.

    2. Rental Properties:

    Rental properties are another popular form of passive income. By owning a rental property, you’ll earn rental income each month from tenants. You can also build equity in the property over time, which can increase its value and your passive income.

    While rental properties can be a great source of passive income, there are also some disadvantages to consider like high upfront costs. Investing in a rental property often requires a large amount of upfront capital, which can be a significant barrier to entry for some investors.

    Also, Rental properties require ongoing maintenance and management, which can be time-consuming and expensive. This includes routine repairs, handling tenant complaints, and managing rental payments.

    In addition, there is always a risk of tenant problems, such as non-payment of rent, property damage, or legal disputes. These issues can be stressful and time-consuming to resolve.

    Also If a rental property is not occupied, the owner may not generate any rental income. Turnover is also a common issue, as tenants may choose to move out at the end of their lease.

    So, It’s important to carefully consider these potential disadvantages before investing in rental properties as a form of passive income. However, with proper management and a long-term investment mindset, rental properties can still be a lucrative source of passive income for many investors.

    3. High-Yield Savings accounts:

    3rd option is saving your money in a High yield savings account than saving your money in a traditional savings account. High-yield savings accounts are designed to help customers earn more interest on their savings while still having the flexibility to withdraw their money when they need it. So if it is paying 4% and you have $10,000 saved in it, you will get $400 as interest income at the end of one year vs getting $25 in a traditional saving account that pays 0.25 percent.

    One of the primary advantages of high-yield savings accounts is that they typically have lower costs because they are online banks and not brick-and-mortar banks so they can pass those cost savings to their customers through higher annual percentage yield or APY this means that customers can earn more interest on their deposits over time which can help their money grow fast.

    Marcus by Goldman Sachs, Capital One, Sofi, Lending Club, and Ally Bank are a few banks that offer high-yield savings accounts. You can check their website, but the interest rate they currently offer ranges from 3.75% to around 5% as of May 18, 2023.

    Just keep in mind that Some, high-yield savings accounts may have certain requirements or restrictions, such as minimum balance requirements or limits on the number of withdrawals allowed each month, so you can check those out at their website.

    Also, remember the interest rates on these accounts can fluctuate over time, so it’s important to monitor them regularly. But usually, they are a better option than traditional savings accounts as they also have atm services.

    4. Create an online course:

    This can be a great way to earn passive income from your expertise. Once you create the course, you can sell it on platforms like Skillshare, Udemy, or Teachable and earn passive income from each sale.

    The initial work of creating the course and setting up the platform will require significant time and effort, but once the course is created and available online, it can generate income with minimal ongoing maintenance. So that’s when you will start earning passively.

    Of course, the success of the course will depend on various factors such as the demand for the topic, the quality of the course material, the marketing strategies you use, and the competition in the market for that subject. However, if the course is well-made and marketed effectively, it can attract a large audience and generate a consistent stream of income.

    Overall, creating an online course can be a viable passive income option for those willing to put in the initial effort and have expertise in a particular area.

    5. Create a blog:

    By creating a blog and attracting a large audience, you can earn passive income from advertising, affiliate marketing, or sponsored posts.

    This can be a good passive income option for those with a passion for writing and a willingness to put in consistent effort over time. Starting a blog requires setting up a website, creating quality content, and marketing the blog to attract readers.

    Once the blog gains a following, it can generate income through various channels such as affiliate marketing, sponsored posts, and advertising revenue. However, it may take a while for the blog to gain traction and generate substantial income, so you have to be patient about that. I do have a blog called your everyday economics. I enjoy writing and sharing my knowledge with others, so this was something I started doing exactly and year ago.

    Again, like online courses, the success of the blog depends on various factors such as the quality and relevance of the content, the audience size and engagement, and the marketing strategies you use. Also, it’s essential to keep the blog updated with fresh and relevant content to maintain the readers’ interest.

    So you can give it a try if you enjoy writing, and like keeping yourself updated about the topic, and most importantly you are willing to spend a couple of hours on the blog each week to keep it running. You will start earning on previous posts that you have written, and it can be a great source of income. In fact, Several bloggers have quit their full time and made blogging their full-time profession once they saw good results.

    6. Renting out your unused space (such as a spare room or parking space):

    This is another option for passive income but can only work for some individuals who have the space to rent. But if you have that extra space you are not using, it won’t harm to advertise it for renting purposes.

    7. Investing in rental storage units:

    This can be another good way to earn passive income. Once the units are built, you’ll earn rental income each month without having to actively manage them.

    This option can be a viable passive income option, especially if the investor can acquire the units at a reasonable cost and in a prime location. Rental storage units can generate steady rental income with relatively low maintenance costs compared to other types of rental properties.

    However, there are a few drawbacks to investing in rental storage units. The demand for rental storage units can fluctuate depending on the economy and season, which can impact the occupancy rate and rental income. Also, investing in rental storage units requires significant upfront capital, including the cost of acquiring the property, property taxes, insurance, and maintenance costs.

    Investing in rental storage units can be a viable passive income option if done correctly, but it requires significant upfront capital and ongoing effort to maintain profitability.

    8. Sell digital products:

    Selling digital products can be another good option to get passive income: If you have skills in design, photography, or writing, you can create digital products like e-books, templates, or stock photos to sell online.

    There are several online marketplaces where you can sell your e-books, templates, and stock photos. I will share Some of the most popular options, one of which I have used myself.

    When choosing a platform to sell your digital products, you should consider factors like fees, payment options, and audience reach. You may want to try out a few different platforms to see which one works best for you and your products.

    1. Amazon Kindle Direct Publishing – This is a platform that allows you to self-publish and sell your e-books on Amazon.
    2. Etsy – This is an online marketplace for handmade and vintage items, including digital products like templates. I myself have an Etsy shop for handmade high-end fashion clothing. I will put its link in the description below. I have seen many shops selling digital products like templates, themed birthday party supplies, and party games that you can download and print.
    3. Creative Market – This is a platform that sells a variety of digital products, including templates and stock photos.
    4. Shutterstock, Stock, and Adobe Stock – These are platforms where you can sell your stock photos and earn royalties each time someone downloads your image.
    5. Sellfy – This platform allows you to sell digital products directly to your audience, including features like payment processing and marketing tools.

    When choosing a platform to sell your digital products, you should consider factors like fees, payment options, and audience reach. You may want to try a few different platforms to see which works best for you and your products.

    9. Royalties:

    If you’ve written a book, recorded music, or created other types of intellectual property, you can earn passive income through royalties. These are payments you receive based on the sales or usage of your work.

    10. Make a Youtube channel

    I would rate starting a YouTube channel for passive income as a good option, but it requires a lot of effort and time to be successful. The competition on the platform is high, and it can take time to build an audience and generate consistent income.

    However, if you have a passion for creating content, and are willing to put in the work, it can be a rewarding way to earn passive income. The channel should fulfill one of two criteria, it should be either entertaining or educational.

     YouTube’s Partner Program allows creators to earn revenue through advertising and other monetization strategies like affiliate marketing and sponsored videos where the creator is promoting a specific product.

    As for me, right now my channel is not monetized, and I can’t reap any rewards of passive income yet, but hopefully, in the future, I will. I know many other successful YouTubers do it as a full-time job earning hundreds of thousands of dollars.

    Conclusion:

    So these are all the options, hope you find something you like and can make it work. Just remember that while passive income may not require constant active effort, it often requires initial setup, sometimes money investment, ongoing management, and occasional maintenance to keep it sustainable and growing.