Jason Hartman Foundation » Financial Education

Introducing COLA to Your Financial Education

The Young Wealth Team — Tue, 31 Aug 2010 19:21:51 +0000

In case your school forgot to include this in a financial education lesson plan, we’ll introduce COLA to you right now. COLA is an acronym that stands for Cost Of Living Adjustment and is an annual figure calculated by the government that measures how much inflation has gone up in the past year. But we don’t care about inflation, right? It doesn’t really have an effect on anything. Wrong. It has everything to do with your purchasing power and ability to create wealth through investing.

Assume that each year brings at least some amount of inflation, which causes a decrease in your purchasing power. For every rise in inflation, there is a corresponding drop in the value of a dollar. That’s why the idea of the COLA is critical to those living on fixed incomes, like retirees. But how does the COLA apply to a young whippersnapper just out of school?

Pay attention. Here comes another financial education lesson plan that was probably neglected by your school. It has to do with investments. At the end of the year, when you add up your total return on investment, it had better be higher than the COLA or you’re not making any money at all. Here’s an example. The government reports an annual increase in inflation that is usually around 5%, a laughable number, in our humble opinion. We believe it’s more like 10% or maybe even higher.

The point is that if you have a mutual fund that performs at a decent rate and returns about 10% per year, you’re only breaking even. Yes, the number of dollars in your account might be increasing but, in terms of purchasing power, unless you’re making more than the real inflation rate of 10%, you’re not coming out ahead. You’re actually losing money by investing, even if it shows a profit on paper.

What you need is an investment asset that profits in the face of inflation. Don’t think it exists? Wrong. Real estate investors who employ an income property strategy correctly could see annual returns in the 20% to 30% range, a high enough level to overcome inflation.

The Young Wealth Team

Flickr / Stefan

#9 – How Gen Y Entrepreneurs Are Rocking The World of Business!

admin — Thu, 12 Aug 2010 16:45:45 +0000

Listen in at:http://jasonhartmanfoundation.org/articles/young-wealth-show

#8 – Young Guns with Rob Tuchman

admin — Mon, 21 Jun 2010 17:43:14 +0000

There is no better time to take risks – especially when it comes to making career choices – than when you are young. Author and entrepreneur Roberts Tuchman knows what it takes to break free of a frustrating job and build a career on your own terms. In his recent authored work, Young Guns, he shows you how to start out on a business venture, how to gain a client base, how to keep those clients, and what you need to sacrifice along the way in order to succeed. For those young, aspiring entrepreneurs, listen in at: http://youngwealthshow.com/articles/young-wealth-show/

#7 – Young Wealth At A Young Age

admin — Fri, 14 May 2010 03:16:22 +0000

Listen in as Jason interviews Jon Swartz about successful teens.

Young investors and sharks

The Young Wealth Team — Sun, 25 Apr 2010 22:22:12 +0000

Winning the investment game is not for the faint of heart but it is critical to realize early on the necessity of embracing the idea that you MUST invest in some way in order to build wealth. Choose the stock market (probably your worst option), start a small business, or invest in real estate (your best choice to succeed). When it comes to investing, the water is murky and current strong, and we don’t want you to get eaten by the first shark that swims your way.

To succeed, you’ve got to stay alive, financially speaking of course. Before you sink your first dollar into an investment, consider the following three factors that have derailed many a young investor career. Watch out for these sharks and maybe you’ll stay alive long enough to actually make some money.

1.Transaction costs – it’s easy to overlook these when perusing a mutual fund prospectus or calling your broker and telling him to “Sell, sell, sell!” or “Buy, buy, buy!” Pay attention to the transaction costs. If it’s too much, go somewhere else. If all your profit is being eaten up by the broker’s cut, find another broker.

2.Your broker is a crook – sad but true. The stories are out there…Enron…Bernie Madoff. Stay alert for crooks in the financial business because they will always be there. Don’t be the next poor sap to see his nest egg disappear in a poof of chicanery.

3.Your broker is incompetent – crooked dealing isn’t the only way to lose money. Your broker could be straight as an arrow but simply not cut out for the job. Maybe he’s in the wrong field. Maybe he doesn’t have the IQ for the gig. The lesson is don’t trust your future to an obvious incompetent.

While we can’t give you an entire financial education in one blog, keep your eyes open for these three pitfalls and your chances for success just increased astronomically.

The Young Wealth Team

Flickr / rednuht

#6 – The Young Wealth Show Talks With One Of Jason’s Listeners

admin — Fri, 26 Feb 2010 16:17:06 +0000

On this show, Jason talks with one of his listeners, Damien Bourke, about the challenges of growing up in today’s economy.

#5 – Rich By 30! Jason Interviews Author, Lesley Scorgie

admin — Mon, 08 Feb 2010 19:54:14 +0000

Jason interviews, Lesley Scorgie, the author of Rich by Thirty: A Young Adult’s Guide To Financial Success, a national bestselling personal finance book geared towards young people. Listen at: http://www.jasonhartmanfoundation.org/articles/young-wealth-show/. When Lesley was only 17 she was a guest on the Oprah Winfrey Show where she discussed financial strategies for young people and revealed her goal of becoming rich by thirty. Money is important because it builds a path to freedom. Without it, your choices can be limited. With it, you can pursue your dreams. Wealth is no longer just about money. It is about freedom. The sooner you start making money work for you, the more financial freedom you’ll have.

#4 – The Eleven Commandments of Financial Success

admin — Wed, 03 Feb 2010 16:42:09 +0000

On this episode, you’ll hear the eleven commandments of financial success. Visit: http://www.youngwealth.com.

#3 – How To Start Building Your Credit

admin — Tue, 12 Jan 2010 05:17:08 +0000

Listen in as Jason talks with credit expert Danny Rosario on how to start building your credit. Visit: http://www.youngwealth.com

#2 – Financial Planning with Jim Lowell

admin — Thu, 07 Jan 2010 23:12:12 +0000

Listen in as Jason interviews financial planner Jim Lowell on The Young Wealth Show. Visit http://www.jasonhartmanfoundation.org