Risk evaluation (in relation to investments)

by Giana

When it comes to choosing an investment, there are some different factors that can contribute to whether the investment will be lucrative or not. Risk evaluation is the probability of you losing or gaining money on your investment. The main factor that will influence the risk of your investment and whether or not it will be rewarding is market conditions, including currency risk and political risk.

The risks you can take with your investments vary widely. The investments that have the lowest risk also give out the smallest gains, or none at all. The investments that have the highest risks have the potential to give out the biggest gains, but since they pose a higher risk, also have a potential for big loss. 

There are some things to take into consideration when you are trying to decide the amount of risk that you want to take with your investment. First, you should not be using the money that you need to live for investments. Depending on how much you have to invest, you might want to spread out your money into different investments, so if you do lose money, you will still have some elsewhere. Also, you might want to invest your money in different asset classes that have different amounts of risk (e.g., bank stocks, gold, real estate, cash and antiques). 

http://www.finra.org/investors/reality-investment-risk

http://www.finra.org/investors/reality-investment-risk

https://www.google.ca/search?safe=strict&biw=1366&bih=662&tbm=isch&sa=1&ei=eHkYW5irKoKwjwS2ooOgAw&q=market+risk+triangle+for+investing&oq=market+risk+triangle+for+investing&gs_l=img.3...42471.51459.0.51619.21.21.0.0.0.0.227.1590.20j0j1.21.0....0...1c.1.64.img..0.2.301...0i8i7i30k1.0.O9WZufaTA5s#imgrc=8YGyC9ZScr3mZM:

The Shockingly Simple Math Behind Early Retirement (from Mr. Money Moustache)

By Giana

The higher the percent of savings you put away from your take-home income the sooner you will be able to retire. If you live on 35% and save the rest (65%) of your take home-income you can retire in 10 years. That means living on 35% in your retirement as well. The 65% savings is then invested, growing your savings exponentially.This takes care of unexpected emergencies.

Making adjustments to you daily routine such as biking, making coffee at home and using community resources can add years to your retirement. It isn’t about making more money but saving the money you do have. Spending all your money as soon as you make it is pointless, save your money and work less.

I think everyone should have the opportunity to read this article before they’re 20. It shows a clear picture on how valuable saving is.  It really is Shockingly Simple.

https://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/

Net Worth

By Giana

Your net worth is the amount of money you have plus how much you stuff cost (assets) minus how much you owe (liabilities).

Calculation:

list assets with estimated value of each item

list liabilities and the outstanding balances

total assets - total liabilities= net worth

Net Worth Calculation Website

https://www.getsmarteraboutmoney.ca/calculators/net-worth-calculator/

Net Worth App

https://itunes.apple.com/ca/app/wealthplus-net-worth/id933534901?mt=8

Downloadable Net Worth Spreadsheet

https://templates.office.com/en-us/Net-worth-calculator-TM01018308

Your net worth is the money that you have. It is your pay cheque after all deductions are made. Deductions may include mortgage, taxes and debt. A person’s net worth is the amount of money they actually have after everything has been payed off. It is their available means.

http://www.schwabmoneywise.com/public/moneywise/essentials/goals_budgeting/personal_net_worth

Minimalist Finance

By Giana

Minimalist finance is all about making things as simple as possible. Straightforward and uncomplicated.

That means:

•      One savings account, one chequing account, one retirement account and only one credit card.

•      Pay in cash for everyday purchases and only use a credit card for big purchases with refundable circumstances.

•      Toss your paperwork, only save paperwork that is 100% important. Of the little paperwork you have it will be simple. If your money is simple your paperwork is simple. 

•      If you’re not debt free become debt free. Debt is one more weight on your shoulders. By making a plan to eliminate your debt, stress will dwindle and eventually be gone!

•      The least number of payments the better. Don’t pay for things you hardly use.

•      Only have one or two financial goals at a time to make them obtainable.

•      Rent instead of own. Renting cuts obligations by reducing the number of payments. Rent also includes maintenance and upkeep which further reduces fees.

https://www.becomingminimalist.com/simplify-finances/

The 1%Challenge (from Afford Anything)

By Giana

The 1% Challenge requires you to save 1% more of your take-home income then you already do, and increase your savings by 1% each month to ease you into saving. Arrange this amount to be taken out with an automatic transfer so it is like you never had to money in the first place. This money should also be in a safe place where you can’t easily access it. The idea behind the 1% challenge is to make savings simple and easy so you don’t have to do any work.  Allowing you to progress in incremental steps so it is effortless.

After-Tax Income	One Percent
$2000 /mo	$20
$3000 /mo	$30
$4000 /mo	$40
$5000 /mo	$50
$10000 /mo	$100
$20000 /mo	$200

The author Paula Pant says to cut things like orange juice, turn down the thermostat, get a cheaper cell phone plan, use Netflix instead of cable and get the cheapest car insurance policy, but some people are already doing these things and don’t have anything else to cut out. Her article doesn’t apply to all cases. It is catered towards people who don’t know how to save money or have a spending problem. Also it would be more helpful if Paula said specifically where to save (such as a tax free savings account or a no charge debit account), or how to setup an automatic transfer.