Tips for Young Investors in Managing Finances

If there’s one thing my experience has taught me, you can’t let your emotions dictate your financial decisions. With that in mind, here are three pieces of advice that young investors just starting out — as well as veterans who still feel rattled by the upheaval of recent years — should keep in mind while managing their finances.

1. Things are never as good — or as bad — as they seem.

Since MONEY published its first issue in 1972, the U.S. economy has weathered six recessions, six bear markets and dozens of other crises. But recovery followed each setback. Why? Because the economy and the financial markets work in cycles, with fat times followed by lean ones.

2. Take doomsayers’ stock market predictions with a large block of salt.

Yes, there were plenty of big setbacks along the way, as there will be in the years ahead. But, anyone willing to ride out stocks’ periodic nosedives stands a good chance of reaping solid rewards over the long term.

3. Focus on what you can control.

You have no power over the returns the markets deliver. The area where you can really exert some control, though, is in deciding how much to save. By making a deliberate decision to live below your means, you should be able to regularly stash some dough in a 401(k) or other savings vehicle. And the more you save, the better off you’ll be should the financial markets deliver less robust returns than you expect.

So start saving regularly and investing sensibly. That won’t solve the world’s problems, but it should improve your finances.

Source: CNN

Image: The Uglycow Finance

What the Facebook IPO Means

We all knew he’d eventually get around to it: Mark Zuckerberg is expected to finally bring Facebook public. The company is reported to be preparing to file for an IPO — initial public offering — through which anyone will be able to buy shares of the social networking company on an open stock exchange.

In reality, however, I don’t think we are witnessing Facebook’s victory over the financial markets as much as its acquiescence to them. Yes, Apple challenged Microsoft for software supremacy, just as Facebook now challenges Google for Internet supremacy. But there’s another operating system churning away beneath all this high tech activity, and it’s called corporate capitalism. If a company is big enough — and that means simply holding enough money — then sooner or later that money influences the rest of the company’s activities.

In Facebook’s case, it meant approaching the legal limit of 500 investors, which triggers a requirement to open the books to regulatory scrutiny. It also meant dealing with a few thousand coveted employees who took jobs at Facebook instead of Google or Apple or anywhere else because they were hoping to get in on a big thing.

The more money a company takes in, the more obligated it becomes to function in accordance with the properties and rules of money. It’s a real corporation, now, and has to behave like one. By all accounts, Zuckerberg was trying to delay this eventuality as long as possible. However much we may not like his vision for our future, his primary purpose was to change the world.

Instead of revolutionizing our reality, by filing an IPO Mark Zuckerberg is finally getting with the program.


Source: CNN

Image: iBug