On 30/09/14 30-Sep-2014;9:11 am, skn wrote: > What are the good financial principles > to live by? Some of the things I have been trying to get my head around > are about property as an investment, (long term) investing in company > shares vs. index funds vs. mutual funds, % income to save vs. how much > to invest vs. how much that can be spent (given I have very young kids) > etc. etc.
The most basic financial principle of all: spend less than you earn. Yes, I know. So stupidly simple that it doesn't need saying, right? Wrong, as it turns out. It seems evident that a large number (perhaps a majority) of people don't follow this principle. Some more high level rambling: I am generally sceptical about real estate as an investment vehicle. 1. Returns are notional unless you sell the real estate in question (this is true of all investments to some level, modulo annuities such as dividends) 2. Especially for salaried people who fund it with a loan, interest costs can often drive up your invested amount, which affects how you compute returns. 3. Taxes can eat away a chunk of any returns. Regarding other vehicles, I am of the belief that it is almost impossible to avoid making money on the stock market as long as your investment horizon is longer than 10 years, and you follow some basic precautions. One way to automate those precautions is to stick to index funds. Udhay -- ((Udhay Shankar N)) ((udhay @ pobox.com)) ((www.digeratus.com))
