Investing 101

You should care because, if you handle your career and finances in the right way, your money will start working for you rather than the other way around.

Just for gits and shiggles, let’s say you got a year-end bonus of $20,000 because you were so awesome selling used homes in a hot market. You pay $10,000 of that bonus in taxes if you live in The People’s Republic of California. So you have $10,000 now to invest. You can either head over to the track and put it all on Salazar’s Pride in Race #7 to win, or you can go the somewhat safer route and invest in stocks. You hear Salazar’s Pride has a bum knee, so you settle on stocks. Good choice.

You find a stock that - for whatever reason - you like. It goes up 10% a year for a long time (think: Coca Cola in the generally good years). That 10 grand made you a minimum of a thousand bucks a year (and more as it compounds and grows) – for doing absolutely nothing. For doing nothing, you got paid 3 bucks a day. That’s a free Big Mac for doin’ nothin’. It’s like you won a sweepstakes.

Can you save another ten grand after tax? How about a hundred grand? That 10% gain on a hundred grand is ten grand a year or 200 bucks a week free money. Just for sittin’ around. That’s why you should care. Not HAVING to work – whether or not you actually decide to do so - is a good thing. Always.

Next Page: A Walk Through the Investing Park
Previous Page: Taxes Shmaxes