Trading Hours For Dollars

By MoneyBlueBook

This topic has been discussed and debated by many in the financial community and is regarded as controversial by some. Numerous bestsellers have been written on the subject.

Traditionally, when it comes to making money, most people share the same mentality - "If I work harder in my job, put in more overtime hours, I'll get ahead and make more money." Unfortunately, no matter how many hours they put in, they'll forever be constrained by the laws of nature. There is only a finite number of hours you can work in a day during which you can exchange your available working hours for monetary compensation - essentially, trading hours for dollars, or trading time for money.

The New Approach

The new approach is hard for many to accept as it requires a different understanding beyond what we were taught as children. The new approach places lesser priority on active income and a greater emphasis on passive income generation. Active income would be money earned while putting in your hours sitting at your office desk (trading hours for dollars). But passive income would be money generated from sources such as stock investments, real estate appreciation, rental income, and even advertisement revenue earned by websites that you own. The limitations of the old approach to money are obvious.

You Are Constrained By Time

By trading hours for dollars, you are foregoing time that could be spent tending to other things in your life such as friends and family. You are choosing to spend your time in an office, rather than

By MoneyBlueBook

The wealthy seem to have all sorts of advisers and planners helping them manage their vast fortunes. But what about the rest of us regular folks who don't have the extra millions of dollars to throw at legions of planners, accountants, and managers? Some of us can rely on planners, but I think it's very important we all learn to educate ourselves about individual financial planning.

Financial Planners Are Also Salespeople

Recently I took a look at my mother's retirement and investment portfolio and was appalled at the funds she had invested in. Apparently, all of her investments were made at the advice of financial planners and account managers that recommended the products. The most glaring aspect was that many of the mutual funds she had put her hard earned money in were front loaded, with unjustifiably high expensive ratios, which meant her brokerage firm took a cut of her money immediately after it was invested in the particular fund and that it also regularly extracted a disproportionate percentage of her investment to cover fund expenses. Some financial adviser obviously profited from this setup and likely received a healthy commission for recommending it to her.

Although we often forget, your personal financial adviser also functions as a salesperson, oftentimes just trying to get his or her commission groove on. In this day and age, with the growth of no loaded funds and exchange traded funds (ETF's) that offer exceptionally low expense ratios, there is no reason why she should have invested in either a front or back loaded

By MoneyBlueBook

I currently use Fidelity Investments as my investment brokerage firm. I have nothing but good things to say about the service they offer. Their selection of mutual funds is broad and their fees are reasonable. Their customer service is also top notch. I have a habit of occasionally bombarding their customer service department with random questions about my account and fees. I almost always receive a prompt reply. Occasionally it will be a few days before I hear from customer service, but they usually provide me with an excellent explanation or solution to my brokerage and investment related questions.

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By MoneyBlueBook

The world stock markets have been rather volatile lately with major highs and lows. These days I'm almost afraid to turn on CNBC and watch the financial news or log into my brokerage account to check my investment portfolio balances. There seems to be a gloomy cloud over every investor I know.

Time to Keep Things In Perspective - Volatility is Not a Roller Coaster

When things get hairy, cooler heads must prevail, but at times it's understandably difficult to do so. When prices are plummeting as they are now, and when panic selling grips the market, it is easy to get caught up in the wave. However, I urge you to keep things in perspective. Many equate a volatile stock market to that of a roller coaster ride, but the problem with that analogy is that with a roller coaster ride, you end up in the same position you were in when you started. But that's not necessarily the case with volatility since market upside has always led to an upward trend in the long term despite occasional wild swings.

Take a look at these charts based on data from the S&P 500:

• The chart on the left shows the total yearly percentage returns of the S&P 500 over 25 years. See how market volatility can create seemingly wild roller coaster-like ups and downs?
• But then take a look at the chart on the right. It uses the same S&P 500 data, but instead of showing it from year to year,