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Proverbs Guide to Finance

The proverbs of Solomon son of David, king of Israel: for attaining wisdom and discipline; for understanding words of insight; for acquiring a disciplined and prudent life, doing what is right and just and fair; for giving prudence to the simple, knowledge and discretion to the young- let the wise listen and add to their […]

Many people get to the point after Baby Step 3 of having a nice sized emergency fund and they wonder what to do next. Should we start investing our extra money, or should we use it to pay off our mortgage. This is where I find myself currently, and I’ve been debating myself back and forth over which is the better plan. Some days I think investing makes more sense, others I think I can’t wait to pay off my mortgage.

Now, I’m not going to pretend to assume I have the right answer for everybody and their situation, but this is what I think is the best idea. I know many will disagree, even the “experts” all have a different idea in regards to this choice. In my opinion, the best thing to do is … drumroll … both. I know that’s cheating and getting around the question, but really think it makes the most sense.

Now, I think the percentage that goes to each is up for debate. Dave Ramsey suggests putting 15% into retirement funds and then putting the rest on the mortgage. I’m not sure I agree, but I think it is reasonable. I think it really depends on the individual situation though. Are you really conservative, and planning really conservative investments? If that is the case I’d probably suggest paying more on the house. Essentially it is a really conservative investment that net’s you the percentage interest you are paying the bank. It is certainly better than putting your money in a CD at this point.

Are you a bit more aggressive, and young, and investing for the long term? If that describes you, as it does me, investing a bit more is probably the best way to go. Over the long term, there is at least a pretty good chance you can do better investing than in the mortgage. Though because of the risk, I certainly wouldn’t advocate putting all of the extra money you have towards investments.

I think a good starting point is to simply take all of your “extra money” and divide it in half. Put 50% towards the house, and put the other 50% in investments. Adjust the percentages as needed based on your current risk tolerances and needs. Also, you need to take into account the current investing environment. Right now interest rates are really low. As such, you may be more likely to invest since it is a low interest rate you are paying. On the other hand, if you are more conservative you might say that there isn’t anything safe paying much at all so you might as well pay off the mortgage. It really just depends on what type of person you are.

On the other hand, there could be a situation in the future where it doesn’t make any sense to pay off the mortgage. Some people refinanced recently for less than 4%. I remember a time when you could get more than that from a savings account or CD. If interest rates rise in the future (which they will, nowhere to go but up from here) then you could be in a situation where you can get a risk free return that is higher than your mortgage rate. In that case I’d suggest putting the money towards the investments.

Now, I personally really want to pay off my house, and I can’t wait for the freedom that will bring. So even in the scenario where I’m making more interest risk free than I’m paying, I might be willing to go ahead and pay off the house. Something about being totally debt free is really enticing. Not owing anybody anything sounds really great, and if you’re like me I won’t fault you for paying off the house when you save up enough to do so.

Conclusion: Do both, because those of you that want more risk need a little bit of the conservative investment that is paying off the house. Those of you that want to be ultra conservative and pay only on the house, should probably take a little bit of a risk and save for retirement in stocks. Your personal situation will determine how much should go to one or the other. Please share your thoughts or personal experience in the comments below.

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This question can be complicated. First off, what kind of debt are we talking about? Do you have a bunch of credit card debt? Maybe you only have the mortgage left. Car loans, student loans, other personal debt? So many different types of debt and people think differently about all of them.

As far as I’m concerned there are essentially two types of debt: house, not-house. Most people would say the difference is between “good debt” and “bad debt,” with the “good” being classified as debt on something that goes up in value. Well since we’ve shown that houses don’t always go up in value, I don’t call any debt good. That being said it is clearly a different type of debt, and certainly not nearly as bad as having $20,000 or more in credit card debt.

Now there are a few stages people can be in and I’m going to try to talk about the subject of vacations in each of them.

In debt, lots of bad debt

If you have credit cards and car loans, in my opinion vacation shouldn’t really be a part of your vocabulary. I’ve made an exception for this once, and it was for my honeymoon. I didn’t have any debt when we got married, but my wife did bring student loans into the marriage. The honeymoon is something that you only get one shot at, so we decided to go ahead and take a nice vacation. Generally speaking though, if you have lots of debt, you shouldn’t be considering vacation. If you haven’t read about our insanely ridiculous honeymoon, you might want to check out the story – How My Emergency Fund Saved My Honeymoon From Total Disaster.

Speaking of emergency funds

So you’re out of debt except for the house? That’s good. Now, do you have an 3 to 6 month emergency fund? No? Probably shouldn’t be taking really extravagant vacations at this point either. If you don’t have an emergency fund at all, you need to wait. Period. If you don’t have a decent amount save but you aren’t quite there, I’m willing to say a small vacation could be okay. If you really need to celebrate getting out of debt, I can get on board for a short weekend away. Provided you pay for everything in cash.

Full emergency fund, still have a mortgage

This is where I find myself currently. We are trying to decide how much to spend on our vacation this summer. I think at this point it is reasonable to go on vacation, I’m just not sure how much I’m willing to spend. At this point we haven’t changed our budgeting at all. We still don’t count my wife’s salary as part of our budget, and 100% of it goes to saving, investing, or paying extra on the house. To take a paycheck or two of hers and go on vacation wouldn’t really hurt us, but it does set us back a bit in our other goals, like retiring early and paying off the mortgage early.

Honestly, I think this is the toughest section to figure out what is reasonable. Part of me says it’s not a problem at all, go have some fun and then get back on it. The other part of me says this is a slippery slope and I might want to “just use a check or two” keep buying other stuff that isn’t and shouldn’t be in the budget. We also save a fixed amount out of my checks each month for vacation (though not much).

The question is, how much vacation is reasonable at this point. Unfortunately, I don’t have an answer for this particular section. So far we’ve been very disciplined with our money as we’ve paid off debt and saved up an emergency fund, so I’m not too concerned about falling off the slippery slope, but it’s there. At this point, I’ll say we are leaning towards adding a bit of her check to supplement our vacation. Feel free to let me know your thoughts in the comments.

Paid off the house

If you have the house paid for and retirement funded, it looks like you’ve reached the goal of baby step 7. Give, save, and spend. This is when you get to spend some of your hard earned money. Take a cruise if you want, or 2 or 3. If you are financially independent you probably don’t need a blog post to decide if you can take a vacation. Go have some fun, see ya in a few weeks.

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Of what use is money in the hand of a fool, since he has no desire to get wisdom. Proverbs 17:16

If you want to learn how to handle money well you have to be willing to learn from your mistakes. If you want to do it without losing a lot of money, you have to be willing to learn from the mistakes of others. This what I’m here for. I’ll try to share the stupid stuff I’ve done with you so that you don’t have to do the same things. On the other side of that coin you also need to learn from the things you’ve done right so that you know why it was right and how to repeat that success. Again, it’s also great to learn from the success of others so you can easily repeat it.

This week I made a mistake in my investing, that I hadn’t really considered before. I have been using Tradeking as my online broker for a couple of years, but I was thinking about changing brokers. I decided to open an account with Interactive Brokers and started an account transfer this week.

Everything sounds fine so far right? Well, a few of my stocks reported their earnings this week. One of them didn’t have a very good report, and I was seriously considering selling it while I had a small gain. Things changed quite a bit, and I’m just not sure if I’m as confident in the future as I was before the report. Now for the problem. When in the middle of a transfer you can’t trade on the account. It was down about 5% right after the report. Since then it is down 15%.

The lesson from all this is don’t make changes when the potential for big news exists with your stocks. Obviously you can’t foresee everything, but you do know when a company is reporting earnings. Earnings season is probably the most volatile time for stocks. I felt so helpless this week as I wanted to make a change to my portfolio and couldn’t.

This is really just a small thing, but the point is to always learn from your mistakes and the mistakes of others. If you don’t learn from your mistakes you will not succeed financially. Remember, a fool and his money are soon parted. Learn as much as you can from as many different people as you can.

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The other day I asked the question, “Should you rent or buy a house?” Today I thought I’d go over the pros and cons of renting. There are plenty of good reasons to rent, and several reasons not to.

1. Pro – You aren’t tied down to an area. If you need to move for a job you don’t have to go through the hassle of selling your house. Alternately, if you just want a new place you also don’t have to worry about selling the house.

2. Con – You don’t own it. There is just something about having a place to call your own. You can paint and remodel and make changes to the yard and you don’t have to ask permission.

3. Pro – It is cheaper. In the long run it may not be cheaper, and we’ll get to that, but on a month to month cash-flow basis renting is cheaper. You don’t have to pay for the insurance, property taxes, PMI if applicable and anything else associated with owning the property.

4. Con – You have to deal with a landlord. They may or may not be pleasant to deal with.

5. Pro – You can get by with a smaller emergency fund. If the heat or AC goes out, it isn’t your responsibility to fix.

6. Con – No equity. When you are paying a mortgage, at least some of the payment goes towards owning the home. Rent is gone as soon as you pay it.

7. Pro – Can’t lose money on it. Many people consider houses to be an investment, which they can be, but in general they are a place to live. As an investment, houses can go down in value as many people have learned recently. While renting, you don’t have to worry about a house being underwater.

8. Con – Potential cost of damages. If you break something you may have pay for it at the end of the lease. There are no guarantees of how much it will cost.

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Rent or Buy a House?

by Derek Clark

Rent or buy, that is the question. It is a tough one for many people. If you asked me that question a few years ago I would have replied buy without hesitation for most people. After thinking about it a lot over the last few years, and with the experience I’ve personally had it is not so clear to me anymore. There are pros and cons to both, and there is no perfect answer for everyone. First off a few questions:

1. Do you have any debt?
2. Do you have an emergency fund?
3. Do you have a down payment?

If you have debt my answer would probably be to rent. You should get rid of your current debt before you take out a mortgage on a house. Second is the emergency fund. Do you have 6 months worth of expenses saved up? If not you are probably better off renting for now. Let somebody else worry about the heat or air conditioning going out. Finally, do you have a down payment saved up? How much do you have saved? 5, 10, 20 percent? I’d suggest to put at least 20 percent down, but I think you could probably be ok with 10 percent down. Personally I’ve done less, but I wouldn’t do it again. I don’t plan on buying another house without at least 20 percent.

If you don’t pass the first 3 tests I’d suggest sticking with renting for now. If you’ve passed those, let’s look at some of the other things to consider:

1. Are you single, engaged, or married?
2. Do you have a steady job?
3. Are you new to the area?
4. Do you like the area you are in now?

First off what is your relationship status. If you are already married this is not a problem. Both spouses will be a part of the decision process. Are you getting married in the near future, or would you like to? You might end up buying a house that your future spouse will hate. This is one of the mistakes I made. I bought a house and then got married about a year later. My wife doesn’t hate our current house, but she doesn’t really like it either. I would have been better off renting until we got married and then picked out a place together.

Do you have a steady job? Is it safe? If you are unsure of your job situation it probably isn’t the best time to be buying a house. Rent until you are more sure.

Did you just move to a new area for a job? I’d suggest renting in this situation until you get to know the area better. Living in an area for a few months will help you decide where exactly you want to look for a house. Related to this, do you like the area you are in now? If you don’t like it why buy a house in the area? Look for a place you like better and find a job there. No reason to tie yourself down in a place you don’t like

If you’ve passed everything so far you are getting closer to the decision on buying vs. renting a house. At this point cost is a big factor. Are houses in your area priced reasonably? How is the rent? This is some research you will have to do. Do the math and consider what type of house you can afford to rent and buy in your area, and how those compare to what you actually want.

Finally, and this is something I’ve recently changed my thoughts on, is the house you are looking at something you could live in forever? Are you looking for a “starter house” or your “dream house?” I bought my current house with the intention of staying in it for 3-5 years. Now I realize that was a terrible idea. Housing prices in my area have crashed since then and wiped out my down payment and then some. If I would have put 20 percent down, I’d be just barely above water. This means selling my house at the 3-5 years I wanted to is going to be a losing proposition. I can still easily afford the payments, so it isn’t a big problem, but my wife and I don’t want to stay here for 10 years (or 5 for that matter).

If you are willing to stay forever, the current value of the home means nothing. If you want to sell in a few years, the current value is very important. This has lead me to a new opinion on home-buying, if you aren’t willing make this your forever home you should seriously consider renting instead. My wife and I have been considering moving to a place that we both will be happier with, but I’ve recently reconsidered this. We aren’t in a position to put 20 percent down on anything either of us would consider staying in forever, so buying something else to stay in for 5 years just doesn’t seem like a good idea anymore. We will either stay where we are for longer than we’d like, or rent something that is in between while we save up for something we’d be willing to stay in longer.

Many people have really liked the idea of a starter house recently. It worked great when housing was in a bubble and houses went up 20 percent a year, but when prices behave normally it is not nearly as good an idea. As it turns out, it is a terrible idea when you are on the other side of bubble.

Rent or buy? It depends. Not only on the things I’ve mentioned but many others. If you’ve passed everything I’ve mentioned you should probably be leaning towards buying. If you do go that route, I suggest paying off your mortgage early. Get completely out of debt as fast as you can. I can’t wait to get to that point so I can work on baby step 7!

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What is a loss leader? Essentially it is something that a store will sell either close to or even below cost to get you in the door. For example, a tech company will advertise a Blu-ray player at cost, and then hope to make up the money on all the Blu-rays and HDMI cables it can sell you as well. This works for grocery stores as well. Each week they have certain items on sale, and they hope these things will entice you to buy everything you need there.

Use this to your advantage. Generally the way people grocery shop is they decide what they want to eat that week, and then they find their recipes and write down a list of all the things they will need. Then they go to the store and get all of the things on the list. Many people will tell you this is a way to save money on groceries, as opposed to just going to the store and getting random stuff that looks good. It could, especially if you happen to be hungry when you go, but it still isn’t the best.

Instead of making a list of what you want to eat and then shopping for the ingredients, turn the process around. Take the flyer for your local grocery store each week, and find out which ingredients are on sale. From that, you should be able to find recipes to fit the ingredients instead of the other way around.

Food is not something we are too frugal with. We have worked hard to get out of debt and save up an emergency fund, and we for the most part now we eat pretty well. Our budget is less than some I know, but certainly much higher than what you could eat on reasonably. For those that are wondering, our grocery budget is approximately $75 a week for the two of us. That being said, I still like to save money where I can, and I think this is a great way to do it. After all, we can always use the money we save to help pay off our mortgage early.

A few weeks ago we got the flyer and put together some of the ingredients that were on sale. Things like ground beef, pasta sauce, tomato sauce, diced tomatoes, and Velveeta were on sale. Out of those, you can pretty easily think of some cheap meals that can be made. We had spaghetti with meat sauce, chili, and chili-cheese dogs for starters. The chili I made was a huge pot, and not counting the leftovers I froze, it accounted for dinner 3 separate nights and about 4 lunches. Overall, shopping this way we spent around $90 for 2 weeks of food. That’s a pretty significant drop from $150.

If you haven’t tried it, give it a try this week and let me know how it works for your. Make your grocery list based on the ingredients for sale instead making a list to fit what you want to eat this week.

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The idea of sustainability can be applied to anything. It can be applied to your shopping list, your home and your car in any situation where you need to obtain resources reliably. It can even be applied to your home insurance in the sense of “How to make your home insurance consistently affordable”. Usually, the best way to make something sustainable is to cost it and lock in a reliable source.

Lifestyle and sustainability

It’s probably fair to say that the reason sustainability becomes an issue in anyone’s lifestyle is mainly cost, but that also applies to where goods and services are obtained. A favorite thing may be difficult to get, expensive, hard to find, or even more annoyingly easy to run out of, meaning you have to put a lot of time and effort into getting it.

The sustainable approach is based on making things accessible, usually on a reliable cost basis. In terms of lifestyle, it’s definitely a better option than mindless compulsive, no-choices consumption. You can even make holidays sustainable and luxury items affordable, if you know how to do it. Christmas is the same time every year. Plan ahead and save money throughout the year and you can sustain the hit to your budget in November and December.

Sustainability is also a lifestyle and ethical motif. Many people use sustainable products on the basis of their personal beliefs, environmental consciousness and common sense. Sustainable lifestyle products are generally higher quality, safe, non-toxic and sourced from natural products. This means by definition a much cleaner environment both in the home and in the wider personal context.

What’s not generally known about sustainability and lifestyle is that it can also be a lot of fun. Mainstream consumer products have a bad habit of being major ordeals to handle both economically and when in use. A simple organic throwaway product can be thrown away safely, and doesn’t require a chemistry degree to use properly.

For example, if you’re a gardener, a lot of pesticides and herbicides are extremely dangerous. Most expert gardeners gravitate to the cheaper, safer and far more sustainable organic products. The lifestyle effect is that you can enjoy your garden without risking your life or anyone else’s. Many insecticides used in the home include chemicals which are particularly dangerous to human beings, including neurotoxins. There are many alternatives which are far cheaper and infinitely safer. To save money in this area just google things like “DIY fill in the blank” and you will get plenty of results for things like cleaners or gardening chemicals.

Getting yourself sustainable

It’s actually pretty easy to create a whole suite of sustainable products and practices for yourself which will probably save a lot of money as well as improving the cost and safety factors of simply living. The fact is that most sustainable products and concepts basically involve doing things more simply and more efficiently. The things contained in the name brand products are simple and easy to combine. There’s no need to spend lots of extra money for the name on the label.

One of the easiest ways to get yourself sustainable is to simply remove costs and issues from the weekly budget. What definitely costs too much? What can be replaced with something better and cheaper? What are the things you don’t like doing for which you would prefer to have either an alternative or not to do it all?

Sustainability is in many ways a decluttering exercise, focusing on personal preferences and better ways of doing things. Ironically, it’s the ultimate form of consumerism, meeting your own demands. Think of it as “contents insurance” for your lifestyle. Finding cheaper ways to do things will widen the gap between your income and expenses and help get you to the ultimate in sustainability, financial independence.

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I know what it is to be in need, and I know what it is to have plenty. I have learned the secret of being content in any and every situation, whether well fed or hungry, whether living in plenty or in want. -Philippians 4:12

This is a major problem in our society in my opinion. We have become a society where nobody is content with what they have. We always have to have a bigger better house, newer car, more stuff. Everything seems to be a race to keep up with the Joneses.

Watching or reading the news they tell me that consumer credit is down, and that’s a bad thing for our economy. Really? Our economy is such that it can only function by everyone going into more debt than they can afford? It seems that people going into more debt than they could afford is what caused this recession. The savings rate is now up to about 6%. We actually had a negative savings rate a few years ago. Seriously. Our country as a whole spent more than we made. Now the savings rate is up to a whopping 6%. This is also apparently bad. Our economy needs you to go out and spend every dime you have.

This is really frustrating to me. We need to be content with what we have, and start saving some money for a rainy day. You probably don’t need a brand new car. You probably don’t need a bigger house. You also don’t need more junk to fill up the house you have that is probably already bigger than you need.

Our economy should not be built entirely on everyone spending more money than they make. That is unsustainable growth. That is not a healthy economy and that is what caused our recent collapse. Our increasing savings is really encouraging to me. It should really be much higher though. It may cause a little bit of pain in the short term, but in the long term it would help so much. For example, think about Social Security and Medicare.

Currently we don’t have the money to pay for Social Security and Medicare. Right now we are going to have to have some really painful changes take place to make those solvent. If everyone saved 15% or more it would be much less of a problem. People would be able to take care of themselves instead of relying on the government.

Be content with what you have. If you can be a bit more content now, you will be much better off later. Would you rather have a huge house, an extra new car, and a boat all of which sit mostly unused because you have to be at work to pay for them? Or would you rather live a simpler life with a smaller house, an older car, and no boat, but with the ability to retire at 40 to spend more time with your family? I know which one I would choose.

You say you don’t want to be cheated. You want to have fun now and all the time. Who said you have to spend money to have fun? Sure it helps sometimes, but there are plenty of ways to have fun without spending a ton of money. Do you feel cheated now that you are 65 and still have to work because you never saved any money? Be content with what you have and start saving more money today. I can’t wait to see what the pundits say when the savings rate hits 15%.

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During this holiday season take some time to think about what you are thankful for. Odds are that you have it pretty good compared to most people. Last month I talked about adding a line to our budget for random acts of kindness. This month I though I’d share where that small bit went for Thanksgiving.

Operation Gratitude

One of the things I’m thankful for is the great country I live in and the men and women that serve it. Whether or not you agree with our current foreign policy is irrelevant. The soldiers that put their lives on the line defending our freedom deserve your respect and gratitude.

This is where Operation Gratitude comes in. From their website:

Operation Gratitude seeks to lift morale and put smiles on faces by sending care packages addressed to individual Soldiers, Sailors, Airmen and Marines deployed in harm’s way.** Operation Gratitude care packages contain food, hygiene products, entertainment items and personal letters of appreciation, all wrapped with good wishes of love and support.

Through Collection Drives, Letter Writing Campaigns and Donations of funds for shipping expenses, Operation Gratitude provides civilians anywhere in America a way to express their respect and appreciation to the men and women of the U.S. Military in an active, hands-on manner.

It doesn’t take much to help out. A small donation or a letter is all that is asked. This is an easy way to support our troops and it is a great random act of kindness. Being able to help make a soldiers day a little brighter is a great feeling.

If you are looking for a different way to help there are quite a few options here. Even something as simple as donating old beanie babies (to give to the children) can help. If you are want to go straight to the donate page it is here.

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To invest successfully over a lifetime does not require a stratospheric IQ, unusual business insights or inside information. What’s needed is a sound intellectual framework for making decisions and the ability to keep emotions from corroding that framework.” Warren Buffett

I don’t believe in predicting markets. I believe in buying great businesses – especially companies that are undervalued, and/or under-appreciated.” Peter Lynch

Peter Lynch and Warren Buffett are two of the greatest investors of all time. So if you are looking to learn how to invest, they are good place to start. The quotes above along with some others I will share throughout this article can give you some insight into the way they think, and the way they invest. It doesn’t have to be hard. So many people are scared of the stock market these days, and that is a shame. You have to get past the media and the talking heads and the high frequency trading. Get back to the basics that Buffett and Lynch teach. Buy great companies at good prices and you will make money.

I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years.” Warren Buffett

This is an amazing thought process to have. Buy great companies and keep them as long as they continue to be great companies. The following is from One Up on Wall Street by Lynch:

The stock market ought to be irrelevant. If I could convince you of this one thing, I’d feel this book has done its job. If you don’t believe me, believe Warren Buffett. “As far as I’m concerned,” Buffett has written, “the stock market doesn’t exist. It is only there is a reference to see if anybody is offering to do anything foolish.

Do you see a trend yet? Gaming the market is not the way to make money. Trying to make a quick buck guessing what a company will do this week is not a smart way to invest. Buy and Hold is alive and well. The key is finding the right companies to hold. You can’t simply pick any company and hope to make money. You have to do your research and make good choices. The great part is like Buffett said, you don’t have to have a stratospheric IQ to be a successful investor.

Great companies are all around us. The signs of good companies, and probably more important the signs of bad companies, are pretty obvious. Good companies have earnings, and they are growing them. They don’t have too much debt. They pay a dividend. Invest in companies that are simple to understand. A great quote is invest in businesses that are so simple an idiot could run them, because someday one probably will. If you don’t understand what a company does and how it makes money, that is not a business you should be investing in.

That doesn’t mean that nobody can invest in complicated businesses. If you are an expert or have a good understanding in a complicated field, there are some things you can invest in that others couldn’t or shouldn’t. The average person should stick to simple things that are great businesses. Pepsi and Coke are both great companies. Everyone can understand what they do. They sell pop. They sell snacks. People buy them and they make money. They are great companies.

That’s the first step. Find great companies that you can understand. After that decide if they are reasonably priced by the market. If it is, buy and hold the stock as long as it continues to be a great company that is fairly valued. Now there are lots of different ways to value stocks, but going over all of them goes beyond the scope of this article. You are never going to be able to pick the absolute bottom in a stock. It is more important too avoid the top of a bad stock. If you find a company that you like and think is fairly valued, go ahead and pull the trigger. If it goes down from there, consider it an opportunity to buy more at an even better price.

My most recent experience with this was a great one. I found a company that I really like, with consistent growing earnings that I considered undervalued. It was trading at $5.50 the first time I bought it. Well, I missed the bottom badly. From $5.50 it went all the way down to $4.17. That is an over 24% loss. However, I still believed in the company, and considered this a great sale the market decided to throw. I continued to buy more on the way down, and lowered my average cost to $4.80. Currently that stock is trading at $6.30. That is 14% higher than my initial purchase, but it is 30% higher than my average cost. When the market puts on a sale, take advantage of it.

That is what Buffett talking about. Check out the market to see if anybody is willing to give you sale on great company. Other than that, don’t worry about the day to day fluctuations and high frequency trading. Over the long term, it just doesn’t matter. If you pick great companies the market can close tomorrow and open up in 5 years. When it does, the great companies you bought today will be worth more than you paid for them.

If you are want to learn how to invest, follow the best. Read any of Lynch’s books, they are all great. One Up on Wall Street and Beating the Street are two of my favorites. Another great resource to read would be Buffett’s annual reports from Berkshire Hathaway.

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