Have you ever wondered why the rich have become rich? Some people say this is because they can use more wealth in each generation of successful people. However, for many people, the real reason is that the rich teach their children's financial skills to live with them. These skills are then used with higher skills in each successful generation, resulting in an increase in the snowball of wealth.
The previous article highlighted three wealth concepts, and you can consider caring for your children at an early age to give them an economic starting point.
#Concept 1: Good debt and bad debts
Many people today have drowned their debts. On the other hand, some people are as far away as possible from debt. A more balanced approach is needed. Debt is important in our economy because it is used to fund large projects. Therefore, the key is to understand the difference between good debt and bad debt is its purpose.
For example, credit card debt is a bad debt for buying depreciated consumer goods, and debt can be a good debt if you can use it to buy real estate and start getting cash flow from the difference between the monthly rental program and the monthly mortgage. installment. So teach your child how to use debt wisely.
#Concept 2: Cash flow and capital appreciation
Many people cannot distinguish between these two concepts. There are usually two types of financial instruments and some mixed metal tools. Most financial instruments are capital instruments, which means you can make money when prices rise and someone buys from you when you sell the tools. [such as stocks and stocks] Therefore, the value of capital [the principal you pay] increases, thus "capital appreciation."
On the other hand, some tools can provide you with cash flow, which means sharing profits. Examples include real estate investment trusts and other mineral trusts, such as oil trusts, where you can share monthly oil revenues. These tools are great when you get a large enough amount from a capital-value-added tool and deposit a portion of the funds into the actual monthly cash used. Children should teach this difference early in life so they can begin to learn how the free economy works.
#Concept 3: Control your own money
Fund managers and analysts like to tout their own corners and tell you how they over-express the market. In fact, fund managers make money by managing your money. That is, they either charge a management fee or charge a fee instead of where your portfolio makes money. This means they can manage your money seriously and still get paid.
Studies have shown that at the end of the day, many fund managers may not be better at the end of the day than individuals who choose stocks, and there will be reports that monkeys randomly throwing darts on a dart board may actually be better fares. This teaches your child to start learning more about investing and to control his finances and make his own investments.
All in all, it is good to teach children to study finance when they are young. In fact, some smart fund managers today talk about their parents and grandmothers analyzing the stocks in front of them when they are young. Begin to teach children how to manage their own financial situation and how to understand how the modern economy works, where they will grow to better handle the financial world.
Copyright © 2006 Joel Teo. all rights reserved. [You can post this article in its entity with information about the authors below, including only live links.]
Orignal From: Personal Finance - Three eternal wealth concepts are taught to your children
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