Fresh Life Advice aims to aid you in taking control of your money by increasing your savings and reducing your spending. FLA will encourage you and help you along your journey to financial independence. I am not a licensed financial advisor. More importantly, FLA does not condone in investing your money in something you do not understand. My goal is give readers a better understanding of his or her own personal finances.
Happy one year blog anniversary to Fresh Life Advice! One year ago, I opened the doors of FreshLifeAdvice.com to the world.
Of course, these doors are electronic and metaphorical.
As a teenager, I can remember using some super cool website called Myspace.com to learn about HTML coding and website building. Myspace was the first social network to reach a global audience, but we all know how the rest of that story ended…
Rest in peace to Myspace as we pour one out for Tom.
Soon, Mark Zuckerberg took over the social media sphere. With roughly 2.89 billion monthly active users as of the second quarter of 2021, Facebook is now the biggest social network worldwide. In the third quarter of 2012, the number of active Facebook users surpassed one billion, making it the first social network ever to do so.
The internet, social media, and technology, in general, are rapidly changing. I had always wanted to a piece of that pie. FLA was my chance of making a small contribution to the big world wide web.
How FreshLifeAdvice.com Was Born
After college, I wanted to fill my free time with a project that would be beneficial to the general public.
I was already writing anything and everything to escape from the daily struggle of the corporate world. Lengthy emails to friends and colleagues, forum posts about stocks, and even personal journal entries.
FLA was born with the mission in mind to help 10 million people with their own path to financial freedom. It sounds crazy, but every life-changing invention also sounded crazy before it revolutionized its respective industry.
As of January 2021, there were 4.66 billion active internet users worldwide – 59.5 percent of the global population. Of this total, 92.6 percent (4.32 billion) accessed the internet via mobile devices. Six in every ten people around the globe now use the internet…
Sure, the internet had plenty of personal finance blogs, but they all had a similar theme. Older retired bloggers who already had a large nest egg just didn’t seem relatable to the younger crowd about to embark on an arduous start to their careers. To be fair, they did inspire me to envision a prosperous future.
The millennial generation is who I wanted to reach, because, well…I’m a part of that crowd.
The mid-20s person sits at a fork in the road. It’s the age when the world presents a choice: head down a path of continuous stress and financial woes, or set yourself up for a lifetime of money mastery.
My net worth steadily grew after the Post-2008 financial crisis. Having this credibility might help people take my advice seriously, so I purchased the domain FreshLifeAdvice.com through Bluehost for any aspiring website owners.
The goal was to put a fresh perspective on personal finance. Hence, Fresh Life Advice was born.
The Great Blogging Experiment – One Year Later
I then spent the next six months nervously designing the site. Hey, I had some good-looking shoes to fill!
Of course, the design wasn’t actually the 6-month hang-up. Truthfully, I was terrified of going live.
What if nobody likes my writing? What if nobody cares what I say? And what if the only visitors are me and my mom, again?
Publishing all your thoughts and opinions for the world to see is scary enough. Baring all on a subject as taboo as money is even scarier.
Against my better judgment, on September 01, 2020, the blog you’re reading right now went live. This was the post.
When I published that first article, I made myself a promise: I was going to make it to FLA’s 1st blog anniversary, no matter what, before I could give up.
I knew I enjoyed writing, but the internet is a big place. And I was just one voice in the chatter. Maybe after one year, I’d be able to tell if anyone cared.
Well, here we are. One year later. I’m happy to report that the site has been a raging success, and I have zerointentions to shut it down.
This blogging experiment has truly been one of the most rewarding projects I’ve ever involved myself in. Every time I receive a personal reader email, an inspiring article comment, or an enthusiastic Facebook share, I can’t help but get excited and marvel at the wonders of the internet.
So, I want to say THANK YOU! At the risk of sounding extremely cliché, you – the reader – are what makes this site what it is.
I’m just a guy typing some nonsense on a keyboard. You’re the one who keeps this site alive.
One Year of FreshLifeAdvice.com Blog Anniversary Statistics
299 Page views in the blog’s first month.
150 About how many of those page views came from me.
100 Page views the first day I thought an article went viral. I remember my heart pounding as I watched the page stats, refreshing them repeatedly.
697 The most page views in a single month.
8 Total email subscribers after the first 4 months.
52 Email subscribers today. (You are on the cool kids’ email list, right?)
25 Total articles published in the past year.
2,217 Average Words Per Post
470,000 Total number of words in the Webster’s Third New International Dictionary, Unabridged, together with its 1993 Addenda Section.
52,070 Total number of words written by FLA. That’s 11% of the entire English Dictionary!
82 International countries reached out the of possible total 195 countries. That’s 42% of the world!
‘Mr. Worldwide’ refers to the self-ascribed nickname of American rapper and music producer Pitbull. Soon, FLA will self-ascribe a similar nickname of ‘Mr. Personal Finance Worldwide’.
These top 5 blogger commenters certainly deserve a shout-out. They’ve supported this site from the beginning. I enjoy reading and commenting on as many personal finance blogs as I can.
The Most Popular Day is Friday, accounting for 21% of views. And the Most Popular Time is 3:00 PM, accounting for 9% of views.
There must be something about Fresh Life Advice that really gets people excited about their weekends.
The stats don’t lie. Every single human falls into one or more of the DISC personality traits so it was no surprise this appeal to many different audiences. It was FLA’s way of putting a fresh twist on personality tests and spending habits.
Conveniently, this post checks both boxes of fun and helpful.
Either there aren’t very many readers, or this post was a total flop.
Don’t answer! That was a rhetorical question.
Seriously, this was the first post on the site as well as one of the shortest articles to date. No surprise here.
I have no regrets writing it because it got the ball rolling for the rest of the blog. It also serves as a constant reminder of my purpose for blogging.
The meme stock mania was very topical, and this post was published during the midst of the hedge funds losing billions of dollars due to a short squeeze.
I really enjoyed writing these ones, and I was happy with the way they turned out. But the stats say most of these weren’t read as much as the others, so here’s to giving them a second chance!
5 Foolproof Steps for Early Retirement – These are some of the most critical practices I implement in my own life to achieve F.I.R.E. as quickly as I can.
It’s been an awesome ride so far. Here’s to many more years together!
Thank you to every single person who has read FLA and supported this site! Happy Blog Anniversary Fresh Life Advice!
Disclosure: Fresh Life Advice is an opinion-based website. I am not a financial advisor, and the opinions on this site should not be considered financial advice.
Personal Capital: The Ultimate Tool to track your Net Worth, Budget and more.
Any advice for Year 2? What are your favorite things about a blog? Let me know in the comments below.
Index funds have been touted across the finance world as the proven way to invest hard earned cash. However, the wealthy have turned their backs on passively managed index funds for other types of assets. But why? Why don’t the rich invest in index funds?
Despite popularity, the ultra-wealthy high net worth individuals aren’t as apt to invest in these low-cost funds.
What are Index Funds? What’s the Advantage?
An index fund is a mutual fund or exchange-traded fund designed to follow certain preset rules so that the fund can track a specified basket of underlying investments.
Over the long term, index funds have generally outperformed other types of mutual funds. Other benefits of index funds include low fees, tax advantages (they generate less taxable income), and low risk (since they’re highly diversified).
At FLA, we preach choosing passively managed index funds or ETF’s (i.e., NYSEARCA: VTI or MUTF: VTSAX) with the lowest expense ratios (less than 0.15%) in lieu of picking individual stocks, mutual funds with high fees, or actively managed hedge funds.
Let us dig into the pros and cons of index funds:
Pros of Index Funds
1. Low-Risk
Losing the principal investment is an investor’s worst nightmare. Index funds offer a low-risk option for investing in batch of stocks. They are inherently diversified, representing many different sectors within an index, which protects against deep losses. When one index is performing better than others, the index fund effectively captures these gains that individual stock picking gurus may miss out on.
2. Steady Growth
A central advantage to index funds is that they are designed for steady, long-term growth. The ideal timeline for an investor is to have their money compound forever. No one can predict the future. As a result, having so many stocks in one fund allows for diversification in addition to a self-cleansing system. The dogs are ousted, and the winners continue to ride high.
Index funds are not designed to beat the market, but simply capture the average return. Stock-picking is much harder than one would expect. For instance, U.S. News & World Report noted in 2011 that index funds tied to the Standard & Poor’s 500 (S&P 500) index generated better returns over the previous three years than almost two-thirds of large-cap actively managed mutual funds.
3. Low Fees
Index funds offer lower fees for investors than non-index funds. This means that even when a non-index fund outperforms index funds, it must perform better by a certain margin to generate returns that overcome the management fees that it charges.
Cons of Index Funds
1. Lack of Flexibility
Because index fund managers must follow policies and strategies that require them to attempt to perform in lockstep with an index, they enjoy less flexibility than managed funds. Investment decisions on index funds must be made within the constraints of matching index returns. For instance, if the returns in an index are declining strongly, index fund managers have few options to attempt to limit those losses. In contrast, managers of an actively managed fund have more flexibility to act to find better-performing options in good times or in bad.
2. No Big Gains
An index fund does not carry the potential to outpace the market the way that managed funds can. This means that if you invest in an index fund you are surrendering the possibility of a massive gain. The top-performing non-index funds can perform far better than the top-performing index funds in a given year. However, the top-performing non-index funds may vary from year to year, so those under-performing years can cancel out the over-performing ones, while index funds’ performance remains steadier.
Why invest in VTSAX or VTI?
Beats 82% of active managed funds
Expense ratio of 0.04% / 0.03%
Self-cleansing (companies come and go)
Tracks the U.S. stock market.
Buy the whole stack, instead of looking for the needles.
Why Are Index Funds So Popular?
A stock index consists of a basket of stocks that is meant to represent something else. Sometimes, this something else is an entire stock market. Other times, this something else is a section of a stock market that serves as a stand-in for either an industry or some other kind of segment.
Whatever the case, it is very common to see interested individuals put their money in an index fund, which is either a mutual fund or an exchange-traded fund that tracks an underlying index.
Index fund investing has become popular since Jack Bogle of Vanguard introduced the Vanguard 500 fund in 1976. The fund tracked the returns of the S&P 500 and marked the first index fund marketed to retail investors.
Index investing is popular for a variety of reasons:
Index investing is a very passive way of investing, which can be contrasted with more active investment strategies that see individuals buying and selling stocks on a regular basis.
It’s extremely tough to beat the market in the long run. Once taxes and trading costs are incorporated into calculations, the index funds prevail.
There is empirical evidence that shows actively managed funds consistently underperform in the long run.
Index investing is a very useful way for investors to protect themselves from non-systematic risks through means of diversification. This is due to the fact they have spread out their money rather than concentrate it in the stocks of a small number of companies.
Individual stock picking can be time consuming. Many hours of research are required before an investor has truly educated opinion on whether to invest. Index funds a practical solution that reduces the necessary time and effort.
Unless you have the knowledge, time, and patience to vet each individual company you’re considering before buying its stock, you could wind up with a portfolio that’s weighed down with bad deals and underperformers. That’s one reason why many investors tend to appreciate the beauty of index funds.
Fees Add Up
When you invest in any mutual fund, you pay a set of annual fees that add up to its expense ratio. In exchange for the actively managed fund’s cost, you are getting the expertise of a seasoned fund manager. The manager and their team will assemble a well-researched collection of stocks, put it into a neat package, and shift the fund’s holdings when they see that as a smart idea.
That doesn’t come cheap.
With index funds, by contrast, most of that work (and pricey expertise) is not necessary, so their expense ratios can be as little as one-tenth of what you’d pay for an actively managed fund. But despite the many benefits of index funds, they aren’t particularly popular among wealthy investors.
Why the Rich Tend to Look Elsewhere
Index funds are an extremely cost-effective, convenient investment choice. But they generally aim to match the performance of their associated indexes, not surpass it. The ultra-wealthy, however, may not be satisfied with that.
Instead, they turn to other money-making assets, such as private equity, art, and even IPO’s. These investments are often far riskier than your average index fund, but they have far greater upside potential. The wealthy can take on this risk because they can still get back on their feet, even after losing a relatively large sum of money. The middle and lower classes do not have this luxury.
Let’s walk through a scenario.
Imagine that you have $500,000 invested in stocks in your tax-advantaged retirement accounts. That’s probably a lot of cash for you. If your portfolio declined in value by half, or worse, it could have a major impact on your future quality of life.
But, for example, someone with an investment portfolio worth $50 million could suffer a major loss and would still be left very relatively wealthy. That allows them the freedom to take on more risk than the average retail investor would be comfortable with.
The rich can pursue high-risk, high-reward investment opportunities without worries because their wealth can make for a very effective cushion from such problems.
In fact, wealthy investors often favor actively managed mutual funds. Their iffy odds of delivering that sought-after outperformance can be overwhelming appealing despite the higher fees. The large majority of actively managed funds won’t beat the market, and over multi-year periods, the share of them that do, drops even further. By contrast, index funds often outperform active funds across different asset classes.
Other Assets
The wealthy also can more easily invest in real estate, antiques, and other less-liquid assets — whereas you probably can’t afford to take on the risk associated with buying a $100,000 piece of art you hope will appreciate in value. And in the “actively managed” sphere, the wealthy also have the ability to put money into hedge funds, which most of us are legally barred from.
In order to protect normal people, the SEC has created all sorts of rules and regulations for how companies that invest money on behalf of other people should operate. While this makes the investments safer and less volatile, it prevents the firm making investments from chasing riskier but possibly more profitable investments.
Hedge funds are not allowed to have more than 100 investors, and they are not allowed to take on any investors with less than $1 million in wealth.
The goal of hedge funds is to earn absolute returns. What this means is that they make money every year, regardless of what the stock market does. A few funds have done this, but 2008 demonstrated that most funds were bluffing in saying they were able to do that, and many of them went out of business.
Why Don’t the Wealthy Invest in Low-Fee Index Funds?
They sometimes do. But it is also easier to buy individual stocks when one is investing large sums.
Also, many wealthy people have business experience which gives them insight into economic trends and specific companies. This leads them to buy individual stocks. Whether they perform better than the indexes is not assured.
A majority of the wealthy seek for Alpha. The finance world defines Alpha (α) as excess or abnormal return over a benchmark index.
In addition, they want to diversify their portfolio across asset class and earn underlying performance return, which is different from an index fund. This has resulted in huge investment growth in the following:
Portfolio Management Service (PMS)
Private Equity
Structured Products
Hedge Funds
Art
Real Estate
The wealthy use these investment vehicles because there is a barrier to entry with high entrance costs. These risky investments generally require large buy-in costs and carry high fees, while promising the opportunity for outsized rewards.
High Risk, High Reward
Over the past 90 years, the S&P 500 averaged around a 9.5% annualized return. You’d think the rich would be satisfied with that type of return on their investments. For example, $10,000 invested in the S&P 500 in 1955 would be worth more than $3 million at the end of 2016. Investing in the whole market with index funds offers consistent returns while minimizing the risks associated with individual stocks.
But the wealthy can afford to take some risks in the service of multiplying their millions (or billions). For another example, look at world-famous investor and speculator George Soros. He once made $1.5 billion in one month by betting that the British pound and several other European currencies were overvalued against the German Deutsche mark.
Hedge funds aim for those sorts of extraordinary gains, although history is filled with examples of years when many hedge funds failed to outperform the stock market indices. But they can also pay off in a big way for their rich clients. That’s why the wealthy are willing to risk hefty buy-in fees of $100,000 to $25 million for the opportunity to reap great returns.
The one percent’s investing habits also tend to reflect their interests. As most wealthy people earned their millions (or billions) from business, they see this path as a way to continue maximizing their finances while sticking to what they know best — corporate structure and market performance.
For that matter, the rich can sink their money into luxuries such as art pieces, sprawling real estate properties, cars, and other collectibles. In this case, they can enjoy grandeur while still benefiting from their increase in value over time. By buying these luxuries, the wealthy not only enhance their lifestyles but also enjoy the value appreciation as a nice bonus.
How the Wealthy Invest
As an example, let’s look at the former CEO of Microsoft, Steve Ballmer. He holds a net worth of about $84 billion in 2021. Even after walking away from Microsoft, Ballmer owns over 300 million shares in the company. This alone translates to a multi-billion-dollar investment.
Some of the other ways Ballmer chose to invest his money included:
A roughly 4% stake in Twitter (before he sold his shares in 2018)
Real estate investments in Hunts Point, Washington, and Whidbey Island
Purchase and ownership of the Los Angeles Clippers basketball team for $2 billion.
The rich can make huge investments in the industries that catch their interest, as shown by the numerous businesspeople who have winded up buying sports teams of one kind or another.
Ballmer’s wealth is concentrated in a handful of investments. This is a far cry from the hundreds of investments that come with Buffett’s and other personal finance gurus’ recommendation of buying low fee index funds.
Hedge funds are likewise popular with the wealthy. These funds of the rich require investors to demonstrate $5,000,000 or more in net worth! The sophisticated strategies intended to beat the market are the allure of the funds. But hedge funds charge approximately 2% of fees and 20% of profits. Investors need to get huge returns to support those high fees!
This isn’t to suggest that the wealthy don’t own traditional stocks, bonds, and fund investments—they do. Yet, their riches and interests open doors to other types of exciting and exclusive investments that aren’t typically available to the average person.
It is true that the wealthy have many opportunities not readily available to the middle and lower class. But this doesn’t necessarily mean they are guaranteed higher rates of return. They won’t always beat index funds, but they more often than not can afford to take on this risk. All in all, they are less dependent on steady growth and returns.
Warren Buffett might be the world’s most famous investor, and he frequently touts the benefits of investing in low-cost index funds. In fact, he’s instructed the trustee of his estate to invest in index funds.
“My advice to the trustee couldn’t be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund.”
-Berkshire Hathaway’s 2013 annual letter to shareholders
If a simple, straightforward low-fee index fund is good enough for Warren Buffett, then it’s certainly adequate for the average investor.
Even though index funds aren’t popular among the very rich, they’re still a great choice for the everyday investor. If that’s the category you identify with, you’d be wise to add some to your portfolio. They may not make you rich overnight. However, by capitalizing on the broad long-term gains of the U.S. market, you could accumulate quite a substantial sum over time and achieve your own financial goals.
Disclosure: Fresh Life Advice is an opinion-based website. I am not a financial advisor, and the opinions on this site should not be considered financial advice.
Personal Capital: The Ultimate Tool to track your Net Worth, Budget and more.
What is your investing strategy? When do you know it’s the right time to buy or sell a stock? Let me know in the comments below.
Disclosure: Fresh Life Advice may receive commissions for affiliate links included in this stocks article. However, we only include links to products that we believe in and utilize ourselves. These recommendations are not given out lightly.
The Main Rules of Fresh Life Advice Stock Investing Strategy
Of all the articles published in this blog’s archives, you can really boil down my incoherent ramblings into a few fundamentals that anyone can use to become a wealthy investor:
Save more than you spend. Live below your means to be able to invest as much money as possible and as early as possible.
Choose passively managed index funds or ETF’s (i.e. NYSEARCA: VTI or MUTF: VTSAX) with the lowest expense ratios (less than 0.15%) in lieu of picking individual stocks, mutual funds with high fees, or actively managed hedge funds.
No short-term active trading. Yes, I’m even talking about the GameStop Stock Frenzy.
Buy and hold for as long as possible, preferably forever. The longer you remain invested, the less “rigged” the market is.
Pick a portfolio allocation and stick to it. Asset allocation trumps stock-picking and a constant search for alpha.
With all that being said, sometimes I will occasionally indulge my animalistic instincts and make speculative plays. In these cases, I am essentially betting on a certain equity (stock) to outperform the market.
But it’s important to realize individual stock investing should not be the majority of your portfolio. We are talking less than 20% of your net worth. Think of it as fun money. If you theoretically lost it all, you would not be devastated.
I know, even losing more than a penny, can be devastating to one’s fragile ego.
INVESTING IN INDIVIDUAL STOCKS
Investing in individual stocks and equities can be overwhelming. There are so many options to choose from. How do you know which will perform well?
The truth is… No one knows.
No one can confidently predict the future without knowing. That’s why investing in low cost index funds is such a trusted solution.
In general, the index funds track the overall market performance. Since indexes like the Standard & Poor’s 500 (S&P 500) are composed of 500 large public stocks, they can capture the stocks that do incredibly well. However, they also contain stocks that possibly underperform or file for bankruptcy.
The world usually references the S&P 500 or the Dow Jones Industrial Average as two major indexes that capture the stock market. They are two different indexes, but both are composed of some of the major companies that drive the market.
Although there is no way to tell what the future holds, studying the general market structure and where we are in the current market cycle can help provide a framework for better decision making and future market expectations.
The chart below shows the historical performance of the S&P 500 Index throughout the U.S. Bull and Bear Markets from 1926 all the way up to 2019. It’s imperative to remember past performance is no guarantee of future results. Nevertheless, looking at the history of the market’s expansions and recessions does help to gain a ‘Fresh Life Advice’ perspective on the benefits of investing for the long haul.
On the other hand, the Dow Jones Industrial Average (DJIA) is comprised of 30 large public companies. In the financial industry, the DJIA is used as a benchmark for the largest stock market in the world.
What can you observe from looking at the charts above?
Have a child look at this, and even they will be able to tell you the line goes up over time.
Investing, otherwise known as buying and holding, is notthe same as gambling. If you invest in the market long enough, your investment will increase! Great news for investors!
Due to the former factors, the rate of return for index funds is much more stable than for individual stocks. In other words, the increases and decreases may not be as significant as other equities. This is also what’s known in the finance world as lower volatility.
Stocks are a risky investment vehicle – don’t get me wrong. But index funds are so diversified that it’s nearly impossible for you to lose your entire investment since the fund is unlikely to crash 100% when so many different companies are held in the fund portfolio.
However, as we’ve seen in the past (Covid-19 Correction of March 2020, Financial Crisis of 2008-2009, Dot-Com Bubble of 2000, etc.), investing in individual companies that do go bankrupt can lead to you lose all of your equity in that respective company.
Just remember:
“The markets can stay irrational longer than we can stay solvent…”
– John Maynard Keynes, Economist
Essentially, just because you made the right fundamental investment doesn’t mean the market will treat you fairly. It’s an “Eat-or-be-eaten” world. And the market can easily strip you of all your hard-earned money if you aren’t careful with your risk.
I’m a firm believer that you should never invest in anything that causes you to lose sleep. Dale Carnegie mentions in his famous best-selling book How to Stop Worrying and Start Living.
Without further ado, the two main approaches to use for investing in individual stocks are fundamental analysis and technical analysis.
FUNDAMENTAL ANALYSIS
Fundamental analysis measures stocks by looking at their intrinsic value. For this theory, companies are worth the net present value of their cash flows. Long-term investors study everything from the overall economy and industry conditions to the financial strength and management of individual companies. Earnings, expenses, assets, and liabilities all come under scrutiny by fundamental analysts.
Let’s run through 3 main aspects of fundamentals to check before investing in a stock.
1. Quarterly Earnings
Quarterly earnings are arguably the most important quality of a good stock.
If the company is consistently making money, you will be consistently making money too!
People always like to advise “Let your winners win”. I interpret this as the classic buy and never sell model that Warren Buffett’s mentor, Benjamin Graham, preaches in his book The Intelligent Investor. The underlying basis of this novel is fundamental analysis.
Companies that flaunt consistent earnings beat will see a steady increase in price. This is a major indication that the company is doing something right.
Many investment gurus also claim that past performance does not indicate future results. There is no denying this, but instincts tell us this isn’t painting the whole picture.
Warren Buffett bought more than $1 billion of Coca-Cola (KO) shares in 1988, an amount equivalent to 6.2% of the company, making it the largest position in his portfolio at the time. It remains one of Berkshire Hathaway’s biggest holdings today. Coca-Cola’s iconic name and global reach created a moat around its core soft drink product, so Buffett did not have to worry a competitor would come and take away its market share.
There was a profound perspective Warren touted: no matter who was the CEO of Coca-Cola, the company would still thrive due to the economic powerhouse it had become.
For 99% of the other companies, leadership matters. If a company doesn’t have a strong C-Suite or Board of Directors, the company’s profits may suffer too.
3. PE Ratio
Price-to-Earnings (P/E) Ratio: A ratio used for valuing companies and to find out whether they are overvalued or undervalued.
A highPrice-Earnings ratio indicates that investors are expecting higher growth of company’s earnings in the future compared to companies with a lower Price-Earnings ratio.
A lowPrice-Earnings ratio may indicate either that a company may currently be undervalued or that the company is doing exceptionally well relative to its past trends.
When a company has no earnings or is posting losses, in both cases P/E will be expressed as “N/A.” Though it is possible to calculate a negative P/E, this is not the common convention.
In general, if you see this P/E ratio higher than 30, the stock is likely overvalued unless there is significant future growth planned.
Siegel is the Russell E. Palmer Professor of Finance at the Wharton School of the University of Pennsylvania. He discusses extensively on the economy and financial markets.
PE Ratio in Action
In his novel, Siegel argues that P/E ratio matters. He compares all kinds of stocks. For example, he asks you if you’d rather invest in Standard Oil of NJ or IBM from 1950 to 2003. What do you think?
Initial instinct tells you IBM because of the technological revolution. As a result, IBM did well because investors expected it to do well.
The basic principle of return states that the long-term return on a stock depends not on the actual growth of its earnings but on how those earnings compare to what investors expected.
The results? Standard Oil of NJ beat out IBM by a narrow margin of a 14.42% return vs a 13.83% return.
Although the difference seems small, when you look at equal initial investments of $1,000 in each company, the outcome is astounding!
After 53 years, the small investment in the oil giant yields $1,260,000 while IBM yields $961,000. That’s 24% less…
Who really would want to leave that $299,000 difference on the table? No one.
Siegel also strongly advises reinvesting dividends, just like I do in my monthly income reports. Reinvesting dividends is the critical factor giving the edge to most winning stocks in the long run.
Siegel has stated that IPOs typically disappoint. In fact, he analyzed 9,000 IPOs between 1968 and 2003 and concluded that they consistently underperformed a small-cap index in nearly 4 out 5 cases. That’s a whopping 80%! Others disagree, especially with some of the hottest tech IPO’s that debuted between 2003 and present day.
If you were curious, Siegel has found the best performing stock from 1925 to 2003. Not many would have guessed it, but Phillip Morris, now known as Altria Group (NYSE: MO), dominated.
Phillip Morris (NYSE: MO)
Abbott Labs (NYSE: ABT)
Bristol Myers Squibb (NYSE: BMY)
Tootsie Rolls (NYSE: TR)
I’m sure no one would have expected Tootsie Rolls to be on that list, but chocolate candies were popular during this time!
The top 20 average is 15.26%, versus 10.85% for the S&P 500.
Average PE ratio of these companies is 19.04 versus S&P 500 PE ratio of 17.35.
Note that the average dividend yield is 3.40%, so they return cash to shareholders.
Siegel says if you look at every stock traded from 1925, the best performing stock is Phillip Morris. If you look at the best performing stock since 1950, it is Philip Morris. What is best stock since 1957? You guessed it – Philip Morris.
If you put $1,000 in the S&P 500 in 1957, it would be $124,522 by the end of 2004.
If you had put that same $1,000 in Philip Morris, it would be worth $4.6 million.
Philip Morris has even paid $125 billion to litigants for cigarette liability… And they still have outperformed the rest of the market.
History shows that, on average, just two stocks from the global market-cap top 10 list remain on the list a decade later. The two survivors almost always include the number-one stock.
But the number-one stock has never been top dog a decade later, ultimately underperforming and moving lower in the list. The second surviving stock has 50/50 odds of beating the market. If this history repeats, 9 of the top 10 market-cap stocks will underperform the market over the next 10 years, and just one has a 50% chance of underperforming.
Fundamental Analysis Summary
Companies are worth the net present value of their cash flows
Buy and hold companies priced below their intrinsic value
Markets are 90% rational, 10% psychological
Long-term investors
TECHNICAL ANALYSIS
Technical analysis uses visual patterns on a chart created by price to determine where the market is moving. For technical analysis, traders attempt to identify opportunities by looking at statistical trends, such as movements in a stock’s price and volume. Traders theorize there is no need to pay attention to the fundamentals since they are assumed to be factored into the price already. Technical analysts do not attempt to measure a security’s intrinsic value. Instead, they use stock charts to identify patterns and trends that suggest what a stock will do in the future.
1. RSI Indicator
Relative Strength Index (RSI): A momentum oscillator that is able to measure the velocity and magnitude of stock price changes.
The relative strength index (RSI) conveys a stock’s momentum, where RSI is calculated as the ratio of positive price changes to negative price changes.
RSI analysis compares the current RSI against different conditions.
An RSI value of 70 indicates the stock is Overbought. Recommended Action: Hold or Sell.
An RSI value of 50 indicates the stock is Neutral. Recommended Action: Hold.
An RSI value of 30 indicates the stock is Oversold. Recommended Action: Buy.
When determining whether to buy a stock, you should go through many steps. Some steps are implicit, but all are necessary in the process.
When checking the RSI of a stock, ensure the indicator somewhere between 25 and 45 before pulling the trigger on the ‘Buy’ button.
2. MACD Indicator
Moving Average Convergence-Divergence (MACD): Difference between short-term and long-term exponential moving averages, as plotted against a center line that represents where the two averages equal each other.
The best-known volume indicator is the moving average convergence-divergence (MACD) indicator.
A positive MACD value shows that the short-term average is above the long-term average and the market should move upward. Recommended Action: Hold or Sell.
A negative MACD value shows that the short-term average is below the long-term average and that the market is moving downward. Recommended Action: Buy.
When the MACD is plotted on a chart, and its line crosses the centerline, it shows when the moving averages that make it up cross over.
The MACD indicator is the most popular tool in technical analysis because it gives traders the ability to quickly and easily identify the short-term trend direction. This helps traders to ensure that they are trading in the direction of momentum.
3. ADX Indicator
Average Directional Index (ADX): Uses positive and negative directional indicators to determine how strong an uptrend or downtrend is on a scale of 0 to 100.
Values below 25 indicate a weak trend.
Values over25 indicate a strong trend.
The ADX indicator can be used to dictate if a security is trending or not. This deduction helps traders choose between a trend-following system or a non-trend-following system. The ADX indicator is an average of expanding price range values.
The Aroon indicator is a very similar tool to analyze trends. The ADX is composed of a total of 3 lines, while the Aroon indicator is composed of 2.
The Aroon indicator plots the lengths of time since the highest and lowest trading prices were reached, using that data to ascertain the nature and strength of the trend or the onset of a new trend.
Technical Analysis Summary
Companies are worth what other investors perceive their as their worth
Buy and sell companies based on movement in stock prices
Markets are 10% rational, 90% psychological
Traders
If you want to learn more about technical analysis, a great place to start is Technical Analysis for Dummies. Don’t be too offended by the title. The book really does a great job of taking a complex subject and educating using terms that an average investor can easily digest.
ARE STOCK ANALYSIS METHODS OUTDATED?
We can look at popular stock like Amazon.com, Inc. (NASDAQ: AMZN) and wonder “Is fundamental analysis broken?”
Yet, when we look at the stock price graph above, the stock continued to soar despite overvaluation.
Some of the most popular tech stocks are from the FAAMG acronym, which stands for:
Facebook (NASDAQ: FB)
Amazon (NASDAQ: AMZN)
Apple (NASDAQ: AAPL)
Microsoft (NASDAQ: MSFT)
Google (NASDAQ: GOOGL / NASDAQ: GOOG)
As of April 01, 2021, the market capitalization of these companies summed up to $848.14B + $1.58T + $2.06T + $1.82T + $1.44T = $7.75 trillion.
Each of the stocks in the FAAMG class is in the top 10, by market cap, of the S&P 500 index. Although the five stocks are only 1% of the 500 companies in the index, they make up 22% of the market value weighting in the S&P 500.
Since the S&P 500 has widely been accepted as representation of the US economy, a collective upward (or downward) movement in the stock performance of FAAMG will most likely lead to a similar movement in the index and the market.
Some experts are predicting another tech bubble and market crash like the one in 2000.
However, some analysts have noted that there is a major difference this time. Nowadays, there is plenty room for the current tech class to grow as areas of cloud computing, social media, e-commerce, artificial intelligence (AI), machine learning, and big data are still being explored and developed.
Only time will tell.
It feels like everyone is day trading or hitting the jackpot. Remind yourself to stay on your own investing course. Boring and slow often is the way to wealth.
USING FUNDAMENTAL AND TECHNICAL ANALYSIS TOGETHER
The Efficient Market Hypothesis argues that asset prices reflect all available information, so you cannot reliably use fundamental analysis (expert stock selection) or technical analysis (market timing) alone to outperform the overall market.
Should you buy what’s been working? Pour money into your losers? Pick new stocks altogether?
Yes, buying individual stocks offers the potential for greater gains but it also opens you up to all sorts of psychological pitfalls that don’t necessarily apply when owning the entire stock market.
The problem for many investors these days is they only believe in their stocks when they’re rising. If you don’t believe in those same stocks when they’re falling, you have no business owning them over the long haul.
You don’t have to meticulously study the stock market day in and day out like some hedge funds or financial analysts, but if you keep an occasional watchful eye, you will be able to tell when the stock market is hot or cooling off.
Buy low, sell high. You’re well aware of this trite advice, but it’s easier said than done. When you’re experiencing 30% – 50% drops of your entire net worth within months, and even in the short span of days, are you really going to have the discipline to refrain from panic selling?
FREE STOCK ANALYSIS TOOLS
One of the best free tools used to track the state of the market is the Fear and Greed Index.
Use this to your advantage to buywhen others are fearful.
Hold (or sell) and enjoy watching your gains skyrocket when most investors are greedy.
Other free tools I frequently use to compare stocks include the following:
This is, by all means, not the most comprehensive method of buying stocks. However, I can guarantee you’ll have an edge over the average Joe.
One of the biggest reasons why I believe my portfolio has outperformed the S&P is pure luck because I never sell. I’ve never sold a stock.
And I don’t plan to until I actually need the money. You ask – when will that be, FLA?
Once I’ve left my corporate 9-5 job, I will live off the dividends of my stocks to financially support my ideal retirement.
WIN OR LOSE
Don’t forget that for every stock buy, there is someone on the other side of the deal that is selling their shares. That’s mainly where you see the buy / ask price. The broker is looking for a seller that agrees to the asking price.
The bid price refers to the highest price a buyer will pay for a security. The ask price refers to the lowest price a seller will accept for a security. The spread is the difference between these two prices. The smaller the spread, the greater the liquidity is of the given security.
For every stock transaction, there will be a winner and loser. Which side will you be on?
Disclosure: Fresh Life Advice is an opinion-based website. I am not a financial advisor, and the opinions on this site should not be considered financial advice.
Personal Capital: The Ultimate Tool to track your Net Worth, Budget and more.
What is your investing strategy? When do you know it’s the right time to buy or sell a stock? Let me know in the comments below.
So what is going on with GameStop stock? What has happened to the stock ticker NYSE: GME? Let’s break it down into layman’s terms and explain this roller coaster ride of a company.
GameStop Corp. went from being nearly bankrupt to seeing its shares up by 2,000% in less than a week — but how did it happen, what’s Reddit have to do with it, and is it even legal?
First, let us define some financial terms.
What Does This Have To Do With Hedge Funds?
Hedge Fund: A group of investors with large amounts of capital – think in terms of billions. These funds hire analysts to track trends in the market to “hedge” against changes in the future.
Point72 Asset Management, Melvin Capital, Citron Research, D1 Capital Partners, Maplelane Capital, and Candlestick Capital Management are all hedge funds that have suffered immense losses, some in the range of billions of dollars, due to the events that have unfolded around GameStop Corp.
How Does Short Selling Work?
Short Selling: Basically, you borrow a stock on credit, and sell it to someone else. Then, you offer to buy it back when the price decreases. Ultimately, you gain the difference in price and it has been the traditional way to gain money off a market crash or decline.
I’d recommend watching the movie The Big Short as it effectively delves into how short selling was pragmatically utilized during the Financial crisis of 2007–2008. The movie also helps to visualize how the economic collapse in America transpired.
In addition, it may be helpful to watch Season 1 Episode 4 of the HBO show Billions because the episode conveys a prime fictitious example of a short squeeze.
Short Squeeze: When two of these hedge funds get into a financial argument, one fund often shorts because they think the stock will go down, and one buys because they think it will go up. The one buying attempts to buy faster than the stock was dipping to put pressure on the shorter to buy back stock to cover its losses.
Okay, thank you for making it this far, very boring, I know.
GameStop Stock (GME) Frenzy
So what happened is there’s a group of individuals on Reddit that like to gamble on stocks (it is speculative gambling, some may argue investing, but advisors can assure you otherwise) called WallStreetBets (WSB). These guys are as young as 17 years old, using new apps like Robinhood that make investing cheap and easy.
WSB were tracking a regime change at GameStop (yes, that video game store). For those of you unfamiliar, GameStop is an American video game, consumer electronics, and gaming merchandise retailer.
GameStop Corp. got a new investor that wanted to change the business strategy there, citing management problems being the biggest issue for the failing company. The investor started working on developing an online presence for the company to buy/rent/sell games for better prices than they were currently offering. This amelioration took the price from about $4 per share in June/July of 2020 to upwards of $10 per share in August/September of the same year.
This was a problem though… “But stocks going up are good, right?” Right… Unless you were shorting the stock due to a guaranteed decline on the back of an outdated business model turning negative revenue.
That’s right, our old friends – those aforementioned hedge funds, had shorted GME upwards of 140% of the available GameStop stock. This was actually such a heavy short that it was contributing to the decline of the stock price up until the regime change.
Meanwhile, on the subreddit WSB, some of these guys figured it out, and began buying the stock, simultaneously encouraging others to buy as well. The stock even got an unexpected bump from Tesla’s / SpaceX’s CEO Elon Musk’s tweet.
See, the hedge funds were so confident they could keep the price down, they did not anticipate a short squeeze, but a couple hundred thousand people on the Internet got together and began squeezing anyway. And squeezing, and squeezing until BOOM…
Suddenly, GME hits all-time highs $100, $150, $200, $300, and $400 per share. At its highest peak, the company was valued high enough to be in the Fortune 500. Yes, you read that correctly. GameStop in the Fortune 500! This is all occurring while GameStop’s physical stores are closing down from lack of business during a global pandemic.
This hit the hedge funds so hard that they borrowed (legitimately) almost 3 billion dollars to short against a couple hundred thousand guys on the Internet.
Some of these WSB guys (and teenagers) have made between $100k and $25 million. They are paying off student loans, medical bills, paying their way through college, etc.
And the hedge funds? Some of them are reporting a 100% loss (in the billions of dollars, mind you).
Why Is This Significant? Should I Care?
Why is this significant if there’s no way this can last? Yes, GME will go back down probably to $20 and there’s no way to tell when. It’s a ticking time bomb of a stock.
But, some of these same hedge funds were bailed out between 2008 and 2010 by the federal government. Guess what. These funds were just taken to the cleaners by a bunch of college-aged common folk with nothing but a free app and a Discord server so they could pay for college and also get rich.
Don’t let anyone tell you that this was some sort of illegal scheme or the poor fund managers are losing too much money. These games are played on Wall Street all the time. That’s just the way the system is set up. This anomaly proved that anything can happen.
How Much Money Are We Talking?
Here’s the original guy on Reddit posting his 20 MILLION DOLLAR gain in ONE DAY. For a grand total of 48 MILLION DOLLARS LEFT IN THE MARKET.
He bought 500 call contracts (100 shares per contract ) at $0.20 per share and bought 50,000 shares at about 15 dollars per share. For context, if the trend theoretically continued, GME would hit $2k per share in a few weeks, and he will have more money than the entire market cap of GameStop was worth in July 2020.
Where To Go From Here
In modern times, it feels like everyone is day trading or hitting the jackpot. Remind yourself to stay on your own investing course. Boring and slow often is the way to wealth. These market success stories that trickle into the mainstream media are there to grab your attention.
For every person that’s winning big, there’s also someone on the other side of that coin that may have lost their shirt. You rarely hear about those stories because they are not “newsworthy”.
Some people have higher risk tolerances than others. It’s ultimately up to you to determine whether you can stomach the volatility of some of these individual stocks. Is it worth the stress? Can you sleep soundly at night?
As for FLA, we are going to continue touting the index funds that have produced sound returns since the beginning of the stock market. The great news is that we don’t have to be the world’s greatest investor to benefit from this phenomenon. I mean, if FLA lucked his way into this, I think the rest of us will do just fine.
With some of the index funds, you can also rationalize that you do in fact own a small portion of GameStop via the index, along with every other stock in the U.S. market. At least, that’s how I help myself sleep at night.
With enough time and patience, nearly every investment you hold can turn into a money printing machine. And that’s when the compound interest starts to go crazy.
End Game for GameStop Stock
The GameStop C-Suite and board of directors are indeed shareholders of GME and are most likely in awe of their stock’s dramatic increase. We can be sure they have had intense meetings to decide on the next company maneuver.
As of the recent short squeeze, there are simply not enough shares of the GameStop stock to meet the demand in the market. That’s exactly why the stock has skyrocketed. But if GameStop can fill this gap, by raising capital, selling stock, and supplying shares to the market, then they will make a hefty profit.
However, given that the shareholder base is a bunch of teenagers from a subreddit, GameStop should know better not to take money from these people at $200+ per share, let alone the huge commissions that will probably go to Wall Street in a capital raise like this.
All in all, this business is unlikely to support such a high valuation. GameStop is not suddenly the new Facebook, Apple, Amazon, Netflix, or Google. It’s still mostly a business that derives its value from brick and mortar stores in malls. If you look around, you know that this is not exactly a big growth area in the coming years.
The WSB community has made a quick buck from the power of technology and online forums, but will it change the way Wall Street operates in the future? I doubt it. To be determined.
These amateur investors have also targeted other heavily shorted names including AMC Entertainment and Bed Bath & Beyond, leaving Wall Street analysts’ targets in the dust.
Robinhood has now restricted users from buying GameStop, AMC, BlackBerry, Nokia stock to stop the madness. I do not see how Robinhood remains unscathed after limiting its users like this.
Disclosure:I / We have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. This site does not receive direct compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
What are your thoughts on the GameStop frenzy? Let me know in the comments below.
As the holiday season is finally here, Fresh Life Advice is giving you all presents. I present to you my favorite top 10 best money blogs to improve your personal finance knowledge.
Collectively, these best money blogs incorporate topics on investing, retirement, estate planning, budgeting, saving, estate planning, mortgages, and many more money related subjects. Their articles are packed with information that keep you stimulated throughout your own personal finance journey.
“If I have seen further, it is by standing on the shoulders of giants.”
-Isaac Newton, Mathematician
What was Newton referring to?
He had the brilliant idea of using knowledge bestowed upon him by great thinkers of previous generations and utilizing their fundamental principles to propel his own understanding to a higher level.
We can apply this same philosophy to personal finance. As you read about me, you know that I’m always looking to learn and advance. Consistent success and growth stem from constant self-improvement.
As you follow FLA through my expedition to early retirement, I will make plenty of mistakes. Inevitable mistakes.
The wise ones with plenty of experience are aware that the path to success is not a straight line. It’s a zig-zag, circular, loop-de-loop type of path that will lead to failure after failure after failure. But the successful ones do not succumb to such intimidating obstacles in their way. They continually battle and never give up. This has been one of the most important lessons I have ever learned.
As I’m always learning and reading, I would like to share with you some of my favorite finance and money blogs that I religiously read. Some of these people have already achieved financial freedom. They represent role models that show you early retirement has been done before or will be completed. Myth debunked.
Fresh Life Advice, on the other hand, is trying to give you a perspective of the beginning of the journey. I want you to learn from my mistakes so you don’t make the same ones.
Top 10 Best Money Blogs
Hopefully, I will be able to collaborate and work with these bloggers in some type of way in the future. The old adage claims that two heads are better than one. Without further ado, below are some of the best money blogs:
My Money Wizard commenced in 2015, and I’ve been an avid reader ever since. Sean works as a financial analyst so he does have a background in economics. Whether it’s touting index funds or analyzing the optimal order in which to invest your money, I see many parallels between FLA and The Money Wiz. Sean’s been tracking his net worth every month and is on track to retire by age 35. My Money Wizard is one of the most humble and down-to-Earth blogs you will see in the Personal Finance blogosphere.
J. Money was one of the first in the game to publicly track his net worth in 2008. With such transparency, this best money blog allows you to track your own net worth alongside J$ to see if you are on pace for your own goals. J. Money made downloadable Excel spreadsheets that will aid with budgeting and net worth tracking. In 2019, J. Money sold the attention-grabbing blog Budgets Are Sexy to The Motley Fool.
Joel has now taken over the blog in 2020 and is one of the most dedicated bloggers I’ve read. Joel wakes up every single day, weekday and weekends, at 5 AM to seize the day. Although this lifestyle may not be for everyone, including his own wife, Joel’s productivity in Los Angeles is through the roof.
Grant’s incredible claim to fame was going from being broke with a balance of $2.26 in his bank account to saving over $1 million in less than 5 years. Grant was earning $50,000 a year in his day job and saving about 20 percent, but he knew it wouldn’t be enough. So he launched a side hustle building websites for law firms, and invested the vast majority of what he made in index funds. Now, Millennial Money has appeared on every major news outlet, and Grant has even gotten to hang out with Rachel Ray to promote his book Financial Freedom.
In 2009, Sam began writing Financial Samurai. Sam did not graduate from any Ivy League school, but he still managed to outwork his competition and got a job for Goldman Sachs out of college. In 1999, he made a $3,000 investment in VCSY and was blessed with a 5,000% return from the Dotcom Bubble. Part of it was luck, but he had done his research, and the big risk paid off immensely. From there, Sam never looked back. He worked his way up the corporate ladder and became a Vice President of his company by age 27. After saving more than 70% of his after-tax income, he was able to retire at age 34 in San Francisco with a net worth of over 2 million dollars. Sam now writes via Financial Samurai for an audience of over 1 million readers every single month. As an expert in negotiating and wealth management, Sam always generates profound posts that make you truly think.
Mr. Tako is one of the wealthiest bloggers that discusses money. Despite what you would assume, his wife and him did not work on Wall Street, receive a large inheritance, sell stocks before the financial crisis of 2008, or flip real estate. No, in fact, Mr. and Mrs. Tako have just been disciplined investors that have weathered the uneasy storm of harsh financial markets and have worked hard to retire at the age of 38. They now enjoy cooking delicious meals and homeschooling their 2 sons in their home in the Pacific Northwest of the U.S. Mr. Tako often provides insightful commentary and predictions about individual equities. His whole reason for writing Mr. Tako Escapes is to document financial independence and provide a resourceful guide for both of his sons to use when they grow older.
Jacob is not only the creator of Early Retirement Extreme but also seems to be the founder of the FIRE movement altogether. Mr. Fisker is one of the most frugal people you will read about with expenses so low that he will make you question your own annual purchases. After living a thrifty life as a PhD astrophysicist and biking to all of his destinations, he was able to free himself of Corporate America by the astounding age 33. In his book Early Retirement Extreme, he explains how his smart financial choices and simple living brought him financial freedom at such an early age.
Another one of the best money blogs is Get Rich Slowly, authored by J.D. Roth. He is a self-proclaimed “professional nerd, accidental personal-finance expert, dog lover, and whiskey drinker.” With so many personal finance sites on the web, J.D. stood out by documenting his struggles to get out of debt in 2006. The idea behind Get Rich Slowly was to convey that there are no shortcuts to achieving wealth. Everyone wants a get-rich-quick scheme, but J.D. exalted the idea of delayed gratification.
When people think of the FIRE movement and best money blogs, usually Mr. Money Mustache is the first person that comes to mind. Many note Pete’s blog as the first website that got them hooked into the pursuit of Early Retirement. MMM developed an iconic yet simple chart that showed if you started saving more money, you’d be able to cut down your working years by a significant amount of years. This, in turn, saved many people the headache of continually slaving away in the office. Pete was a software engineer who reached total financial independence at the ripe age of 30. After he promptly quit his job, he started a side construction business as a hobby. The man with the wacky blog name now enjoys his freedom fully with his wife and son.
Jeremy and Winnie were able to hit financial independence in their 30’s. Go Curry Cracker and his wife pride themselves on traveling and exploring the world. The Go Curry Cracker site has many travel hacks, tax tips, and great insight to get you the best bang for your buck. By saving and resisting the splurge on unnecessary purchases, this couple now enjoys more annual vacations than they could ever imagine. With a playful yet analytical tone, Go Curry Cracker shows you how you can make the world your adventure too.
J.L. Collins is a FI blogger that is most noted for The Stock Series. Starting out selling flyswatters door-to-door, he is now an accomplished consultant, speaker, and author of one of the best money blogs. J.L. is also an avid index fund investor and world traveler. Based off of his blog, he’s written a book The Simple Path to Wealth, which chronicles his rags to riches life. J.L. Collins discusses controversial dollar cost averaging (DCA) and other interesting investment strategies on the honest best money blog.
Moreover, the Internet is a vast endless space so this list is ever-growing as I read and find more interesting sites along my journey. I’m always looking for new recommendations because an important part of life is the continual pursuit of education and self-growth. With that being said, I cannot limit the list to only 10 websites, so I must also present the honorable mentions for the best money blogs.
The story of Chris and Jenni stems all the way back to middle school, when they first met. After going to high school and college together, they eventually got married with similar financial goals. Chris and Jenni reached FI at age 33 to retire early at 35. Their goal became a reality. Chris and Jenni offer principals they learned along the way that readers could adapt to their own lives. They even started a Reader’s Fund, which generously donates monthly to non-profits of the blog readers’ choice! This Donor-Advised Fund is something FLA hopes to start too and something other best money blogs should mimic for the greater good.
Impersonal Finances is written by a man in his 30’s living in the San Francisco Bay Area. Despite what you may have predicted, he does not work in the tech industry. His blog chronicles how it’s possible to live in one of the most expensive areas in the U.S. but still retire early through consistent investment and constant saving. IF has one of the best senses of humor around that makes personal finance enjoyable to read.
Noel is 2nd generation Chicano union carpenter with a lot of soul. He is not only a veteran of the Iraq War but also has backpacked around the world…twice. Is there anything this blogger can’t do? His travel has given him and his wife a taste of retirement. The site Happily Disengaged talks about consumerism, the corporate rat race, and anything to do with commuting on a freeway. With the eventual dream of living in Spain full time, Noel writes this blog to make both of his daughters proud.
If you have a career as a physician, then the Physician on Fire site is for you. Even if you are not a physician, you can learn so much from Lief’s approach towards money and his financial independence journey. He is an anesthesiologist by day, but he makes sure family comes first. PoF is definitely not afraid to speak his mind, and that’s exactly what you want in lieu of the slimy financial advisors that beat around the bush to make a quick buck off of your ignorance. All in all, Lief covers topics from income earning to credit cards and much more. You can look forward to his weekly series The Sunday Best, where he features other refreshing reads from around the personal finance blogosphere.
Founded in 2016, Kelan and Brittany have a mission as The Savvy Couple to help families learn how to budget their money, organize their life, and unlock the freedom to do more of the things they love! This pursuit is simple yet very admirable. Once children are introduced into the mix, expenses and budgeting are thrown to the side, but Kelan and Brittany are there to keep you in line using tools such as the Eisenhower Matrix, automating systems, and outsourcing menial tasks.
16. Financial Fred – Fred
Financial Fred is written by who else, but Fred himself! As a millennial in these fast-paced times, Fred advocates that everyone should become more financially responsible. He loves to read and write about finance, economics, and how emotions affect our decisions. Currently working on his CPA designation, he’s had several management and executive roles within the field of finance. Thus, you can trust that Fred knows what he’s talking about.
In 2016, Graham took a year off from working as a stock broker in Toronto, Canada. He mused and took time to prioritize his financial goals in life. From then on, Reverse The Crush was born. If you’re looking to build income streams through blogging and dividend investing to reach financial independence, then Reverse The Crush is the place to start.
No, Sean and Simone do not currently own a farm. But the name Our Intentional Farm is “about planting seeds of intention to reap a well-balanced and joyful life.” With the hopes to inspire and encourage others in similar financial situations, Sean and Simone show you how to keep track and rid yourself of debt. These are compelling articles that are not hypothetical situations. Instead, they represent real-life struggles to learn how to manage finances. The style is relaxed, while the content is rich.
19. The Working At Home Man – Matt
The Working At Home Man name is pretty self-explanatory. Matt has been working from home ever since 2017 only to discover that working from home has many more benefits to working in the office. If you’re looking to live a similar lifestyle, then Matt has plenty of resources to help you on your path to financial independence. The Working At Home Man also publishes monthly updates along with his portfolio progress.
Common Cents Lifestyle came to life after Ashley found her passion in helping others with personal finance. She currently holds an MBA and has spent her expansive career in the world of finance. Ashley has a great understanding of retirement accounts, insurance, and general business. She even has a successful track record of growing several small businesses to medium-sized business. In her free time, Ashley loves to travel and ski. Not a bad way to spend your free time.
21. Max Out of Pocket – Max
Max Out of Pocket is not just a fun pun. In truth, Max created this blog with a wealth of knowledge from both the healthcare industry and the personal finance space. Armed with answers to every medical question you may have, Max shares information from his experience of working more than a decade in the American healthcare system. Knowing how the corporate world can be rewarding, toxic, and addictive, Max is here to help make your mental and physical life easier.
D4J has one of the most creative names on the list. Some live and die by stock dividends. Dividends have yet to fail D4J. D4J writes the Divs4Jesus blog, including some pretty good stuff about investing. I’ve learned a thing or two from reading this blog, which means it definitely merits inclusion into the best money blogs honorable mentions. He shows how a diversified portfolio of 33 stocks and bonds can provide considerable passive income. For those of you who didn’t know, Jesus’ age at the time of his death was also 33.
GenY Money a fun site that’s chock-full of great material to help you manage your finances. As you probably have guessed from the site name, GYM is a member of Generation Y. She’s here to prove that Gen Y is not entitled, spoiled, and lazy after all. Gen Y can be very good with money, and GYM has all the tips for you to learn. In her 30’s and living in one of the most expensive cities in Vancouver, British Columbia, Canada, GYM shares net worth updates along the way to the target $1 million goal by age 40.
Jordan is the creator of FIRE Your Own Way. Discovering FIRE is life-altering for many, and the story was no different for Jordan. She was able to save over $200,000 by age of 30 and is now well on her way to retire by 40. As a fellow proponent of experimentation and optimization, Jordan continues exploring for different ways to Financial Independence. Whether you want to retire early or retire eventually, Jordan is there to shed light on the process.
Mr. Robot is not actually a robot. Artificial Intelligence running personal finance blogs may become the norm, but humans are still generally the faces behind these sites. Financially free in 10 years is exactly what it sounds like. A Dutch man in his mid-30’s using the pseudonym Mr. Robot works in IT by day and runs this blog at night. Mr. Robot aims to retire at age 55 to enjoy the most of his freedom with his wife Mrs. Robot and child Lil’ Bot in The Netherlands. Like FLA, Mr. Robot also enjoys sports and movies in his free time. Without fail, Mr. Robot is the go-to guy for an obscure movie reference or sound personal finance advice.
When I read Kevin’s story, what struck me was the mentality he adopted to take control of his money. That is, he decided to look at his personal life as a business. He looked for ways to lower expenses, increase revenue, and pay down debt. It’s inspiring to read, and he continues to write insightful posts.
Fresh Life Advice will keep a running list of the best money blogs that will be continually changing, as this list is not intended to be comprehensive.
Fortunately, I have come to known some of these sites’ creators on a personal basis. I can assure you these people truly do want to spread financial knowledge to as many readers as possible. Readers that are earnestly searching for personal finance knowledge. All of these best money bloggers have a passion for helping others navigate the often confusing world of personal and business finances.
The aforementioned blogs should make for plenty of reading material to keep you busy during the holiday season! I really hope you learn something interesting from reading all of those amazing money, investing, and personal finance blogs!
If you have any websites or niches that come to mind, please include them in the comment section below. I cannot promise to add them, but I can guarantee I will check them out and read as much as I can.
Happy Holidays and Happy New Year to you and your family!
