Eight Keys to Financial Security

Yesterday, an article on Kiplinger suggested some steps to secure your financial future, though I don’t agree with all the suggestions (especially the “pay cash for everything else”).

1. Invest in yourself
Your own earning power is the most valuable asset you’ll ever own, and it can’t be wiped out in a market crash. Keep your earning power growing through continuous education, training and personal development.

2. Protect yourself and your loved ones
Before you acquire any financial assets, make sure you have enough insurance against life’s big risks – serious illness, disability and early death.

3. Borrow sparingly
Use credit only to purchase things of lasting value: a home, education, maybe a car. Pay cash for everything else such as clothing, travel, entertainment and furniture.

4. Pay yourself first
Make the first check you write each month a deposit to your mutual fund, money market or brokerage account. Then pay all your regular monthly bills, finishing up with the credit card bill.

5. Don’t go for the home run
Don’t try to time markets, because no one does it consistently well. Use dollar-cost averaging to invest regularly in markets good, bad and lackluster. Have the patience to wait out the occasional (and inevitable) bear markets.

6. Diversify, diversify, diversify
But successful investors have always known that any one class of assets – stocks, real estate, bonds, cash – will have its day in the doghouse and its day in the sun.

7. Live simply today for a more comfortable tomorrow
Deferred gratification is no fun, but it’s the only way to fund your long-term goals – college for your kids or grandkids, that vacation home you’ve always wanted, early retirement, a generous bequest to your alma mater.

8. Give generously to create a better world
Your own financial security depends far more than you may think on the financial, physical and spiritual health of others in your community, our nation, our world. When you share your good fortune by donating your money, time and talent to charity, you help create a stronger economy and a healthier, safer world.

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