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9 important money concepts to understand before you’re 30

1h Tim Clayton/Corbis via Getty Images There are a few money concepts everyone should know by the time they’re 30 if they want to build wealth . Compound interest , bear market and bull market, and diversification are important terms for investors. Net worth , interest, and inflation are good for even non-investors. When it…

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9 important money concepts to understand before you’re 30

1h Tim Clayton/Corbis via Getty Images There are a few money concepts everyone should know by the time they’re 30 if they want to build wealth . Compound interest , bear market and bull market, and diversification are important terms for investors. Net worth , interest, and inflation are good for even non-investors. When it comes to personal finance, education is power.

You may have spent your 20s developing some bad money habits — and hopefully kicking them — but as long as you master some important money concepts by the time you hit 30, you’ll be well on your way to building wealth. Here are nine fundamental money concepts every 30-year-old should know: 1. Net worth “Your net worth is a measure of your financial health,” said certified financial planner Mary Beth Storjohann, founder of Workable Wealth . It’s the result of your total assets minus your liabilities, or the amount you owe.

“Net worth can also be used to measure how far you’ve come over time,” Storjohann says. You’re in good standing if your net worth is well into the positives, and you have some work to do if your net worth is anywhere in the negatives. 2. Inflation Inflation is the increase in the price of goods and services over time.

Historically, the rate is 3% per year, Storjohann says. As prices rise due to inflation, the power of your dollar diminishes. “What’s most important is whether your income is rising at the same rate as inflation,” Storjohann says.

Use this inflation calculator to find out if your salary is keeping up with the annual inflation rate in the US.

3. Liquidity “Liquidity is how accessible your money is,” Storjohann says. Cash is the most liquid your money can be, because you can access it immediately. “Your emergency fund should be in a cash account since it needs to be readily available in case of an emergency,” Storjohann says. You may also store your emergency fund in a money market account — another safe and liquid alternative — where you can earn 1% interest on your money. In contrast, assets such as your home or your retirement accounts are the least liquid. The money isn’t at your fingertips, but rather invested, allowing it to gain value over time. Likewise, Storjohann says, “Money you have invested in the stock market is not as available, because you risk losing some of it if you take it out.

” 4. Interest Interest is a double-sided coin. When it comes to saving money, “Interest means your money is going to work for you,” Storjohann says. When you put your money in a savings account at a bank, you’re letting that bank borrow your money.

Interest is what they pay you to borrow it; it’s a percentage that can go up or down depending on the state of the economy. Most traditional savings accounts have an interest rate of 0.

01%, whereas a high-yield savings account could earn you 1% interest on your money. On the flip side, when you borrow money from someone — whether your credit card issuer or your student loan lender — you pay interest to them for borrowing that money. The longer you take to repay a loan, the more you’ll pay in interest. 5. Compound interest Compound interest is on your side; it’s basically the snowball effect applied to your money.

As time goes on, the money in an account will earn interest, and that sum of money will earn interest on itself, and so on. Here’s an example: If you deposit $100 with an annual interest rate of 7%, after a year you’ll have $107. The following year, you’ll be earning 7% interest on $107 so you’ll earn $7.49 instead of $7. Compound interest is the bedrock of the financial world.

Specifically, it can make all the difference when saving for retirement as it rewards those who start saving early and often. 6. Bull market A bull market refers to a market where stocks are up 20% from a low. A bull market typically means the economy is in a good state, and the level of unemployment is low.

7. Bear market Just the opposite of a bull market, when stocks are down 20% from a high, it’s called a bear market. Share prices are decreasing, the economy is in a downfall, and unemployment levels are rising. It sounds like a bad thing (and it certainly isn’t good), but Storjohann says the most important thing to keep in mind is that the stock market is a “roller coaster,” meaning it’s bound to go up and down and people shouldn’t panic every time the market takes a turn. “Millennials have time on their side,” she explains, “and over time, money has the ability to grow.

” 8. Risk tolerance If the stock market is a “roller coaster,” according to Storjohann, your risk tolerance is how comfortable you are weathering the ups and downs. “It’s about whether you understand the cycle or stress out about it,” she says.

If you have a high risk tolerance, you may get excited during a market downturn and choose to be more aggressive with your investments. If you’re risk-averse, however, you’ll tend to be less aggressive, or perhaps steer clear of the market all together. Risk tolerance isn’t just emotional, though.

Ultimately, it depends on how much time you have to invest (your age), your future earning potential, and the assets you have that are not invested, such as your home or inheritance.

Major banks such as Wells Fargo , Merrill Lynch , and Vanguard provide online tools to help determine your own risk tolerance. 9. Asset allocation and diversification Asset allocation is the balance of risk and reward and the basis of diversification, which allows you to effectively spread your wealth. Take a low-cost target date fund , for example. It’s a diversified retirement account that invests your money into a combination of stocks, bonds, and alternative assets and automatically adjusts your asset allocation and risk exposure based on your age and retirement horizon. If you keep your eggs “all in one basket,” as Storjohann describes it, what happens to your wealth if the basket falls and breaks? You’re going to want money stored elsewhere. “Diversification allows for balancing,” Storjohann says. “You give up some upsides, but you lower some downsides.

” Original reporting by Sarah Schmalbruch.

Personal Finance Insider offers tools and calculators to help you make smart decisions with your money. We do not give investment advice or encourage you to buy or sell stocks or other financial products. What you decide to do with your money is up to you. If you take action based on one of the recommendations listed in the calculator, we get a small share of the revenue from our commerce partners. Disclosure: Axel Springer is Business Insider’s parent company.

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There are 3 fundamental money concepts most people still don’t grasp

Author and financial expert David Bach says many people still don’t understand some personal finance basics. Bach is a champion of the “pay yourself first” strategy, which prioritizes automatic savings . He also says it’s important to understand how your money can grow in a retirement account, and that you can’t predict the stock market.…

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There are 3 fundamental money concepts most people still don’t grasp

Author and financial expert David Bach says many people still don’t understand some personal finance basics. Bach is a champion of the “pay yourself first” strategy, which prioritizes automatic savings . He also says it’s important to understand how your money can grow in a retirement account, and that you can’t predict the stock market. Personal finance is a complicated subject, and chances are you weren’t required to take an introductory financial literacy course in high school or college.

Perhaps you, like me, were left to school yourself on topics like investing, taxes , debt, and saving for retirement once you entered adulthood.

As commendable as that may be, David Bach, who has spent 25 years in the wealth management industry and is the author of ” The Automatic Millionaire ,” says there are three simple, basic money concepts that many of us are still missing.

1. You need to ‘pay yourself first’ “People still don’t grasp the fact that they need to save a dime out of every dollar,” Bach told previously Business Insider in a Facebook Live interview . He said that the average American who’s saving money is saving just 15 minutes a day of their income, when they should be saving an hour .
Bach noted troubling research from the Federal Reserve that revealed nearly half of Americans wouldn’t have enough money on hand to cover a $400 emergency. Yet, he continued, millions of those people will buy a coffee at Starbucks today and expect to buy the new $800 iPhone next year. Americans have money, he says, but we aren’t saving it.

“It’s an American crisis. That’s why I’m still doing this at 50, because there’s still so many people that aren’t getting it,” Bach said.
So get on the “pay-yourself-first plan,” as Bach calls it, and automatically save an hour a day of your income. “When that money is moved before you can touch it, that’s how real wealth is built,” Bach, who became a millionaire by age 30 by increasing his automated savings over several years , told Business Insider.

Check out these offers from our partners to grow your savings:
2. You don’t ‘buy’ a retirement account Bach says that many Americans are confused by IRAs and 401(k)s and believe that they “own” a retirement account.
In reality, he says, “the retirement account is just a bucket and their investment is put inside that bucket. It’s those investments that go inside that bucket that create the return.


When you sign up for an employer-sponsored 401(k) you are contributing a designated percentage of your pretax income to that “bucket.

” As time passes, that money will compound and grow tax-free until you withdraw it upon retirement. In 2019, you can contribute up to $19,000 to your 401(k), or $25,000 if you’re over age 50.
Find out how much money you’ll need for retirement:
If you open up an individual retirement account, like a traditional IRA or Roth IRA , you can contribute up to $6,000, or $7,000 if you’re over 50, to each account in 2019.

The money in a traditional IRA will grow tax-free but is taxed upon retirement, whereas the money in a Roth IRA will be taxed before it goes into the account and is tax-free to withdraw upon retirement.
3. The stock market isn’t predictable Investing in the stock market is risky business , and it isn’t for everyone.
Still, Bach says he’s “constantly surprised” that people think they’re going to figure out the best time to buy and sell stocks by watching a TV show or reading an article. Unfortunately, the stock market is incredibly hard to predict, and trying to time it is often fruitless.
“You’d be better off with a boring, balanced approach that you invest systematically every two weeks and you leave it alone for your lifetime,” Bach said.

“And that’s not sexy, and that may not sell, but that’s what works.”
Personal Finance Insider offers tools and calculators to help you make smart decisions with your money.

We do not give investment advice or encourage you to buy or sell stocks or other financial products. What you decide to do with your money is up to you. If you take action based on one of the recommendations listed in the calculator, we get a small share of the revenue from our commerce partners..

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Dollar General will open 975 stores this year – CNN

New York (CNN Business) Dollar General keeps expanding even as discount rivals like Family Dollar shrink. The company said Thursday it will open 975 new stores in the United States this year. Dollar General will remodel 1,000 older stores with new queue lines to drive last-minute impulse buys. It will also spruce up its health…

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Dollar General will open 975 stores this year – CNN

New York (CNN Business) Dollar General keeps expanding even as discount rivals like Family Dollar shrink.
The company said Thursday it will open 975 new stores in the United States this year. Dollar General will remodel 1,000 older stores with new queue lines to drive last-minute impulse buys. It will also spruce up its health and beauty sections to lift sales. Dollar General has been growing for years in rural America. Dollar General ( DG ) opened 900 stores in 2018 and 1,315 the year prior. It has more than 15,300 stores across the country and sales have increased for 29 straight years. Despite a strong economy today, the uneven recovery in the United States has buoyed Dollar General .

“While the economy is doing very well, our core customer continues to struggle,” Dollar General chief executive Todd Vasos told analysts last year. Vasos said on Thursday that Dollar General is preparing for the consumer environment to weaken in the second half of the year. Read More The chain caters mainly to low-and-middle-income customers in rural and suburban areas. That helps it stand out against suburban chains like Dollar Tree ( DLTR ) and Family Dollar, which focuses on urban customers.

Family Dollar has struggled in recent years and will close nearly 400 stores this year . Family Dollar will close nearly 400 stores Dollar General looks to build stores in rural areas where big box retailers or grocery stores are not within 15 or 20 miles. That gives the company close proximity to shoppers and compels more frequent store visits.

The company says 75% of its locations are in towns with 20,000 or fewer people. Dollar General even surged during the holidays. Dollar General’s sales at stores open at least a year increased 4% during its most recent quarter compared with a year earlier, beating analysts’ expectations. The US government shutdown boosted Dollar General sales by 0.7% last quarter because the Agriculture Department doled out February SNAP benefits early, the company said.

It also got a lift from more shoppers buying food and home products, such as kitchenware and small appliances.

Despite strong sales, Dollar General’s stock dropped around 9% in early trading Thursday. Dollar General said it lowered prices on some merchandise during the holidays to win market share, but that dented its profit margins. Its profit forecast for 2019 also fell short of Wall Street’s expectations. The company wants to get current customers to spend more at stores and reach new shoppers, so it plans to introduce its own cosmetics and baby product brands this year.

Dollar General will also focus on selling more groceries and fresh food to grow its business. It is adding produce sections and refrigerators to hundreds of stores. Dollar General has said that offering fruit and vegetables at stores in rural and urban food deserts can “drive a tremendous amount of traffic.” The strategy could help Dollar General compete with bigger rivals such as Walmart ( WMT ) and beat back the threat of German discount grocery chains Aldi and Lidl. Aldi has poured billions of dollars into new stores with fresh food sections.

Lidl acquired a couple dozen Best Market grocery stores in New York and New Jersey last month. In addition, the company will roll out buy online, pickup in store at select stores for the first time later this year, a sign that Dollar General believes the popular digital option will take off in rural areas. Correction: An earlier version of this article misstated the number of Dollar General stores in the United States..

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A new survey shows that zero top US economists agreed with the basic principles of an economic theory supported by Alexandria Ocasio-Cortez

J. Scott Applewhite/AP Images Modern Monetary Theory is becoming a larger part of the economic conversation. The theory posits that government deficits are less concerning if a country controls its own currency and issues debt in that currency. MMT says the amount a government can spend is limited by real assets and the debt’s effect…

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A new survey shows that zero top US economists agreed with the basic principles of an economic theory supported by Alexandria Ocasio-Cortez

J. Scott Applewhite/AP Images Modern Monetary Theory is becoming a larger part of the economic conversation. The theory posits that government deficits are less concerning if a country controls its own currency and issues debt in that currency. MMT says the amount a government can spend is limited by real assets and the debt’s effect on the broader economy. MMT has received a huge amount of pushback. In a new survey, not a single mainstream economist agreed with the basic aspects of MMT. Modern Monetary Theory is having a moment.

The once fringe idea, known as MMT , has been vaulted into the national conversation as progressive economists and some politicians seize hold of the economic theory. Even Federal Reserve Chairman Jerome Powell has weighed in on MMT . But a new survey has found that while MMT may be getting attention, it does not have much support among some of the top US economists. Put (very) simply, MMT posits that a country that controls its own currency can continue to pay down its debt as long as it is denominated in that currency. So because the US prints dollars and issues debt in dollars, it can pay down its debts and does not need to rely on taxes to fund debt issuance.

Instead, the theory says, a country in the aforementioned situation is limited by the availability of real assets. So while we can’t just ignore the national debt, unlike a household budget the debt number — such as the US’s record $22 trillion debt load — doesn’t matter until inflation and economic effects show up. Explained to Marketplace by the economist Stephanie Kelton, an MMT proponent, Congress would use fiscal policy to control how much money goes into the economy. To borrow Marketplace’s metaphor, Congress would be a sink faucet, money would be the water, and the stoppered sink bowl would be the economy.

To deal with inflation (an overflow out of the bowl) you can lessen the flow of water into the bowl. Taxes would also act as the stopper letting money out of the economy sink bowl. The idea has gained a following among progressive economists and some politicians. Rep. Alexandria Ocasio-Cortez of New York told Business Insider in January that MMT should be “a larger part of our conversation.

” Read more: Alexandria Ocasio-Cortez says the theory that deficit spending is good for the economy should ‘absolutely’ be part of the conversation But the idea has also faced intense pushback from economists and pundits across the political spectrum , and none of the mainstream economists interviewed in a new survey were ready to sign on to the idea just yet. In the latest survey of 42 of America’s top economists by the University of Chicago Booth School of Business, not a single respondent agreed with the basic aspects of MMT: Thirty-six percent of economists disagreed, and 52% strongly disagreed with the statement “Countries that borrow in their own currency should not worry about government deficits because they can always create money to finance their debt.” (Two percent had no opinion.) Twenty-six percent of economists disagreed, and 57% of economists strongly disagreed with the statement “Countries that borrow in their own currency can finance as much real government spending as they want by creating money.” (Seven percent had no opinion.) Some the responding economists said continued debt issuance would lead to persistent inflation problems and expressed concern about the long-term sustainability of MMT. .

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