$18 million to $14 billion in 13 years? Check. Averaged more than double the return of the S & P 500 during his tenure? Check. In the 1980s managed the best performing mutual fund in the world? Check. Down to earth, nice guy? Check.
This is Peter Lynch, who rose from humble beginnings to become a financial legend. Born in 1944 in Newton, Massachussetts, Lynch did not seem destined to become a financial titan. Unfortunately, when he was ten Peter's father passed away from brain cancer, leaving his family struggling to make ends meet. Lynch's mother had to work very hard to support the family, with Peter caddying during his teens to help. Lynch graduated from Boston College in 1965, then earned his M.B.A. from the Wharton School of the University of Pennsylvania in 1968.
Some of the lessons that follow will likely surprise you, while others probably won't. The important thing about the insights in this article is that they are derived from empirical studies of wealthy people. In his landmark book The Millionaire Mind, Ph.D. and scholar Thomas J. Stanley chronicles the habits and mindsets of wealthy people. The data in the book come from 733 surveys from affluent individuals, whose average net worth was $9.2 million. Not a bad bunch to emulate, eh? Reading the full book is highly recommended- it can be purchased here:
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Unless you were born into mega wealth and never plan to borrow a cent, building your credit score is a great thing to do. It will help lower all you future payments on items such as cars, homes and other big ticket items you may plan to purchase on credit. The important caveat is that it takes time to properly build your credit, so the earlier you start the better. The good news is that you can significantly raise your credit score, it won't take much time and if you do it correctly, you won't have to spend much money.
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Influence: The Psychology Of Persuasion by Robert Cialdini- the book of which legendary investor and vice chairman of Berkshire Hathaway Charlie Munger said, "This is the book that I give most often as a present and is my top recommendation." So what is this book, which is truly about psychology doing on a personal finance website? There are two answers- the first is that behavioral psychology effects peoples decisions and can therefore help one understand markets as well as their own behavior. The second is that the author found this book fun to read and absolutely fascinating. Let's jump into a summary of some of the main concepts covered in the book.
Rule One: Reciprocation
As Cialdini states, "According to sociologists and anthropologists, one of the most widespread and basic norms of human culture is embodied in the rule of reciprocation. The rule requires that one person try to repay, in form, what another person has provided. By obligating the recipient of an act to repayment in the future, the rule allows one individual to give something to another with confidence that it is not being lost.
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Which should you invest in- mutual funds or index funds? What's the difference and which is a better option for you? First, let's discuss the commonalities of these two types of investments. Both are great tools to help you diversify, allowing you to buy shares in many comnpanies at once. Basically, mutual funds and index funds both own shares in many stocks and when you purchase the fund you are buying a small portion of all the stocks owned by the fund. However, there are some major differences between index funds and mutual funds you should know about before you make a decision on which to invest in.
Active Management vs. Passive Management
The main difference between index funds and mutual funds is that mutual funds are actively managed while index funds are passively managed. This means that mutual funds own stocks purchased by a mutual fund manager, whereas index funds simply own shares in indexes like the S and P 500 or the Dow Jones Industrial Average. While mutual funds have a manager picking the stocks that constitute the mutual funds, index funds typically own shares in the companies that make up the index in roughly equal proportion to how much of the index the stock comprises.
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Warren Buffett, often referred to as the Oracle of Omaha, is one of the most renowned and successful investors in the world. As the chairman and CEO of Berkshire Hathaway, his wealth and investment strategies have made him an iconic figure in the finance world. While many are familiar with his remarkable financial achievements and investment philosophies, there are several lesser-known and intriguing facts about Warren Buffett that provide a more comprehensive understanding of this legendary investor.
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