If you have any experience in personal investments, you'll know that a recession = financial investment opportunities.
So perhaps it's time to put the fancy cars, big homes and designer clothes aside, and focus on a lasting solution to guide us towards long-term financial health.
Recession or no recession, here's some investment advice that is sure to contribute greatly to your future finances.
The burning question is how much should we save and invest? A common rule of thumb of the financially secure-those with sizable nest eggs-is 25% of pre-tax income for the first 20 years of full-time work.
After this period, you can live luxuriously without saving and watch your nest egg grow.
Dr.
Bradford D.
Smart, a world-renowned management psychologist, asks us to imagine a husband and wife, both managers at a fast food chain.
Let's say they each earn $50,000 per year, a little over the median income in the United States.
Now and managed an 8 suppose they each put aside $12,500 per year (for a total of $25,000), and they have been saving like this since they were 20 years of age.
They chose to invest conservatively% return.
In 20 years, at an 8% ROI, they'll have $1.
1 million.
Even more exciting is the fact that they can now let this money grow without additional savings from their salaries.
Their nest egg will double every 9 years, totaling $2.
2 million when they're 49 years of age.
If they don't touch it until they are 67, they'll have $8.
8 million.
The fact is most people don't think long-term.
By living lean for the first 20 years of saving, they can now spend a lot while their nest egg grows and grows.
Most of their friends who start saving at 40 will never catch up.
The fast food managers won't get to lead flashy lives between the ages of 20 and 40, but once they reach middle age they'll have the satisfaction of financial freedom.
The majority don't save early.
They figure out the magic of compounding when they're about 45 and realize it's too late to let the money earn money for 30 or 40 years.
Realizing that they're never going to catch up, they crank up their ambition and aim for the job with the highest salary (and the longest hours).
Meanwhile, their friends (with lower salaries) who have been steadily saving get to kick back in their later years and watch their money grow.
Right now you're probably thinking this is all very well - in theory - but we're in the middle of an economic tailspin.
Yes, the market is down, way down (40% since the beginning of the year), but it won't be like this forever.
People need to think long-term - 10 to 20 years into the future.
People also need to read Warren Buffet's op-ed piece for the New York Times where he talks about how he is personally buying up American stocks.
Lots of them.
A simple rule dictates Buffet's buying: "Be fearful when others are greedy, and greedy when others are fearful.
" He rightly points out that investors should be wary of highly leveraged entities or businesses in weak competitive positions, but explains that fears regarding the long-term prosperity of the nation's many sound companies make no sense.
The big take-away point here is to think long-term-to start saving and investing early and to take advantage of the investment opportunities presented by the downturn in the market.
Today most people are digesting their daily dose of media panic about the market and failing to see the big picture.