How to Diversify?

How to reduce risk by spreading capital into different investments? More »

Does Economical Living make People Free?

Some people live below their means, work hard, save bulks of their income and pursue financial independence aggressively. Is this the right path? More »

How to Build an ETF-Portfolio?

Guideline for constructing a market portfolio. More »

 

High Return Investments

An professor and his student were walking. The student notices €50 lying on the sidewalk and says, ‘Look! €50 on the street!’ The professor replies, ‘Rubbish. Markets are efficient. If there were really €50 on the sidewalk, someone would have already picked it up.’
So both keep walking
.

When people need to cut their budget, they generally start the process by attempting straightforward ideas:

Reductions: “I will try going out to eat less often.”
Eliminations: “I do not need to take a trip this year.”
Substitutions: “Maybe I can find a cheaper mobile phone contract.”

Eventually, however, you will exhaust all the low hanging fruits. If you attempt to hold your budget steady, you will need to continue to make routine cuts in order to combat inflation. It will not take long until all the straightforward cuts have been made. Now what do you do?

Price Segmentation

Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist.

— John Maynard Keynes

We suppose that when most people are presented with “price segmentation” as the stimulus, no synapses fire in the brain. At best, a few people may have a vague recollection of some concept from a marketing course long forgotten. This is an unfortunate state of affairs and the purpose of this article is to show the importance of price segmentation to the average consumer.

Budgeting Software

If time be of all things the most precious, wasting time must be the greatest prodigality.

— Benjamin Franklin

We suppose this post might disappoint those who are looking for a budgeting software review or an angry post about which product is best, but we need to state what we really believe: your choice of budgeting software will not significantly affect the quality of your household budget and it is probably better not to spend a lot of time selecting the perfect budgeting software for you.

Learning Budgeting from Children

Children are like wet cement. Whatever falls on them makes an impression.

— Haim Ginott

A few years ago, we were vacationing for two weeks. At the end of the first day, we were thoroughly enjoying ourselves. The weather was great, the coastline was beautiful and meals were delicious. However, there was one big problem.

All About Choices

Your life is the sum result of all the choices you make, both consciously and unconsciously. If you can control the process of choosing, you can take control of all aspects of your life. You can find the freedom that comes from being in charge of yourself.

— Robert Bennett

Every single day of our lives, we are faced with a barrage of spending decisions. Sometimes it can be almost overwhelming. Are we in control of our spending? Or is our spending in control of us? Even those of us who do not feel like we are “out of control” nonetheless often feel like our spending decisions are not always explainable. Why do we say “yes” to certain purchases one month and then “no” to the same purchases the next month? Why do our choices on some occasions seem almost arbitrary?

Create a Framework for Budgeting

High achievement always takes place in the framework of high expectations.

— Charles Kettering

In the first part of this series on budgeting, we discussed the importance of starting the budget process by looking at the big picture. Now let us try to bring those lofty ideals down to earth. When we asked ourselves significant questions about life (listed in the previous article), we found that some of the things that were important to us were the follwing.

Mental Accounting

Understanding the mental accounting helps with spending, budgeting and investing decisions. Mental accounting means that people mentally divide their assets and income into buckets. Depending on the mental account, vastly different decisions are made regarding the money. Even though money should be exchangeable. Scientists mainly seem to be interested in trying to predict and explain behavior, so they do not necessarily label mental accounting as a negative thing. There can indeed be some positive aspects to mental accounting. However, when a mental accounting decision has a negative impact on current or future net worth and there appears to be no rational motive for it, it is a mental accounting error.

Five Areas in Life that Impact us Most

A lot of people know what to do, but only a few actually do that they know. Knowledge can only be valuable due action. You must take action. But, when the action becomes really important?

Top Ten Online Markets

A profitable internet business model needs a huge target market. The larger the market, the higher the upside.

Impulse Purchase

How to attract impulse purchases? What motivates impulse buying? Consumers made even large purchases on impulse. Three sales arguments are related to such impulse decisions. Valuable information for both, the conscious consumer and the eager salesman.