Part 1: Personal Finance

If your goal is simply financial security or financial abundance in retirement the most important thing is not how you invest your savings. 

The main idea is to spend less than you make while you are working.  Once you make that a habit then the rest is easy. You do not need to know much about investments to achieve financial security. 

If you spend less than you make you allocate your savings according to the following priorities.

1. Pay down all credit card, installment credit.  Home mortgages are okay.  Car payments should be avoided but they are also okay.  Lease payments are no good. 
2. Put aside some money for a rainy day fund.  If you are starting out it can be as little as $1000.  The rainy day fund should be liquid - meaning bank account, money market or a bank CD.
3. If you have a 401K save at least up to your companies match.  In fact if your company has a match this might move up to #2 in priority.
4. If you've achieved 1 through 3 then you can either add to your rainy day fund.  The amount you add depends on your job security.  If you're confident in your job situation enough money to cover 3 months of unemployment should be sufficient.
5. If you get this far you now should add to your 401K to the max allowed even if there is no match form your company.
6. If you still have surplus then invest in a non-retirement account. Open up a brokerage account at Vanguard or a discount broker.  I'll cover how to invest in the next post.

That's about it.  As long as you spend less than you make you'll be adding to your savings each month.  

Recap and restart

It's been a long time since the last post.  Time to restart a new set of posts on personal finance, markets, investments and economics.  But before I begin I need to do a short recap.

The last post was about the Fiscal Cliff of 2012.  Pres. Obama was finally able to get the GOP to increase taxes on the wealthy.  The Bush tax cuts on the wealthiest families did expire. 

Over the next 4 years there was little fiscal policy to help the economy.  The Fed kept interest rates at 0 until Dec 2015 and then raised it a mere 25 basis points.  The inertia of the fiscal policies including the 2012 changes were enough to keep both the economy as a whole and the labor market in particular on a path to steady improvement.  But Dec 2016 the unemployment rate was 4.6 and wages were growing.

Obama was content not to avoid the big mistakes.  With the help of the Senate Dems the GOP was prevented from screwing things up.   Obamacare started to kick in and as predicted by some was actually a boon to the labor market.  Folks now were in a better position to change jobs.

In addition the energy market improved dramatically.  The combination of increased US production, a slow down in the global economy and conservation and alternate energy policies all lead to the price of oil/gas tumbling in 2015/2016.

By the end of Obama's second term:
- stock market up
- unemployment down
- wages up
- interest rates low
- inflation under 2%
- gas prices about 2.50 gallon

My hope is that now that the GOP 'controls' the federal government they don't screw things up.  There is hope that the GOP will remain divided between the fiscal hawks and traditional conservatives and Trump who is neither.