On The Agenda:

Do you know the four worlds of money and how they affect you? We break down the pros and cons of each.

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Episode Show Notes:

Banking world

This is the world you’re probably most familiar with. Most people have checking accounts and savings accounts. They represent no risk to your principal and you can earn a little interest. Right now, you’re likely earning very little interest.

You can use money in these accounts for short-term purchases, emergency funds and cash reserves. The downside is with interest rates so low, these accounts can’t keep up with inflation. So, putting money there is not a good long-term investment.

Insurance world

This allows you to transfer some or all of the risk you would take to an insurance company. For example, insuring your home or car.

If you don’t want any risk to your principal, you may be interested in an equity index annuity, which allows you to keep what you make, even if the index goes back down. The downside is you don’t have 100% liquidity, so don’t put all your money there.

Wall Street world

“It’s been said that stock investing is a zero-sum game, which basically means that someone’s gain is another person’s loss,” said Craig.

Take the mental image of surfing. You have to catch another wave. With Wall Street, you’re trying to buy a stock at its low and let it go up.

Many people have money in the Wall Street world with their 401K plans, IRAs, etc.

“It’s been said that stock investing is a zero-sum game, which basically means that someone’s gain is another person’s loss.” – Craig Moser

Real estate world

People in the real estate world say all the money is made when you make the buy. If you buy a really good property lower than market price, you typically can make some money.

The downside is you don’t have access to your capital very quickly. The upside is you may be getting a check in the mail every month if you’re renting out property.

Listen to the full episode or use the timestamps below to jump to a specific segment to learn about the four worlds of money. Thanks for listening!

Important Points:

0:29 – Banking world

3:52 – Insurance world

7:10 – Understanding your options

10:12 – Wall Street world

14:42 – Ways people misuse investing

15:52 – Real estate world

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