ISN’T THE PSYCHOLOGY AND MATH OF MONEY AMAZING? IF WE HAVE A SINGLE SHARE OF A $5 STOCK AND THE PRICE RISES TO $10 (ie a 100% increase, or doubling your money), TO ALMOST ALL IF US, THIS IS NOT A LIFE-CHANGING AMOUNT OF MONEY. HOWEVER, IF WE HAVE 10,000 SHARES OF THAT SAME $5 STOCK, AND THE STOCK PRICE DOUBLES, NOW OUR INVESTMENT OF $50,000 HAS DOUBLE TO $100,000. TO ALMOST ALL OF US, THIS WOULD BE A LIFE-CHANGING AMOUNT OF MONEY. THE SAME STOCK, SAME STOCK PRICE, SAME STOCK PRICE INCREASE, BUT DRAMATICALLY DIFFERENT IMPACT ON ONE’S LIFE. ALL OF THIS DUE TO TO THE INITIAL, OR CUMULATIVE, TOTAL DOLLAR AMOUNT INVESTED.

The lesson seems to be that our earliest work to earn money (in order to invest), our earliest attempts to reduce debt and taxes (and to use these savings to invest), and our earliest buying and holding of quality investments, are by far the most important effects for our long-term financial wealth. Charles Tadros, M.D.Continue reading “ISN’T THE PSYCHOLOGY AND MATH OF MONEY AMAZING? IF WE HAVE A SINGLE SHARE OF A $5 STOCK AND THE PRICE RISES TO $10 (ie a 100% increase, or doubling your money), TO ALMOST ALL IF US, THIS IS NOT A LIFE-CHANGING AMOUNT OF MONEY. HOWEVER, IF WE HAVE 10,000 SHARES OF THAT SAME $5 STOCK, AND THE STOCK PRICE DOUBLES, NOW OUR INVESTMENT OF $50,000 HAS DOUBLE TO $100,000. TO ALMOST ALL OF US, THIS WOULD BE A LIFE-CHANGING AMOUNT OF MONEY. THE SAME STOCK, SAME STOCK PRICE, SAME STOCK PRICE INCREASE, BUT DRAMATICALLY DIFFERENT IMPACT ON ONE’S LIFE. ALL OF THIS DUE TO TO THE INITIAL, OR CUMULATIVE, TOTAL DOLLAR AMOUNT INVESTED.”

THE ABSOLUTE VALUE OF MONEY IS NOT NEARLY AS IMPORTANT AS THE FUNCTIONAL VALUE OF MONEY.

The same $1 bill (absolute value) is able to purchase dramatically different goods and services (functional value) now versus 30 years ago. It is much easier to count and compare the absolute value of money than it is to calculate and compare its purchasing power. HOWEVER, what almost all of us really care about isContinue reading “THE ABSOLUTE VALUE OF MONEY IS NOT NEARLY AS IMPORTANT AS THE FUNCTIONAL VALUE OF MONEY.”

THE DIFFERENCE BETWEEN RELATIVE AND ABSOLUTE…

YOU HAVE A PENNY AND SOMEONE GIVES YOU ANOTHER PENNY. YOU HAVE NOW INCREASED YOUR CASH BY 100% (i.e. doubled your money). WOW! THIS IS AN EXAMPLE OF A RELATIVE INCREASE. HOWEVER, WHEN YOU COUNT YOUR PENNIES YOU ARE STILL POOR. YOU ONLY HAVE TWO CENTS (i.e., ABSOLUTE INCREASE IN CASH), WITH WHICH YOU CANContinue reading “THE DIFFERENCE BETWEEN RELATIVE AND ABSOLUTE…”