One For The Money

• Negativity sells the news [01:20]
• Progress over the years [02:41]
• Investing proves itself again and again [06:40]
• Credit score and financial plans [10:40]

This year has brought a lot of market volatility, creating fear in investors’ hearts. With a war in Europe, inflation at levels we haven’t seen in over 40 years, a pandemic still lingering in parts of the world, and political and civil strife, there’s an overall theme of negativity in the news. It’s essential to remember that media companies are businesses, and negative news attracts more attention, creating more revenue. While the media may have a financially compelling reason to focus on negative things or things that generate fear, it’s important not to let that shape our perspective of the general trajectory of humanity, which is undoubtedly positive. 

The photo on my website shows my great-grandparents, both clad in fur coats. My great-grandpa John was born in the United States and emigrated to Canada in 1894. My great-grandma Margaret was born in Germany, immigrating first to Wisconsin. She later emigrated to Canada, having answered my great grandpa John’s advertisement in a newspaper for a wife. Great Grandpa John was a rancher and settled near the town of Mountain View, where he built his home. While that was a stunning place to live, cattle ranching is a hard way to make a living, especially through the brutal Canadian winters. 

My great-grandparents didn’t have indoor plumbing for most of their lives, let alone toilet paper or a way to order it to be delivered just hours later. What would they say about self-driving cars or about the feats of architecture, medicine, agricultural productivity, airplanes, and space travel that could all be enjoyed by their great-grandson? All of this progress occurred in the last 100 years, and the pace of that progress and positive change is only moving faster. If this is the progress of the previous 100 years, what do the next 100 years hold?

A review of history shows that there have always been reasons why investing is scary, but that investing has repeatedly proved itself. Some may argue that this time is different, but they are joining a long line of people who said the same thing and were proved wrong. Regardless of what happens, people will still work, earn a living, and spend their money on goods and services. Investing in well-run companies that provide those goods and services is one of the best ways to grow your wealth. 

Credit scores can be a critical part of a financial plan, especially when purchasing a home. However, most people don’t know how their credit score is determined. Thirty-five percent of a credit score is derived from payment history, and thirty percent is derived from the amount owed. The next fifteen percent is derived from the length of credit history, ten percent is new credit, and the final ten percent is the type of credit owed. A credit score over 800 is deemed exceptional, and the higher a credit score is, the lower interest rates are in the terms offered.

Three companies provide credit scores to lenders: TransUnion, Equifax, and Experian. The first tip I recommend is freezing credit with all three companies, which will prevent someone from opening new credit in your name. The second tip is regarding credit history. Fifty percent of credit score is based on credit history. Before canceling a credit card, consider how it can shorten credit history, negatively affecting a credit score. Before dropping off an old credit card, it’s also important to ensure that annual fees aren’t being paid on that card. 

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