The financial planning profession has a long history of demonstrating the power of compounded growth to clients who are looking to invest for the future.  Typically, a chart will be shown that shows the difference between investing $100 per month at 1%, 5%, 8%, and 10% rates of return for 20, 30, and 40 years.  As expected, the results are typically astounding.  The extended impact of compounding for a longer period of time at a higher rate of return creates a tremendous difference in the amount of compounded returns after …

During business and economic discussions, it seems that distinctions are rarely made between income and wealth when it comes to personal and professional well being.  Income represents the amount of resources that are accumulated annually, and Wealth represents the total amount of resources that have been accumulated throughout the tenure of your life.  One very important distinction between these two resource categories is that income must be earned by you year after year, and wealth can be used to generate income year after year, without any direct input from you.
The …

One of the factors that are important to investment, but are frequently overlooked by market forecasters is the psychology or ‘hedonics’ of investing.  The thing that makes hedonics so important is the fact that our financial decisions tend to be made emotionally, even though they ‘should’ be made with calculating logic and reason.  Because of this, many people have much more emotional difficulty making investments in volatile assets even if the average rate of return is higher.
To demonstrate why this is the case, consider a person whose investments have resulted …