Ways to Make Your Finances Go Smoother

We have all been there: overlooked small but important things in our daily lives thanks to bigger, more vital day-to-day problems at work, school, family, etc. A lot of times these panic-striking things have had something to do with our finances. As widely known, young people more often than not find themselves to be on tight budgets with limited sources of income. We are at the stage when we either have a lot of time on hand but little money, or little time and rather modest amounts of inflows. This is especially true for students or young professionals. And maybe it is a good thing. This discomfort can be turned into an opportunity to learn how to manage money on an early stage with small risks and repercussions. As they say, it is not how much you make but how much you keep. A couple of implications follow this principle. First, if you are lucky to be on the top of the food chain early in your life, it does not mean that you settled, or well-off: making a lot of money from your job does not immediately translate into financial freedom in the foreseeable future. Economics tells us that the more people make the more they consume. Oftentimes, the growth in spending supersedes the positive change in income. No wonder many yuppies find themselves paying off their credit cards with year-end bonuses. Secondly, take a look at the net numbers. People tend be overly optimistic and they oversimplify things when it comes to budgeting. I have been there myself. One tends to overestimate cash inflows and underestimate expenses. Of course, sometimes there are one-time, unforeseen expenditures that are mandatory and cannot be factored in early enough. However, this established practice more or less has to do with how our minds work: we do not welcome stress and cannot endure negativity for too long. Hence, the simplest thing we can do is to make a deal with ourselves and postpone bad things to a later date. This is especially true for those that have had a long experience in solving problems successfully with ad hoc decisions.

Wine As An Asset Class

Many people know that wine can not only be an exquisite alcoholic drink but also an investment. French wine cellars, stocked up to the roof, serve not only as storage places but also as investment portfolios. Rare wine of old vintages costs a lot of money. This way, wine has become an asset class. Unfortunately, so-called “old money” like wine, is not as popular today as innovative financial products such as binary options, CFDs, Bitcoin, etc. Wine is also not a traditional asset class, such as stocks, bonds, mutual funds, precious metals, and real estate. Wine investments are illiquid and riskier. Nevertheless, history shows that these risks are well compensated with above-average returns from this asset class: wine index Liv-ex has made investors a return in excess of 250% for the last 10-12 years (which translates into 8-10% compounded annual growth rate (CAGR)), whereas the more popular S&P 500 has not returned more than 50% since 2001. A number of private equity funds invest in wine bottles, although the total capital raised for these funds came short of $300 million in 2011 (about 3% of total capital committed in that year). All this means that wine is an exotic investment, which demands patience and, most of all, time.