The World's Best Book Summaries
What exactly is compound interest? Do index funds benefit from compounding? Compound interest is the interest earned on reinvested gains. Because interest compounds over time, your money grows exponentially instead of linearly. However, your losses also compound, which means that your actual return on investment might not match the market’s average return. Here’s what you should know about the effect of compound interest.
Why does Warren Buffett advise against portfolio diversification? What’s the problem with diversifying your investments? How does diversification hurt your return on investment? Portfolio diversification is a sacred cow in the world of investing. However, the world’s most successful investor, Warren Buffett, scorns the idea of diversifying your portfolio to protect against risk. Keep reading to learn about Warren Buffett, diversification, and why it’s better to have skin in the game.
What exactly are financial derivatives? Why does Warren Buffett scorn derivatives? Derivatives are contracts between two parties in which one pays the other if some other financial instrument (for example, a stock or a bond) reaches a certain price, up or down. On derivatives, Warren Buffett famously said: “Derivatives are financial weapons of mass destruction.” Here’s why Warren Buffett warns against derivatives.
What are leveraged buyouts? How do takeover companies profit from acquisitions financed with leverage? Leveraged buyouts were the hallmark of many notorious “corporate raiders” in the 1980s, who used them to practice so-called “hostile takeovers.” Takeover companies make fortunes with leveraged buyouts, but they carry significant social and financial costs. Keep reading to learn about leveraged buyouts, how they work, and their consequences.
Do you need a financial advisor to manage your investments? Why does Warren Buffett scorn brokers and financial advisors? Many people who aren’t well-versed in finance believe they need professional advice to invest profitably. But according to Warren Buffett, financial advisors aren’t worth the money. Furthermore, advisers can give misguided financial advice because they bear none of the risks as their clients’ fortunes rise or fall. Here’s why Warren Buffett says you should steer clear of financial advisors.
Do you want to know how to budget money on a low income? What are some budgeting practices you can adopt to secure your future and maximize the value you’re getting for your money? Budgeting is one of the most important financial skills you can develop, especially if you’re working a low-paying job. However, many low-income earners don’t budget their money and spend to their heart’s content, without much regard for how their spending takes them further and further away from long-term financial security. With this in mind, here’s how to budget money on a low income.
Do you regularly put money aside in a savings account? Why is it important to save money? We’re taught from a young age that saving money is important, but many people don’t have savings because they can’t resist the temptation to spend. This can be dangerous because emergencies can strike anytime. Furthermore, saving money is instrumental in building wealth. Keep reading to learn about the benefits of saving money and what you should do with your savings.
Are billionaires ethical? Is it possible to be a billionaire without exploitation? How do people become so rich? According to a survey, most Americans see billionaires as neither good nor bad for the country. However, there’s a growing number of those who doubt that it’s possible to be an ethical billionaire, claiming the ultra-wealthy unfairly influence policy-making and don’t use their riches for the greater good. Read on to learn if billionaires are ethical, based on arguments for and against billionaires in the U.S.
What’s causing the record-high credit card debt in America? Why are Americans spending so much yet saving so little? Credit card debt in America rose to $890 billion in 2022, with total household debt hitting a record high of $16.5 trillion. Credit is a survival tool for most Americans—and the debt tied to it is so ubiquitous in the U.S. that it’s become normalized. Read on to learn more about credit card debt in America, including tips for managing debt.
Why are care workers paid so little? How do cultural values contribute to underpaying care workers? Author and anthropologist David Graeber wrote Bullshit Jobs in part to explain how society undervalues care work. According to him, because care work doesn’t produce goods, society views it as less important and justifies paying care workers so little. Read on to learn more about why care workers are paid so little, according to Graeber.