When it comes to personal finance, most people tend to believe that investing is the most complicated part. They're intimidated by the industry's jargon, the ever-fluctuating markets, and the endless list of investment products.
As a result, they often overlook the essential aspect of personal finance: managing cash flows.
The perception that investing is complex generally arises from the belief that active involvement is necessary for success. Many individuals feel the need to constantly watch market trends, carefully select individual stocks, or time the market perfectly to make profitable investments.
The truth, however, is quite different. For most people, investing can be as simple as setting up a regular direct debit to an index fund. In other words, the majority of investors can be passive in their investment strategy.
<aside> šµ Fact: Passively investing in index funds beats 99% of active investment strategies
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The real difficulty in personal finance is managing day-to-day finances to allow for passive investing. That requires financial knowledge, planning skills, self-discipline, controlling your emotions, resisting all the spending temptationsā¦ And thatās where most people fail.
But you need to create sufficient Free Cash Flow that can be consistently and reliably invested to increase net worth.
So, let's do it right: take an active role in managing your cash flows and a passive approach to investing. That's the real secret to personal finance success.