Investment fundamentals
Put Your Dollars to Work.
A short educational article on consumption, investing, and the Rule of 72.
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The larger decision
Put Your Dollars to Work.
Every dollar you have can do one of two things: be consumed today or go to work for your future.
A dollar can be traded for a meal, clothes, a car, or another purchase. Once spent, that dollar goes to someone else. Or it can become a tiny employee—one that never gets sick, never takes a vacation, and can keep working around the clock. That is investing.
Consumption can make today feel better. Investing puts some of today's resources to productive use in an effort to create more resources for your future self.
A simple illustration
The Rule of 72
Divide 72 by an annual rate of return to estimate how many years it would take an investment to double if that rate were sustained.
- 4%
- ≈ 18 years
- 8%
- ≈ 9 years
- 12%
- ≈ 6 years
This is an educational illustration, not a promised return. Actual investment returns vary, may be lower, and can be negative.
Choosing where to invest
Once you decide to become an investor, the next question is where to put your money to work.
Every investment involves a relationship among potential return, risk, liquidity, control, time, and complexity. Tax liens and tax deeds are an asset class worth understanding because, depending on the jurisdiction, they can involve statutory interest or penalties and claims tied to real property.
- Potential return
- Risk
- Liquidity
- Control
- Time
- Complexity
Rules, priority, redemption, title consequences, surviving liens, and procedures vary by state and county. These investments are not guaranteed, risk-free, or FDIC-insured. Understanding the instrument and jurisdiction comes before evaluating a property.
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