Thrifty Thinking: The Money Compass

Disclosure: I received complimentary products to facilitate this post. All opinions are my own.

The Money Compass:  Where Your Money Went and How to Get it Back is a book written by Mark Anthony Grimaldi, an economist who correctly predicted many major events of the last decade: the 2008 recession, national unemployment hitting 10%, the housing depression, and the weak recovery. For many people, the "American Dream" is an unattainable goal or a thing of the past. But this book provides direction, explaining how things have changed and how to smartly invest for a brighter future.

Although the book deals with economy, which can be challenging to understand, Grimaldi does a good job breaking things down and making them comprehensible without dumbing it down. He provides a clear roadmap for future financial decision.

I had a chance to interview him to learn more.

Q:  Why does money often "disappear?"   

A:  Money “disappears” when there is a larger sell-off in the stock market. The money “reappears” in the bank accounts of the investors who actually sold and locked in their profits.  Unfortunately, the average investor has been programmed by the larger investment companies to “stay the course."  I cringe whenever I hear that advice. I am on a mission to re-educate the masses on how profits are harvested by the rich.

 

Q.  What has changed over the last decade in terms of personal wealth?

A:  The biggest change is that the median household income is lower now than in 1999. In fact, it is even lower then when the great recession ended in 2009. This has caused contributions into 401(k) plans to drop.  Home ownership has also returned to 2003 levels. 

Q:  Can you share some tips for sound saving and investing in today's climate?

A:  Rule #1 is to save money every month, even if it is only 1% of your income. Saving money is much more important than the interest you earn on it. Many mutual fund companies have very low minimums. After one year, invest in an additional fund until you are investing in five funds in your portfolio. The small investor needs to take advantage of dollar-cost averaging, which is investing the same amount of money, in the same investment, each month. This method is easy, and best of all, free of charge.