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Brian Feroldi Profile picture
@BrianFeroldi
Dec 10, 2020 • 25 tweets • 10 min read • Read on X
1/ My Mission: To Spread Financial Wellness (thread)

Here’s what "financial wellness" means to me

⬇️⬇️⬇️⬇️⬇️⬇️⬇️⬇️⬇️⬇️
2/ Mindset

Humans are programmed to think short-term

Evolutionary, thinking short-term makes sense. It helps with survival.

Financial wellness is all about training yourself to develop a long-term mindset

Not easy -- it takes practice Image
3/ Mindset

If you join the right tribes, you can’t help but improve

My favs:
@AffordAnything
@ChooseFiFI
FinTwit
@MicroCapClub
@themotleyfoolFool
@visualizevalue

Twitter / Podcasts / Blogs / YouTube -- when used correctly -- are amazing resources

4/ Mindset

Educate yourself - constantly!

Especially about:

1⃣Money
2⃣Relationships
3⃣Health

These 3 categories have an outsized influence on all areas of your life

Books help

5/ Career

In the beginning, focus on growing your income

Do more than what is expected

Become a lynchpin

Find a career that you ENJOY (<- important!) that also has high-income potential

Start a side hustle (<- important!)

Build your talent stack

6/ Career

Network!

@JordanHarbinger’s course is great

Ask co-workers you don’t know out to lunch. Pick their brain. Don’t ask for anything in return.

Just focus on developing relationships Image
7/ Personal Finances

You don’t get rich at work — you get rich at home

Its YOUR responsibility to become wealthy, not your employers Image
8/ Personal Finances

Track your spending!

@mint / @PersonalCapital / @ynab / Excel / Google Sheets

I don’t care how, just do it!
9/ Personal Finances

Attack ALL costs

Big 4 especially

1⃣Housing
2⃣Transport
3⃣Food
4⃣Education

Eliminate all luxuries - You can always add them back if you truly miss them

Use @FrugalWoods / @mrmoneymustache / @ChooseFi as guides
10/ Personal Finances

You need to know where you stand today

Create an:

1⃣Income Statement
2⃣Net Worth Statement

ImageImage
11/ Personal Finances

The average millionaire has 7 sources of income

Develop new income streams! Image
12/ Personal Finances

Boost your savings rate

10% is the minimum

20% is achievable for most

50%+ is hard, but not impossible

Go hardcore for a few years, especially in the beginning

It makes a huge difference Image
13/ Personal Finances

Use your savings to eliminate ALL non-mortgage debt

Then, build an emergency fund of 3+ months of expenses Image
14) Personal Finances

Max out all retirement accounts

401(k) / 403 (b) / IRA / ROTH IRA / HSA.....etc

Broad-based, low-cost index funds are a great choice
15/ Personal Finances

Protect your family from disaster! Image
16/ Investing

Once your personal finances are rock-solid, you can focus on growing your wealth

If stock investing bores you, just buy broad-based, low-cost index funds

If stock investing interests you, learn how to invest
17/ Investing

I highly recommend subscribing to @TMFStockAdvisor and @TMFRuleBreakers

I'm biased, but this is where I learned almost everything that I know about investing

Free podcasts:
@AnswersPodcast
@MotleyFoolMoney
@MFIndustryFocus
@MarketFoolery
@RBIPodcast
18/ Investing

What I wish I knew when I first started

18/ Investing

Use checklists, journals, and watchlists!

19/ Investing

Invest in high-quality businesses Part 1

20/ Investing

Invest in high-quality businesses part 2

21/ Investing

How to build positions

22/ Investing

It's OK to suck in the beginning

I sure did!

23/ Investing

Connect with other smart investors on Twitter

Every Friday, I share a list of follows that made me smarter that week

Follow them!
24/ Investing

Share!

The key to learning faster is to publically share your wins and losses

Peer review is a powerful resource

• • •

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More from @BrianFeroldi

Brian Feroldi Profile picture
Aug 16
WACC Cheat Sheet

What is the Weighted Average Cost of Capital?

Here's a quick primer: Image
WACC is the average after-tax expense of capital for a company from all of its sources.

This includes common stock, preferred stock, bonds, and other hybrid debt & equity instruments.

WACC is the mean rate a company pays to fund its operations. Image
WACC = [(E/V) x Re] + [(D/V) x Rd x (1 - Tc)]

E = Market value of the firm’s equity
D = Market value of the firm’s debt
V = E + D
Re = Cost of equity
Rd = Cost of debt
Tc = Corporate tax rate

WACC is a sum of the weighting of each capital source Image
Read 6 tweets
Brian Feroldi Profile picture
Jul 3
If you pick stocks, you MUST learn how to analyze a cash flow statement.

Here's how to do it in less than 2 minutes: Image
The Cash Flow Statement shows how cash moves in and out of a company over a period of time.

Its purpose is to track cash movement through a business. Image
The Cash Flow Statement uses CASH accounting.

This method only records transactions when money goes in or out of an account.

This differs from ACCRUAL accounting, the accounting method used on the Income Statement and Balance Sheet. Image
Read 10 tweets
Brian Feroldi Profile picture
Jul 2
How to analyze a Balance Sheet in less than 2 minutes: Image
The balance sheet is one of the three major financial statements.

It shows a company’s:
▪️Assets: What it owns
▪️Liabilities: What it owes
▪️Shareholders Equity: It's net worth

At a fixed point in time Balance Sheet
That “at a point in time” part is key!

A balance sheet is a SNAPSHOT of a company’s net worth.

It is measured at the end of a quarter/year. Image
Read 11 tweets
Brian Feroldi Profile picture
Jun 21
Warren Buffett's favorite way to measure profit isn't Net Income or Free Cash Flow.

It's Owner's Earnings.

What is it? How to does it work?

In this thread, I'll walk you through the calculation: Image
Imagine that you're opening a coffee shop.

You spend $100k on furniture & fixtures that will last 10 years.
You spend $60k on coffee equipment that will last 3 years.

Here are your total annual operating costs: Image
You make $1 million in revenue, so here's your income statement:

Revenue: $1,000k
Expenses: $450k
Pre-tax income: $550k
Taxes: $110k
Net Income: $440K

If you started with $105K in cash, how much do you have now?
Read 11 tweets
Brian Feroldi Profile picture
Jun 17
If you invest, you MUST understand accounting.

This thread will walk you through the Income Statements, visually: Image
An Income Statement is a *record* of how much money a business made (or lost) during a particular period of time -- eg, a quarter or a year.

The formula is: Revenues - Costs = Profits

Here's an example using Starbucks's income statement: Image
The Income Statements also contain a few other numbers that interest investors, including:

Gross Profits, Gross Margin, EBITDA, Operating Profits, Operating Margin, Earnings Per Share, etc. Image
Read 12 tweets
Brian Feroldi Profile picture
May 31
Tangible vs Intangible Assets.

What's the difference?

Here's everything you need to know: Image
They confused me until I discovered an easy way to distinguish them:

𝗧𝗮𝗻𝗴𝗶𝗯𝗹𝗲 𝗔𝘀𝘀𝗲𝘁𝘀 𝗖𝗮𝗻 𝗕𝗲 𝗧𝗼𝘂𝗰𝗵𝗲𝗱

𝗜𝗻𝘁𝗮𝗻𝗴𝗶𝗯𝗹𝗲 𝗔𝘀𝘀𝗲𝘁𝘀 𝗖𝗮𝗻'𝘁 Image
Another major difference.

- Tangible assets are depreciated

- Intangible assets are amortized Image
Read 7 tweets

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