BetterTrades

Better Trade Offs

When deciding how to use or save their money, people are always confronted with a variety of financial trade-offs. Better trade-offs can be defined as better or more beneficial result for competing funds or capital. Since capital can only be spent or invested, deciding what to do with it is the first trade-off hurdle that must be examined. Whether spending or investing is the better trade-off will be specific to each person and their specific financial situation.

However once one has decided where or how much to allocate to consumption or savings there are a myriad of other potential places to put capital. The following pages of articles investigate some trade-offs that one should examine to help them allocate the use of their discretionary funds. These financial trade-offs will be examined and pros and cons for each possibility will be provided. A better trade-off for most individuals should be the opportunity that provides the greatest financial benefit for the longest period of time. Although some trade-offs may seem black and white some are more complex. For many the better trade-off is the least agreeable since it may require some time to reach the intended benefit. Consumption for immediate gratification is usually the least beneficial trade-off in the long term although for many it is a necessity that must be considered.

The better trade-offs you face must be viewed through a long-range and short-range lens. You must consider the best course to take for the long term, without wasting any short-term advantage or opportunity. This can sometimes be a daunting deed. Sometimes things look rosy down the road, but require you to survive some short-term hardships or problems. After all, the idea of swimming a mile may sound great, but the prerequisite is the ability to swim; the inability to swim must be overcome in order to actually swim the mile.

Conversely, you can't weigh the short-term benefits too greatly or you might risk long-term success. This is one reason some young people get in trouble early in their career. They focus too heavily on the short term and fail to learn how to save money. By learning to save money, they can pay for their long-range success without short-changing their immediate future. It's a better trade-off in this situation.

Sometimes you may face a decision that has no trade-off; it may be a win-win proposition. In these cases, you jump in and make the move. Being able to win on a short-term and long-term basis is profitable for anyone.

The following financial trade-offs are ones that most people will or should have to face at some time. The writers have done their best to provide various alternatives so that you can determine the potentially better trade-off for yourself.

• 401K vs IRA
• Broker or Online
• Fundamental or Technical
• Investing or paying down debt?
• Renting vs. Owning
• Savings vs. Credit Union