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TL/DR: Three of the richest money managers I can think of (who are not Warren Buffet) are Carl Icahn, Bill Ackman and David Einhorn.Carl Icahn is a New York-based investor and one of the 50 richest men in the world, with more than $20 billion in assets. He is known for his brash style as a corporate raider and as an outspoken shareholder activist. He founded his own firm in 1968 focused on arbitrage opportunities, and went on to fame in the 1980s through a series of takeovers and attempted takeovers of some of the biggest companies in America, including Texaco, TWA and American Airlines (Nasdaq: AAL). In 1985, he successfully took over TWA, and brought it back from the verge of bankruptcy for several years through a series of controversial changes. It finally went bankrupt in 1992 and emerged the next year, at which point Icahn relinquished his role as chairman.In the 1980s, Icahn frequently locked horns with CEOs and corporate boards, sometimes winning needed reforms or driving his targets into mergers with other companies. He was also the beneficiary of a practice known as greenmailing, in which a company would get him to abandon his takeover attempt in one of two ways: either they would make the strategic and organizational changes he demanded, or they would simply buy him out.A colorful figure and an aggressive investor, Icahn is credited as one of the inspirations for the Gordon Gecko character in Oliver Stone’s 1987 film Wall Street.[1][1][1][1]Bill Ackman founded and runs Pershing Square Capital Management.Mired in one of Wall Street's most brutal slumps, the $8.8 billion hedge fund has underperformed the S&P 500 by 20% for three straight years.Ackman created Pershing Square in 2004 and rose to fame for his short of bond insurer MBIA and his rescue of mall operator General Growth.Coming out of the crisis, he at times topped Wall Street with activist wins on Canadian Pacific, Fortune Brands and Allergan.His orchestration of a merger between Valeant Pharmaceuticals of Allergan drew allegations of insider trading (and a $290 million settlement in 2017).[2]In the hedge-fund world, [one] event, known as the Ira W. Sohn Investment Research Conference, is a big deal. People pay up to $3,250 a seat to hear a dozen or so highly regarded investors pitch an idea. It’s a charitable event, benefiting pediatric-cancer programs, but it’s also a heavyweight Wall Street ritual, with serious profit opportunities at stake.A few days before this year’s conference in May, Einhorn and his analysts at Greenlight had a private call with Erin Callan, the then–chief financial officer of Lehman Brothers. In two previous speeches at other investing conferences, Einhorn had raised doubts about Lehman; in April, he had explicitly stated that his firm was shorting Lehman, meaning that it had borrowed stock and sold it, with the idea that the firm would replace it at a later date when the stock declined in value (in essence, a bet that the stock would go down, not up). Very few people publicize their shorts, and when Einhorn did, it got Lehman’s attention. The conversation with Callan was to give her a chance to explain discrepancies he had uncovered between the firm’s latest financial filing and what had been discussed during its conference call about that filing.[3][3][3][3]Do they really study stocks?Yes, but they do it more intensely than we do. I suspect when they are interested in a publicly-listed company, they will read the company’s quarterly reports in order to find out whether the company is growing or not. What’s more, they have to compare the quarterly report with their own judgement of the marketplace, to see if the report is an honest reflection of reality.If you own shares in a company like Apple (AAPL), then the company will probably send you a complimentary copy of their reports directly to your inbox. If not, you could check with Google…Following the second link will lead you to the Financial Information page……which (as I write this) has the (three-page[4][4][4][4]) Q1 report of FY19 (“fiscal year 2019”) available to the public. Scroll down and you’ll come to a link that takes you here:https://www.apple.com/newsroom/pdfs/Q1_FY19_Consolidated_Financial_Statements.pdfSince 10-K reports are written in a special “investor’s jargon,” you might need a comprehensive book that explains how to read quarterly and annual reports. In my opinion, this book is remarkably thorough: [5][5][5][5]There are no doubt other financial books that would serve as a good introduction to the stock market (as opposed to, say, the bond market[6][6][6][6]):The Wall Street Journal Complete Money and Investing Guidebook24 Essential Lessons for Investment SuccessMartin Zweig's Winning on Wall StreetAlso, there are several major business magazines whose websites give you access to information and opinions about your favorite stocks.Bloomberg MarketsMarketwatch (US)Seeking Alpha will let its members create a portfolio of stocks (for informational purposes only) so you can focus on your favorite companies:How much do they really study stocks? How do they do that?You can get a good idea of what Carl Icahn is investing in by checking out the Securities and Exchange Commission website for his company’s filings.EDGAR Search Results - Carl Icahn, CIK # 0000921669[CIK stands for Central Index Key and it can be useful to help locate companies in the SEC database called Edgar.] You can find a detail page with the most recent filing using Edgar; it looks like this:I managed to find Mr. Icahn’s 13-F form (listing his current portfolio) via an article by John Vincent on Seeking Alpha. That list can be found here. (Click at the link where the yellow arrow is and you’ll see the 13-F below:***UPDATE:This website might be easier to follow:Carl Icahn Top Holdings and Current Portfolio.I used to think that investors specialized in one single sector and focused on some companies in that sector (e.g., McDonald’s, Tim Hortons, Starbucks, Chipotle), but it appears that, judging by the 13-F form, Icahn’s holdings are fairly diverse: he invests in Dell computers and a railroad, among other things. It stands to reason that he did a lot of research into the customer demand for those companies’ products/service.LAST BUT NOT LEAST…IS THERE A SECRET STRATEGY?Michael Lewis interviewed a man who made a lot of money writing a newsletter about stocks before becoming an investor. That man’s name was Michael Burry. Mr. Burry often looked for companies that had bad publicity but good business plans. He called it the “Ick!” factor: most investors would see the bad publicity and say, “Ick! I’m not investing in that!” But Burry realized that bad publicity was temporary, and a good business plan would outlast it and make the company profitable. One such company is Avanti!, a software company, which was involved in a lawsuit that had to be settled. I wrote about that previously here:Reid Butler's answer to What are strategies for picking a quality stock investment?And here it is in detail, quoted in a LONG article in Vanity Fair:[7][7][7][7]Those are my thoughts on the subject of major investors in the stock market. I’m sure there are plenty of blogs on the internet that will help you as well.Footnotes[1] Carl Icahn Biography[1] Carl Icahn Biography[1] Carl Icahn Biography[1] Carl Icahn Biography[2] William Ackman[3] The Confidence Man[3] The Confidence Man[3] The Confidence Man[3] The Confidence Man[4] Apple Reports First Quarter Results[4] Apple Reports First Quarter Results[4] Apple Reports First Quarter Results[4] Apple Reports First Quarter Results[5] The Five Rules for Successful Stock Investing[5] The Five Rules for Successful Stock Investing[5] The Five Rules for Successful Stock Investing[5] The Five Rules for Successful Stock Investing[6] How the Bond Market Works[6] How the Bond Market Works[6] How the Bond Market Works[6] How the Bond Market Works[7] Betting on the Blind Side[7] Betting on the Blind Side[7] Betting on the Blind Side[7] Betting on the Blind Side

Insurance:What is Insurance?Insurance is a contract, represented by a policy, in which an individual or entity receives financial protection or reimbursement against losses from an insurance company. The company pools clients' risks to make payments more affordable for the insured.Insurance policies are used to hedge against the risk of financial losses, both big and small, that may result from damage to the insured or her property, or from liability for damage or injury caused to a third party.InsuranceUnderstanding How Insurance WorksThere is a multitude of different types of insurance policies available, and virtually any individual or business can find an insurance company willing to insure them, for a price. The most common types of personal insurance policies are auto, health, homeowners, and life. Most individuals in the United States have at least one of these types of insurance, and car insurance is required by law.Businesses require special types of insurance policies that insure against specific types of risks faced by a particular business. For example, a fast food restaurant needs a policy that covers damage or injury that occurs as a result of cooking with a deep fryer. An auto dealer is not subject to this type of risk but does require coverage for damage or injury that could occur during test drives. There are also insurance policies available for very specific needs, such as kidnap and ransom (K&R), medical malpractice, and professional liability insurance, also known as errors and omissions insurance.Insurance Policy ComponentsWhen choosing a policy, it is important to understand how insurance works.[Important: Three crucial components of insurance policies are the premium, policy limit, and deductible.]A firm understanding of these concepts goes a long way in helping you choose the policy that best suits your needs.PremiumA policy's premium is its price, typically expressed as a monthly cost. The premium is determined by the insurer based on your or your business's risk profile, which may include creditworthiness. For example, if you own several expensive automobiles and have a history of reckless driving, you will likely pay more for an auto policy than someone with a single mid-range sedan and a perfect driving record. However, different insurers may charge different premiums for similar policies; so, finding the price that is right for you requires some legwork.Policy LimitThe policy limit is the maximum amount an insurer will pay under a policy for a covered loss. Maximums may be set per period (e.g., annual or policy term), per loss or injury, or over the life of the policy, also known as the lifetime maximum. Typically, higher limits carry higher premiums. For a general life insurance policy, the maximum amount the insurer will pay is referred to as the face value, which is the amount paid to a beneficiary upon the death of the insured.DeductibleThe deductible is a specific amount the policy-holder must pay out-of-pocket before the insurer pays a claim. Deductibles serve as deterrents to large volumes of small and insignificant claims. Deductibles can apply per-policy or per-claim depending on the insurer and the type of policy. Policies with very high deductibles are typically less expensive because the high out-of-pocket expense generally results in fewer small claims.So let's define insurance scheme:What is an insured scheme?There are two kinds of scheme that landlords can use to register a rental security deposit: custodial and insured. ... Under a custodial scheme, the money is held by the scheme provider; under an insured scheme, the landlord can keep the money in their own bank account during the tenancyNow we will define what is online banking fraud:Internet Banking Fraud is a fraud or theft committed using online technology to illegally remove money from a bank account and/or transfer money to an account in a different bank. Internet Banking Fraud is a form of identity theft and is usually made possible through techniques such as phishing.So let's take a closer look into online banking fraud and how to avoid it:Internet banking fraudsInternet Banking Fraud is a fraud or theft committed using online technology to illegally remove money from a bank account and/or transfer money to an account in a different bank. Internet Banking Fraud is a form of identity theft and is usually made possible through techniques such as phishing.Now internet banking is widely used to check account details, make purchases, pay bills, transfer funds, print statements, etc. Generally, the user identity is the customer identification number and password is provided to secure transactions.But due to some ignorance or silly mistakes you can easily fall into the trap of cybercriminals.Here are some simple tips to prevent you from falling into the trap of cybercriminals. Remember, simple ignorance or oversight can make a huge dent in your hard- earned savings.Securing your account: Avoid online banking on unsecured wifi systems and operate only from PCs at home. Never reveal the password to anyone. Do not even write it on a piece of paper on a diary. Just memorize it. It should be alphanumeric and change it frequently.Never reply to queries from bank online about account or personal details. The personal information should not be kept in a public computer or in emails.Phishing: A person's personal details are obtained by fraudsters posing as bankers, who float a site similar to that of the person's bank. They are asked to provide all personal information about themselves and their account to the bank on the pretext of database upgradation. The number and password are then used to carry out transactions on their behalf without their knowledge.Phishing involves using a form of spam to fraudulently gain access to people's online banking details. As well as targeting online banking customers, phishing emails may target online auction sites or other online payment facilities. Typically, a phishing email will ask an online banking customer to follow a link in order to update personal bank account details. If the link is followed, the victim downloads a program which captures his or her banking login details and sends them to a third party.Spam: Spam is an electronic 'junk mail' or unwanted messages sent to your email account or mobile phone. These messages vary but are essentially commercial and often annoying in their sheer volume. They may try to persuade you to buy a product or service, or visit a website where you can make purchases, or they may attempt to trick you into divulging your bank account or credit card details.Nigerian Scam: Nigerian or Frauds 409 or 419 are basically the lottery scam in which some overseas persons are involved to cheat innocent persons or organizations by promising to give a good amount of money at nominal fee charges. Their intention is to steal money in the form of fee against the lottery prize.Spyware: Spyware such as Trojan Horse is generally considered to be software that is secretly installed on a computer and takes things from it without the permission or knowledge of the user. Spyware may take personal information, business information, bandwidth; or processing capacity and secretly gives it to someone else."Trojan Horse" scheme unfolds when malicious software (malware) embeds to a consumer's computer without the consumer being aware of it. Trojans often come in links or as attachments from unknown email senders. After installation, the software detects when a person accesses online banking sites and records the username and password to transmit to the offender. People using public computers, in places like Internet cafes, are often susceptible to Trojans like malware or spyware.Check sites Url: Always check the URL of your bank's web site. Fraudsters can lure you to enter your user ID and password at a fake website that resembles your bank. If you see anything other than the bank's genuine URL, it has to be fake.Never enter your user ID or password or such sensitive information without ascertaining that you are on the right website. Always type the Web address of your bank into the browser address space. Never click on the link in the email.Fool-proof password: Change your online banking password at regular intervals. Also, avoid easy-to-guess passwords, like first names, birthdays, kid's or spouse's name and telephone numbers. Try to have an alpha-numeric password, one that combines alphabets and numbers.If you have several bank accounts, never use the same online banking password for all. Never select the option on the browser that stores or retains user name and password. As it can easily be cracked by cybercriminals. Also, never paste your password, always type it in. This little amount of `finger exercise' will go a long way in safety.Always check 'last logged': Most banks have a 'last logged in' panel on their websites. If your bank has it, check the panel whenever you log in. If you notice irregularities (like you are logging in after two days, but the panel says you logged in that morning!), report the matter immediately to your bank and change your password right away.Always log out when you exit the online banking portal. Close the browser to ensure that your secure session is terminated. Never exit simply by closing the browser.Keep your system up to date: Regularly check for security updates for your computer operating system. Most security updates are aimed at reducing risks to your computer, these may be data-related or otherwise. Make sure that your operating system and browser have the latest security patches installed. And, always install these only from trusted websites.Install a personal firewall to prevent hackers from gaining unauthorized access to your computer, especially if you connect to the Internet through a cable or a DSL modem.Public access can be injurious: Don't leave the PC unattended after keying in information while transacting on the website. Avoid accessing your bank online at cyber cafes or on a share or public computer. Also, avoid locations that offer online connections through wireless networks (Wi-Fi), where privacy and security are minimal.Follow Bank instructions: Banks say that appropriate upgradations are carried out from time to time by their IT departments for risk mitigation. They issue instructions to the customers to manage their accounts through virtual keyboards by way of which the characters typed by them are not identified by hackers. SMS alerts are also an important tool since any transaction carried out on account is reported to the account holder through an SMS.Protection: Learn the ways to protect yourself from online banking fraud schemes. Detect Trojans that appear on your PC in the form of viruses, spyware or malware through Antivirus Software, anti Spyware, and Adware. Also, learn to keep your cards, documents, and passwords safe, and monitor your accounts to safeguard yourself from bank fraud committed through identity theft.Now, let’s look at the services an insurance broker is supposed to provide you with:Services Your Insurance Agent Should ProvideBY MARIANNE BONNERUpdated October 02, 2018Insurance agents and brokers earn commissions on the premiums you pay for insurance policies. What services can you reasonably expect your agent or broker to provide in return for those commissions? This article will answer that question. For this discussion, any reference to an agent includes a broker.Knows Your BusinessYour agent should understand your business. He or she needs to know what your company does, how it operates, where it is located and other essential details. Your agent is not a mind reader. You know more about your business than anyone else. Your agent must rely on you to be forthcoming with information. Be sure to tell your agent if your business has any unique risks, such as a sideline operation or an affiliation with another business.Conduct a Risk AssessmentOnce your agent understands your business, he or she should help you assess your risks. Ask your agent what types of losses are typically incurred by businesses like yours and what you can do to prevent them. Your agent should help you review your options for managing risk. For instance, your agent may suggest that you set up a loss control program, buy an insurance policy, utilize self-insurance, and/or transfer risk to someone else via an indemnity agreement.Analyze Your NeedsOnce your agent has a basic understanding of your company's risk, he or she should analyze your coverage needs. Some types of insurance, such as auto liability and workers compensation, are compulsory. Others are not mandated by law but are crucial nonetheless. An example is ​general liability insurance. Some types of insurance (like auto physical damage coverage) are valuable but not always essential. To make the most of your insurance budget ask your agent to rank the coverages he or she recommends based on their relative benefit to your business.​Shop AroundThe next step is to submit applications on your behalf to one or more insurance companies. If you are using an independent agent, he or she should be familiar with the products offered by the insurers the agency represents. Your agent should also know which of these products will best suit your needs. Preferably, your agent will obtain quotes from several insurers. However, this may not be possible if your business is risky, has unusual characteristics or poor loss history. In that event, your agent may ask a surplus lines broker to obtain quotes from one or more non-admitted insurers.Review Quotes and Select the Best OptionOnce your agent has received quotes from the insurers, he or she should help you compare them. It is your agent's responsibility to ensure that the quoted premiums include the coverages you requested. If any of the premiums are too high or the coverage is lacking, your agent should try to negotiate a better deal on your behalf. Once the quotes have been finalized your agent should help you select the policy that best suits your needs.Monitor Your CoverageYour agent's job doesn't end once you have purchased a policy. Your business is likely to grow and change over time, and your insurance needs to adapt to those changes. Your agent should contact you at least once a year for a renewal update. If your insurance has been written by the same insurer for several years, ask your agent about marketing your business to other insurers. The marketplace may have changed since your coverage was written and better options may be available.Help With ClaimsIf your company sustains a loss, your agent should provide guidance in completing claim forms and submitting them to the insurer. The agent should monitor the claim to ensure it is processed promptly. If your claim payment is delayed or denied, perhaps due to missing or inaccurate information, your agent can talk to the adjuster on your behalf to speed up the payment process. Once your claim has been paid, your agent can help you determine whether the payment amount is fair and reasonable.Provide GuidanceYour agent should be available to answer questions related to your insurance coverage. For example, if you intend to travel outside the U.S. on business, your agent should be able to tell you whether your existing coverage will apply in a foreign country. Be sure to contact your agent right away if your business takes on a new risk (such as buying a new building) or undergoes a significant change.Serve as Your AdvocateYour agent should serve as your advocate in dealing with insurers on a variety of issues (not just claims). He or she should work with insurance company employees to resolve problems on your behalf. For example, suppose an underwriter wants to non-renew your property policy because you have sustained several losses. Your agent should work with the underwriter to negotiate a less drastic solution, such as a larger deductible.It’s a bit difficult to narrow down the best insurance brokers, that would provide the best scheme for online bank fraud, so what I am going to do is provide a list of the first 15 top brokers, and the services they provide- then you will make your choice:15 Largest Insurance BrokeragesBY MARIANNE BONNERUpdated December 10, 2018The 15 largest insurance brokerages of U.S. business are listed in the table below. The rankings are based on revenue earned in 2016. The source of the data is a list published by Business Insurance (an insurance news magazine) entitled "100 Largest Brokers of U.S. Business." When it created the ranking, Business Insurance did not include brokers that derived more than 49% of their gross revenue from personal lines business.Act on Behalf of BuyersInsurance brokers serve as intermediaries between insurance buyers and insurance companies. They differ from insurance agents, who sell policies under contractual agreements with insurance companies. Brokers act in the interest of insurance buyers. They have no authority to bind coverage or issue policies. To initiate coverage on behalf of an insurance buyer, a broker must ask an underwriter at the insurer to issue an insurance binder. Alternatively, the broker may issue a binder but no coverage will take effect unless the binder is signed by an underwriter or other authorized representative of the insurer.Broad Range of ServicesLarge brokers provide a broad range of services. While the specific services provided vary from broker to broker, many offer the following:Risk management servicesLoss control servicesClaims management servicesPrivate client services (personal coverages for wealthy individuals)Analytics (such as loss forecasting)Employee benefitsCaptives and other forms of alternative risk transferAffinity programs (insurance programs designed for groups, such as franchises)Mergers and acquisitions (help facilitate transactions and manage risks)Terrorism and political risk (help manage risks and secure insurance)Several of the largest brokers operate worldwide. Some, like Aon and Willis Towers Watson, is based in London. Others are headquartered in the U.S. Many maintain offices in foreign countries. Examples are Marsh, AON, and Willis. Others, such as USI and BBT, operate mainly in the United States. Some, like BB&T, our insurance subsidiaries of financial conglomerates.The first six brokers on the list are public companies and are listed on the New York Stock Exchange. HUB, Lockton, USI, Alliant, NFP, AssuredPartners, Acrisure, and Broadstreet Partners are private companies.Recent AcquisitionOne significant change that has occurred in the brokerage industry is the acquisition of Wells Fargo Insurance Services by USI Insurance Services. USI announced its intention to purchase Wells Fargo's insurance business in June of 2017 and finalized the transaction the following December. According to Insurance Journal, USI obtained various insurance operations from Wells Fargo. These include commercial insurance brokerage and consulting, employee benefits, property/casualty national practices, small business insurance, student insurance, and a program administrator called Safehold Special Risk.The Top 15Here are the largest 15 brokerages listed in descending order based on 2016 revenue. Note that the list includes insurance brokerages only. The largest 25 insurance agencies are included in a separate list.1. Marsh & McLennan Cos. Inc.​Revenue: $6,614,500,000Headquarters1166 Avenue of the AmericasNew York City, New York 10011Tel.: (212) 345-5000Website: Global Leader in Insurance Broking and Risk Management2. Aon P.L.C.Revenue: $6,065,933,500Global HeadquartersThe Aon CentreThe Leadenhall Building122 Leadenhall St.London, England EC3V 4ANTel.: +44 (0)20 7623 5500Fax: +44 (0)20 7621 1511Website: http://www.aon.com3. Willis Towers Watson P.L.C.Revenue: $3,733,440,000HeadquartersThe Willis Building51 Lime St.London EC3M 7DQTel.: +44 (0) 203 124 6000Website: Global Risk Advisor, Insurance and Reinsurance Broker4. Arthur J. Gallagher.Revenue: $2,888,409,000Global Corporate Headquarters2850 Golf RoadRolling Meadows, IL 60008Tel.: (630) 773-3800Website: Gallagher Insurance, Risk Management & Consulting : Gallagher5. BB&T Insurance Holdings Inc.Revenue: $1,809,175,000Headquarters3605 Glenwood AvenueRaleigh, NC 27622-1128Tel. Tel.:919-716-9770Website: McGriff Insurance Services6. Brown & Brown, Inc.Revenue: $1,762,787,105Headquarters220 South Ridgewood AveDaytona Beach, Florida 32115(386) 252-9601Tel.: 919-716-9770Website: Brown & Brown Insurance | Insurance & Risk Management Solutions7. HUB InternationalRevenue: $1,286,060,100Headquarters300 N. LaSalle St., 17th FloorChicago, IL Illinois 60654Tel. (312) 432-2558Website: Insurance Brokers | HUB International8. Lockton Cos. LLC.Revenue: $1,054,685,740Corporate Office444 West 47th St., Suite 900Kansas City, MO 64112Tel.: (816) 960 9000Website: https://lockton.com9. USI Insurance Services L.L.C.Revenue: $1,030,124,263Corporate Office200 Summit Lake Drive, Suite 400Valhalla, NY 10595Tel.: (914) 749-8500Website: Insurance Brokerage and Consulting10. Wells Fargo Insurance Services USA Inc.Revenue: $980,800,000Headquarters200 Summit Lake Drive, Suite 400Valhalla, NY 10595Tel.: (914) 749-8500Website: https://wfis.usi.com11. Alliant Insurance Services, Inc.Revenue: $966,769,832Headquarters1301 Dove St., 2nd FloorNewport Beach, CA 92660Tel.: (949) 756-0271Website: https://alliant.com12. NFP Corp.Revenue: $930,815,040Headquarters340 Madison AvenueNew York, NY 10173Tel. :(212) 301-4000Website: Insurance Brokerage and Consulting | NFP13. AssuredPartners Inc.Revenue: $820,926,226Headquarters200 Colonial Center Parkway, Suite 140Lake Mary, FL 32746Tel.: Tel.: (407) 804-5222Website: Insurance Broker & Employee Benefit Solutions14. Acrisure LLCRevenue: $639,312,851Headquarters25664 Prairie Creek Dr. SECaledonia, MI 49316Tel.: 800) 748-0351Acrisure | Top 15 Insurance Brokerages in the United States15. BroadStreet Partners Inc.Revenue: $423,200,000Headquarters580 N. Fourth St., Suite 450Columbus, OH 43215Tel.: (614) 993-3011Website: BroadStreet Partners - Insurance Brokerage in Columbus, OH

Embrace the suck.The phrase is one of several lessons learned by a West Point grad, and this saying relates directly to investing in your early 20s. Acknowledge that investing successfully is hard, because it takes self-discipline and delayed gratification.Those two concepts don’t sound any fun.But, as the writer says, we should embrace times that are difficult, because we always learn something- and we’ll be better prepared for the next time things suck.I’ll answer this question by pointed out two advantages that you have as an investor in your early 20s, then provide some concrete steps for investing.Your credit scoreIf you’re in your 20s, you can stay on top of your credit score, and build a great credit history over time.Take action to monitor your credit report, correct errors, and improve your credit score. Read this article to learn about recent changes in the credit scoring process.The power of compounding earningsIt was 1999, and I was talking to a co-worker, Ron, who was about 50 years old. A large insurance company we both worked for was merging with another firm, and we were both leaving the company. (I left to start my current business).I had suspected that Ron well below his means, because I had a good idea of how much money he made. Both Ron and his wife worked, yet they lived in a blue collar-type neighborhood with small homes.Ron wasn’t retiring early, but he had enough money to take some time off. He told me that he and his wife had planned financially, so neither of them would need to start working immediately after leaving a job.They planned, they saved aggressively, and invested wisely.How did he do it?He compounded earnings on his investments.Here’s how: Consider a $1,000 investment at a 5% interest rate, with total annual interest of $50.Compounding interest is defined as earning “interest on interest”, and when you compound interest, your total earnings can be much higher.In year one, you earn $50 in interest. Here’s the key point: in year two, the investor keeps the original $1,000 invested, plus the year one earnings of $50. The total amount invested in year two is $1,050.$1,050 invested at 5% = $52.50 in interest, or $2.50 more than in year one.The returns get bigger over time.Think about a bucket. You can envision more money going into the bucket each year, since you leave your earnings in the bucket. If you took each year’s interest out, you’d only invest the original $1,000 each year- and you’d end up with far less money over time.You have a longer time to compound earnings on investments in your 20s vs. your 50s.If you’re recovering from a financial setback, this article may help.You can make up for investment losses over timeAnother advantage of investing in your 20s is that you can make up for investment losses, because you’re investing for a longer period of time.So, what’s a “normal return” on stock investments, if such a number exists? Seeking Alpha (a site I highly recommend) has some great stats on historical returns for the S&P 500 from 1928 to 2015:Over 88 years, the S&P 500 went up 64 years and went down 24 years.The worst return was -43.84% in 1931 (ouch) .The best return was 52.56% in 1954.The mean return (think average) was 11.4122%So, what’s normal? Seeking Alpha says 11%, and other stats suggest 8-10% over a 70-80 year period.If you stay invested for the long term, those losses will balance out with the gains over time- and you’ll probably earn that average 8-10% rate.Here are some practical steps:Create a budget, and move funds into a savings accountCreate a budget, even if that budget is simply on notebook paper.Separate your expenses between fixed and variable, and take a hard look at your variable spending.Take steps to cut your variable expenses each month and put the amount you save into a separate savings account.Monitor your spending and your budgetConsider using a budgeting app to monitor your spendingSet up a separate bank account to discipline yourself to saveSave 5% of your monthly gross incomeUse a retirement account to invest- through an employer, or on your ownCarefully review each retirement plan offering from your employer.Ask about the tax-deferred investing component of your firm’s retirement plan. Do your investments grow tax-deferred?If you’re self-employed, ask financial advisor about your investment optionsOne last thing: Read The Richest Man In Babylon. It’s a simple- yet powerful- book on savings and investing.As always, check with a financial advisor and a CPA for more specific advice.Good luck!I blog at Accounting Accidentally.com.If you like this answer, please upvote it. Thanks!Image: Bullseye, Jeff Turner CC by 2.0