Understanding Financial Literacy and Investment Strategies

Financial literacy is the foundation of your relationship with money. It's about understanding how money works, managing personal finances, budgeting, and investing. The lack of financial literacy can lead to poor financial decisions.

Albert Einstein reportedly called compound interest 'the eighth wonder of the world.' It allows your wealth to grow faster over time, as the interest you earn accrues interest on itself. Starting early can significantly increase your savings.

Inflation can erode the purchasing power of your money. An item costing $1 today could rise in price due to inflation. This means that not investing your savings could actually lose you money in real terms over time.

Behavioral finance studies how psychology influences financial decision-making. Impulse purchases, for instance, can undermine financial goals. Being aware of cognitive biases helps in making more rational and beneficial financial choices.

Diversification involves spreading investments across different asset classes to reduce risk. It's akin to not putting all your eggs in one basket. A diversified portfolio can better withstand market volatility.

Cryptocurrencies are digital or virtual currencies secured by cryptography. Bitcoin, the first and most well-known, was created in 2009. Investing in cryptocurrencies can be highly volatile but also offers a modern alternative to traditional assets.

Global debt reached an unprecedented $281 trillion in 2020, exceeding 355% of global GDP. Countries, corporations, and individuals all contribute to this number, making it a complex yet integral aspect of the world's financial ecosystem.