Risk Is Never as Simple as It Seems
.Risk Is Never as Simple as It Seems
Posted August 18, 2020 by Ben Carlson
“The financial models many banks used gave them a false sense of security leading up to the Great Financial Crisis. Garbage-in, garbage out is the same for financial models as it is for your sink.”
A number of years ago I was packing up my bags on a Sunday morning to fly out to an investment conference when my wife told me we had a plumbing situation. Water was coming up out of the drain in the shower. And the kitchen sink was backed up. That’s not good.
She was scheduling a plumber to come to the house as I walked out the door to hop on my flight. As my flight touched down I called to see what the verdict was. The news was weirder than I expected. So what’s the damage? I asked.
Well it’s not great she told me. When the plumber put his snake video device into the pipe that runs from the kitchen sink to our master bathroom he discovered it was full of eggshells.
Risk Is Never as Simple as It Seems
Posted August 18, 2020 by Ben Carlson
“The financial models many banks used gave them a false sense of security leading up to the Great Financial Crisis. Garbage-in, garbage out is the same for financial models as it is for your sink.”
A number of years ago I was packing up my bags on a Sunday morning to fly out to an investment conference when my wife told me we had a plumbing situation. Water was coming up out of the drain in the shower. And the kitchen sink was backed up. That’s not good.
She was scheduling a plumber to come to the house as I walked out the door to hop on my flight. As my flight touched down I called to see what the verdict was. The news was weirder than I expected. So what’s the damage? I asked.
Well it’s not great she told me. When the plumber put his snake video device into the pipe that runs from the kitchen sink to our master bathroom he discovered it was full of eggshells.
What?! There’s something living in the pipe?!
No, Ben — eggshells from your morning breakfast.
Oh.
You see I’m a creature of habit. Every morning for breakfast I have scrambled eggs. And when I first started making eggs I would discard the shells into the garbage disposal. I probably did this hundreds of times.
The problem was the grade of the pipe was off just a smidge so those eggs weren’t finding their way out of the house but instead sat on the bottom of the pipe and built up over the course of a couple of years.
Whoops.
After flushing the pipe with many blasts of water to clear things up the plumber gave us some advice: Never put any food down your garbage disposal. Garbage disposals are what keeps me employed.
He said the garbage disposal gives people a false sense of security that they can just put anything down their sink and it will magically disappear. Much to my surprise, garbage disposals are not as trustworthy as I thought.
Lesson learned.
https://awealthofcommonsense.com/2020/08/risk-is-never-as-simple-as-it-seems/
Once upon a time in Hollywood. . .
.Once upon a time in Hollywood. . .
Notes From The Field By Simon Black August 20, 2020 Bahia Beach, Puerto Rico
When Charlie Chaplin first arrived to Los Angeles in December 1913, the city was still a fairly small oil town… just a fraction of the size of San Francisco.LA was so underdeveloped that, as Chaplin wrote in his autobiography, wild coyotes frequently roamed around Hollywood and Beverly Hills. But within a few years the city was booming, and Chaplin had become one of the most famous people in the world.
This is obviously in large part due to the development of the motion picture industry-- the most revolutionary technology of its era. But what’s interesting is that the motion picture industry didn’t actually start in LA. The technology was originally developed in the late 1800s in part by Thomas Edison, who was based in New Jersey.
Edison’s east coast film studio produced over 1,000 movies (including a bizarre snuff film called Electrocuting an Elephant). And he notoriously threatened to sue anyone who attempted to make movies.
Once upon a time in Hollywood. . .
Notes From The Field By Simon Black August 20, 2020 Bahia Beach, Puerto Rico
When Charlie Chaplin first arrived to Los Angeles in December 1913, the city was still a fairly small oil town… just a fraction of the size of San Francisco.LA was so underdeveloped that, as Chaplin wrote in his autobiography, wild coyotes frequently roamed around Hollywood and Beverly Hills. But within a few years the city was booming, and Chaplin had become one of the most famous people in the world.
This is obviously in large part due to the development of the motion picture industry-- the most revolutionary technology of its era. But what’s interesting is that the motion picture industry didn’t actually start in LA. The technology was originally developed in the late 1800s in part by Thomas Edison, who was based in New Jersey.
Edison’s east coast film studio produced over 1,000 movies (including a bizarre snuff film called Electrocuting an Elephant). And he notoriously threatened to sue anyone who attempted to make movies.
In 1902, a US Appeals Court ruled that Edison did NOT invent the motion picture camera… but his lawsuits continued regardless.
This constant threat of legal action was a huge disincentive to entrepreneurs. And so, in the early 1900s, several young studio executives packed up and left the east coast for Southern California where they were much better protected from Edison’s frivolous lawsuits.
This is the primary reason why the motion picture industry grew up in LA; sure, the region’s ample sunshine was a nice benefit, allowing for year-round outdoor production.
But the chief benefit was the city’s free-wheeling, pro-business culture. It was like Hong Kong in its heyday-- anything goes-- which attracted talented artists and entrepreneurs from all over the world who were free to build their dreams.
This industry created vast prosperity. Studio executives became unimaginably wealthy. Actors became rich and famous. The industry created countless jobs and supported a deep middle class.
And the city collected substantial tax revenue. It was a win/win for everyone. And, unsurprisingly, the local government did its part to protect the Golden Goose.
For example, unions were allowed to organize. But they received no special favors or privilege from the government.
Taxes were kept low. Regulations were simple. In short, people were free to create, experiment, and build their businesses.
So much has changed since then.
The entertainment industry is still the primary economic driver of Southern California today. But the state and local governments routinely engineer ways to chase away production.
Pay attention to the end credits next time you watch a movie. You’ll probably see something about production in New Mexico or Georgia.
These are among the states that have rolled out the red carpet for production companies, enticing them with tax credits, grants, and a much easier regulatory environment.
Georgia has become so prominent that Atlanta is rapidly becoming the next Hollywood; several mega-hits, like Black Panther, Avengers: Infinity War, and Stranger Things were produced in Georgia.
The economic impact has been in the tens of billions, and tens of thousands of jobs. Those are jobs (and tax revenue) that could have gone to California. But California is too busy burdening businesses and productive individuals with absurd regulations and taxes.
If you want to move a lighting pole three feet to the left on the set of a Hollywood production, you’d better have a union employee do it (which adds dearly to production costs).
And now the state legislature wants to soak the rich with retroactive income taxes and wealth taxes.
You’d think California would be doing everything it can to keep Hollywood the capital of the entertainment industry… and to keep wealthy people in the state.
Remember, fewer than 1% of Californians pay half of the state’s taxes. So if even a small number leaves the state, California’s finances will be in dire straits.
But that’s exactly what’s happening.
Data from real estate websites like Redfin show a surge in Californians looking for houses outside of the state.
In the city of San Francisco, there’s been a 200% increase in the number of homes for sale compared to this time last year. Meanwhile, properties across the state line in Nevada (which has no state income tax) are being gobbled up.
Coincidence?
Other self-exiled Californians are heading to places like Florida and Texas (which also have no state income tax). Or even here to Puerto Rico, which has incredible incentives to reduce your total tax rate to 4% or less.
I imagine there will be a lot of people who leave the US altogether… which not only allows you to escape state income tax, but federal tax as well.
The biggest federal tax benefit is the Foreign Earned Income Exclusion: US citizens living abroad are eligible to earn up to $107,600, tax free.
And your spouse can earn an additional $107,600 tax free.
Plus there’s a generous housing benefit… so in total we are talking $250,000+ of earned income, virtually free of US federal tax.
Note- this exclusion applies to ‘earned’ income, like wages. It does not apply to investment income, like capital gains or dividends. Investment income is generally still taxable if you live abroad.
(People who generate their income through investments really ought to consider Puerto Rico, which has 0% tax on most investment income.)
There are two ways to qualify for the Foreign Earned Income Exclusion.
One is to demonstrate that you are a bona fide resident of a foreign country; this is more qualitative. It means, for example, you have legal residency in a foreign country and live there with your family as your primary residence.
An alternative way to qualify is through ‘physical presence’, meaning that you spend at least 330 days outside of the US during a 12 month period.
If you find yourself sick and tired of lockdowns, politics, and general social hysteria, spending some time abroad is worth considering.
In addition to the tax benefits, you might find the cost of living to be much lower… and the personal experience to be incredibly rewarding.
To your freedom and prosperity Simon Black, Founder, SovereignMan.com
https://www.sovereignman.com/trends/once-upon-a-time-in-hollywood-28695/
Price Is What You Pay, Value Is What You Get
.Price Is What You Pay, Value Is What You Get
August 15, 2020 · by The Escape Artist
Imagine that Bill and Ted have gone trekking in a remote corner of the Death Valley National Park in the USA.
They’ve been backwoods camping and were carrying all their own food, tents and equipment.
Unfortunately some coyotes stole all their stuff a couple of days ago and its taken 2 days to walk back to the edge of the national park towards the car park. Their water ran out a day ago and they’re still a full days hike in the hot desert sun from where their car is parked. Without water they won’t been able to keep going much longer.
As luck would have it, they then turn a corner and see a lemonade stand that has been set up by some enterprising kid. What a relief!
Then they see the price: the mini-entrepreneur is charging $10 per cup of lemonade when they know perfectly well that, at home in the suburbs, the normal going rate for a cup of lemonade is $0.50 a cup.
Price Is What You Pay, Value Is What You Get
August 15, 2020 · by The Escape Artist
Imagine that Bill and Ted have gone trekking in a remote corner of the Death Valley National Park in the USA. They’ve been backwoods camping and were carrying all their own food, tents and equipment.
Unfortunately some coyotes stole all their stuff a couple of days ago and its taken 2 days to walk back to the edge of the national park towards the car park. Their water ran out a day ago and they’re still a full days hike in the hot desert sun from where their car is parked. Without water they won’t been able to keep going much longer.
As luck would have it, they then turn a corner and see a lemonade stand that has been set up by some enterprising kid. What a relief!
Then they see the price: the mini-entrepreneur is charging $10 per cup of lemonade when they know perfectly well that, at home in the suburbs, the normal going rate for a cup of lemonade is $0.50 a cup.
Bill pays the $10 with as much good grace as he can muster, acknowledging that this is a remote area and the entrepreneur’s cost of sales is higher out here in the boondocks. The kid is providing convenience and a premium service here so good for him. Plus Bill knows his chances of finding another lemonade stand before he collapses and dies are basically zero…so there’s that. Bill buys the lemonade, walks on refreshed to his car and drives home.
Ted has the $10 but refuses to pay because, well $10 is daylight robbery. He grumbles that its a total con, never gonna pay that etc etc. The funny thing is that Ted feels like he’s standing up for what’s right…but really he’s just a penny-pincher. Ted refuses to buy the lemonade and a few hours later he collapses with dehydration and dies.
OK, so maybe that example is a little contrived but I’m trying to illustrate a real blindspot: the problem with penny-pinching. Ted’s mistake was to focus exclusively on the price without thinking about value. Price is what you pay, value is what you get and the two can be very different. I’ve written before about the difference between frugal and cheap. It makes no sense to be penny-wise and pound foolish.
It seems like the next year or so is going to be tough economically so a lot of people are going to need Monk Mode. Lockdown showed what was possible in terms of living cheaper and cutting out unnecessary spending. The aggregate savings rate in the UK went from ~5% at the start of the year to ~30% during lockdown. Credit card debt got paid down at a record rate (every cloud has a silver lining).
If you are young / broke / in debt etc full-on frugality in Monk Mode should be part of your strategy. Monk Mode is also good for higher income people that want to break some of their bad spending habits. Some things are hard to do in moderation. If you are trying to get off heroin, cold turkey is the way to go.
To continue reading, please go to the original article here:
https://theescapeartist.me/2020/08/15/price-is-what-you-pay-value-is-what-you-get/
Notes From Our Sovereign Woman
.Notes from our Sovereign Woman
August 18, 2020 Dubai, United Arab Emirates
Today’s Notes from the Field is a little bit different.
As you’ll notice instead of Bahia, this letter is coming to you from Dubai, UAE. And, is penned by a Sovereign Woman.
Hi, I’m Viktorija, for those who don’t know me yet, I’ve been with Sovereign Man for the majority of its existence, working behind the scenes most of the time. I’ve traveled to about 100 countries around the world, and I am working on eventually beating Simon’s record of 122.
While most of the world seems to be on lockdown, I wanted to share some travel stories with you. And before you ask-- yes, traveling is definitely possible during this time. And frankly it’s been pretty enjoyable.
Notes from our Sovereign Woman
August 18, 2020 Dubai, United Arab Emirates
Today’s Notes from the Field is a little bit different.
As you’ll notice instead of Bahia, this letter is coming to you from Dubai, UAE. And, is penned by a Sovereign Woman.
Hi, I’m Viktorija, for those who don’t know me yet, I’ve been with Sovereign Man for the majority of its existence, working behind the scenes most of the time. I’ve traveled to about 100 countries around the world, and I am working on eventually beating Simon’s record of 122.
While most of the world seems to be on lockdown, I wanted to share some travel stories with you. And before you ask-- yes, traveling is definitely possible during this time. And frankly it’s been pretty enjoyable.
Once I turned off the news and went outside, the first thing I noticed was that life is pretty much back to normal in many parts of the world.
I had the pleasure of spending the peak of the Covid-19 lockdown phase in Puerto Rico and after that I traveled to Chile, then to Europe, and now in Dubai.
The range of government restrictions in these places has been remarkable.
In Puerto Rico where I spent time with Simon at his home, life was normal-ish.
As Simon likes to say, Puerto Ricans don’t have much regard for their government, so most people have openly defied government rules about lockdowns, and most of those rules have loosened up anyhow.
Chile was the total opposite.
When I was there last month, the Chilean government had kept people in total lockdown. Chileans were allowed to leave their homes only twice each week, and they had to apply online for a special permit to do so.
From there I went to Europe where the situation is a lot more sensible. And from what I’ve seen, it all comes down to attitude.
In a lot of places (like parts of the US, Latin America, etc.) there are people who are terrified of Covid. And they believe the solution is to wait.
They think that if they sit in their homes and wait long enough, the virus will eventually die off and life go back to the way things used to be.
In Europe (and here in Dubai), people seem to have a longer term view.
They understand that Covid-19 is here to stay.
Even if a vaccine is developed, it will take YEARS before it’s properly tested, with billions of units manufactured and distributed around the world.
The Coalition for Epidemic Preparedness has been marshaling manufacturing capacity worldwide in preparation to mass produce a Covid-19 vaccine.
But even their estimates are to be able to produce 2 billion vaccines by the end of next year.
That’s only 25% of the world’s population, and it’s still more than a year away. Wider adoption is going to take several more years.
So what’s the solution in the meantime-- lock down every house, school, business, and church in the world? Cancel every performance and sporting event? Print infinite quantities of money to pay people to NOT work?
There will be no economy left. People will suffer from depression, and suicide rates will soar.
But this doesn’t have to be all gloom and doom.
And my travels have shown me that there are plenty of countries in the world who have a much saner, longer-term view.
Governments, businesses and people understand that they need to continue living their lives, and that means making certain adjustments.
For instance, when coming to Dubai, I had a Covid test done before boarding the plane.
Plus I had to have a travel insurance policy that would cover expenses in case I test positive inside the country and need medical care.
Hotels, restaurants and malls have all made necessary adjustments, making sure people are able to keep reasonable distance from one another while still maintaining a happy, social vibe.
When I was in Lithuania recently, the municipal government of the capital city (Vilnius) opened up outdoor public spaces to bars and restaurants so that they could operate at maximum capacity while still giving patrons appropriate distance.
Airports and planes are cleaner than ever before, and people are actually more mindful about the space around them. It’s honestly been a real pleasure to travel right now.
Obviously I’m always careful and very mindful of my own health, and that of others around me. I’ve even had multiple Covid-19 tests to make sure I can safely visit my mother.
With all of that being said, once you turn the news off and expand your horizons, you’ll quickly realize that there is still normal, vibrant life out there.
As Simon has written extensively over the last few months, the world is not coming to an end. It’s definitely changing rapidly.
At Sovereign Man we prefer to have a positive perspective and a position of strength.
We want to be prepared for obvious risks, but also to take advantage of the abundance of opportunity that the world has to offer… especially at a time when most people are consumed with fear and hysteria.
To your freedom and prosperity, Sovereign Man Team, SovereignMan.com
https://www.sovereignman.com/trends/notes-from-our-sovereign-woman-28669/
Lessons Driving an $800 Car Can Teach Your Kid
.Lessons Driving an $800 Car Can Teach Your Kid
August 15, 2020
Editor: Teaching a teenager to drive with an $800 dollar can create some real life lessons. In addition to just learning to drive, you can learn how to fix a car, and carE for something that may not have a lot of life left in it. It can definitely teach you to appreciate what you have! White Coat Investor shares all about his teenager’s experience in today’s Saturday Selection, originally published on The White Coat Investor.
[Update August 2020: Originally published in November 2019, Whitney and I teamed up for this post about this new (to us) car. It is now August 2020, and it is still running great and just passed emissions again and continues to teach Whitney important lessons.
Most recently she learned that a car will not run forever on empty and that if you do not turn the lights off when you get out, it will not start when you come back to it. She also got to learn how to jumpstart a car! This Spring she rattle-canned it and now looks like an Easter Egg. She is currently regretting that decision so it may be a new color soon.]
We decided to do this post interview style. Enjoy!
Lessons Driving an $800 Car Can Teach Your Kid
August 15, 2020
Editor: Teaching a teenager to drive with an $800 dollar can create some real life lessons. In addition to just learning to drive, you can learn how to fix a car, and carE for something that may not have a lot of life left in it. It can definitely teach you to appreciate what you have! White Coat Investor shares all about his teenager’s experience in today’s Saturday Selection, originally published on The White Coat Investor.
[Update August 2020: Originally published in November 2019, Whitney and I teamed up for this post about this new (to us) car. It is now August 2020, and it is still running great and just passed emissions again and continues to teach Whitney important lessons.
Most recently she learned that a car will not run forever on empty and that if you do not turn the lights off when you get out, it will not start when you come back to it. She also got to learn how to jumpstart a car! This Spring she rattle-canned it and now looks like an Easter Egg. She is currently regretting that decision so it may be a new color soon.]
We decided to do this post interview style. Enjoy!
Q. I understand you were recently involved in the purchase of a “new” car for you to learn to drive and then drive to high school. What were the criteria your dad gave you for the car?
Whitney: Yes, recently (as in 4 months ago) we purchased a “new to me” car that I’ve been learning to drive. However, my dad imagined a set of nearly impossible criteria. It had to run well, (which isn’t easy to find for that cheap of a price), it wouldn’t need any immediate repairs (which was REALLY difficult to find), and it had to be a manual transmission or “stick-shift” which really helped the ever-narrowing options. But the real kicker: the car had to be under $1,000.
I began searching around the beginning of May and found some interesting listings on a local Craigslist-like website (KSL.com). One (my personal favorite) read, “Bought this car for my son to learn to drive stick, he crashed it into the mailbox, I gave up, so good luck!” Unfortunately, we didn’t get that one or that would’ve been a great story, but not to say my car doesn’t look like it’s been crashed into a mailbox.
Jim: As regular readers are well aware, we could easily have gone out and bought Whitney a brand-new Tesla to drive to high school. But what kind of message would buying a new car have sent to her? Imagine how hard your life would be if you started out flying first class and then found yourself riding in coach later? So we decided not even to put Whitney in coach. She’s basically riding on the wing, the cargo hold, or the lavatory. We hope she’ll appreciate being able to ride in coach later. The reasoning behind the criteria was:
To continue reading, please go to the original article here:
https://thephysicianphilosopher.com/lessons-driving-an-800-car-can-teach-your-kid/
Who Are You After Financial Independence?
.Who Are You After Financial Independence?
Financial Independence, FIRE, Money and Life by Vicki Robin
Your Identity Closet: What shall you wear now that you are free?
When we discover the possibility of financial independence, we change our identity from working stiff to working towards financial freedom. It affects every choice. Not spending money isn’t deprivation. It’s saving our lives.
Saving money is not longer impossible, it’s easy. Getting out of debt is no longer a goal too far, it’s a fierce commitment to liberate ourselves from debt slavery. FI has nothing to do with being dutiful, with putting on a costume that doesn’t fit. It’s the most exciting prospect on the horizon and every actions conforms to it.
In high school all three sororities asked me to join – three different flavors of girls to giggle and gossip with. I must have joined one because my actual memory isn’t of joining. It’s of dropping out in protest to some clique cruelty. When offered options A, B or C – I chose D. Life went on. I didn’t make a habit of rebellion. In fact, I developed quite a High School resume of clubs, groups and honors. Yet I’d learned that you can step outside any box you want to – and survive.
Who Are You After Financial Independence?
Financial Independence, FIRE, Money and Life by Vicki Robin
Your Identity Closet: What shall you wear now that you are free?
When we discover the possibility of financial independence, we change our identity from working stiff to working towards financial freedom. It affects every choice. Not spending money isn’t deprivation. It’s saving our lives.
Saving money is not longer impossible, it’s easy. Getting out of debt is no longer a goal too far, it’s a fierce commitment to liberate ourselves from debt slavery. FI has nothing to do with being dutiful, with putting on a costume that doesn’t fit. It’s the most exciting prospect on the horizon and every actions conforms to it.
In high school all three sororities asked me to join – three different flavors of girls to giggle and gossip with. I must have joined one because my actual memory isn’t of joining. It’s of dropping out in protest to some clique cruelty. When offered options A, B or C – I chose D. Life went on. I didn’t make a habit of rebellion. In fact, I developed quite a High School resume of clubs, groups and honors. Yet I’d learned that you can step outside any box you want to – and survive.
By my mid-20’s I’d built a serious smoking habit. Serious because I’d picked up a disaffected Galoise smoker identity when I lived in Europe, translated that to Pall Malls in the United States and was burning through a pack a day. It made me feel intellectual and complex. One day, at a beach house I’d rented, I smoked a cigarette, quashed it in the sand and headed off for a run along the water.
I was soon wheezing and gasping for breath, came back and dropped down on the blanket where I’d left my pack of cigarettes. I looked at it squarely. In a short few minutes I saw the cost of smoking, decided I needed to stop and then spontaneously a voice said, I can’t quit smoking but I can become a non-smoker. And that was that. In the 50 years since I’ve visited a few cigarettes for old time sake but have not become a smoker again.
THE DIAGNOSIS
Fast forward many decades of choosing many roads less traveled. I’m 58 and my doctor has just told me I have cancer. Actually he told me I had an apple core lesion in my colon, which sounded harmless, so he had to emphasize that what he meant was I had cancer. I would need surgery. Still nonplussed I said, “While you’re in there, can you do some liposuction.”
People with a diagnosis of cancer know what comes next. You start to become an expert in a topic you never wanted to deal with. I read all the literature. About treatments and options and odds.
For me another logical next step was to call a friend and medical intuitive as I know cancer has meanings, not just symptoms. I told him the diagnosis. He went silent for several minutes, scanning my body at a distance, then said, “You don’t have cancer.” I explained that I certainly did and he explained that his inner eye saw no signature of cancer anywhere in my body. I had A cancer, but I did not have cancer. This distinction, that I had not taken on the mantle of cancer but simply had a cancer that my otherwise vigorous body could deal with, liberated me to choose freely how I would go through this challenge.
FRUGALITY WAS HOW I LIVED, NOT WHO I WAS
To continue reading, please go to the original article here:
https://yourmoneyoryourlife.com/after-financial-independence/
5 Pieces of Dumb Financial Advice That Most People Believe
.5 Pieces of Dumb Financial Advice That Most People Believe
By The Penny Hoarder Staff
Some of the links in this post are from our sponsors. We provide you with accurate, reliable information. Learn more about how we make money and select our advertising partners. When it comes to money, everyone likes to put in their two cents. Oh, you should definitely buy and not rent. Stay away from credit cards; they’re evil. Why are you so worried about your credit score? It doesn’t matter.
There’s a lot of — quite frankly — dumb advice floating around out there, and it can be difficult to figure out what’s up and what’s down. Well, we’re here to set the record straight. Here’s all the dumb money advice out there — and what you should do instead.
Dumb Advice #1: Put Your Money in a Savings Account
You’ve probably heard the best way to grow your money is to stick it in a savings account and leave it there for, well, ever. That’s bad advice.
5 Pieces of Dumb Financial Advice That Most People Believe
By The Penny Hoarder Staff
Some of the links in this post are from our sponsors. We provide you with accurate, reliable information. Learn more about how we make money and select our advertising partners. When it comes to money, everyone likes to put in their two cents. Oh, you should definitely buy and not rent. Stay away from credit cards; they’re evil. Why are you so worried about your credit score? It doesn’t matter.
There’s a lot of — quite frankly — dumb advice floating around out there, and it can be difficult to figure out what’s up and what’s down. Well, we’re here to set the record straight. Here’s all the dumb money advice out there — and what you should do instead.
Dumb Advice #1: Put Your Money in a Savings Account
You’ve probably heard the best way to grow your money is to stick it in a savings account and leave it there for, well, ever. That’s bad advice.
But maybe you’re just looking for a place to safely stash it away — but still earn money. Under your mattress or in a safe will get you nothing. And a typical savings account won’t do you much better. (Ahem, .09% is nothing these days.)
But a debit card called Aspiration lets you earn up to 5% cash back and up to 11 times the average interest on the money in your account.
Not too shabby!
Enter your email address here, and link your bank account to see how much extra cash you can get with your free Aspiration account. And don’t worry. Your money is FDIC insured and under a military-grade encryption. That’s nerd talk for “this is totally safe.”
Dumb Advice #2: Keep Wasting Hundreds of Dollars on Homeowner’s Insurance
You’re probably wasting money right now. And it’s probably on something you’d never expect — your homeowners insurance policy. This isn’t something you actively think about — you just know you’re required to have it.
To continue reading, please go to the original article here:
The Three Sides of Risk
.The Three Sides of Risk
Aug 8, 2020 by Morgan Housel
In investing, the average consequences of risk make up most of the daily news headlines. But the tail-end consequences of risk – like pandemics, and depressions – are what make the pages of history books. They’re all that matter. They’re all you should focus on. We spent the last decade debating whether economic risk meant the Federal Reserve set interest rates at 0.25% or 0.5%. Then 36 million people lost their jobs in two months because of a virus. It’s absurd.
I grew up ski racing in Lake Tahoe. I was on the Squaw Valley Ski Team, and it was the center of my life for over a decade. At a conference a few months ago I was asked what skiing taught me about investing. This was on stage, where you can’t ponder your answer – you have to blurt out whatever you can think of. I didn’t think skiing taught me anything about investing. But one incident came to mind.
“Well, let me take this to a dark and tragic place,” I said before telling a group of 500 strangers a story I hadn’t talked about much in almost 20 years. A dozen of us had grown up skiing together. Most had known each other since we were young children. By 2001 we were in our late teens, having spent the majority of our waking hours over the previous decade never far from each other. We skied six days a week, 10 months a year, spending summers on the glacier of Mt. Hood, Oregon and in New Zealand, where the seasons mirror our own. Skiing took precedence to everything.
The Three Sides of Risk
Aug 8, 2020 by Morgan Housel
In investing, the average consequences of risk make up most of the daily news headlines. But the tail-end consequences of risk – like pandemics, and depressions – are what make the pages of history books. They’re all that matter. They’re all you should focus on. We spent the last decade debating whether economic risk meant the Federal Reserve set interest rates at 0.25% or 0.5%. Then 36 million people lost their jobs in two months because of a virus. It’s absurd.
I grew up ski racing in Lake Tahoe. I was on the Squaw Valley Ski Team, and it was the center of my life for over a decade. At a conference a few months ago I was asked what skiing taught me about investing. This was on stage, where you can’t ponder your answer – you have to blurt out whatever you can think of. I didn’t think skiing taught me anything about investing. But one incident came to mind.
“Well, let me take this to a dark and tragic place,” I said before telling a group of 500 strangers a story I hadn’t talked about much in almost 20 years. A dozen of us had grown up skiing together. Most had known each other since we were young children. By 2001 we were in our late teens, having spent the majority of our waking hours over the previous decade never far from each other. We skied six days a week, 10 months a year, spending summers on the glacier of Mt. Hood, Oregon and in New Zealand, where the seasons mirror our own. Skiing took precedence to everything.
Most of us were in an independent study program that let us bypass traditional high school. After skiing all day we read a few books and filled out a few forms in the evening in what – to our amazement – led to a diploma. The amount of time we spent together created a relationship closer to siblings than friends. Ski racing is an odd hybrid between a team and individual sport. You train and travel and eat as a team, but the sport itself is individual. Our race results did not rely on each other; our daily sanity did. Any group of a dozen teenagers will find a way to butt heads. Half the time I think we hated each other. Twenty years later, few of us keep in touch. But of the dozen teenagers who, by 2001, I had spent the majority of my life with, four of us had become inseparable best friends.
This is the story of two of them – Brendan Allan and Bryan Richmond.
You take amazing things for granted when they become routine. Squaw Valley is one of the largest ski resorts in North America, was home to the 1960 Olympics, and attracts a million visitors a year. It’s staggeringly beautiful. To us, it was just an extension of home.
Ski racing required four hours a day of training, which felt like work to us. The rest of the time – another four hours a day, six days a week – we just skied around, unstructured, having a good time. We called it “free skiing.” Everyone else just calls it skiing.
On February 15th, 2001, we had just returned from a race in Colorado. Our flight home was delayed because Lake Tahoe was blasted with a blizzard vicious even by its own standards. You can’t race or train when there’s a blanket of new snow – racing requires hard-packed ice. So it was time for a week of free skiing.
To continue reading, please go to the original article here:
https://www.collaborativefund.com/blog/the-three-sides-of-risk/
What Always Changes
.What Always Changes
Aug 5, 2020 by Morgan Housel
A few things that always change, never staying in one place for long:
1. The information and metrics people pay attention to always change. So even if you know what’s going to happen, you don’t know whether other people will care.
James Grant says successful investing is about “getting everyone else to agree with you … later.”
Merely predicting what’s going to happen next isn’t enough. To be right you have to predict what’s going to happen next and get millions of other investors to agree that what happened is worth paying attention to in a way that draws their interest and dollars to an investment. And the things other people pay attention to – the information and metrics that grab our attention – are always changing.
What Always Changes
Aug 5, 2020 by Morgan Housel
A few things that always change, never staying in one place for long:
1. The information and metrics people pay attention to always change. So even if you know what’s going to happen, you don’t know whether other people will care.
James Grant says successful investing is about “getting everyone else to agree with you … later.”
Merely predicting what’s going to happen next isn’t enough. To be right you have to predict what’s going to happen next and get millions of other investors to agree that what happened is worth paying attention to in a way that draws their interest and dollars to an investment. And the things other people pay attention to – the information and metrics that grab our attention – are always changing.
Book value is what investors paid most attention to during the early 20th century. Ben Graham mentions it twice as often as the phrase “net income” in his classic book The Intelligent Investor. Then it kind of faded away. Profits became the metric of choice for most of the late 20th century. At other times dividends were the prized metric. In the late 1990s it was page views. In the mid-2000s, user growth.
If Uber was a company in 1985, when investors obsessed over free cash flow, it would be considered a joke. But since it exists in the 2010s, when investors mostly care about revenue growth and brush aside profitability, it became a darling.
Investment facts are always changing. But prediction is doubly hard because the facts investors care about and pay attention to – which is what makes facts relevant – change all the time. Not just by industry, but for the market as a whole. They change by economic condition, generation, and when a compelling story about a new metric finds its way into enough people’s heads.
The same is true in business, politics, and relationships.
Rarely can you say, “When this happens, that occurs,” because that occurring relies on other people thinking this matters, when their attention may have drifted off to something else.
To continue reading, please go to the original article here:
https://www.collaborativefund.com/blog/what-always-changes/
Economic Prosperity Is No Longer The Priority. Guess What Happens Next...
.Economic Prosperity Is No Longer The Priority. Guess What Happens Next...
Notes From The Field By Simon Black August 10, 2020 Bahia Beach, Puerto Rico
Recently I held a live Q&A Zoom call with my friend Peter Schiff, and several dozen members of our Total Access group. And towards the end of the call, one of our members asked-- what do you think the future looks like for the US, and the West in general? Peter went off into one of his classic tirades about how the US dollar is doomed because of how much money the central bank is printing.
And while I generally share Peter’s dim view about the dollar (were it not for all the other world currencies that are being printed into oblivion), my answer was a bit different. In deference to the 20th century Danish Proverb-- “predictions are hard, especially about the future”-- I do think it’s possible to look at major trends to at least have a sense of direction.
So if you want to understand where things are going, just take a look at everyone’s priorities.
Economic Prosperity Is No Longer The Priority. Guess What Happens Next...
Notes From The Field By Simon Black August 10, 2020 Bahia Beach, Puerto Rico
Recently I held a live Q&A Zoom call with my friend Peter Schiff, and several dozen members of our Total Access group. And towards the end of the call, one of our members asked-- what do you think the future looks like for the US, and the West in general? Peter went off into one of his classic tirades about how the US dollar is doomed because of how much money the central bank is printing.
And while I generally share Peter’s dim view about the dollar (were it not for all the other world currencies that are being printed into oblivion), my answer was a bit different. In deference to the 20th century Danish Proverb-- “predictions are hard, especially about the future”-- I do think it’s possible to look at major trends to at least have a sense of direction.
So if you want to understand where things are going, just take a look at everyone’s priorities.
Most governments’ Covid reponses are an obvious example.
The economic destruction they’ve created is staggering. Tens of millions of people unemployed, countless businesses gone bust, trillions of dollars of wealth wiped out.
In the first wave back in March, they shut down the economy to protect us from the virus. Then they opened up again… but-- shocker-- the virus was still there.
What a surprise! Shutting down the economy did not eradicate a virus.
So what did a lot of these people do when the second wave hit? They started shutting down the economy again.
It didn’t work the first time, so let’s keep trying the same approach and expect a different result. It’s genius!
This is clearly economically destructive. But again, economic prosperity is no longer the priority. All that matters is force-feeding people a false sense of safety.
Governor Andrew Cuomo of New York probably captured this mentality the best when he said back in May,
“We don’t want to lose any lives [to reopen the economy]. We’ll figure out the dollars, and we’ll figure out the economic impact, but we’ll protect people in the meantime, and we’ll protect their health.”
This is total BS. The sad reality is that lives are lost all the time in the normal course of economic activity.
In New York City, two workers died during the construction of Freedom Tower. Plus there were dozens of life-altering injuries, like spinal fractures and paralysis.
The government knew the tower’s construction would likely cost human lives. But they approved the construction permit regardless, because they knew the benefit would outweigh the human cost.
Similarly, over 100 people died constructing the Hoover Dam in the early 1930s. The government knew that people would die. But the benefit outweighed the cost.
Today there can be no discussion of cost or benefit. There is one priority, and it’s no longer economic
But the shift in priorities doesn’t stop there.
Basic fiscal responsibility is no longer a priority-- and it hasn’t been for a long time.
Most western governments were racking up enormous debts even before Covid started.
In the US, even during the economic boom of 2015-2018, the federal government added at least $1 trillion to the debt each year.
Now the debt growth is completely insane: the US Treasury Department expects to add $5-$6 trillion to the debt this calendar year.
(That’s more than the entire national debt as recently as 2001!)
And not to be outdone, the Federal Reserve has conjured trillions of dollars out of thin air since the start of Covid and slashed interest rates, once again, to zero.
Plus, there’s a good possibility they’ll make interest rates negative. Just imagine how much prosperity you’ll achieve once you have to start paying your bank just to save money.
Of course, all of these tactics-- printing money, going deeper into debt, negative interest rates, paying people $600/week to stay home and NOT work-- are destructive to economic prosperity.
Then we have the rise of the Bolsheviks… a growing chorus of politicians (and voters) who despise capitalism.
Like Seattle city councilwoman Kshama Sawant, who claimed she wants to overthrow “the racist, sexist, violent, utterly bankrupt system of capitalism” and replace it with “a socialist world.”
A few years ago this was a fringe view. Now it’s mainstream fever.
They want to get rid of capitalism-- the system that created the most prosperous nation in the history of the world-- and replace it with the same economic model as Cuba and the Soviet Union.
And Joe Biden, of course, unveiled his economic plan last month, built around ending “the era of shareholder capitalism.”
He wants the government (and Twitter mob) to set the priorities and stakeholders in your business, rather than the market.
This, again, is an obvious reflection of priorities. And economic prosperity is clearly not on the list.
Economic prosperity also takes a backseat to social justice.
Yes, most reasonable people probably agree that the mistreatment of minority groups should change. But that’s not an excuse to go on a violent rampage.
Yet whenever angry mobs take to the streets and destroy private property, the media elite and their political allies justify criminality as necessary to end systemic racism.
Meanwhile, universities have turned into hotbeds of progressive radicalism to perpetuate white fragility and the evils of capitalism.
Corporate America has also caved. You can’t even sell beans anymore without things turning political.
Countless people who are talented, productive, and made valuable contributions to their companies have been fired because they used the wrong words or expressed some intellectual dissent from the Twitter mob.
Firing a rock-star employee because of his/her personal (and non-controversial) views would ordinarily be considered completely stupid. But now it’s the norm… because economic prosperity is no longer the priority.
This trend is obvious: several powerful movements have gripped the world… and most of them are economically destructive.
So it’s not terribly difficult to see where things are headed.
To your freedom & prosperity, Simon Black, Founder, SovereignMan.com
How To Get Money To Stick To Your Fingers
.How To Get Money To Stick To Your Fingers
August 9, 2020 · by The Escape Artist
When I was young and in my first proper job, one of the senior people described a new client that he was excited to be working with. He explained the reason by saying: “they’re the sort of person for who money just sticks to their fingers”.
Being an inexperienced idiot, I didn’t know what he meant. Perhaps that person had jam on his hands and sticky fingers? Perhaps he worked in a glue factory?
Er, no. What my colleague meant by that was that the person (a successful entrepreneur / businessman) had a Money Blueprint that meant they couldn’t help but get rich(er). They had a set of beliefs, habits and skills that meant that, all things being equal, they would likely go on to accumulate more wealth. There are no guarantees in life but a helpful Money Blueprint is…well, helpful to getting money.
How To Get Money To Stick To Your Fingers
August 9, 2020 · by The Escape Artist
When I was young and in my first proper job, one of the senior people described a new client that he was excited to be working with. He explained the reason by saying: “they’re the sort of person for who money just sticks to their fingers”.
Being an inexperienced idiot, I didn’t know what he meant. Perhaps that person had jam on his hands and sticky fingers? Perhaps he worked in a glue factory?
Er, no. What my colleague meant by that was that the person (a successful entrepreneur / businessman) had a Money Blueprint that meant they couldn’t help but get rich(er). They had a set of beliefs, habits and skills that meant that, all things being equal, they would likely go on to accumulate more wealth. There are no guarantees in life but a helpful Money Blueprint is…well, helpful to getting money.
Maybe they were born and raised by parents who were good with money, knew all about the stockmarket / property development and passed that knowledge on to them? That’s a form of social capital and some people inherit more of this than others. Or maybe they were from a background of poverty and were hungry and self-taught?
I don’t know how that rich person thought because I never lived inside their head but I would bet that success in business and with money was somehow tied up with their identity: the way they saw themselves.
The way I think about identity is with the phrase: I am the sort of person who…
So in my case, the ways I see myself (in relation to money) would include:
I am the sort of person who bends down to pick up 10p on the pavement
I am the sort of person who gets stuff done
I am the sort of person who doesn’t waste food
I am the sort of person who adapts, improvises and overcomes
I am the sort of person who turns the lights off when not needed
You may say I’m delusional and you may be right but these are helpful beliefs. The point is not so much whether they are objectively true; the point is that I believe them, they form part of my identity and they help me function in the world. We all have to believe in something, so why not believe in something that helps you?
To continue reading, please go to the original article here:
https://theescapeartist.me/2020/08/09/how-to-get-money-to-stick-to-your-fingers/