To Exchange It All or Not?

To Exchange It All or Not?

Muhammad Ali   / Currencyexchangeplanner.com

​I was asked this question recently from one of my Currency Exchange Planner customers; his name is Robert from California.

Will you exchange all IQD or some and hold and wait if it comes out low?

Now I see 2 sides to this question, I’ll tackle the easy side first, if the value comes out low, for example $1 to 1 Dinar, I would only change a few notes and wait for the value to go higher before changing the bulk of my notes.  How much YOU would change would depend upon how many notes you hold?

​Now, let’s say the value comes out to $4 right away, would I still change all?  Again, I would still only change a few and wait for the rate to rise higher and then change more.  I already have my personal target in mind.

​OK let’s turn this question around, and change the focus from the rate to this: Will you exchange all IQD or some?

​Now, I know myself and my limits and limitations, but the answer to this question would be determined by YOU and how well you trust yourself.  I am going to give you a few scenarios and the main purpose of this article is to give you several vantage points for you to consider and think about.

​I have written several articles about the greatest enemy that we will encounter with this currency investment, and that is Sudden Wealth Syndrome, S.W.S.  It will eat us up alive and why is that? Because we failed to plan effectively.  It has proven itself, time and time again, and the statistics proves that, not me.  Statistically speaking 70% of people who receive sudden wealth blow through it within 2 years.  That is the statistics. 

​And for those who have been reading my articles you’ll remember that I talked about having a Work Free and Worry Free lifestyle.  Work free is clear, you’re a multi-millionaire, right?  So who needs to work?  BUT how can we have a worry free lifestyle if we are constantly worrying about SWS?  Does that make sense?

​I covered in my past article, Precious Metals - My Plan B, you can find the article on my website, that one way to provide a worry free lifestyle was to have enough gold and silver as a backup.

​You can find that article and read it again on my website, so I won’t go too much into it here.

​What if, we were to use some of our currency as a backup?  But how can we do that, if we already exchanged it all?   That’s the thing; if we exchange all of our currency then it is bye, bye baby.  She’s all gone, so should we really exchange it all?  So let’s address this and carefully think it through. 

There is so much talk of higher rates and contract rates and that we need to get as much as we can get from the go and there’s nothing really wrong with that thinking.  It’s logical.  But would it have been worth it, to seek after higher rates and only to then blow it all in 2 years?  So it wouldn’t of matter if you received an exchange rate of $4, or $10 or $28, the more you have the faster you might have blown it all away.  Only time will tell on that, and your ability to plan.

​Let’s get back on track here, and if you decided to withhold some of your currency to exchange later on, for example, 5 years from now, if required, first we need to understand the demonetization periods of the notes that we hold.  Meaning the time frame that these notes can be exchanged before they expire.  

For the Dinar, we have been told by the previous Governor of the Central Bank of Iraq that the period will be 10 years.  So let’s say you exchanged ¾ of your Dinars, leaving ¼ in a safe deposit box or safety deposit box, just in case SWS kicks you in the butt and you lose it all in 3 years. 

It’s not like you’ll find some guy still selling on eBay for $50 a note, right?  So not a problem, you had a safe guard in place, as you have ¼ of your Dinar stashed away in your box but when you go to exchange it, you find out that Iraq lowered the demonetization period to 2 years!  So now, you’re S.O.L.!

​Remember, when they Re-Instate their rate, they must officially post it on their website, so knowing the exact demonetization period WILL BE VERY IMPORTANT.

​Now how can we avoid this?  It’s very easy actually, by changing the old 25,000 notes to the new Dinar notes and store the new Dinars in your safe deposit box.  The new Dinar notes will not have an expiration date on them.  So this is the worry free way to go about it.  We are worried about the old notes expiring but we wouldn’t need to worry about the new notes, unless of course you left them in the box for 25 years and forgot about them. That’s another story!

So the point to get across here is that you can change some of your old dinars for the new dinars and store those away.  Just in case the rainy days comes around.

​And I hear some of you saying, ¼ of my Dinar is a few millions, Muhammad.  Just leaving that to sit in my box seems like a waste.  I could exchange that and put it in a fixed deposit account and make 5% per year and keep that as part of my worry free backup plan. 

​And I would say, well of course you can, but your money may be locked in a fixed deposit for 1 year; if the currency was in the box then you can liquidate it at any time. 

​And then you will say, What If I deposit some the IQD in an Iraqi Bank fixed deposit account and leave some in the box.  Then it is all still in Dinar, right?

​And I would say, hmmm now you’re thinking.  We know that many of the Iraqi banks are opening locations around the USA, Europe and Asia, so we may not need to go to Iraq to open an account.  You’ll need to further investigate this option.

So we could play Devil’s Advocate and go on and on until we’re blue in the face and believe me, I have done this with myself many times.  It’s actually fun, cause it really gets you to think.  And best of all if you used my Currency Exchange Planner, it’ll help you see the numbers in black and white, instead of in your head.  Getting the numbers out of your head and onto paper should be your priority.  I still have my CEP on promotion price so if you haven’t picked up your copy of it yet, you can save some money on the purchase price right now.

​What I suggest for you, on where to start is, take a blank paper, and write on it, in large print.  WORK FREE – WORRY FREE LIFESTYLE.  And stick it up somewhere that you’ll see it every day.  And that is where your planning will start.  If you can truly plan towards a work free and worry free lifestyle then S.W.S. will never find you.  There are other things that you can do, it just depends upon your creative mind and how you think things through.

​The idea behind this lifestyle is that you can travel, where ever you want to go and not worry about money, you can invest and lose and not worry about money, and you can even help others and not worry about money.  Worrying is not an option for you.  To have a TRUE work free – worry free lifestyle will depend upon how much currency you hold now.  Do you think you can do that with a few notes?  Probably not, but you may be able to achieve one or the other, either work free or worry free, that is possible but it all depends on you and your exchange plan.

Part of my Work Free plan is to have several bank investments, in low, medium and high risk categories that provide me a stable monthly income. How much I invest and how much you invest would be determined by the amount of currency we each hold.  Everyone’s plans will be different, so just work with what you have.

​Part of my Worry Free plan, is to have cash reserves to back up my investment capital and also to have gold and silver to back up my investment reserves.  This way, if my Wealth Manager mismanages my high risk trading account, then I am not worried at all as I have reserve funds as needed.  Trading can continue but with some changes. 

Like I said, the ultimate goal of the Worry Free plan is that you can travel and do other things and not have to worry about money. If your Wealth Manager takes a 2 week vacation and there’s no one monitoring your account, etc., we do not need to be concerned about it. 

We want to be enjoying our lives and not have to be checking charts and watching our account balances go down.  We’ll have safety measures in place for that and we just go fishing.  The amount of reserves you allocate would depend upon you and to the extent that you want to live worry free.

​If you have no plan then you’re probably going to fall prey to the S.W.S statistics of the 70% will lose their wealth in 2 years?  I was also made aware that 85% of the millionaires from the Kuwait raise in value lost their wealth in less than 6 months.  That’s even worse! 

I waited 14 years for this RV/GCR and I don’t want to lose my wealth in 2 years or 6 months!  And I don’t want my new wealth to stress and worry me out to my grave.  Our new wealth could either be a blessing or a curse and I choose the first.

​So please think carefully on what you want to do and I hope my article brings awareness to you and opens the creative tunnels in your mind towards beating S.W.S.  That is the name of the game after all.

​All the best with your planning, and please use my software, the Currency Exchange Planner and the Companion Edition.

​Muhammad Ali   The No. 1 Planning Tools for the Dinar community.

https://www.currencyexchangeplanner.com/article-35-to

Money Lessons From Disney Movies

10 Subtle (But Important!) Money Lessons From Disney Movies

By Michelle From Savings & Sangria  -- Happy Money Management

So I was watching Disney’s Up (for maybe the millionth time). And I died a little bit inside every time Carl and Ellie had to spend their Paradise Falls savings to cover a run-of-the-mill little emergency. And I thought that’s the perfect illustration for why you need an emergency fund separate from your dream fund. So I wrote a post about it.

But that got me thinking about all the subtle money lessons hidden in Disney movies. And I think I found some good ones! So let’s jump right in! Here are the top 10 subtle (but totally important) money lessons from Disney movies.

Starting with that emergency fund from Up…

1. Have An Emergency Fund   (Up)

Don't end up like Carl and Ellie! Keep your emergency savings separate from your dream savings so you can handle emergencies and achieve your dreams. Money lessons from Disney MoviesDisney/Pixar’s Up

Oh, the most heartbreaking of all the Disney/Pixar movies. Carl and Ellie are saving their pennies for the adventure of a lifetime: a trip to Paradise Falls. But every time their savings starts to grow into anything substantial, life happens. They need new tires, Carl breaks his leg, they need to repair the roof after a storm.

Life will throw emergencies at you without warning. And if you don’t keep an emergency fund separate from your dream fund, you’ll never save enough money to make your dreams come true.

2. Take Advantage Of Supply And Demand   (Frozen)

Understanding the supply and demand lesson from Frozen can help you make and save more money.

Yoo hoo!

Kristoff learns a little lesson in supply and demand when he tries to buy low-supply, high-demand winter gear in the middle of a snowstorm. The shop owner, Oaken, explains that the price of the winter stock jumped from $10 to $40 because “supply and demand have a big problem”. Of course Kristoff can appreciate the situation because he’s the one trying to sell ice when Arendelle is literally full of it. It’s the oldest lesson in economics. When supply is low and demand is high, the price skyrockets.

Here are a few practical ways to take advantage of supply and demand in the real world:

Build skills in in-demand fields. That will offer some level of income security. And you may be able to earn more money if you can do something few others can.

To continue reading, please go to the original article here:

https://www.savingsandsangria.com/10-subtle-but-important-money-lessons-from-disney-movies/

Five Things That Matter More in Life Than Wealth

Five Things That Matter More in Life Than Wealth

By Maria Nedeva  

I’ve been thinking lately that my relationship with wealth and money is like the one of someone suffering from bulimia has with food. I oscillate between a state where money – making it, keeping it and investing it – dominates completely and another one where I’m not that bothered.

How do people find a balance? How do you find a balance between ‘money rules’ and ‘there are more important things in life’? For me, money has never been important when separate from the things that it can bring with it. And I’m not talking about new kitchen, fancy shoes and all the consumerist stuff with which we clutter our lives.

Money is important to me not because of what I could buy with it but because of the independence, security and quality of life it brings with it.

Today I’m in a contemplative mood. This morning we saw close friends who have been having tough time over the past year. They were both reminded of their own mortality in no uncertain terms. Talking to these friends made me reflect on the things in life that matter more than life.

Here they are.    #1. Health #2. Wisdom #3. Freedom #4. Family #5. Friendship

Finally… Can you think of things that matter in life more than money?

#1. Health

Obvious, isn’t it. There is nothing in life that is more important than health. Anything is possible when one is healthy: fun, laughter and building wealth. Following some text results, I had back couple of weeks ago, I must focus on my health. Have reached the age where ‘prevention is better than cure.’

#2. Wisdom

Wisdom, in my mind, has three elements to it:

Knowledge. Wisdom and ignorance don’t go together well. To achieve wisdom, one needs to learn about many aspects of life. (Personal finance bundles this one under ‘invest in yourself’ though there is a certain bias towards knowledge that can be used to make money. The knowledge you need for wisdom doesn’t have to be like that.)

To continue reading, please go to the original article here:

https://www.themoneyprinciple.co.uk/five-things-that-matter-more-in-life-than-wealth/

Lessons On Inflation From The Past

Lessons On Inflation From The Past

by Tyler Durden  Sat, 09/26/2020

Authored by Alasdair Macleod via GoldMoney.com,

This article examines two inflationary experiences in the past in an attempt to predict the likely outcome of today’s monetary policies.  The German hyperinflation of 1923 demonstrated that it took surprisingly little monetary inflation to collapse the purchasing power of the paper mark. This is relevant to the fate of the “whatever it takes” inflationary policies of today’s governments and their central banks.

The management of John Law’s Mississippi bubble, when he used paper money to rig the market is precisely what central bank policy is aimed at achieving today. By binding the fate of the currency to that of financial assets, as John Law proved, it is the currency that is destroyed.

The Economics of Inflation, which has been frequently reproduced and will be familiar to many who have read about Germany’s post-First World War inflation.

Looking at the progress of the collapse of the paper mark from its parity with the gold mark, we can take a punt on where the dollar might be today on this scale. The dollar has lost 98.2% of its purchasing power since the failure of the London gold pool in the late 1960s. That puts the dollar at 56 on the chart, which is approximately the equivalent of Germany’s paper mark valuation relative to gold in the first half of 1922.

If it follows the same course as the paper mark, in five- or six-months’ time it will be 100 and in ten- or twelve-months about 12,000. Instead of the paper mark’s original pre-1914 parity to the gold mark, the dollar started at $35 to the ounce, so the gold price in dollars would be $1960, $3,500 and $42,000 respectively. The final price at which the German inflation was stopped on 20 November 1923 when it was fixed to the rentenmark at a trillion to one would be the equivalent today of $35 trillion to the ounce.

Playing around with figures like these is not a replacement for sound reasoning, but it does impart an interesting perspective. A better understanding of the possible demise of the unbacked dollar is not to think of the numbers of dollars per ounce of gold rising or gold potentially hitting $42,000 within a year, a seemingly ridiculous number, but to think of gold as being broadly stable while the dollar loses its purchasing power. The presentation of an impossibly steep and accelerating uptrend is less believable than a collapsing one. Furthermore, the commonality of the paper mark and the dollar is that they were and are unbacked state-issued currencies liable to the same influences, a fact the consequences of which are becoming increasingly apparent.

Germany’s 1920s Hyperinflation

For the paper mark it all started in 1905, when a German economist and leader of the Chartalist movement, Georg Knapp, published a book whose title translated as the State Theory of Money. Thus encouraged, under the direction of Bismarck the Prussian administration financed the military build-up to the war to end all wars by utilising the state’s seigniorage. And when Germany lost, any thoughts of raiding the wealth of the vanquished came to nought. Instead, it was Germany that faced reparations and a post-war crisis. Just as the Fed is responding to the covid crisis today, the answer was to print money. Monetary inflation became the principal source of government finance, just as it is now in America and elsewhere.

There is hardly an economist today who does not condemn the Reichsbank for its inflationary policies. Yet they are supportive of similar monetary policies by the Fed, the European Central Bank, the Bank of Japan and the Bank of England. We should compare the stewardship of Rudolf Havenstein at the Reichsbank with that of Jay Powell, who after reducing interest rates the previous week, on 23 March issued an FOMC statement promising an inflationary policy of “whatever it takes”. And Rishi Sunak, the British Chancellor, used the phrase multiple times in his emergency budget.

But there is a difference. Today, alternatives to inflationism are never discussed amongst policy makers, who are like a blind cult believing entirely, with only minor variations, that monetary inflation is the cure for all economic ills. At least in Germany, the actions of the government were the subject of wider debate both in Germany and without, even though the answers were mostly ill-informed.

Part of the problem was the quantity theory of money was dismissed in a confusion between cause and effect. As Bresciani-Turroni put it, a great number of writers and German politicians thought that government deficits and paper inflation were not the cause, but the consequence of the external depreciation of the mark. A financier, politician and one of the leading German economists at the time, Karl Helfferich put it this way:

“The increase of the circulation has not preceded the rise of prices and the depreciation of the exchange, but it followed slowly and at great distance. The circulation increased from May 1921 to the end of January 1923 by 23 times; it is not possible that this increase had caused the rise in the prices of imported goods and of the dollar, which in that period increased by 344 times.”

It is a valid and important point, but not in the way Helfferich thought. The disparity between the increase in the money quantity and the increase in the general level of prices should be noted by observers today. Crucially, it did not require hyperinflation of the money supply to cause a hyperinflation of prices, a point we address later.

As well as dealing with the post-war economy and the capital dislocation that needed to be corrected, there was the burden of reparations. Many blamed the collapse of the paper mark on the latter, which is an inadequate explanation, when the Austrian crown, the Hungarian crown, the Russian rouble and the Polish mark all collapsed at roughly the same time.

Having resorted to monetary inflation as the means of marginal finance it rapidly became the principal source of government revenue. The German authorities then observed a dislocation between the increase in the quantity of money and the effect on its purchasing power, as described by Helfferich. It was taken as evidence against the quantity theory, as expounded by David Ricardo a century before, and upon which Peel’s Bank Charter Act of 1844 in England was based. Clearly, the dismissal of the quantity theory paved the way for more inflationary financing in 1920s Germany in the manner of today’s monetary planning. It led to the observation that the money supply was insufficient for an economy faced with rapidly escalating prices for imported goods.

The disparity between increases in the money supply in Germany and the effect on the paper mark’s purchasing power was so great that the accuracy of the underlying numbers does not matter. But today, while we can presumably rely on monetary statistics being reasonably accurate, the statistics that reflect the effect on prices are not. Today’s suppression of increases in the general price level simply disqualifies any statistical analysis, and in that sense, Helfferich’s observation is a more honest appraisal than those of today’s monetary planners.

On the surface, his deduction appeared to have some merit. He goes on to say,

“The depreciation of the German mark in terms of foreign currencies was caused by the excessive burdens thrust on to Germany and by the policy of violence adopted by France; the increase of the prices of all imported goods was caused by the depreciation of the exchanges; then followed the general increase of internal prices and of wages, the increased need for means of circulation on the part of the public and of the State, greater demands on the Reichsbank by private business and the State and the increase of the paper mark issues.

Contrary to the widely held conception, not inflation but the depredation of the mark was the beginning of this chain of cause and effect; inflation is not the cause of the increase of prices and of the depreciation of the mark; but the depreciation of the mark is the cause of the increase of prices and of the paper mark issues. The decomposition of the German monetary system has been the primary and decisive cause of the financial collapse.”

The starting point in this logic is it is never the government’s fault but always the fault of external factors and markets. And doubtless, as the dollar declines in the foreign exchanges over the coming months and commodity prices rise, we shall continue to see similar arguments embedded in future FOMC statements.

The error common to both is to misunderstand the underlying subjectivity of money. Money takes its value from the marginal value placed upon it relative to owning goods. If money is widely regarded as sound, an economising man is happy to hold a reserve of it, only exchanging it for goods and services when they are needed. This is the most important quality of metallic money, to which people have always returned when government money fails.

A further benefit, which state currencies lack, is that gold and silver as money are accepted everywhere, having the same values in New York, London, and Mumbai. With the exception of cross-border trade, investment, and perhaps longer-term strategic considerations, government currencies are generally restricted to national boundaries. Paper currencies are therefore vulnerable to changes in demand in the foreign exchanges in a way gold and silver are not; if the foreigners don’t like your currency, they will reduce their exposure by selling it, irrespective of fundamental considerations.

In a currency collapse, the foreign exchanges are often the first to be blamed, as a press cutting from Germany towards the end of 1922 illustrates:

“Since the summer of 1921 the foreign exchange rate has lost all connection with the internal inflation. The increase of the floating debt, which represents the creation by the State of new purchasing-power, follows at some distance the depreciation of the mark. Furthermore, the level of internal prices is not determined by the paper inflation or credit inflation, but exclusively by the depreciation of the mark in terms of foreign currencies. To tell the truth, the astonishing thing is not the great quantity but the small quantity of money which circulates in Germany, a quantity extraordinarily small from a relative point of view; even more surprising is it that the floating debt has not increased much more rapidly”

Blaming a falling currency on foreign influences is the oldest excuse in the fiat book, but generally, foreigners who do not have much attachment to a national currency are only the first to sell. Initially, domestic users notice that prices have generally risen and that their income and savings buy less. It is a cause for complaint instead of a reasoned assessment, and of the logic employed in the press cutting above. And despite the evidence that it is the currency losing purchasing power instead of prices rising, the purchasing power can fall substantially before a currency’s users abandon it altogether.

Given upcoming events, we can see a similar trend for today’s paper money, particularly when represented by the American dollar. The first covid wave was assumed to be a one-off, hitting the American economy but to be followed by a rapid return to normal — the V-shaped recovery. Everywhere the official story was the same, that following lockdowns the economy, wherever it was, would return to normality. But it drove the US budget deficit to over $3.3 trillion in the fiscal year just ending, up from a previously forecast trillion or so. The Federal deficit is already one hundred per cent of Federal tax revenues.

Now we face a second covid wave, which will require more money-printing. The US Government budget deficit in the next fiscal year will again exceed revenues by a substantial margin. From last March, it has been in the position the German government faced in the early 1920s: monetary inflation has become the dominant source of government funding over tax revenue.

The slide in global cross-border trade, which is the consequence of the imposition of trade tariffs between America and China, comes at the end of a decade-long period of bank credit expansion, replicating the fragile position in America at the end of the roaring twenties. The stock market and economic collapses that followed had limited inflationary effects at the price level only due to a working gold standard; but even that could not withstand the political consequences of the depression, leading to a dollar devaluation in January 1934. This time, there is no check for the dollar, which is doubly afflicted by coronavirus lockdowns.

In Germany, the collapse of the paper mark ended by being stabilised at the rate of a trillion to one gold marks on 20 November 1923, the equivalent of 4.2 trillion to the US dollar. The paper mark was then replaced by a new unit, the rentenmark which was simply given the value of the gold mark. This arrangement only became legal on 11 October 1924. The success of the stabilisation, despite an inflation of the rentenmark — the quantity increasing from 501 million on 30 November 1923 to 1,803 million by the following July — has confused economists ever since.

Students of the Austrian school, and particularly of the writings of Ludwig von Mises should deduce that after the final flight out of money into goods, the emergence of a new money requires its users to accumulate a reserve of it. All that was required was a growing acceptance that the rentenmark would stick. The increase in cash and savings balances in the economy absorbed the increased inflation of the rentenmark with the result that consumer prices remained broadly stable.

If the stabilisation arrangement had been introduced before foreigners, businesses and the wider public had not discarded the paper mark entirely, the stabilisation would have failed. Those who think a German-style inflationary collapse today can be avoided by an early currency reset with a different form of fiat should take note.

The Comparison With John Law’s Crisis In 1720

The collapse of the paper mark is not the sole representation of how a government currency loses its facility. The advantage of its comparison with today is that a substantial cache of books, records and statistics exist on the subject, prompting economic historians to use it as a template for all the other hyperinflations of fiat money recorded since.

The economic history of John Law’s experiment in France in not so blessed in this regard. Exactly 300 years ago, his Mississippi bubble deflated, taking his currency, the livre, down with it. But to understand the relevance to the situation today, we must first delve into the facts behind his scheme.

The death of Louis XIV in 1715 left France’s state finances (which were the royal finances) insolvent. The royal debts were three billion livres, annual income 145 million, and expenditure 142 million. That meant only three million livres were available to pay the 220 million interest on the debt, and consequently the debt traded at a discount of as much as 80% of face value.

Following Louis XIV’s death, the Duke of Orleans had been appointed Regent to the seven-year old Louis XV, and so had to find a solution to the royal finances. The earlier attempt in 1713 was the often tried and repeatedly failed expedient of recoining the currency, depreciating it by one-fifth. The result was as one might expect: the short-term gain in state revenue was at the expense of the French economy by taxing it 20%. Furthermore, the Controller General of Finances foolishly announced the intention of further debasements of the coinage with a view to raising funds. This bizarre plan was announced in advance as an attempt to somehow stimulate the economy, but the effect was to increase hoarding of the existing coinage instead.

At about this time, John Law presented himself at court and offered his considered solution to the Regent. He diagnosed France’s problem as there being insufficient money in circulation, restricted by it being only gold and silver. He recommended the addition of a paper currency, such as that in Britain and Holland, and its use to extend credit.

Banknotes did not previously exist in France, all payments being made in specie, and Law persuaded the Regent of the circulatory benefits of paper money. He requested the Regent’s permission to establish a bank which would manage the royal revenues and issue banknotes backed by them as well as notes secured on property. These notes could be used as a loan from the bank to the king at 3% interest instead of the 7½% currently being paid on billets d’etat.

On 5 May 1716 he gained permission to establish Banque Generale as a private bank and to issue banknotes. Law succeeded in persuading the public to swap specie for his banknotes. He was so successful that after only eleven months, in April 1717 it was decreed that taxes and revenues of the state could be paid in banknotes, of which Law was the only issuer.

Law could now capitalise his bank. Besides his own money, this was done mostly with billets d’etat, in the books at their face value but obtained at a discount of 70% or so. He used public anticipation of future currency debasement to encourage the public to swap metallic money for his notes, which he guaranteed were repayable in coins that had the silver content at the time of the note issue. Law’s banknotes became an escape route for the general public from further debasement of silver coins.

The banknotes rose to a fifteen per cent nominal premium over coins within a year. The bank was exempt from taxes, and by decree foreigners were guaranteed their deposits in the case of war. The bank could open deposit accounts, loan money, arrange for transfers between accounts, discount bills and write letters of credit. Law’s banknotes could be used to settle taxes. There was no limitation placed on the total number of banknotes issued.

Money that had been hoarded for fear of further debasement was liberated by the premium on Law’s banknotes, and the improved circulation of money rapidly benefited the economy. Other private banks and moneylenders used Law’s banknotes as the basis of extending credit. This success meant his credibility with the Regent, the French establishment, and the commercial community was secured.

The use of his banknotes to settle taxes gave the bank the status of a modern note-issuing central bank. The expansion of circulating money stimulated trade, particularly given the banknotes’ convenience compared with using coin. It is worth noting that the earliest stages of monetary inflation usually produce the most beneficial effects, and this combined with Law’s apparent financial and economic expertise, particularly measured against the ineptitude of the Controller-General of Finances, gave the economy a much-needed boost.

It is worth noting that at this stage, there was no material inflation of the currency, banknotes being issued only against coins. However (and this appears to have generally escaped economic historians) it was clear that a loan business was facilitated on the back of Law’s paper money, which inflated the quantity of bank credit in the economy.

Law could now turn his attention to raising asset prices to pay down the royal debts, to enhance the public’s riches, and thereby his own wealth and that of his bank.

The Mississippi Connection

The Regent was understandably impressed by Banque Générale’s apparent success at issuing paper currency and rejuvenating the economy. The bank was being run on prudent lines, with banknotes being exchanged only for specie, and the quantity of what today would be called narrow money had not expanded materially beyond the release of hoarded specie. But Law had a problem: the note issue and the fact the bank had been capitalised on a mixture of partial subscriptions and billets d’etats at face value meant the bank had insufficient capital and profits to achieve its ultimate objective, which was to reduce the royal debts and the interest rates that applied to them.

Consequently, Law developed a plan to increase the bank’s assets as well as those under its indirect control. In August 1717, Law had requested of the Regent and was granted a trading and tax-raising monopoly over the French territory of Louisiana and the other French dependencies accessed by the Mississippi River, the existing trading lease having lapsed. A major attraction was supposed to be precious metals as well as the tobacco trade.

The Mississippi venture’s corporate title was Compaigne de la Louisiane ou d’Occident, but ever since has been commonly referred to as the Mississippi venture. For nearly two years, Law kept the project on hold while he established his bank. The shares languished at a discount to their nominal price of 500 livres, and what was needed was a scheme of arrangement to beef up the both the bank and the company.

As a first step, in the summer of 1719 he acquired three other companies to merge with the Mississippi venture. These had exclusive trading rights to China, the East Indies and Africa, which effectively gave Law’s Mississippi company a monopoly on all France’s foreign trade. To pay off these companies’ debts and to build the ships required for transport, Law proposed a share issue of 50,000 shares at 500 livres per share, 10% payable on application. By the time legal permissions were granted, the shares stood at 650 livres, making the new shares worth three times their subscription price in their partly paid form.

Law’s earlier success with his banknote issue, and the contribution made to improving the French economy, coupled with his ability to enhance the share price by issuing bank notes, were a guarantee that his scheme would be spectacularly profitable for anyone lucky enough to have a subscription accepted.

The bank was re-authorised as a public institution and renamed Banque Royale in December 1718. At the same time, the Regent authorised the further issue of up to a billion livres of notes, which was achieved by the end of 1719. While it had been the Banque Generale, notes had only been issued in return for specie to the extent of 60 million livres, but this new inflationary issue was entirely different. While it is impossible at this distance to forensically track the course of this money, we can be certain that it was used to manage the share price of the Mississippi venture, and it fuelled much of the public’s panic buying of shares that year.

But it was not only the printing of money to push the share price that fuelled the bubble. Law’s skills as a promoter took its inflation to a new level, with further issues of 50,000 shares approved in the summer of 1719 and executed as rights issues that autumn. Existing shareholders were offered the opportunity to subscribe for one share for every four old shares held, to be partly paid with an initial payment of 50 livres, the next payment deferred for over a month. These could be sold for an immediate profit, while providing a low-price entry point for new investors.

The expansion of the banknote issue without an offsetting acquisition of specie was used by Law to assemble and finance a total monopoly of France’s foreign trade. As well as this monetary expansion, we can be sure that private banks and moneylenders used it as a base to expand credit. We know this to be the case from court documents in London when Richard Cantillon in 1720 successfully sued English clients in the Court of Exchequer for £50,000 owed to him (about £18 million today), despite having already sold the Mississippi shares as soon as they were deposited as collateral.

It seems obvious to us that to give to one man both the monopoly of the note issue and monopolies on trade, and then for him to use the notes to create wealth out of thin air is extraordinarily dangerous. It seems equally obvious that such an arrangement was certain to collapse when the excitement died down and investors on balance sought to encash their profits.

It seems less obvious to us today that the principal elements of Law’s monopolies exist in modern government finances, which use paper money to inflate assets providing their electorates with the illusion of wealth.[xi] The difference is not in the methods employed, but the gradualness of today’s asset inflation, and the claim by the state that it is acting in the public interest, rather than one individual making the same claim on the state’s behalf.

Meanwhile, the Mississippi venture share price had continued rising, and by the end of 1719 it stood at 10,000 livres. Increasing pressure from share sales by people who sought to take profits had to be discouraged. The announcement of a 200 livres dividend per share was undoubtedly with that in mind, to be paid, like in any Ponzi scheme, not out of earnings but out of capital subscriptions. The price finally peaked at 11,000 livres on 8th January 1720.

By late-1719, Law had found it increasingly difficult to sustain the bubble. The banknote issues continued. In late-February 1720, the Mississippi Company and the Banque Royale merged. Afterwards, the shares began their precipitous fall, and by May, Law lost his position as Controller-General and was demoted. By the end of October that year, the shares had fallen to 3,200 livres, and a large portion of them had faced further unpaid calls throughout that year.

The year 1719 saw monetary inflation take off, directly fuelling asset prices. The decline of the Mississippi share price the following year was not as sharp as might otherwise have been expected, but against that must be put the fall in the paper livre’s purchasing power, particularly in the later months. The exchange rate against English sterling fell from nine old pence to 2 ½ pence in September 1720, most of that fall occurring after April as the price effect of the previous year’s inflation worked its way through into the exchange rates.

In the last three months of 1720 there was no sterling price quoted for paper livres, indicating they had become worthless.

The Relevance To Today

John Law’s ramping of a single financial asset by monetary inflation correlates with the Fed’s monetary policy today. The material differences are the suppression of interest rates, and therefore the market costs of government funding, and the far wider range of financial assets being inflated on the back of government bonds. The importance of maintaining financial asset prices is not only Fed policy, but it is increasingly realised that it is a policy that cannot be allowed to fail.

To the extent that other central banks are suppressing yields on their government bonds, this policy extends beyond America. This time, the John Law strategy has gone truly global, with the consequence that the future of fiat currencies is tied to the perpetuation of current financial bubbles.

In this regard it is interesting to note that the most astute banker in John Law’s time, Richard Cantillon, never played Law’s game on the bull tack. He made his first fortune extending credit to others for the purchase of John Law’s stock, which as collateral he promptly sold. Subsequently, he sued for the return of the loans to those who refused to pay up, thereby getting two bites of the cherry. His second fortune was shorting Law’s scheme in 1719, not by selling shares in the scheme, but by selling the currency for foreign exchange. In other words, he calculated that when the scheme failed, it would be the currency that collapsed more than the shares. He was right.

Conclusion

The two empirical models by which we can judge the collapse of a fiat currency offer food for thought in our current situation.

The policy of deliberately rigging financial markets replicates that of John Law’s scheme, suggesting the collapse of currencies will be tightly bound to the end of the government bond bubble. Today’s bubbles in financial assets are sustained by equally artificial means, even more transparent than Law’s market rigging — quantitative easing, suppressed and negative interest rates etc., to which we can add the manipulation of price inflation statistics.

The German experience in the early 1920s showed how it did not take as much monetary inflation as monetarists might think to collapse a currency. Karl Helfferich’s quote about the relationship between the 23 times increase in the money quantity while the number of paper marks to the dollar increased 344 times gives us an important perspective: it will not require a hyperinflation of the money supply to destroy paper currencies today.

A fundamental difference is that the greatest sinner, if not on scale but likely effect, is the Fed in its puffery of the dollar, everyone else’s reserve currency. And unlike Germany a century ago and unlike France three centuries ago, there is no foreign currency against which to measure the dollar’s decline, except perhaps in the short run, because all central banks follow similar inflationary policies with their fiat currencies.

In the past a suitable foreign currency was fully exchangeable into silver or gold, so the decline and collapse could only be measured accordingly. It also means that it will be impossible for businesses to bypass the currency collapse by referencing prices to other currencies, being all similarly fiat. Many businesses in Germany survived the paper mark collapse in this way, but their modern equivalents will not have this option.

The final collapse of a currency is always a flight out of government fiat currency into goods. That can be the only outcome from the continuation of current macroeconomic policies. But above all, it would be a mistake to think it cannot happen, nor that it will be a long process giving us all plenty of time to plan. The final flight out of paper marks took approximately six months. Law’s scheme took slightly longer to destroy his livre. These should be our reference points.

https://www.zerohedge.com/economics/lessons-inflation-past

Making Financial Decisions Is Hard, Overcoming Barriers

Making Financial Decisions Is Hard, Overcoming Barriers

By Philip Fernbach & Abigail Sussman Market Watch

Teaching people about money doesn’t seem to make them any smarter about money – here’s what might

Making financial decisions is hard, but three promising ideas are helping Americans overcome barriers. If the average American went in for a financial checkup, he or she might get rushed to the emergency room. Forty-four percent of us can’t cover a $400 out-of-pocket expense, and 52% of American households have no retirement savings. We seem to be chronically poor at making financial decisions. We commit costly mistakes across all areas of personal finance including decisions about savings, investing, budgeting and borrowing.

Diagnosing the problem is easy: We make mistakes because financial decision making is hard, and we lack an understanding of the decisions we face. Finding a cure is much more difficult. To many, the obvious treatment is financial education, but recent research suggests that financial education is not effective.

Some promising new ideas such as “just-in-time” education and “nudges” to help us make better decisions are starting to emerge as alternative approaches.

Ineffective Programs

Governments around the world have invested huge resources in initiatives aimed at improving financial literacy, such as the Federal Deposit Insurance Corp.’s My Smart program, which helps low-income individuals develop financial skills.

Unfortunately, research into the effectiveness of these programs paints a grim picture. A recent meta-analysis looked at every known study examining whether a financial-education intervention — such as training sessions, classes or one-on-one counseling — improves positive financial behaviors and financial health. Across all those studies, there was almost no benefit. Those participating in financial education were essentially no better off.

If we want to come up with better solutions, we need to understand the psychological barriers to financial education. Why is it so hard for people to learn?

Challenges To Learning

The first reason is relevance. The mind is not like a computer that can store arbitrary amounts of information. Instead, we tend to retain only what is useful for navigating our current circumstances.

To continue reading, please go to the original article here:

https://www.marketwatch.com/story/financial-education-flunks-out-and-heres-whats-being-done-about-it-2018-10-10

5 Lessons I Learned From Growing Up In The Ghetto

5 Lessons I Learned From Growing Up In The Ghetto  

(And How They Helped Me On The Road To Financial Independence)

Post From Peerless Money Mentor

“Just like a rocket ship needs a lot of fuel (energy) to escape Earth’s gravitational pull before it can get into the freedom of space, to escape the ghetto we needed to expend a lot of energy in the form of hard work to gather enough money to escape the gravitational pull of the ghetto and into the freedom of a better life.” -Jack The Dreamer

Today’s post is written by Jack who blogs about fire, personal finance, and minimalism at Jack The Dreamer.

I first came across Jack’s blog when an article of his was featured on Rockstar finance.  The article was titled What Living On A Farm For A Year Taught Me About Financial Independence And Life.  I really enjoyed reading it, and I think you will, too!  Check it out after reading this post. Instead of writing about the lessons he learned on the farm, today he will be sharing the lessons he learned while growing up in the ghetto.

The Inspiration

Peerless Money Mentor’s article “Growing Up In The Ghetto” inspired me to reach out to him because I also grew up in the ghetto and eventually my family made it out with money from starting our own business. Reading his article was very nice because I was like, “Ah! Someone who grew up in similar circumstances and understands!” His article made me re-assess how growing up in the ghetto during my formative years affected me. I say this because ever since we left, I never really took a good hard look at how the ghetto affected me, from how I walked and talked, to how I dressed, thought, and ultimately, how it affected my path to being financial independent.

Anyways…

Without further adieu, here are the 5 Lessons I learned from growing up in the ghetto and how they relate to striving for financial independence.

1) Being Different Can Make You Stronger (And Richer)

We moved to another ghetto outside of New York City. My parents each worked 3 jobs and saved up money for 3 years before opening a restaurant. They opened a restaurant because it didn’t require a college degree, their English wasn’t that good, and it allowed them to be their own bosses.

Also, they came from a small business background in Thailand, and according to Robert Kiyosaki’s Cash Flow Quadrant from Rich Dad, Poor Dad, once you’re in a certain quadrant, you tend to stay there.

The 4 quadrants are employee, small business employer, big business employer, and investor.

My family have been in the small business quadrant for close to a hundred years in Thailand, and I’m looking to grow myself beyond that and break the dynastic cycle of platitudes.

But that’s a post for another day. Back to the story.

To continue reading, please go to the original article here:

https://www.peerlessmoneymentor.com/5-lessons-i-learned-from-growing-up-in-the-ghetto-and-how-they-helped-me-on-the-road-to-financial-independence/

Sustaining Wealth is Harder Than Getting Rich

Sustaining Wealth is Harder Than Getting Rich

by Ben Carlson

The Forbes 400 list of the world’s richest people looks fairly similar at the top every year.

Buffet, Gates, Bezos, Bloomberg and the Walton family are at the top of the list in some order year in and year out (they’ve been joined by Mark Zuckerberg in recent years as well).

But this list isn’t as stable as it may appear.

Over 70% of those who made this list (or their heirs) lost their status in this rarified group between 1982 and 2014. Getting there is easier than staying there for most.

High-income earners have a similarly difficult time staying at the top.

Research shows over 50% of Americans will find themselves in the top 10% of earners for at least one year of their lives. More than 11% will find themselves in the top 1% of income-earners at some point. And close to 99% of those who make it into the top 1% of earners will find themselves on the outside looking in within a decade.

I was reminded of these studies this past week after reading two stories of financial folly. The first was Spencer Pratt, the reality TV star from the MTV show The Hills (I may or may not have watched this show at one point).

CNN Money profiled how Pratt and his wife, Heidi, made and then spent millions:

By 2008, they were crazy famous, ridiculously rich, and it seemed impossible that they ever wouldn’t be.

“We were more famous and [making] more money than Kim Kardashian,” Pratt says.

But as frosted tips fell out of style, so did Speidi. MTV canceled The Hills after six seasons, and the Pratts’ luxurious lifestyle quickly caught up to them. After years of splashing $30,000 on shopping sprees and ordering $4,000 bottles of wine at dinner, the now-married couple had officially blown through their $10 million fortune. Tabloid OK! Magazine announced the news in all caps, writing“HEIDI MONTAG & SPENCER PRATT ARE BROKE.”

“It’s really easy to spend millions of dollars if you’re not careful and you think it’s easy to keep making millions of dollars,” 34-year-old Pratt says. “The money was just coming so fast and so easy that my ego led me to believe that, ‘Oh, this is my life forever.’”

To continue reading, please go to the original article here:

https://awealthofcommonsense.com/2018/07/sustaining-wealth-is-harder-than-getting-rich/

How Billionaire Investors Are Protecting Their Wealth

Animation: How Billionaire Investors Are Protecting Their Wealth

Jeff Desjardins 

It can take a lifetime to build a fortune of Buffett or Dalio sized proportions.

But, as all billionaires know, there is always risk present in the market – and even though a catastrophic geopolitical or financial event is very unlikely, it is important to be prepared for anything.

How Billionaires Protect Their Wealth

Today’s animation comes to us from Sprott Physical Bullion Trusts, and it shows the worries that are keeping billionaires up at night, and how they are positioning themselves to preserve wealth in any market environment.

https://www.youtube.com/watch?v=IshYIYyNopU

Let’s take a closer look at the actions that these billionaires are taking, and why they are so concerned in the first place.

The Cash Misconception

Most billionaires are surprisingly cash poor on a relative basis. The average billionaire only holds 1% of their net worth in liquid assets like cash because the vast majority of their fortunes are usually tied up in business interests, stocks, bonds, mutual funds, and other financial assets.

Wealth is not stagnant, and the portfolios of these billionaires will move along with the health of the economy and markets. This can either make their wealth flourish – or any market crash could damage their entire fortune.

For this reason, billionaires are very concerned about market fluctuations, and they actively seek ways to protect their wealth even in the wake of a catastrophic geopolitical, economic, or monetary event.

How Billionaires Are Positioned

In two earlier infographics, we outlined the current geopolitical risks that have elite investors worried, as well as the types of market risks that could materialize.

Keeping the above points in mind, billionaire investors are positioning their portfolios accordingly.

Warren Buffett

By accumulating massive amounts of cash in Berkshire Hathaway, value investor Warren Buffett has preserved his optionality. If a downturn hits the market, he can deploy the cash and get assets at bottom barrel prices. (Sidenote: see the size and scope of the vast Warren Buffett Empire)

David Einhorn

The billionaire founder of Greenlight Capital believes that financial repression and monetary debasement employed by central bankers can be neutralized with gold.

Paul Tudor Jones

The reclusive hedge fund manager, who called the 1987 crash, is being very careful in choosing the assets he holds. He has observed bonds are the most expensive they’ve ever been by virtually any metric – and has joked that he’d rather hold a burning chunk of coal than a U.S. Treasury bond.

Ray Dalio

The founder of the world’s largest hedge fund is adamant that 5-10% of a portfolio should currently be held in gold. Not surprisingly, in November 2017, Bridgewater loaded up on its gold holdings by 525%.

No matter the size of your investment portfolio, it’s worth studying how the world’s most elite investors are protecting their fortunes. By hedging against big events and diversifying their investment portfolios to include safe havens, they maximize their chances for success in any investment environment.

https://www.visualcapitalist.com/animation-billionaire-investors-protecting-their-wealth/

On The Importance Of Putting First Things First

On The Importance Of Putting First Things First

By J.D. Roth   

Holy cats! That was an interesting 72 hours.

For the past three days, I’ve been fighting a terrible cold. Or maybe the flu. I’m not sure which. It hasn’t been fun.

On Sunday, while I was in Florida attending an early-retirement retreat, I woke with crap in my lungs. All day, I was coughing and sneezing and hacking. I still felt relatively strong, though, so I made sure to get in my four-mile training run. (I made two goals involving running this year: I want to run at least one mile every day and I want to run a half marathon at the end of March.)

On Monday morning, I felt worse. Still, I rolled out of bed and tromped the one mile I had scheduled for myself. It was a l-o-n-g mile, let me tell you. I was wheezing and gasping the entire ten minutes.

The six-hour flight home to Portland on Monday afternoon was miserable. I hate flying when I’m sick, and I know how much that sucks for other passengers. I huddled next to the window and tried not to breathe too deeply. Breathing too deeply rattled the crap in my lungs and sent me into fits of coughing, so I mainly zoned out and made an effort to take shallow breaths.

“You sound terrible,” Kim said when she picked me up from the airport. That night, she made me sleep in the guest room.

I spent all yesterday fighting a high fever. I tried to write an article, but it was a futile endeavor. I couldn’t focus. I couldn’t write or read or even watch TV. (I starting watching the new Blade Runner movie, but I couldn’t focus for more than a few minutes at a time.) I could barely focus on video games.

In the afternoon, I felt a little better, so I decided to take the dog for a walk. “I have a three-mile training run scheduled today,” I thought to myself. “I probably shouldn’t do that. But surely I can do just a mile.” I put on my running clothes, grabbed the leash and the dog, and headed outside.

After two minutes of running — and less than a quarter mile — I pulled up short. I couldn’t catch my breath. I felt like I was going to faint. I walked the dog back home and crawled into bed.

And that’s how my goal of running at least one mile each day in 2018 came to an end.

Blind Pursuit Of The Less Important

My example of blindly pursuing a small goal at the expense of the Big Picture is relatively minor. It’s not a big deal. But it’s not hard to find examples of people doing this on a grander scale, which can lead to all sorts of complications.

I’ve noticed, for instance, that many people who discover the ideas behind early retirement become laser-focused on their “number” — the amount they need to save in order to reach financial independence (a.k.a. FI). They rearrange their lives so that they can save 50% or 70% or 85% of their income, but never take time to figure out what they’re saving for. Why are they saving for financial independence? What’s the purpose?

Then a crisis occurs and they realize the goal they’ve been pursuing was a red herring. Financial independence and early retirement aren’t the actual objective — and they never were. A happy life filled with meaning and purpose is what they really want; financial independence is merely a tool to help them achieve it.

To continue reading, please go to the original article here:

https://www.getrichslowly.org/first-things-first/

Avoiding the fate of the dodo: How To Prepare For An Uncertain Future

Avoiding the fate of the dodo: How To Prepare For An Uncertain Future

By J.D. Roth

Our financial decisions are based on our expectations for the future.

We save for retirement because we expect we’ll live a long time in old age, a period where we expect to be relatively unproductive. We invest in stocks because we expect the market to provide outsized returns when compared to other asset classes.  We set aside emergency savings because we expect that bad things will happen — if not tomorrow, then next week (or next year).

We base our expectations on past experience — both our own experience and the experiences of others.

We expect to live a long time in old age because statistically most of our contemporaries live a long time in old age. We expect the stock market to provide excellent returns because for the past 100 years, that’s what the stock market has done.We expect bad things to happen because bad things always happen.

Generally speaking, there’s nothing wrong with this method of planning. It works.

When we base our expectations for the future based on what’s happened in the past, we tend to get good results. We accumulate money for when we’re no longer able (or willing) to work. Our investments grow. We have a cash cushion for when the car breaks down or little Jimmy breaks his leg.

Beyond All Expectations

But what happens when the old patterns break? What happens when past data becomes meaningless? That’s the subject of an intersting article from Nick Maggiulli at Of Dollars and Data.

He tells the story of how the dodo went extinct. Evolving in an ecosystem without predators, these birds had no fear of humans. They had no expectation that another creature might hunt them down and eat them and end the species.

The Dodo

Maggiulli writes:

From the perspective of the dodo, the arrival of humans (or any other large predator) was outside the realm of its evolutionary grasp. Anything the dodo had approached previously had not tried to eat it. However, the arrival of humans broke the old pattern. It was beyond all expectations.

This idea is directly relevant to how investors use historical financial data to make decisions about the future. We assume that history is a great guide for what is to come, which is only sometimes true. We rely heavily on previous patterns…until they break. This is the classic black swan problem explained by Nassim Taleb, and highlights the difficulty with relying on financial history to make predictions.

“Just like the dodo,” Maggiuilli says, “investors are on their own island of financial history with no clue what will wash ashore from the seas of tomorrow.”

To continue reading, please go to the original article here:

https://www.getrichslowly.org/uncertain-future/

4 Risky Life Decisions Millionaires Made — But You Shouldn't

4 Risky Life Decisions Millionaires Made — But You Shouldn't

By Emily Guy Birken  19 June 2018

When you read about self-made millionaires and billionaires, it can often seem as if their success was an inevitable result of their tenacity and savvy decisions. But sometimes those choices are less savvy and more borderline irresponsible — and it would be foolhardy for most of us to try some of these stunts in our own lives. The stories of people going from rags to riches may be inspiring, but most of us need to remain practical. That's why you should avoid copying these four life decisions successful millionaires have made. (See also: 5 Bedtime Routines of Famous Financial Gurus)

Dropping out of high school

There are a number of hugely successful individuals who did not complete their high school educations, and it did nothing to stop them from reaching the top of their fields. For instance, Wendy's founder Dave Thomas, Tumblr developer David Karp, director Quentin Tarantino, and Virgin Atlantic founder Richard Branson all dropped out of high school and still went on to become multi-millionaires.

Yes, these millionaires were able to build wildly successful careers without completing their formal educations, but it's a mistake to assume that most people can emulate their irregular paths. To begin with, a worker without a high school diploma earns an average of $520 per week, according to the Bureau of Labor Statistics. Assuming a year of constant earning (which is not necessarily the case, as many workers without a diploma cannot count on steady employment), this works out to $27,040 annually.

Just completing high school means a bigger paycheck, as workers with a diploma earn a median weekly income of $712, or $37,024 per year. In addition, high school dropouts have the highest rate of unemployment in America at 6.5 percent. Workers with at least a high school diploma have an unemployment rate of 4.6 percent, while the national unemployment rate is 3.8 percent overall. Clearly, completing your high school education is one of the surest ways to ensure financial stability.

This is why Dave Thomas, the founder of Wendy's, earned his GED in 1993 at the age of 61. He described dropping out of high school as one of the worst mistakes of his life, and he did not want his subsequent success to encourage young people to quit school.

Putting your life savings into your business

From Elon Musk, who funneled the money that he earned from the sale of PayPal into Tesla and SpaceX, to Sara Blakely who put the $5,000 she had managed to save from her sales job into the business venture that became Spanx, there are a number of successful entrepreneurs who gambled their own funds on their business ideas.

Between these inspiring stories and the prevalence of such gambits working out in movies, it would be easy to assume that being willing to put your own money into a business venture is the secret to entrepreneurial success.

To continue reading, please go to the original article here:

https://www.wisebread.com/4-risky-life-decisions-that-millionaires-made-but-you-shouldnt?ref=car