The Laws of Investing
.The Laws of Investing
By Morgan Housel
Think of how big the world is. And how good animals are at hiding. Now think about a biologist whose job it is to determine whether a species has gone extinct. Not an easy thing to do.
A group of Australian biologists once discovered something remarkable. More than a third of all mammals deemed extinct in the last 500 years have later been rediscovered, alive:
We identified 187 mammal species that have been missing (claimed or suspected to be extinct) since 1500. This number includes all such mammals for which we were able to find key variables for analysis. In the complete dataset, 67 species that were once missing have been rediscovered.
A lot of what we know in science is bound to change. That’s what makes science great, what makes it work, and what distinguishes it from religion. Science is filled with rules, evidence-based theories, and probabilistic observations. Laws – immutable truths lacking exceptions – are rare. Most fields only have a handful.
The Laws of Investing
By Morgan Housel
Think of how big the world is. And how good animals are at hiding. Now think about a biologist whose job it is to determine whether a species has gone extinct. Not an easy thing to do.
A group of Australian biologists once discovered something remarkable. More than a third of all mammals deemed extinct in the last 500 years have later been rediscovered, alive:
We identified 187 mammal species that have been missing (claimed or suspected to be extinct) since 1500. This number includes all such mammals for which we were able to find key variables for analysis. In the complete dataset, 67 species that were once missing have been rediscovered.
A lot of what we know in science is bound to change. That’s what makes science great, what makes it work, and what distinguishes it from religion. Science is filled with rules, evidence-based theories, and probabilistic observations. Laws – immutable truths lacking exceptions – are rare. Most fields only have a handful.
But the handful of laws that exist have a special function: they’re the great grandmothers, the old wise men, of the day-to-day theories and rules used to discover a new truth. There’s a hierarchy of science: laws at the bottom, specific rules above that, then theories, observations, hunches, and so on.
The higher you go on the pyramid the more exciting things become. That’s where discovery and opportunity live. But everything at the top of the pyramid must respect the laws at the bottom.
The idea of flexible rules deriving from unshakeable laws applies to every field. John Reed writes in his book Succeeding:
When you first start to study a field, it seems like you have to memorize a zillion things. You don’t. What you need is to identify the core principles that govern the field. The million things you thought you had to memorize are simply various combinations of the core principles.
Same thing in investing.
What’s an investing law? There’s no definition, so I’ve taken some liberties here. I try to limit them to forces that influence all types of investments, in all sectors, in all countries, throughout all of history, with few exceptions, and some explanation for why it will continue indefinitely.
A theme here is that investing is not just the study of finance. It’s the study of how people behave with money. So most of these “laws” describe a universal feature of how people respond to risk, reward, and scarcity.
They are simple. But they are, I think, part of a foundation that governs most of what happens in investing, and will keep happening as long as investing exists.
Law #1: Optimism and pessimism will always overshoot because the boundaries of both can only be known in hindsight, once they’re passed.
The correct price for any asset is what someone else is willing to pay for it, because all asset prices rely on subjective assumptions about the future. And like a blind man who doesn’t know where a wall is until his cane touches it, markets cannot know when optimism or pessimism has gone too far until they bump into the limits and enough investors protest in the other direction.
The peaks and bottoms of market cycles always look irrational in hindsight, like they went too far. But in real time markets are just trying to find the limits of what people can endure. And they have to do that because any gap between an asset’s potential and what investors are willing to endure creates opportunities that will be exploited.
Yale economist Robert Shiller won the Nobel Prize for a paper he wrote in 1981 about a similar idea. The bottom line is that markets aren’t really rational; they’re just pretty reasonable.
Law #2: Calm plants the seeds of crazy.
There’s More
To continue reading, please go to the original article here:
https://www.collaborativefund.com/blog/the-laws-of-investing/
3 Ways to Start Anticipating Your Financial Needs
.3 Ways to Start Anticipating Your Financial Needs
Posted by Daniel Azzoli
Managing your finances can sometimes feel like an overwhelming task. You’ve got bills to worry about, maybe a family to support, and plenty of other financial responsibilities on your plate. If you’re trying to keep your financial life in order, one of the most important things you can do is learn how to anticipate your financial needs. This can help you to start preparing for these expenses ahead of time and hopefully ease the impact they have down the line.
If you’re not used to thinking ahead when it comes to your finances, this may be a tricky thing to wrap your head around. For example, when you run out of groceries, maybe you just run over to the grocery store, browse through the aisles and pick out a few items to make meals for the next few days. Or maybe you’re used to getting bills in the mail that you hadn’t expected.
3 Ways to Start Anticipating Your Financial Needs
Posted by Daniel Azzoli
Managing your finances can sometimes feel like an overwhelming task. You’ve got bills to worry about, maybe a family to support, and plenty of other financial responsibilities on your plate. If you’re trying to keep your financial life in order, one of the most important things you can do is learn how to anticipate your financial needs. This can help you to start preparing for these expenses ahead of time and hopefully ease the impact they have down the line.
If you’re not used to thinking ahead when it comes to your finances, this may be a tricky thing to wrap your head around. For example, when you run out of groceries, maybe you just run over to the grocery store, browse through the aisles and pick out a few items to make meals for the next few days. Or maybe you’re used to getting bills in the mail that you hadn’t expected.
The problem is that when you only deal with financial issues as they come, you might be costing yourself more money than you need to be. Maybe your little trips to the grocery store end up being more expensive than if you had planned your trip ahead of time around an upcoming sale. Or maybe you could have set aside money for those surprise bills ahead of time if you had paid more attention to your budget calendar.
The point is, if you don’t have a clear idea of what your financial needs are in advance, your regular expenses may start to inflate. This may lead you to start racking up credit card debt and spend money you don’t have.
Use Budget To Anticipate Financial Needs
If you want to avoid this, it helps to understand how to anticipate your financial needs. When you’re organized and know that an expense is on the horizon, you can put yourself in a position to make things easier on yourself when it finally comes. Here are three things you can do to prepare yourself for upcoming financial needs.
1. Plan Your Groceries Ahead Of Time
We’ve already spoken a bit about how your grocery shopping habits can affect your budget. You run out of food at home, head to the store, wander through the aisles and slowly pick out a few things that you need, and maybe pick up a few extra items while you’re at it. There are a couple of issues with taking this approach.
First, you may be spending more time than you need to on this process. When you go grocery shopping without a list and a clear idea of what you’re looking for, you can burn time wandering around looking for inspiration for your next few meals. This time could be much better spent doing something more productive.
Secondly, when you take this approach to grocery shopping, you’re not putting yourself in the best position to capitalize on whatever sales are going on. Maybe you get lucky and stumble upon a few things on sale that you grab, but you may be missing a great deal from earlier in the week that could have shaved off a significant amount from your grocery bill. Or maybe you end up buying things on sale just because they’re discounted, and then don’t know what to do with them later on.
To continue reading, please go to the original article here:
https://www.moneykey.com/blog/start-anticipating-financial-needs/
Inheriting a house? Read this before you make any rash decisions
Inheriting a house? Read this before you make any rash decisions
Alessandra Malito Mon, May 23, 2022
There are tax implications to whatever decision you make.
Beneficiaries must juggle many considerations when they inherit a home, especially if they’re sharing that gift with siblings or others. There are tax implications whether they keep or sell the home, emotional attachments to the house and the items within the house, as well as other potential estate planning issues. In some cases, the property can become a source of rental income, whereas in other situations, it could be another source of cash after it’s sold — especially when the real-estate market is doing well.
Leaving behind a home for a loved one to inherit is a huge gift, but without the right planning, it could be an equally large headache.
Inheriting a house? Read this before you make any rash decisions
Alessandra Malito Mon, May 23, 2022
There are tax implications to whatever decision you make.
Beneficiaries must juggle many considerations when they inherit a home, especially if they’re sharing that gift with siblings or others. There are tax implications whether they keep or sell the home, emotional attachments to the house and the items within the house, as well as other potential estate planning issues. In some cases, the property can become a source of rental income, whereas in other situations, it could be another source of cash after it’s sold — especially when the real-estate market is doing well.
Leaving behind a home for a loved one to inherit is a huge gift, but without the right planning, it could be an equally large headache.
Beneficiaries must juggle many considerations when they inherit a home, especially if they’re sharing that gift with siblings or others. There are tax implications whether they keep or sell the home, emotional attachments to the house and the items within the house, as well as other potential estate planning issues.
There is no right or wrong answer when choosing to keep or sell an inherited home. In some cases, the property can become a source of rental income, whereas in other situations, it could be another source of cash after it’s sold — especially when the real-estate market is doing well. But before jumping into the choice, here’s what to know:
The tax implications of selling the home
Individuals who sell a home after living in it for two out of the last five years enjoy the tax benefit of an exemption — for single filers, the exclusion is $250,000, while for those who are married filing jointly, it’s $500,000. This exemption is applied when a home is sold to reduce the capital gains the sellers would have to pay.
For example, if a married couple sold a home for $1 million and had a basis of $500,000, they would pay $0 in capital-gains tax for that sale. Comparatively, if they sold it for $1.5 million, they would reduce the tax obligation by $500,000, and pay capital gains tax on the remaining $500,000.
Surviving spouses who inherit the full value of their home after their husband or wife dies can still take advantage of the $500,000 exemption if they sell the house within two years of death, said Peter Palion, a financial adviser and founder of Master Plan Advisory.
To continue reading, please go to the original article here:
A Surprising Benefit To Owning Gold-- Especially Now
.A Surprising Benefit To Owning Gold-- Especially Now
Notes From the Field By Simon Black May 23, 2022
By the year 41 BC, just a few years after the assassination of Julius Caesar, Rome was under the strict rule of a three-person dictatorship known as the Tresviri rei publicae constituendae.
Historians today refer to this committee as the Triumvirate, and it included a general named Aemilius Lepidus, as well as Gaius Octavius-- who would eventually become Emperor Augustus.
But the leader of the group, at least at first, was Marcus Antonius, also known as Mark Antony.
A Surprising Benefit To Owning Gold-- Especially Now
Notes From the Field By Simon Black May 23, 2022
By the year 41 BC, just a few years after the assassination of Julius Caesar, Rome was under the strict rule of a three-person dictatorship known as the Tresviri rei publicae constituendae.
Historians today refer to this committee as the Triumvirate, and it included a general named Aemilius Lepidus, as well as Gaius Octavius-- who would eventually become Emperor Augustus.
But the leader of the group, at least at first, was Marcus Antonius, also known as Mark Antony.
Mark Antony was not especially popular. Many Romans rightfully suspected that Mark Antony had been involved in Caesar’s assassination. Plus he was sleeping with Caesar’s widow, Cleopatra.
But Antony’s power through the Triumvirate was absolute. He could raise taxes, establish new social and religious traditions, regulate daily life, seize private property, and even condemn people to death… all without any oversight or due process.
And he wasn’t shy about using this power to squash his opposition.
Antony put several of his political enemies to death-- including the much beloved Cicero, who was trying to escape Rome when Antony’s goons killed him.
Antony also threatened to kill another Senator named Nonius. But unlike Cicero, Nonius managed to escape Rome… bringing with him about $1.5 million worth of gold and jewels.
People in the ancient world knew that precious metals (and precious stones) were pretty much the only portable forms of wealth.
Human civilization at the time was completely agrarian, so most productive assets like land and crops were impossible to move. Gold was almost the singular option to move large sums of wealth, and it remained this way for centuries.
These days there are much better options. Many forms of wealth-- financial securities, intellectual property, bank deposits, and cryptocurrency-- are completely portable. So gold is no longer necessary as a way to move money abroad.
And yet gold still has a number of incredible benefits.
For starters, it’s a great way to hold wealth privately. When you own physical gold and store it in a safe, there’s no ‘counterparty’ like a bank or broker standing between you and your money.
No one is keeping tabs on your gold, your name isn’t in some database. And when you pass away, your heirs can easily take possession of the gold without any bureaucratic hurdles.
Second, over the long-term, gold has proven to be a pretty great investment.
Since August 1971, in fact, when gold formally decoupled from the US dollar, the gold price has increased 42x.
Comparatively, the S&P 500 has grown about 40x over the same period.
This isn’t to say that gold is a better investment. In fact, if you reinvested dividends, stocks outperformed. But history shows that gold is worth consideration.
Another benefit of gold is that it has traditionally hedged against systemic risks. It’s like an insurance policy; in times of real crisis, physical gold has historically been a great asset to own.
Notice that I keep saying “physical gold”, i.e. bars and coins.
A lot of people invest in ‘paper’ gold products, like Exchange Traded Funds (ETFs). And 99.99% of the time, these ETFs perform very similarly to physical gold.
It’s that 0.01% of the time-- the real emergencies-- when the performance of ETFs materially diverges from physical gold.
We saw this quite recently in the early days of the pandemic: in early March 2020, major gold ETFs actually fell by around 10%. But the price of physical gold bars and coins went through the roof.
So, in my opinion, physical is always better than paper.
Now, there are plenty of other reasons to consider owning gold-- but there’s one in particular I want to leave you with today: diversification.
Most people understand the concept of diversification quite well: don’t put all of your eggs in one basket.
We constantly write about international diversification at Sovereign Man, i.e. ensuring that your assets, lifestyle, business, etc. isn’t all tied to the same country.
In financial investment terms, diversification means holding multiple assets that have a low correlation to one another.
To use a simple example, Coca Cola and PepsiCo are technically two different companies. But they share similar risks and rewards.
If Coke does well, chances are Pepsi is also doing well, and vice versa. So if you own stock in both Coke and Pepsi, you’re basically invested in the same thing. Your risks and rewards are not diversified.
Now, many people think they’re diversified because they’ve invested in, say, a bank stock and a tech stock-- JP Morgan, and Amazon.
Sure, those two companies certainly have a lower correlation than Coca Cola and Pepsi. But you’re still invested completely in US stocks. And that’s not very diversified.
This is where gold comes in.
Compared to the general stock market, i.e. the S&P 500, gold has a very LOW correlation. In other words, there are years when gold does well, but the stock market does poorly. There are years where stocks are up but gold is down. There are years where they both do well, and years where they both fall.
So, mathematically speaking, gold represents diversification away from the stock market; their risks and rewards are totally different.
Interestingly, though, gold’s diversification doesn’t stop there.
If you look at the price history of gold (again, going back to 1971), it also shows very low correlation to the US economy, i.e. there are periods where the economy shrinks, but gold goes up. There are also periods where the US economy booms, but gold trades sideways.
There’s even a very low correlation between gold and the Federal Reserve, i.e. the gold price moves independently of whether interest rates rise or fall, or whether the Fed balance sheet rises or falls, or whether the Fed expands the money supply.
This diversification is a really interesting benefit of gold, especially right now in such volatile times.
(You might also be surprised that silver represents significant diversification from gold; but more on this another time.)
To your freedom, Simon Black, Founder, SovereignMan.com
The Rise After the Fall
.The Rise After the Fall
May 16, 2022 by Ted Lamade
Guest post by Ted Lamade, Managing Director at The Carnegie Institution for Science
Two weeks ago, I was scheduled to attend an annual meeting in Chicago. I caught an early morning flight into O’Hare and arrived at my hotel on Michigan Avenue shortly before noon. Knowing I had a few hours to kill before my first meeting, I decided to walk around the city to see how much it had (or had not) emerged from the Covid-19 lockdowns.
As I walked along the city’s Riverwalk, I shielded myself from the wind on a day that was unseasonably cold, even for the spring in The Windy City. Dodging people along Wacker Drive, I noticed a bookstore around the corner from The Wrigley Building. In order to warm up, but also in an effort to embrace Barton Biggs’ bookstore philosophy, I ducked into the store (Biggs’ bookstore philosophy was simply that whenever he traveled to a new city as Morgan Stanley chief investment strategist, he would visit bookstores due to his belief that which books were selling and how they were positioned on the shelves provided a good indicator of a city’s or country’s current mood/sentiment).
The Rise After the Fall
May 16, 2022 by Ted Lamade
Guest post by Ted Lamade, Managing Director at The Carnegie Institution for Science
Two weeks ago, I was scheduled to attend an annual meeting in Chicago. I caught an early morning flight into O’Hare and arrived at my hotel on Michigan Avenue shortly before noon. Knowing I had a few hours to kill before my first meeting, I decided to walk around the city to see how much it had (or had not) emerged from the Covid-19 lockdowns.
As I walked along the city’s Riverwalk, I shielded myself from the wind on a day that was unseasonably cold, even for the spring in The Windy City. Dodging people along Wacker Drive, I noticed a bookstore around the corner from The Wrigley Building. In order to warm up, but also in an effort to embrace Barton Biggs’ bookstore philosophy, I ducked into the store (Biggs’ bookstore philosophy was simply that whenever he traveled to a new city as Morgan Stanley chief investment strategist, he would visit bookstores due to his belief that which books were selling and how they were positioned on the shelves provided a good indicator of a city’s or country’s current mood/sentiment).
While my visit didn’t lead to any earth shattering conclusions regarding the state of the country or economy, I did notice a book incredibly out of place on one of the shelves – a biography of Vince Lombardi. A book about the legendary Green Bay Packers head coach in a Chicago bookstore? A mile from the home of the Monsters of the Midway? It felt like seeing a jelly donut for sale in a Sweetgreen.
As I flipped through the book, there were several quotes strewn throughout. Two jumped out, not because I hadn’t seen them before, but rather because they seemed to be a bit at odds with one another.
“Winning isn’t everything, it’s the only thing.”
And
“The greatest accomplishment in life is not in never falling, but in rising again after you fall.”
I left the bookstore and headed back to my hotel. As I walked towards Michigan Avenue, once again bracing the cold, I began to question my initial impression. Were these two quotes really at odds with one another? Or, were they if fact inseparable?
If Lombardi were alive today, my guess is he would make the case that the former is actually a direct byproduct of the latter — Winning, in the truest sense of the word, results from rising after you fall.
Then it suddenly dawned on me. In the midst of one of the longest bull markets in history, had we somehow forgotten this along the way?
The last decade and a half has been a period characterized by low interest rates, abundant capital, unlimited support from both the Federal Reserve and the U.S. government, and low commodity prices. As a result, nearly every investable asset has appreciated in value.
If so, the logical question is, has this created a generation or two (or even three) of investors with an elevated opinion of their abilities? It would be hard not to.
The fact is, both millennials and the older Gen Z’ers have now spent the bulk of their careers working and investing in a sustained bull market, which has led to an elevated level of confidence. This confidence is arguably even more pronounced for the younger Gen Z’ers who haven’t even entered the workforce. How could it not be when, as the Wall Street Journal pronounced in an article titled What New Grads Want this past weekend,
“This current class is the most in demand group of college graduates to enter the job market in years and they have expectations to match. Grads are seeking more money, flexibility, and specifics about likely assignments than prior classes.”
More money, flexibility, and specifics? I remember just wanting a job that paid enough to cover the rent for my apartment during the financial crisis
So, why does this matter?
To continue reading, please go to the original article here:
https://www.collaborativefund.com/blog/the-rise-after-the-fall/
Quiet Wealth: An Asset Protection Strategy
.Quiet Wealth: An Asset Protection Strategy
Time is Money: An Asset Protection Strategy
Diversified Investments
I’ve never worn a watch. I flatter myself that’s because of a high school Latin teacher/lacrosse coach named Thurber who, when asked why he didn’t, responded that “a man who wears a watch worries too much about time.”
That quote has always stuck with me. Its philosophical brevity is almost Hellenic.
My real reason for going watch-less is simpler, however. I have a hard enough time keeping track of my keys, wallet, eyeglasses and anything else I need during my daily journey to worry about a watch as well.
Quiet Wealth: An Asset Protection Strategy
Time is Money: An Asset Protection Strategy
Diversified Investments
I’ve never worn a watch. I flatter myself that’s because of a high school Latin teacher/lacrosse coach named Thurber who, when asked why he didn’t, responded that “a man who wears a watch worries too much about time.”
That quote has always stuck with me. Its philosophical brevity is almost Hellenic.
My real reason for going watch-less is simpler, however. I have a hard enough time keeping track of my keys, wallet, eyeglasses and anything else I need during my daily journey to worry about a watch as well.
In fact, I’m pretty sure the only watch I ever owned was one that had belonged to my grandfather, that my Dad gave me when I was about 5 — what was he thinking? — that I promptly dropped and broke.
My relationship with timepieces, in other words, is Thurberesque in another way entirely.
But there are people for whom watches are an asset protection strategy
Last week in Lausanne, Switzerland, auction house Phillips sold 164 watches by makers such as Rolex, Patek Phillippe, Longines and Piaget. All were from the 20th century, the oldest from the ‘20s, but many made as recently as the 1990s.
The sale prices impressed me for two reasons. First, who knew that someone would deem a simple wristwatch to be worth almost $5 million? Apparently someone does. A 1927 Patek Philippe Stainless Steel Model 130 fetched that much. There were several $1 million-plus items as well, and dozens made it into six figures.
The second thing that struck me about the auction results was that in almost every case, the sale price significantly exceeded the pre-auction estimate, sometimes significantly.
The lucky seller of the 1927 Patek Philippe doubled his or her hoped-for gains, whilst the prior owner of a 1969 Piaget Montre-Manchette 9850 in 18-carat yellow gold got five times what Phillips thought he or she would.
I’m no expert on watches, but clearly, there’s more to these things than telling the time.
The values reflected in the Phillips auction derive from a combination of outstanding craftsmanship, rarity, and an artistic je ne sais quoi that watch aficionados must surely understand.
The 1931 Longines Lindbergh Hour Angle in silver, to the right, is clearly a gorgeous example of human creativity.
Quiet Wealth: An Asset Protection Strategy
My colleagues and I often refer to items like these watches as “quiet wealth” — an asset protection strategy quite unlike conventional stocks, bonds, metals and other financial instruments.
Quiet wealth is largely synonymous with collectibles, such as stamps, coins, fine wines, historical artifacts and similar rarities. But they can also include such little-known items as comic books (a Jeff Opdyke favorite) and vintage guitars (my personal weakness).
What they all have in common is that (a) significant numbers of people out there value them intrinsically, i.e. for what they are, where they came from, who owned them previously, and so on, and (b) in most cases, they aren’t making any more of them.
A 2015 Rolex may be worth a lot more than its sale price to a collector someday, but that will be largely because there will be so few of them around.
Quiet wealth collectibles tend not to be correlated with traditional financial assets. That means their prices move independently of the financial markets.
For example, indices of rare collectible stamps have never lost value — even when the global economy tanked in 2008. The growth in the market value of many forms of quiet wealth may speed up or slow down, but it almost never reverses.
Some Caveats
Quiet wealth like collectible watches are an ideal way to store and grow wealth. They’re also an effective asset protection strategy. But as with everything, you have to be aware of the taxman’s interest. Here are some important things to know in this regard:
With the exception of some bullion coins, collectibles like watches cannot form part of any tax-deferred retirement planning vehicles, such as an Individual Retirement Account (IRA) or private placement annuity.
If you bequeath any quiet wealth assets to your heirs, the IRS will levy inheritance tax on the items’ fair market value at the time of inheritance, even if they are not sold.
If you give quiet wealth assets to someone as a gift, you will pay gift tax on the difference between your original purchase price (less any costs associated with acquiring and maintaining the asset, such as auction fees and storage) and their fair market value at the time of your gift.
The annual gift tax exclusion of $14,000 applies, however, so any assets under that value gifted are tax-free.
Appraisal of quiet wealth assets is critical, both for insurance and when calculating capital gains for tax purposes. The IRS actually has an “art advisory panel,” whose determinations are binding on the IRS but not on the asset’s owner — so if they are wrong about what an asset will fetch on the market, you will save tax on the difference.
The Icing on Top
Despite these tax-related cautions, one of the most attractive things about quiet wealth like the Lausanne watches is that they aren’t reportable to the IRS if they’re stored in a non-bank institution, which makes collectibles such an effective asset protection strategy.
For example, you could take your newly-acquired 1948 Patek Philippe 518 in rare 18-carat pink gold down to Vienna, put it in a private storage facility like Das Safe, and nobody need know about it.
People used to buy fine Swiss watches because of their security and reliability. It seems they still do.
Of course, there are many more forms of quiet wealth, which is why The Sovereign Society will soon launch a new service based on growing and protecting your wealth through collectibles. Stay tuned for more details.
Kind regards, Ted Baumann Offshore and Asset Protection Editor
5 Important Lessons From Squirrels For A Better Life
.·5 Important Lessons From Squirrels For A Better Life
Raymond Marlborough Sep 15, 2021
Love them or loathe them, these furry acrobats have lessons to teach.
Squirrels divide opinion, you either love their acrobatics and furry antics or are tearing your hair out as they evade your latest defenses to devour all the seed that you have left out for the birds.
While I was living in England our house backed onto a wood which had a lively squirrel population in addition to birds of all types, foxes and even deer on occasion. My wife and I got to observe squirrel behavior up close and were also trying and failing mostly in stopping them getting to the seeds that we left out for the birds.
·5 Important Lessons From Squirrels For A Better Life
Raymond Marlborough Sep 15, 2021
Love them or loathe them, these furry acrobats have lessons to teach.
Squirrels divide opinion, you either love their acrobatics and furry antics or are tearing your hair out as they evade your latest defenses to devour all the seed that you have left out for the birds.
While I was living in England our house backed onto a wood which had a lively squirrel population in addition to birds of all types, foxes and even deer on occasion. My wife and I got to observe squirrel behavior up close and were also trying and failing mostly in stopping them getting to the seeds that we left out for the birds.
We learnt a lot from the squirrels that could be lessons for our, in theory anyway, more evolved species. Here are our top 5 lessons:
Always Be Curious And On The Lookout For Opportunity
Squirrels in our garden were always exploring, looking under every leaf and rustling through the plants in the garden on the lookout for opportunity, they would sit on a tree branch opposite our window and look in at us, curious about what we were doing.
Often in this exploring they would find something, a fallen nut or piece of fruit that we had thrown from the window, and when they did find it they would grab it wholeheartedly and rush to a safe spot, devouring everything they could and discarding what was not for them.
How often do we look at an opportunity from the outside and analyse it and second guess before we embrace it? We spend so much time looking at it that it has often passed by before we truly commit to it. We should act more like squirrels (of course taking safety into account) and dive into an opportunity, but also not be afraid to discard it if it is not what we needed.
Don’t Stop At The First Sign Of Difficulty, Persevere
Squirrels really want nuts and seeds and are very motivated to get them and there is a whole industry designing and building bird feeders that are squirrel proof and people are always trying to find new ways to keep their birdseed away from hungry squirrels and mostly, failing.
From watching the squirrels in my garden, I think that the clear reason for this is in addition to their intelligence, squirrels have a remarkable sense of perseverance. Once they have identified something that they want they will devote themselves to working out a way to get it.
They will try one approach and fail and then sit on a nearby branch for a few minutes with their eyes locked on their prize and then try a different approach and then another and another until they achieve their goal, or they discover that it is truly impossible to reach and even then, they will occasionally revisit the problem to see if anything has changed.
I know that in my life I have seen something that I want to achieve given it a try and failed and then decided that it obviously wasn’t for me. But how many things that are truly worthwhile are attained easily on the first try?
If we have a goal that we truly believe in then we have to keep trying, this is not blind trying just rushing in and doing any old thing, but after failing sit back for a moment, think through why the approach didn’t work and look for an alternative strategy and then after truly exhausting all strategies you can declare the goal unattainable, but just like the squirrel we should come back every so often to see if something has changed to make our goal available.
Practice Your Skills To Keep Them Sharp
To continue reading, please go to the original article here:
https://medium.com/writers-blokke/5-important-lessons-from-squirrels-for-a-better-life-a0596671bbf9
Brain Meets Money
.Brain Meets Money
Richard Quinn February 20, 2020
HOW OFTEN DO you think about money? Hey, you just did. Seriously, we think about money every day and sometimes every hour. Some studies say we ponder financial matters even more often than the old standby: sex.
We’ve been thinking about the stuff for a long time. Money goes back about 3,000 years. Paper currency can be traced to China in 700 BC. They didn’t fool around: Their currency stated that all counterfeiters would be decapitated. I’m guessing counterfeiting was rare.
Today, it costs two cents to manufacture a penny and almost eight cents to make a nickel. Result? Each year, we taxpayers lose about $85.4 million on the production of pennies and $33.5 million on nickels.
Brain Meets Money
Richard Quinn February 20, 2020
HOW OFTEN DO you think about money? Hey, you just did. Seriously, we think about money every day and sometimes every hour. Some studies say we ponder financial matters even more often than the old standby: sex.
We’ve been thinking about the stuff for a long time. Money goes back about 3,000 years. Paper currency can be traced to China in 700 BC. They didn’t fool around: Their currency stated that all counterfeiters would be decapitated. I’m guessing counterfeiting was rare.
Today, it costs two cents to manufacture a penny and almost eight cents to make a nickel. Result? Each year, we taxpayers lose about $85.4 million on the production of pennies and $33.5 million on nickels.
Gee, at that rate, those of us on Social Security could receive a $2-a-year raise if they made cheaper money. Who needs pennies anyway? Money is no more than a piece of metal or paper—basically worthless, except you can get stuff for it because the people who sell you stuff can get other stuff with the money you give them.
Does money make us happy? Benjamin Franklin didn’t think so. “Money never made a man happy yet, nor will it. The more a man has, the more he wants. Instead of filling a vacuum, it makes one.”
The evidence suggests Ben was right, but try telling that to addicted lottery players. I recall a TV show depicting the impact of winning the lottery on people. Instead of making the winners happy, it often messes up their lives, mostly because they’re ill-prepared to handle the money and because they thought spending would make them happy.
One winner stands out in my memory. He bought several pieces of used heavy construction equipment just to have. He didn’t know the tax withholding on his winnings wouldn’t cover all of the tax he owed. He eventually lost all of his prize possessions and a great deal more to the IRS.
Another family lived in a trailer and, instead of moving, expanded it, bought each child their own ATV and gave each an allowance of $1,000 a month. The kids were ostracized at school and had to leave.
“The conviction of the rich that the poor are happier is no more foolish than the conviction of the poor that the rich are,” offered Mark Twain. Indeed, if you Google the subject of happiness and money, you will find assessments from every point of view. But none concludes that money buys permanent happiness, only fleeting pleasure perhaps.
On the other hand, money can relieve stress—or create it. If you don’t have enough to pay the bills, more money will help. But if you have plenty of money, the fear of losing some may be stressful.
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This Is How Much Money Americans Think They Need To Be Considered Wealthy
.This Is How Much Money Americans Think They Need To Be Considered Wealthy
Alicia Adamczyk Wed, May 18, 2022
an you put a dollar amount on what it means to be wealthy in the U.S.? An annual survey asks Americans to do just that, and this year, $2.2 million is the magic number.
That's according to the annual Modern Wealth Survey from Charles Schwab, which also finds people believe that an average net worth of $774,000 is what it takes to be financially comfortable.
This Is How Much Money Americans Think They Need To Be Considered Wealthy
Alicia Adamczyk Wed, May 18, 2022
an you put a dollar amount on what it means to be wealthy in the U.S.? An annual survey asks Americans to do just that, and this year, $2.2 million is the magic number.
That's according to the annual Modern Wealth Survey from Charles Schwab, which also finds people believe that an average net worth of $774,000 is what it takes to be financially comfortable.
The report, which surveyed 1,000 Americans ages 21 to 75 in February 2022, asked respondents a range of questions about their personal finances, including the factors influencing their savings and investment decisions.
The average net worth needed to be considered wealthy and to be financially comfortable both rose from last year's survey. In 2021, Americans said they needed $624,000 in net assets to live comfortably, while it would take $1.9 million to be rich. That said, the averages are still lower than they were before the COVID-19 pandemic, likely because many people are focusing less on hitting a specific number and more on their overall goals, financial and otherwise, says Rob Williams, managing director of financial planning, retirement income, and wealth management at Charles Schwab.
"People are concerned about other things besides the balance in their portfolio and in their investment account," says Williams, including their physical health and overall stability.
The average net worth of U.S. households actually isn't so far off from Schwab's survey: It stood at $748,800 in 2019, according to the most recent Survey of Consumer Finances by the Federal Reserve. But that's skewed by the richest households. The median net worth for U.S. households is $121,700, per the Fed. And as other reports have found, many U.S. households have very little or no savings at all.
Build your savings momentum
To continue reading, please go to the original article here:
https://finance.yahoo.com/news/survey-seeks-identify-magic-number-040100617.html
Decades-Old Investment Wisdom From Albert Einstein
.Decades-Old Investment Wisdom From Albert Einstein
Notes From The Field By Simon Black
March 3, 2020 Bahia Beach, Puerto Rico
Albert Einstein is rumored to have said that “Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it.”
These days interest rates are near zero. The average savings account currently pays .09% interest per year, according to the FDIC. So over the course of a decade, saving $100 with compound interest would give you a grand total of $109.37.
But at the same time, the opposite force is working against us. Inflation currently stands around 2.5%. And that compounds too. What $100 can buy now will cost $102.50 next year. After ten years, assuming inflation stays the same, it will cost $128. So just by saving $100 for ten years, you’ve lost $18.63 of real value.
Decades-Old Investment Wisdom From Albert Einstein
Notes From The Field By Simon Black
March 3, 2020 Bahia Beach, Puerto Rico
Albert Einstein is rumored to have said that “Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it.”
These days interest rates are near zero. The average savings account currently pays .09% interest per year, according to the FDIC. So over the course of a decade, saving $100 with compound interest would give you a grand total of $109.37.
But at the same time, the opposite force is working against us. Inflation currently stands around 2.5%. And that compounds too. What $100 can buy now will cost $102.50 next year. After ten years, assuming inflation stays the same, it will cost $128. So just by saving $100 for ten years, you’ve lost $18.63 of real value.
That’s why these days, you have to invest to make money. Luckily stocks, real estate and pretty much every asset class is close to all time highs right now.
But last week's “coronavirus drop” is a good reminder that it’s not going to last forever.
If you have substantial unrealized capital gains, and you’re looking for an exit strategy, there is one available right now. It allows you to compound your current gains for almost six years before paying capital gains tax.
I’m talking about Opportunity Zones. These were created by Trump’s tax reform law to reward investors who fund projects in distressed areas.
One of the major benefits of investing in an Opportunity Zone is the chance to compound your gains BEFORE you pay taxes on them.
For instance, if you bought $100,000 worth of stocks that are now worth $200,000 you have $100,000 worth of capital gains. At current tax rates, you could owe as much as $23,800.
But by investing those $100,000 of gains in an Opportunity Zone, you can defer paying those taxes until 2026. That means the $23,800 that would have gone to taxes instead grows from the new investment.
Let’s say that the new investment increases in value by 10% each year. When the time comes to pay the capital gains taxes on the original investment, you will have earned an EXTRA $18,363 just from deferring taxes.
In addition, after holding the Opportunity Zone investment for several years, you’ll finally pay tax on your original capital gain, but at a discounted rate. (Technically they call this a ‘step-up in basis’, so instead of being taxed on $100,000 you are taxed on a gain of $90,000.)
This can save you even more money.
But there is yet another major tax benefit of Opportunity Zones.
If you keep your funds in the Opportunity Zone for ten years, you’ll NEVER pay tax on the capital gains from your Opportunity Zone investment.
So to continue our example, say that after ten years, your $100,000 Opportunity Zone investment has compounded into $259,374-- a total capital gain of $159,374. Your total capital gains tax bill will be ZERO.
Remember, ALL capital gains are eliminated on Opportunity Zone investments held for at least 10 years. So if you invest in the next Facebook and turn $100,000 into $100 million you still owe ZERO capital gains taxes on that $99,900,000 gain.
But like most good things, this won’t last forever.
And some of the benefits have already expired.
For instance, you could have had a 15% step-up in basis on your original capital gains (i.e. only paid tax on $85,000 instead of $100,000).
But you had to hold the Opportunity Zone investment for seven years. And with the deadline to pay the original capital gains set at the end of 2026, it is too late to hold the investment for seven years.
But you can still get the discount of 10% by holding for five years, as long as you get into an Opportunity Zone by the end of 2021.
It’s worth looking into. And a good place to start is our new in-depth article: Opportunity Zones: Ultimate Guide and My Personal Experience.
To your freedom & prosperity, Simon Black, Founder, SovereignMan.com
Where Do Millionaires Keep Their Money?
.Where Do Millionaires Keep Their Money?
Rosemary Carlson Sat, May 14, 2022
Where do millionaires keep their money? High net worth individuals put money into different classifications of financial and real assets, including stocks, mutual funds, retirement accounts and real estate. Most of the 20.27 million millionaires in the U.S. did not inherit their money; only about 20% inherited their money. More than two-thirds of all millionaires are entrepreneurs. Here are some of the places the genuinely rich keep their money.
Whether you're a millionaire or not, a financial advisor can help you take significant steps toward achieving your goals.
Where Do Millionaires Keep Their Money?
Rosemary Carlson Sat, May 14, 2022
Where do millionaires keep their money? High net worth individuals put money into different classifications of financial and real assets, including stocks, mutual funds, retirement accounts and real estate. Most of the 20.27 million millionaires in the U.S. did not inherit their money; only about 20% inherited their money. More than two-thirds of all millionaires are entrepreneurs. Here are some of the places the genuinely rich keep their money.
Whether you're a millionaire or not, a financial advisor can help you take significant steps toward achieving your goals.
Cash and Cash Equivalents
Many, and perhaps most, millionaires are frugal. If they spent their money, they would not have any to increase wealth. They spend on necessities and some luxuries, but they save and expect their entire families to do the same. Many millionaires keep a lot of their money in cash or highly liquid cash equivalents. They establish an emergency account before ever starting to invest. Millionaires bank differently than the rest of us. Any bank accounts they have are handled by a private banker who probably also manages their wealth. There is no standing in line at the teller's window.
Studies indicate that millionaires may have, on average, as much as 25% of their money in cash. This is to offset any market downturns and to have cash available as insurance for their portfolio. Cash equivalents, financial instruments that are almost as liquid as cash. are popular investments for millionaires. Examples of cash equivalents are money market mutual funds, certificates of deposit, commercial paper and Treasury bills.
Some millionaires keep their cash in Treasury bills that they keep rolling over and reinvesting. They liquidate them when they need the cash. Treasury bills are short-term notes issued by the U.S government to raise money. Treasury bills are usually purchased at a discount. When you sell them, the difference between the face value and selling price is your profit. Warren Buffett, CEO of Berkshire Hathaway, has a portfolio full of money market accounts and Treasury bills.
Millionaires also have zero-balance accounts with private banks. They leave their money in cash and cash equivalents and they write checks on their zero-balance account. At the end of the business day, the private bank, as custodian of their various accounts, sells off enough liquid assets to settle up for that day. Millionaires don't worry about FDIC insurance. Their money is held in their name and not the name of the custodial private bank.
Other millionaires have safe deposit boxes full of cash denominated in many different currencies. These safe deposit boxes are located all over the world and each currency is held in a country where transactions are conducted using that currency.
Real Estate
To continue reading, please go to the original article here:
https://finance.yahoo.com/news/where-millionaires-keep-money-070638027.html