18 Rules To Creating Long-Term Wealth

Billionaire Michael Lee-Chin’s 18 Rules To Creating Long-Term Wealth

Special to Financial Post | Daina Lawrence  Thu, October 10, 2024

Billionaire Michael Lee-Chin has 18 principles he has stuck to in order to build his wealth, he says.

The Jamaican-Canadian chairman and chief executive officer of Burlington, Ont.-based private investment firm Portland Holdings Inc., says it is possible for other investors to follow these principles and build wealth, especially younger ones who have time and compounding on their side.

With Warren Buffet as his role model since the 1970s, Lee-Chin has used his prescriptive framework to predict, and invest in, future trends, such as wealth management for a growing baby boomer cohort.

Lee-Chin came to Canada in 1970 and studied engineering on a scholarship, then graduate business studies, eventually becoming a financial advisor. In the 1980s, he borrowed money to invest first in Mackenzie Financial Corp., then in what became AIC Ltd. and set up financial services entity Berkshire group of companies, with billions of dollars in assets under management, selling to Manulife Financial in 2009.

Forbes pegged Lee-Chin’s wealth at $1.4 billion in 2023.

What follows is a condensed and edited interview with Lee-Chin, where he shares his investment rules, including the 3 Ps and the 3 Ts, and his predictions on sectors that address an aging baby boomer cohort, as well as world’s energy and carbon challenges.

FP: Is The Investment Environment Of Today Different To When You First Started Investing?

Michael Lee-Chin: It has always been complex.

When I first started as an advisor, I was looking around for a methodology that made sense to me, that I could practise consistently, and that really, if I adhered to the methodology, to the frameworks, the only outcome would be wealth.

A framework that has guided me throughout my life is if you want to be successful at any endeavour, this three-step formula will always work: 1. Identify a role model and choose the most eminent person in that field; 2. Get the recipe; 3. Don’t change the recipe.

Back in the late 70s to early 80s I identified Warren Buffett as my role model. Starting in 1982 I would attend his annual general meetings and I got the recipe.

It doesn’t matter what the investing environment is doing, all of those external factors in the long run mean nothing.

FP: What Advice Would You Have For Young Investors Today?

MLC: When you invest, you have to have some framework that guides you so that you have consistent behaviour. It’s not just arbitrary.

I’m going to tell you the eight characteristics of great investors — those that created their wealth (the first three are what we call the three Ps):

Predict: These people made a prediction about the future;

Plan: They planned for their prediction;

Persevere: They persevered with their plan;

These people also own a few high quality businesses;

They understand their businesses;

They ensure these businesses are in long-term growth industries;

They use other people’s money prudently;

They also hold on to these businesses for the long run.

Whether you’re a beginner, you manage a family office, you’re a professional investor — those eight characteristics are the essence of investing … and of creating wealth. Anything else is speculation.

This brings me to the ten qualities of high quality businesses. These are laws if you want to create wealth. This is our religion. This is our value system.

TO READ MORE:  https://www.yahoo.com/finance/news/billionaire-michael-lee-chin-18-110053318.html

America Is Now On “The Second Half Of The Chess Board”

America Is Now On “The Second Half Of The Chess Board”

Notes From the Field By James Hickman / Simon Black October 10, 2024 

Over fifteen centuries ago, according to an ancient Sanskrit legend, a mythical Hindu priest named Sissa was ordered to invent a new board game to entertain the king of Taligana.

Sissa labored over the task for quite some time, but he eventually brought the King a military strategy game with a 64-square board and beautifully hand-carved pieces. Today we call this game chess. And according to the legend, the King was absolutely enamored with it.

So enamored, in fact, the King offered Sissa any reward he desired. So, the priest asked for a single grain of wheat to be placed on the first square of the chess board. Then two grains on the second square. Four grains on the third. Eight grains on the fourth. And so on.

The King of Taligana thought the request to be humble and cheap. After all, a little bit of wheat was nothing compared to the endless entertainment of this new game. So, he ordered his men to bring in the grain.

But as they continued counting, the numbers began to grow quickly.

One-quarter of the way through the board (sixteen squares), Sissa was owed around 131,000 grains-- roughly four kilograms of wheat. No big deal.

But with every square the amount kept doubling. Halfway through the board Sissa is owed over 8 billion grains-- about a quarter of a million TONS of wheat. And it keeps doubling from there.

By the final square, the amount of grain owed is far more than all the wheat that the world can possibly produce.

This is known in mathematics as exponential growth, i.e. when something grows at a faster and faster rate. Sort of like my kids. Or more ominously, the US national debt.

According to data just released by the federal government, interest on the national debt for Fiscal Year 2024 (which just ended last Monday, September 30) was roughly $1 TRILLION.

That’s just the interest bill.

And while that number itself is simply astonishing, it’s even more important to put it in context. $1 trillion is significantly more than the government spends on virtually EVERY other line item, including the military and Medicare.

In fact, Social Security is the ONLY federal program whose budget exceeds interest on the debt. For now. But within the next 5 years, interest on the debt will surpass even Social Security.

Just going back to FY 2020— which started pre-pandemic on October 1, 2019— the interest bill that year was “only” $345 billion. And in FY21, it only rose to $352 billion. That was just a $7 billion, or 2%, increase. No big deal.

But in FY 2022, it took a more significant jump to $475 billion. Then $660 billion. And now a TRILLION dollars.

So not only is the interest bill increasing, but the rate at which it is increasing… is increasing.

Just like grains of wheat on a chessboard, this is an exponential problem. At first it looks manageable. Even paltry. But around halfway through the chessboard, the problem starts to spiral out of control very quickly.

Technologist and author Ray Kurzweil actually refers to this phenomenon as “the second half of the chess board”, i.e. the part of the exponential growth model where the problem becomes too big to solve.

How did the most powerful nation in the history of the world reach this point?

For starters, a complete lack of discipline when it comes to federal spending. For decades now, the government has spent money as if there were no limit and would never be any consequences to increasing the debt.

This was most noticeable during the pandemic when they (and the media) engineered widespread fear and hysteria, shut down the economy, and then spent trillions of dollars to keep everyone afloat.

The national debt skyrocketed as a result. But at the time, interest rates were practically zero. So, the government’s borrowing costs were pretty negligible. That’s why the annual interest bill barely moved between FY2020 and FY2021.

But as you probably recall, rates soared in 2022. And so did the government’s interest bill.

Each year, in fact, much of the existing national debt matures; money that the Treasury Department borrowed five or ten years ago becomes due and must be paid back.

Naturally, the Treasury Department doesn’t have any money to pay back its lenders. So instead, they issue new debt to repay the old debt.

The problem, of course, is interest rates. The money they borrowed years ago was at 0% or 1%. Today it’s 4%.

Just this past Fiscal Year (2024) the Treasury Department refinanced roughly $5 trillion in debt at significantly higher interest rates… in ADDITION to the $2 trillion in NEW debt that they borrowed.

This means that NEXT YEAR’s interest bill will likely be even HIGHER.

You can see how this problem can quickly become a crisis. Again, five years ago the annual interest expense was $345 billion. Five years from now it could easily be $2 trillion.

Sure, the government’s overall tax revenue is also increasing. A bit. But the interest bill is growing much faster-- at an exponential rate. You can’t have linear growth in your revenue and exponential growth in a major expense and expect to survive.

It appears that the US government has crossed the proverbial Rubicon into the second half of the chessboard. And their options are extremely limited.

On one hand, the government could slash spending, reform entitlement programs (like Social Security, welfare, etc.), and engage in a massive deregulation effort to boost economic productivity. But I’m not holding my breath.

Their other approach will be to increase taxes and print tons of money to keep interest rates artificially low.

This is already starting to happen.

The government released its new inflation data just this morning showing that core inflation is STILL on the rise. Inflation is not beat by a long shot. And yet the Federal Reserve is going full steam ahead in its rate cutting cycle.

Fed officials aren’t stupid. They know that 0% interest rates are the only hope for the US government’s financial survival.

And the chief consequence, of course, will most likely be some pretty nasty inflation.

This is why we keep saying that real assets make so much sense, i.e. crucial materials like metals, energy assets, and productive technology that are (1) useful and critical in the economy, and (2) cannot be created out of thin air by central banks or governments.

Historically, real assets perform extremely well and hold their value during inflationary times.

And the added benefit is that, right now, many of the businesses which produce real assets are at historically cheap levels. We’ll show you a great example tomorrow.

To your freedom,   James Hickman  Co-Founder, Schiff Sovereign LLC

https://www.schiffsovereign.com/trends/america-is-now-on-the-second-half-of-the-chess-board-151643/

5 Essential Books and Resources for Financial Planning Enthusiasts

5 Essential Books and Resources for Financial Planning Enthusiasts

Laura Bogart  Wed, October 9, 2024   GOBankingRates

You might think that you need an expensive education, or at least hours of formal training, to become knowledgeable about financial planning. And who has time for all of that, especially if you’re locked in to your current job, your family life and your other responsibilities?

However, you don’t have to spend hundreds of dollars on financial planning certifications, or even head back to school to learn more. After all, you’re reading this GOBankingRates article, hoping to learn more about personal finance issues that are relevant to you and your loved ones and explore the worlds of smart saving and growing your wealth.

There are myriad resources out there that can help you boost your own financial literacy at very little personal cost, from books you can check out from your local library to podcasts that will inspire you on your next long walk.

GOBankingRates talked to some financial planners and professionals to get their recommendations for the books and resources that are essential to your financial growth.

Earning passive income doesn't need to be difficult. You can start this week.

‘The Total Money Makeover’ by Dave Ramsey

Tyler Meyer, CFP, founder of Retire to Abundance, recommended this popular title by Dave Ramsey as a terrific entry point for people who need a plainspoken and practical approach to money management. This book focuses on paying off debt, building an emergency fund and living on a budget.

“His ‘Baby Steps’ strategy breaks personal finance down into easy-to-follow stages, making it less overwhelming for people who are just starting out,” he said. “While his advice is more rigid than some other approaches, especially when it comes to debt, the fundamentals of disciplined budgeting and saving are timeless.”

 ‘Simple Wealth, Inevitable Wealth’ by Nick Murray

Meyer also suggested that people hoping to rethink their relationship with wealth and money check out this title by Nick Murray. According to Meyer, the book is powerful because it emphasizes the mindset behind wealth building rather than just the financial strategies alone. The author focuses on a message that long-term investing and staying the course are important, as is understanding that accumulating wealth is all about patience and perseverance.

“His insights into human behavior and how it impacts investing make this a must-read for anyone serious about growing their wealth. It’s particularly relevant for those nearing or in retirement, as it helps readers see the bigger picture of how time in the market creates success,” Meyer said.

TO READ MORE:  https://finance.yahoo.com/news/5-essential-books-resources-financial-180234829.html

4 Uncomfortable Truths About Money You Should Know

4 Uncomfortable Truths About Money You Should Know

 According to Rachel Cruze  GOBankingRates  Peter Burns  Thu, October 10, 2024

Getting your finances right isn’t a walk in the park. Sometimes it takes a long look in the mirror and admitting some uncomfortable truths about your money situation before you can make real progress.

Rachel Cruze, personal finance expert and co-host of “The Ramsey Show,” got candid about her financial journey in a recent YouTube video. In it, she shared some hard financial truths she’s learned over the years and broke them down so you can benefit from her knowledge.

Making More Money Doesn’t Guarantee Financial Success

As a finance expert for more than 15 years, Cruze has dealt with people with different levels of income. She’s met successful individuals who pull in $200,000 a year but still live paycheck to paycheck, and some who make $40,000 annually but have an emergency fund and no debt. The lesson she’s learned through these interactions is that having more money doesn’t guarantee that you’ll solve your financial issues.

A recent survey by Capital One found that 77% of Americans feel anxious about their finances, with 58% saying it controls their life. Cruze explained that the way to get your finances under control is more about your behaviors than the amount you make.

Practicing smart money habits, like developing a paycheck routine and budgeting, will benefit your long-term financial health more than a raise.

Investing Should Be a Goal You’re Working Toward

Another recent survey found that 41% of millennials aren’t investing, with nearly half of those individuals saying they don’t earn enough money to do so. Cruze believes this is a big mistake, because making a habit out of investing even small amounts can pay off in big ways.

TO READ MORE: https://finance.yahoo.com/news/4-uncomfortable-truths-money-know-120021923.html

4 Tips To Handle Your Finances in an Uncertain Economy

4 Tips To Handle Your Finances in an Uncertain Economy, According to Money Expert Michela Allocca

Chris Ozarowski  Wed, October 9, 2024  GOBankingRates

Michela Allocca is a personal finance creator who shares tips for managing money through her social media pages.  In a recent post on her Instagram @breakyourbudget, she offered viewers four tips to help them handle their finances and prepare for an uncertain economy or even a recession.

Why Recession Prep?

So why prepare for a recession? According to Allocca, in recent years there has been a noticeable rise in financial anxiety among people across the U.S. This isn’t necessarily confined to any particular age group, income bracket or industry — concerns are universal. Record inflation has impacted essential expenses like rent, groceries, gas, insurance and home prices.

Recently, an economic indicator known as the Sahm Rule was triggered, signaling that the country may be on the verge of a recession. The Sahm Rule is used to detect the start of a recession quickly. Developed by economist Claudia Sahm, it focuses on changes in the unemployment rate.

The rule states that if the three-month average of the national unemployment rate rises by 0.5 percentage points or more above its lowest point in the previous 12 months, it signals the beginning of a recession. A recession could mean more layoffs and a tougher and more competitive job market, so preparing as much as you can can be a good idea.

Michela Allocca’s 4 Tips for Recession Prep

1. Take a Financial Snapshot

Allocca suggests starting by getting a firm understanding of your current financial situation. “Review your accounts and get clear on how much you have and where,” she said.

Start by listing all your bank accounts, investment accounts, retirement funds and other assets. Then list all of your debts, such as credit cards, student loans or mortgages. This gives you your net worth — the difference between your assets and liabilities.

Next, assess your cash flow — the amount of money coming in and going out of your accounts each month. List all sources of income, including your salary and any freelance work or side gigs. Then, compare that to your expenses by reviewing bank statements and receipts. You should categorize your spending into essentials like housing, utilities and groceries, and non-essentials like entertainment and dining out.

By auditing your outflow, you can identify areas where you might be overspending. If you find places where you are spending more than you need to, you can cut back and put that money aside for a rainy day.

2. Audit Your Cash Position

Allocca explains that it’s important to decide where you keep your money, especially when the economic situation is more uncertain. She describes this as auditing your cash position. Allocca lists two options for where to keep cash.

One option is a high-yield savings account. Allocca says that this is “a great place for your emergency fund or any other short-term cash savings.” An emergency fund should be one of your top priorities — you’ll need it if you lose your job or have unexpected expenses.

TO READ MORE:  https://www.yahoo.com/finance/news/4-tips-handle-finances-uncertain-140210755.html

Warren Buffett: 14 Simplest Pieces of Money Advice That Can Work for Anyone

Warren Buffett: 14 Simplest Pieces of Money Advice That Can Work for Anyone

Ellie Diamond  Mon, October 7, 2024  GOBankingRates

Warren Buffett has a gift. He’s the 10th wealthiest person in the world and the largest shareholder of the famous Berkshire Hathaway, but he shares some of the most relatable money advice.

Buffett’s 60-plus-year career has left the personal finance world with some of its favorite quotes and most evergreen advice.

Start Small and Be Patient

“Someone’s sitting in the shade today because someone planted a tree a long time ago.”

Buffett didn’t start with millions to invest. He describes his early days as “working with a tiny, tiny amount of money,” when he would choose a promising small company and invest in its growth.

He believes this freedom to choose small companies makes small-scale investing powerful. More important: Anyone can follow this advice. Choose an affordable company you believe in, then wait for it to work its magic.

As Buffett said at the 2001 Berkshire Hathaway annual meeting, “I think if you’re working with a small amount of money, you can make very significant sums.”

Invest in Index Funds

“In my view, for most people, the best thing to do is own the S&P 500 index fund.”

If you’re looking for the simplest way to invest, Buffett recommends the index fund.

Index funds are investments that track the return of a market index, representing a particular section of the stock market. The Standard & Poor’s 500 Index is one such index.

The S&P 500 includes 500 companies in various top-performing industries. Its broad representation means you’re not tying your funds to a tiny slice of the economy. Buffett likes it for everyday investors because it’s a simple yet effective way to spread your money around.

Buy Bonds

“Put 10% of the cash in short-term government bonds.”

If you’re looking for investment strategies, why not do what Buffett does with his money? As Buffett told shareholders in 2013, he has instructed the administrator of his wife’s trust to split the funds 90/10: 90% in the S&P 500 and 10% in government bonds.

The U.S. government offers two types of bonds: treasury and savings. Treasury bonds cost a minimum of $100, while savings bonds cost $25 and up.

Understand Your Investments

“Risk comes from not knowing what you are doing.”

Knowledge is power when it comes to your money. You don’t need to know everything about the market or the industry you’re investing in. Most people would never be able to invest if that was a requirement.

You do need to understand the basics of how an investment works. You’ve already taken the first step by learning about index funds and bonds. If you have another investment interest, start researching it. You can always ask a financial advisor for help if you need it.

Don’t Follow the Crowd

“The most important quality for an investor is temperament, not intellect. You need a temperament that neither derives great pleasure from being with the crowd or against the crowd.”

Buffett has never made investment decisions by following trends. He made billions by finding companies he believed in and holding his shares in them for as long as it made sense.

If you understand the products in your portfolio and why they’re smart, you don’t need to follow investment trends.

Keep Cash Available

“When bills come due, only cash is legal tender. Don’t leave home without it.”

Buffett believes in his investments but knows the market can be volatile. In 2008, when its competitors were faltering, Berkshire thrived because it had plenty of access to cash.

That money was in cash equivalents, a short-term investment that you can cash in relatively quickly. Think of certificates of deposit and money market accounts, which you can open at most financial institutions.

One word of caution: CDs tend to charge fees if you withdraw early. There are always high-yield and traditional savings accounts if you need quick access.

TO READ MORE:  https://www.yahoo.com/finance/news/warren-buffett-14-simplest-pieces-230010894.html

Warren Buffett's Son Cashed In His $90,000 Inheritance at 19

Warren Buffett's Son Who Famously Cashed In His $90,000 Inheritance at 19 Spends Millions in 'Buffett Bucks' Transforming A Small New York Town

Jeannine Mancini  Updated Sun, October 6, 2024   Benzinga

Warren Buffett has always been clear about how he wants to handle his wealth with his kids, famously saying he'd give them "enough so they can do anything but not enough so they can do nothing."

His son, Peter Buffett, really took that to heart. At 19, Peter made a bold move by cashing in his $90,000 inheritance – Berkshire Hathaway stock – and using it to chase his dream of becoming a musician. While that stock would be worth hundreds of millions today, Peter has no regrets. For him, it wasn't about the money but the time it bought him to explore his passion.

In 2010, Peter and his wife Jennifer moved to Kingston, a small city in New York's Hudson Valley. From there, they began using their foundation, NoVo, to invest in the community. We're not talking pocket change either – NoVo's contributions rival Kingston's annual budget. One of the more interesting investments? The introduction of a local currency, known by some as "Buffett Bucks."

Yes, you read that right – Buffett Bucks. As part of Peter's vision for sustainable, community-focused development, the NoVo Foundation has supported the creation of a local community currency. The idea is to keep money circulating within the city, supporting local businesses and initiatives. It's an unconventional move, but it's all part of Peter's broader mission to strengthen the area's economy in a way that builds resilience and keeps things local.

Of course, NoVo's influence stretches beyond currency. The foundation has invested millions in projects like the Hudson Valley Farm Hub, which they purchased for $13 million in 2014. The farm has become a cornerstone of local agriculture, growing grains, vegetables and dry beans on 1,500 acres. It's not just about food production; the farm is also a training ground for future farmers, focusing on organic and sustainable practices.

But it's not all smooth sailing. Some Kingston locals have reportedly raised concerns about the foundation's decision-making process, particularly the lack of public input. Transparency becomes a big deal when so much of a town's economy is tied to one private organization. According to Tablet Mag, there are whispers of an unspoken rule: don't talk bad about NoVo if you want to keep getting funding.

Still, Peter isn't one to shy away from criticism. In response to some concerns, he's emphasized that NoVo isn't trying to claim all the answers. They're in it for the long haul, committed to finding solutions through dialogue and collaboration. It's all part of Peter's belief in using his resources not to control but to empower the community.

TO READ MORE:  https://www.yahoo.com/finance/news/warren-buffetts-son-famously-cashed-153019216.html

5 Financial Habits Keeping You Broke

5 Financial Habits Keeping You Broke, According to Money Expert Michela Allocca

Caitlyn Moorhead  Thu, October 3, 2024   GOBankingRates

The strategies and habits that lead to your personal financial success aren’t just comprised of big investments and down payments, but also of knowing which things to avoid. According to money expert and financial analyst Michela Allocca, a rising voice in personal finance, certain financial habits are major contributors to keeping people broke.

She said, “Personal finance success is 10% strategy and 90% behavior. There are so many things you can do that are external of your income to help ensure you stay on the right path.”

So many money moves are positive, such as starting an emergency fund, diversifying your portfolio or maximizing your 401(k). However, keep reading to discover the five habits Allocca says you should break unless you want to stay broke.

Earning passive income doesn't need to be difficult. You can start this week.

Not Keeping a Grocery List

If you are living paycheck to paycheck and spending every dollar you earn, there’s no room for impulse buying at checkout if you want to start saving.

Grocery shopping is inevitable, but Michela Allocca said it doesn’t have to derail your monthly budget. Keeping a grocery list is a great way to ensure you stick to your budget while shopping.

“Having a grocery list and shopping my pantry makes it so much easier to save money on food and not waste anything,” added Allocca. “It’s a simple habit that makes a big difference!”

Not Tracking Your Expenses

One of the most common mistakes people make is failing to create and stick to a budget. One of the biggest culprits in this is not tracking your expenses.

“You need to be doing this to know where your money is going,” she said.

Allocca stressed that budgeting is not about restriction but about clarity and control over your money. Without a clear plan, it’s easy to overspend and lose track of where your money is going.

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TO READ MORE:  https://www.yahoo.com/finance/news/5-financial-habits-keeping-broke-180032867.html

Do This One Thing If You Can’t Afford a Financial Emergency Right Now

Do This One Thing If You Can’t Afford a Financial Emergency Right Now, According to Rachel Cruze

Nick Perry  Mon, September 30, 2024  GOBankingRates

A third of Americans say they cannot afford a $400 emergency expense in cash, according to research from Empower. That’s an astounding number that reflects the financial challenges most Americans are facing today. Unfortunately, life can be unforgiving, and just because you can’t afford a financial emergency doesn’t mean you might not experience one.

That’s why financial expert Rachel Cruze insists on the importance of an emergency fund. An expert at financial firm Ramsey Solutions, Cruze tells her more than 600,000 followers on Instagram that now is the time to start building an emergency fund.

Her No. 1 solution to prepare for a financial emergency is simple.

How To Build an Emergency Fund

Cruze’s biggest tip for building an emergency fund is to start selling things you don’t use. As she puts it, “Look around your house and think, ‘What crap do I have that I don’t use and that I don’t need?'” Turning those items you don’t want or need into cash will give you a buffer to pay off surprise debts like car repairs, medical bills or even semi-planned expenses like books for school or an increase in your phone bill.

Cruze notes that there are many things you can do to cut back on your spending, like picking up a side hustle or dining out less, but says, “Fast cash is what you need if you’re in that position [of not having an emergency fund].”

Some of the items Cruze recommends selling include:

Exercise equipment

TVs

Clothes

Shoes

With tools like Facebook Marketplace, Craigslist and Poshmark, it’s easy to turn the belongings you no longer want or need into cash.

How Much Should Your Emergency Fund Be?

Cruze notes in the caption of her post that a Ramsey Solutions study found that 34% of Americans have no savings at all. To gain a measure of financial peace, Cruze recommends selling enough items to secure a $1,000 cash emergency fund. That’s the first step to taking better control of your financial health.

4 Reasons To Have an Emergency Fund

TO READ MORE:  https://www.yahoo.com/finance/news/one-thing-t-afford-financial-120019524.html

5 Secrets About Money American Banks Don’t Want You To Know

5 Secrets About Money American Banks Don’t Want You To Know — Plus How To Beat Them At Their Own Game

Maurie Backman  Tue, October 1, 2024  Moneywise

As consumers, we rely on banks to keep our money safe and secure. They’re an essential part of our economy — but they’re also a profit-seeking business.

As much as banks are a mainstay of people’s personal finances, some of their practices aren’t exactly as transparent as they should be — and many Americans have caught on.

In fact, a 2023 study from the Associated Press-NORC Center for Public Affairs Research revealed that only 10% of U.S. adults have a “great deal of confidence” in banks and financial institutions, while 56% say the government is not doing enough to regulate the industry.

There are certain tricks banks employ to make money and protect their own interests — and these tactics aren’t necessarily general knowledge.

Here are a few of the biggest banking secrets you should know about.

1. Sneaky fees

From maintenance fees to overdraft charges, one of the main ways banks make their money is through various fees. Even ones that seem negligible at first glance can add up over time.

For example, personal finance celebrity Dave Ramsey once called maintenance fees “some of the sneakiest,” adding that, “you agree to them when you open an account, and you may not even realize it until they show up on your statement six months later.”

But it may be possible to avoid paying maintenance fees. For instance, some banks may waive the fee if you maintain a certain minimum account balance.

However, fees on big loans, such as a mortgage, are often hiding in the fine print of your contract. Although it may feel tedious, always read the fine print before you open any account.

If you come across any fees, in general, you should feel empowered to contest it. After all, a bank is like any other business — they don’t want to lose you as a customer, especially if there’s a risk that they’ll lose you to a competitor.

2. Credit cards offer more protection than debit cards

Using a debit card over a credit card can be beneficial, especially since many businesses impose a surcharge on customers for credit card purchases. However, credit cards tend to offer more protection than debit cards.

Often, when there's a fraudulent transaction on your credit card account, you can dispute it. Typically, the charge will be removed from your balance while it's being investigated, or you'll receive a credit for that charge so you don't have to pay for it.

But when your debit card is used fraudulently, you have less protections in place. You generally only have a small window of time to report a fraudulent transaction on a debit card — and that window may depend on the rules and regulations your bank has in place.

If your debit card or PIN number is stolen, you may find yourself responsible for up to $500 in unauthorized transactions if you notify your bank after two business days, according to the FDIC.

With a credit card, on the other hand, you could report fraud several weeks later — on average, around 60 days after the fact. In some situations, it can be even longer.

For this reason, it could pay to use a credit card more often than your debit. As an added bonus, credit cards let you rack up points or cash back on your purchases, which debit cards don't.

TO READ MORE:  https://www.yahoo.com/finance/news/5-secrets-money-american-banks-121300122.html

Suze Orman: 1 Reason You Should ‘Absolutely’ Own Bitcoin

Suze Orman: 1 Reason You Should ‘Absolutely’ Own Bitcoin

GoBankingRates  Kellan Jansen  September 23, 2024

Suze Orman is a financial host and author, and in a recent interview with CNBC, she said she believes “everyone should absolutely” own the cryptocurrency bitcoin. Usually, people who support bitcoin as an investment view it as a store of value — but Orman doesn’t.

Here’s the real reason you should own the No. 1 crypto asset by market cap, according to Orman.

Young People Are Fascinated by Bitcoin

Orman’s main idea is that young people are excited by bitcoin, and they’re likely to continue buying it for years. This, she argued, should be positive for the coin’s price over time.

Orman doesn’t buy into the idea that bitcoin will become a store of value like gold or supplant the dollar. But she does view it as a speculative asset that may still have room to run in the future.

However, Orman doesn’t recommend putting all of your money into the crypto market. She said you should invest only what you can afford to lose. That aligns with the general recommendation of allocating no more than 5% of your portfolio to crypto.

Orman is correct in pointing toward younger generations’ interest in cryptocurrency. Millennial and Gen Z investors are now as likely to own crypto as they are to own real estate. One reason for that could be dissatisfaction with the current financial system.

But Orman doesn’t evaluate further than this. She argued that the buy-in from young people is all that really matters. In other words, as long as people continue believing in bitcoin, its price should keep increasing.

Is Orman Right About Bitcoin?

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