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Showing posts from April, 2017

Only invest in stocks.

There I said it.  Up there in the title.  This post is done. This is not advice, but do as I say. I only put my money into stocks.  They have the highest return out of most of the asset classes. If you want a better career or want to start a business, then you may dabble in those fields. But at the end of the day when we're still taking home minimum wage, ya need to turn to your old faithful friend.  The stock market.

Dollar Cost Averaging is for Losers

Dollar cost averaging is where you invest the same amount every month, no matter what. Because we need another financial obligation.  Gonna do great for my stress levels. Forget about it. Just buy everything that you need and want, then invest the rest. Last paycheck I had twenty bucks left over.  So I invested twenty bucks.  If I win the lottery next month and have a million dollars left over, then I'll invest a million.  If my tax check comes back and I have a thousand dollars left over after buying everything that I want, then invest the thousand. Forget plans, forget stress, and forget obligations.  Just do whatever you can.  Compounding will go to fight for you.

20 myths about retirement

These are the top twenty myths about retirement. Not really, because ya know, everyone knows what retirement is. That's when ya quit your crappy job and do whatever you feel like doing. No myths there. More specifically retirement is when you no longer need to sell your time for money. Ya get that way by just getting started.  No matter how small the amount, compound interest will step up to fight for you. I believe it was Albert Einstein who said that compound interest is the eighth wonder of the world. That guy was pretty freaking smart.  If he thinks compound interest is number eight in the world, then ya best be taking advantage of it.

Secrets to Saving Money

There is one secret to saving money that will change your life forever. Buy a washcloth. There it is, that is the secret to success. "Now wait just a minute." you might say.  "How am I supposed to get rich by buying a washcloth?" Well I'll tell you. From now on we will refer to it as the shit rag. The purpose of the shit rag is to replace your spending on toilet paper. Seriously throw all that toilet paper away.  From now on use the shit rag. "But wait just a minute." you might say.  "That thing will be dirty." That's why buckets were invented. If you want water then you better get used to scattering buckets around your yard and waiting for it to rain.  You should only be taking showers in the rain anyways. Now that you have buckets full of water you can use one to wash out your shit rag. The important thing is that you're not spending money on toilet paper. Money saved = money invested. There are more ways

I've been looking over usafacts.org, amazing website!

Wow there is so much great facts at this website. - The median annual wage is 36,200 (summary page 33). - Those who make between 8,000 and 31,000 a year fall in the second 20% of society, or put another way, from 21 to 40%.  They have $42,000 in income, pay $7600 in taxes (summary page 35). -  Those in the second 20% claim $38206 of disposable income, yet consume 50,750 dollars worth (summary page 38).  Only the top 20% have more disposable income then consumption.  (summary page 38). - 29.8% of the people are obese (summary page 39) -The second 20% have $145,000 in assets and 32,000 in debt, meaning that us minimum wage earners have an average net worth of over $112,000!  (summary page 47). Consuming roughly 50,000 worth on a minimum wage paycheck is not even close to my experience. Neither is having over a hundred grand in net worth.  How do you all do it?

Teach a Man to Fish

If you give a man a fish then he will eat for a day, however if you teach a man to fish then he will eat for a lifetime. The only problem is, I really don't want to eat fish anymore. I was taught to get a good paying job, and then the authorities and leaders in my life would look after my interests.  But what really happened? The supermarkets are full of poison. Education never once taught how to manage money, or how to have a healthy diet. Work grants you a forty cent raise. Till death do us part ends with high divorce rates, and leads to a fifty percent loss (or more) of capital. Your fishes are all toxic! Yet there are good things out there. The standard of living is high. The luxuries like water and electricity are nice. You have the right to speak out against the government and not worry about dying. So if all these good fish are out there, then why are all the fish that I'm being given toxic? It is because you cannot trust your authorities.  They are

I got a .40 cent raise and don't know how I feel about it

I work 60 hours a week and on my own initiative I correct millions of dollars in mis-charged inventory. So when I heard that raises were coming I got excited.  Finally I would be given my due for all the hard work that I've done.  My boss surely sees the excellent work that I do and will reward me, right? Forty cents.  That is all the raise was.  Meanwhile everyone else in the factory has gotten so many raises over the past two years that a person can have no experience, no qualifications, and get hired on full time to make more money then I make, even after the raise. So now I"m conflicted. When I found out I was so angry that I couldn't even speak.  I've given two years of my life to becoming a valuable member of the business, and the guy doesn't even value me as much as someone new off the street?  IF I PUT THE COMPANY INTERESTS FIRST, THEN THE COMPANY BETTER RETURN THE FAVOR AND PUT MY INTERESTS FIRST. Yet a part of me is thankful for the forty cent ra

You only need half your goal plus seven years.

The final number it takes to become financial independent can seem daunting. You mean I need $300,000 for early retirement?  I only gross $30,000 a year, how can I ever amass such a high number? However this number is misleading, thanks to the rule of 72. The rule of 72 states that if you take 72 and divide it by the rate of return, then you'll have an approximation of how long it will take to double your money. The stock market returns roughly 10% per year.  Therefore 72/10 = 7.2.   It'll take roughly 7 years to double your money. That makes things seem much more doable, The rat race is only to $150,000.  After that you don't have to contribute another dime, all you need to do is sit on your behind for seven years while your retirement builds itself. It feels good knowing that once I reach $150,000 the maximum amount of time until retirement is 7 years.  I'll keep contributing though, so it should be shorter. Why 300,000?  Because 300,000 times .08% yield

The Doubling Lilly Pad Problem

There is an old mathematical problem that goes something like this: A lily pad sits on a pond and doubles in size every day.  If it completely covers the pond on the 3,650th day, then on what day did the lily pad cover half of the pond? Answer:  The lily pad covered half of the pond on the 3649th day. That is the pain of investing towards early retirement.  Compound growth is parabolic and a ton of it happens at the end.  Hurry up and wait for that moment.

Don't invest in index funds if you want to sleep well at night.

The other day I was told that I should invest money into VTSAX. It was a well intended suggestion, so I decided to look into it. As of today, according to Morningstar, VTSAX is an index fund that owns over 3500 positions in stocks. Holy crap! If I can't even value one company and pay fair value for it, how do they expect me to know and value a basket of over 3500 of them?  This is insanity.  This is stay up all night worrying insanity. Thank you Coca Cola for being so simple. Before you tell me Coca Cola is not so simple, that's exactly my point!  If you can't agree that a company like coke is simple to value then how can anyone value and obtain a fair price for over 3500 of them? Disclaimer:  I don't own VTSAX as of this writing.  I do own KO.

Why intelligence trumps both earning more and spending less.

There are only three things you can do to get to early retirement quicker.  They are: earn more, spend less, and get a higher return on your investments. 1.  Earn more.  Let's get real here, if I knew how to earn more then minimum wage ninja wouldn't exist.  It would be called median wage ninja, or slightly below average wage ninja. 2.  Spend less.  Being cheap does not allow you to retire early.  How can you get more cheap then living on minimum wage?  (I'm looking at you, paid survey websites). 3.  Be smart and get a higher return on your investments.  This is the way that minimum wage earners must take.  Right now there is an opportunity out there to double your money.  For example Bank of America was trading around $12 a share around the Brexit buying opportunity, now after Trump has been made President of the United States the shares have skyrocketed to over $24 a share.  That's twice as much.  Beanies Babies, gold, housing, hot wheels, sports cards, shorting

Why I Take Responsibility for my Investments (an argument in favor of taxable accounts).

My grandfather served this country in the military. Yet he does not get any retirement dollars because the military claims that the records which shows his service were lost when the building holding them caught fire and burned to the ground. He had over twelve years of service, and is only credited with one year. Despite obtaining letters from his previous officers attesting to his service, he is not allowed to reestablish a claim to the years that he endured in the military. After he left the armed forces he became an officer of the law.  When he left his job he was given six thousand dollars in retirement pension.  That is total dollars. He claims that the entire police pension was in Enron, and they lost it all when the company went belly up. This man can barely walk and is over seventy years old.  After two highly successful careers he has little to nothing to show for it. With no disrespect, I don't want to end up like that. When I invest in an individual comp

Parking Lot Wisdom

I'm not an enviro-mental, so I don't go out in the wilds too often. Thus it was exciting to take a stroll through the parking lot during lunch. What strikes me as odd is that everyone's vehicles were in mostly good shape. If people were truly acting out of a desire to hurt others, then all the windows would be shot out, all the doors would be keyed, the tires would be slashed, etc. Thats just not the case. When I worked as a Customer Service Manager at Walmart I used to marvel at the 95% of people.  None of them were acting in their own best interest.  In fact they would frequently act against it. For the life of me I could not understand why, until I came across Charlie Munger's mental models. People do not act in their own best interest.  People do not act for money.  People do not act for entertainment.  People do not act out of a sense of justice.  Instead the brain causes people to take 'short cuts' in their actions.  People are just running s

The six to five job, why you won't know what to do in traditional retirement.

Our parents used to clock in at nine and leave at five.  They had what is called a day job. At my job I clock in at six and leave at five.  Despite all the so called advances in society, things have gotten three hours a day worse for me.  That's eighteen hours a week.   If it takes 10,000 hours to master a skill 1 , that means I master roughly one less skill per decade then my parents did.   Should I take the traditional path to retirement of working from the age of twenty until the age of sixty, then I will have at minimum four less skills by the time I retire. The skills that I will cut out are not the bare bones necessities.  Instead the skills that are cut will all be entertainment and hobby skills.  By the time I reach sixty I will not know how to enjoy myself.   I only foresee this getting worse for future generations.  Will the next generation work a three to five job?  How about a midnight to five job?   This is why early retirement is so important,

Everyone Will Retire

One day the Grim Reaper is coming for you.  He will retire you, and your job.  There is no escaping his career ending aspirations. Your job is to cheat Death. Time is money.  Every dollar saved towards early retirement is additional time spent doing whatever it is that you want to do. Here is a fun way to think about it.  Standard retirement age is 60.   If you save ten days worth of expenses, then you will be able to retire ten days earlier than 60.  If you save ten years worth of expenses, then you will be able to retire at 50, and so on. Just keep pushing forward your retirement date until it catches up with your age.  Then you are financially independent. Just like death, do it quickly.

I've Been Listening to the Podcasts on the Madfientist Website.

One of the perks of moving from a manual labor job out in the warehouse to an administrative assistant job in the office is that I'm able to listen to whatever I want as I perform my job duties. One of the websites that has caught my attention is the Mad Fientist.  There are currently thirty three podcasts on his website, and I've listened to the first twelve.  While the podcasts themselves don't seem to offer much by way of specific and actionable advice, it is nice to have a list of early retirement players.  This podcast series is sort of an introduction as to the who's who of early retirement. The three biggest takeaways so far are: 1.  Hyper focus on one activity to build wealth at a time. 2.  Online sites can sell at extremely low multiples. 3.  Measure invested amounts by percentage. Despite the low multiples of online websites, I'm going to stick with investing in the common stocks of good dividend paying companies, because it is my one activity to