Any tips from those who are financially "well off"?
Registered User
Joined: Apr 2002
Posts: 943
Likes: 0
From: Seaforth, Sydney
remember it's not how much you earn but how much you keep.
you can earn $250k a year, big deal. it ain't much when the taxman takes his grab. i earn less then six figures by a lot but materialistically and financially i'm secure.
it's all about educating yourself on tax breaks, tax efficiency, etc and i'm not referring to tax evasion which is a one way ticket to prison. do it correctly, get educated first.
you can earn $250k a year, big deal. it ain't much when the taxman takes his grab. i earn less then six figures by a lot but materialistically and financially i'm secure.
it's all about educating yourself on tax breaks, tax efficiency, etc and i'm not referring to tax evasion which is a one way ticket to prison. do it correctly, get educated first.
Joined: May 2002
Posts: 19,734
Likes: 247
Like one of the first few posters, I think diversification is the key. Not only that, but if you must go with stocks, go with ones that are a REQUIREMENT for the future. Microsoft is good, energy companies (despite the recent glitches) are also generally quite good, and any company providing a REQUIRED service (not a frivolity) should be a decent investment. I'd be careful about companies that are riding a trend - sure, some work out, but I find they tend to hit problems fairly quickly.
Real estate is good - it rarely depreciates and if you can buy it outright (or pay for 50% of it, for instance), you can recoup losses fairly quickly. Renting it out is a great way to pay for the building without it really costing you much - I know of a co-worker that is only 35 and he has two houses, neither of which he has paid a cent for. He also has a ton of toys... Basically, he's got about $250K in real estate assets and he's not paid a penny for them... Hard to beat that.
GICs are relatively small in terms of yield, but you can get 5% or more from some banks and that adds up over the years, especially if you're putting in significant amounts of money. They're guaranteed (Guaranteed Investment Certificates) so there is no risk involved.
That said, I've ignored all of my own advice and thrown all my eggs in one basket - a company I know of is going public shortly in the oil and gas sector (a new drilling system that is 50% to 10000% faster (depending on depth) than anything out there). That is one sector where technology is ALWAYS (pretty much without exception) accepted quickly since costs are so high in retrieving hydrocarbons - a tiny percentage improvement translates into millions of dollars saved. I work in that industry, so I guess I should know.... Company is estimated to be worth $8B (yes, that's BILLION) in the first ten years and already has people knocking down the doors to secure their place on the service list (or get a chunk of the company).
Take it for what it's worth - just don't be greedy. What I do is set a limit for highs and lows, then get out at those points. If you don't set a reasonable max profit you want to make, you'll almost always wait too late and lose out. Better to get what you want (even if it goes higher, later) than to get less than you hoped (based on how high you see things go, then drop before you can sell).
My $0.02.
Real estate is good - it rarely depreciates and if you can buy it outright (or pay for 50% of it, for instance), you can recoup losses fairly quickly. Renting it out is a great way to pay for the building without it really costing you much - I know of a co-worker that is only 35 and he has two houses, neither of which he has paid a cent for. He also has a ton of toys... Basically, he's got about $250K in real estate assets and he's not paid a penny for them... Hard to beat that.
GICs are relatively small in terms of yield, but you can get 5% or more from some banks and that adds up over the years, especially if you're putting in significant amounts of money. They're guaranteed (Guaranteed Investment Certificates) so there is no risk involved.
That said, I've ignored all of my own advice and thrown all my eggs in one basket - a company I know of is going public shortly in the oil and gas sector (a new drilling system that is 50% to 10000% faster (depending on depth) than anything out there). That is one sector where technology is ALWAYS (pretty much without exception) accepted quickly since costs are so high in retrieving hydrocarbons - a tiny percentage improvement translates into millions of dollars saved. I work in that industry, so I guess I should know.... Company is estimated to be worth $8B (yes, that's BILLION) in the first ten years and already has people knocking down the doors to secure their place on the service list (or get a chunk of the company).
Take it for what it's worth - just don't be greedy. What I do is set a limit for highs and lows, then get out at those points. If you don't set a reasonable max profit you want to make, you'll almost always wait too late and lose out. Better to get what you want (even if it goes higher, later) than to get less than you hoped (based on how high you see things go, then drop before you can sell).
My $0.02.
Joined: May 2001
Posts: 1,118
Likes: 2
From: Bergen County, NJ
I don't have any real good advise on making money.
In terms of keeping it, I think it is a live-it-up now or later proposition. I would strongly suggest that you stay away from the 'keeping up with the neighbor's' mentality. Nothing drains the bank like new cars, new/bigger houses, exotic vacations, the latest toys, etc. I enjoy myself but I have an end goal of retirement at 55.
If your looking to retire at 30~35, you have to have a 'BIG' nut being managed really well. If your looking to throw-off $100K in retirement income. You'll need 1.75~2.50 million invested conservatively (to protect the principal). You'll also need some growth over time as $100k in 30 or 40 years won't get you very far.
Michael
In terms of keeping it, I think it is a live-it-up now or later proposition. I would strongly suggest that you stay away from the 'keeping up with the neighbor's' mentality. Nothing drains the bank like new cars, new/bigger houses, exotic vacations, the latest toys, etc. I enjoy myself but I have an end goal of retirement at 55.
If your looking to retire at 30~35, you have to have a 'BIG' nut being managed really well. If your looking to throw-off $100K in retirement income. You'll need 1.75~2.50 million invested conservatively (to protect the principal). You'll also need some growth over time as $100k in 30 or 40 years won't get you very far.
Michael
Joined: Oct 2000
Posts: 752
Likes: 8
From: South Jersey
First off, if you want to be "rich" by the age of 30-35, diversification is NOT the key. Dividing your money into a bunch of different, SMALL investments controls risk. Controlling risk is good, but it decreases your payout. You have to figure out what risk you can live with and invest from there. Be smart, be patient, and do tons of research. Knowlegde is king.
Real estate is great but renting is probably not the way to start. Renting can bring in a lot of hidden costs that you might not be ready for. If you rent, make sure you can liquidate money quickly. A better way might be to buy a fixer-upper (not a terrible one, say, needs 10K of work) and then resell it. Then once you have some capital, then start to rent homes. There are plenty of people on this board who rent homes, so they might disagree with this. But that's what I have read more then a few times.
Real estate can be a problem also depending on where you live. You can do it in ANY area, but some are more difficult then others. NJ, for example, is extremely tough. Housing and property taxes in NJ are even more ridiculous then normal.
A decent book that is easy to read is "Rich Dad, Poor Dad". I forget the author's name. Good book, and there is a whole series of books you can buy. This book goes through two philosophies of how to make money. It's a good read. You are on the right track though, no debt is key, and keep it that way.
Good luck.
ERIK
Real estate is great but renting is probably not the way to start. Renting can bring in a lot of hidden costs that you might not be ready for. If you rent, make sure you can liquidate money quickly. A better way might be to buy a fixer-upper (not a terrible one, say, needs 10K of work) and then resell it. Then once you have some capital, then start to rent homes. There are plenty of people on this board who rent homes, so they might disagree with this. But that's what I have read more then a few times.
Real estate can be a problem also depending on where you live. You can do it in ANY area, but some are more difficult then others. NJ, for example, is extremely tough. Housing and property taxes in NJ are even more ridiculous then normal.
A decent book that is easy to read is "Rich Dad, Poor Dad". I forget the author's name. Good book, and there is a whole series of books you can buy. This book goes through two philosophies of how to make money. It's a good read. You are on the right track though, no debt is key, and keep it that way.
Good luck.
ERIK
Registered User
Joined: Aug 2001
Posts: 518
Likes: 0
From: L.A.
Originally posted by iLikeBeer
Who said I have debt? I paid for my S in cash, and my $375/ month rent covers utilities, water, and basic cable. After all my other bills (internet/HBO) I pay another $28 (after being split up with three roomates). I already have about 4 months of liquid assets in the bank. I will be getting a *fat* bonus check this month, hence I am trying to find what is best to do with my money, so that I have a nice pillow by the time I'm 30.
Who said I have debt? I paid for my S in cash, and my $375/ month rent covers utilities, water, and basic cable. After all my other bills (internet/HBO) I pay another $28 (after being split up with three roomates). I already have about 4 months of liquid assets in the bank. I will be getting a *fat* bonus check this month, hence I am trying to find what is best to do with my money, so that I have a nice pillow by the time I'm 30.
Sure, in the end you'll be paying a little bit more by financing it over 48 or 60 months, but the money you'll make by investing the cash will most probably outweigh that extra money you'd pay by financing it.
Just a thought.
Joined: Dec 2000
Posts: 4,404
Likes: 2
From: Cape Girardeau
To my mind you have to find out what will make you happy NOW, and not spend a penny more. There is a hidden ratio you need to find, for some people it's simple...spend 90% and save 10% with no investment. For others (most people), it's spend 110% and owe forever. On the opposite end of the spectrum you don't want to save 100% after living expenses either, all work and no play makes Jack a dull boy. After you get your comfort ratio figured out you can go from there, but I'm going to agree with the others and say that you made a bad investment with the S2K. Buy a cheap car that'll last you forever and be done with it, can anyone say Civic?
My .02
Andrew
My .02
Andrew
Thread Starter
Registered User
Joined: Apr 2002
Posts: 1,794
Likes: 0
From: Houston
Sorry, the S was something I bought at the spur of the moment in a really bad point, it probably saved my life, so I don't feel the least bit regretful for buying it.
I understand what you all are saying about financing it though, I have basically no credit, other than what comes from renting an apartment. I am not the type for person to rely on any type of credit at all, though I think I probably should start doing so.
I was really asking how to invest the money that I have, not necessarily how much I need to save every month. I save more than 50% of my paycheck every week, so it's not a problem for me (I will recoup the loss from the purchase of the S very soon). Anyways, I appreciate all the comments.....
I understand what you all are saying about financing it though, I have basically no credit, other than what comes from renting an apartment. I am not the type for person to rely on any type of credit at all, though I think I probably should start doing so.
I was really asking how to invest the money that I have, not necessarily how much I need to save every month. I save more than 50% of my paycheck every week, so it's not a problem for me (I will recoup the loss from the purchase of the S very soon). Anyways, I appreciate all the comments.....
