- This topic has 27 replies, 12 voices, and was last updated 18 years ago by La Jolla Renter.
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September 25, 2006 at 5:05 PM #7606September 25, 2006 at 5:16 PM #36374heavydParticipant
This is great advice — I wish you could come to our office to deliver it in person to our jr analyst, a year out of college and spending down to his last dollar each month on a Porsche, trips to Vegas, the works! A couple of bits of advice that I would add are:
1) Establish a rainy day fund early on, equal to at least six months worth of your expenses — and keep it in cash or cash-like investments (CDs, money market, etc).
2) Regarding your comment on ‘flash’, keep in mind that the greatest luxury in the world is having the financial security to tell your boss to take a hike!
September 25, 2006 at 6:16 PM #36381anParticipantI think it’s a lot easier to talk the talk than walk the walk. Especially for guys who are single and just graduated. My #1 advice is take full advantage of the power of compound interest. Max out your 401k and ROTH IRA asap. The money you don’t see won’t be missed. You’ll adjust your spending habit around the $ you have from your paycheck in your checking account. That’s what I’ve been doing since my first full time job @ 22 and through 1st person point of view, I have to say that it works.
September 25, 2006 at 6:27 PM #36383PerryChaseParticipantOnly marry a rich girl. Just joking. 😉
September 25, 2006 at 6:29 PM #36384AnonymousGuestI am 25 years old and graduated from Stanford a few years ago. I max out my 401k 7 months in to the year at 15%, put $5,000 a month in to ETFs, own a condo in San Diego, 2 lots on the beach in Nicaragua, a small record label I founded, and a percentage of a family run wealth management business. I also have a private bank unsecured line for 100k of which I am currently using 7.5k and 3 credit cards with total limit of 90k of which I currently am using 7k.
I think that you sound a little bit like Suze Orman with your well-meaninged yet somewhat cookie cutter advice. Your advice is perfect for a person of average ambition and intelligence who is at constant risk of making a bad decision.
Unfortunately, if you really want to be fabulously wealthy you need to take a few more risks. Watching out for consumer debt may be good but avoiding debt in general is a wealth-killing maneuver. You have to take on strategic debt to further your business interests or you will never make a large enough impact.
The other comment I have is that in most professional service businesses, some “flash” is important. If you are providing high level services to wealthy people, you need to drive a nice car and have nice business attire. They will not give you their business otherwise.
September 25, 2006 at 6:32 PM #36385rseiserParticipantI have some more, but you already gave the best yourself:
1) Never follow the crowd into a stupid bubble like oil, stocks, or real-estate have been in the past. This is of course the famous “contrarian” stance. First, we are not in paradise, and it would be impossible that everyone is getting rich without the equal amount of production. Second, you could never get a good price if everyone else competes with you for buying.
2) Use your own brain. If someone tells you that Y goes up because of X, just think it through yourself. Does it make sense in island economics? How did it do in history? Did it work in reverse, i.e. Y going down when X went down. There is so much nonsense on TV these days that can be dismissed immediately.
3) Don’t rely on any government program for your retirement. The rule of thumb I use is to put aside the amount per month that I want to live on later (per month, in today’s dollars). It works amazingly well. Say, I think $2000 would be an ok retirement nowadays. I now have to put aside pretty much $2000 every month (in various programs). The gains I make after tax are probably just around inflation, and if I work for 30 years, then it will last exactly for 30 more years, give or take. Sure, maybe I beat inflation a little, or maybe I work longer. But maybe I live a little longer too, or just live a little better. My point: The money can only come from you. The government and nobody else can pay anything that wasn’t created. If they print money it will just go into increased prices.
4) Of course, use the best vehicles for your savings, e.g. diversified investments, and max out Roth and IRAs.September 25, 2006 at 6:38 PM #36386ChrispyParticipantYou might want to advise your nephew that people of real wealth don’t have to brag about it. The people whose cocktail party chatter consists of how much their stock portfolio is worth, the raise they just got, the incredible deal they got on their new sports car, etc are not only boring to listen to, but quite often liars.
True wealth doesn’t have to advertise. Also, the people who brag get hit on by salesmen of all types – another reason to just shut up about it and enjoy your treasures with the trusted few.
September 25, 2006 at 7:00 PM #36389anParticipantrseiser, I don’t see what’s wrong with follow the crowd and take advantage of the sheeple created bubble. As long as you know it’s a bubble and get ready to sell at the first sign of weakness.
September 25, 2006 at 7:02 PM #36390heavydParticipantWhy am I not surprised the 25 year old talks about the importance of ‘flash’? I think it was Chrispy who pointed out that the truly wealthy typically do not make a show of their wealth or achievements — after all, who do they need to impress? And while I can agree that avoiding debt altogether is difficult and sometimes unwise, unthinking reliance on debt financing has destroyed a lot more fortunes than it has created. These days, real wealth is created by people with great ideas. And great ideas are usually funded, in the initial stages, with venture capital or cash savings — not debt.
September 25, 2006 at 7:04 PM #36392anParticipantmalfred, there’s absolutely nothing wrong with playing safe. Not everyone is ready or able to do the calculation behind the calculated risk that you’re referring to.
September 25, 2006 at 7:11 PM #36391mydogsarelazyParticipantHi Malfred,
I also graduated from Stanford, with distinction, and should point out to you that you meant to say well-meaning, not well-meaninged.
You commented:
“I think that you sound a little bit like Suze Orman with your well-meaninged yet somewhat cookie cutter advice. Your advice is perfect for a person of average ambition and intelligence who is at constant risk of making a bad decision.”
So I gather you are above the fray?
My advice is heartfelt, and represents my own wisdom, gained the hard way.
Why don’t you drop by this forum in 25 years or so and let me know how things have worked out for you.
JS
September 25, 2006 at 7:37 PM #36395rseiserParticipantasianautica, regarding
I don’t see what’s wrong with follow the crowd and take advantage of the sheeple created bubble. As long as you know it’s a bubble and get ready to sell at the first sign of weakness.Sounds probably easier said than done, especially for someone under 30, haha. Not sure how easy it is to still make money once the crowd is on it. There are quite some transaction costs involved including time and psychology, and certainly it’s not creating much for the overall system. Think of the Japanese people. Wouldn’t you agree, they would be better off, if they wouldn’t have all jumped on the bandwagon in 1987-1990?
But if you can personally do it, hats off. How about this: When the crowd is onto gold in a few years I will notify you and we can both hop on with some speculative position. Then, on the first sign of weakness you will let me know when to hop off. Let’s see how well it will work out for us.
Deal?September 25, 2006 at 8:23 PM #36410anParticipantrseiser, I agree that it will not be easy. I will keep on trying to perfect my timing and knowing that I will fail many times. But I’m hoping I’ll succeed more than fail.
September 25, 2006 at 8:28 PM #36411sdduuuudeParticipantMy advice:
Date 35 year olds when you are 18. Date people the same age as you in your late 20s and, if you aren’t married or interested in getting married, date 18 year olds when you are 35.
It all works out financially and otherwise.
September 26, 2006 at 7:15 AM #36454La Jolla RenterParticipant1. Get 100k in credit cards
2. Buy a business with 50k down.
3. Party hard like your peers with the other 50k… trips to Vegas, 15k martinis in the gaslamp, etc.It will all work out… did for me.
PS read the book “The Millionaire Next Door” and one or two of Dave Ramsey’s books… over and over and over.
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