Author Archives: Money Reasons

About Money Reasons

A offbeat personal finance blogger that comes from the tech world.

Busy Taking A Mini-Vacation At Kalahari Waterpark

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This weekend, my family and I decided to take a mini-vacation at the Kalahari Resorts.

Kalahari Resorts

Kalahari Resorts

It’s touted to be the second largest water park in the world.  I’m not 100% sure of that claim, but I do know it’s a lot of fun and my kids are having a blast.

Needless to say, I’m not typing while I’m in the water area, so I need to get back to the fun!

Here are some other interesting articles for your viewing pleasure…

Everyday Tips and Thoughts:  Halloween Past and Present –  Great analysis of Halloween of the recent past (1970s) and the present.  I’ve come to always expect great articles from Kris and as always, she doesn’t disappoint with this one!

Budgeting In The Fun Stuff:  NEW GOAL – Paying Off Our Mortgage in 6 Years or Less!!! –  Awesome!  I did this and overall (after thinking about if for a while), I’m glad that I did.

Beating the Index:  Investing in Oil: 5 Junior Oil Stocks for 2012 –  I admin, I don’t know much about Canadian stocks, but the investor at Beating the Index seems to.  Check out his site for other Canadian stocks to research.

101 Centavos:  Situational Awareness 101 proves that security is a very serious matter at airports and other security checkpoints theses day!

20’s Money:  How to Land that Job: Playing Hard to Get? – Interesting advice on getting a job.

Money Q&A:  Why You Need Umbrella Insurance I have to admit, I’ve been thinking of getting one of these.

Okay, my family want to leave, so I hope you enjoyed the assortment of articles from above.

Well, I’m off to enjoy my mini-vacation…

MR

Why A World Without Rich People Would Suck

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All to often, the media (whom all are rich themselves, don’t be fooled) points out that the rich people are the problem with society.  They ridicule and make fun of the rich, and blame everything under the sun on the rich.  It’s kind of ironic considering those same folks complaining about the rich are much richer than the top 1%.

Let’s play a game called rich elimination.

In this game, we take the money away from those that are rich and ban them from making money.  They now have to live on the median income amount that the average individual (or household) makes.  Let’s identify those rich folks as people who have more than 20 million.

This destruction of this level of rich folks makes angel investors practically disappear!  Luxury purchase that eventually trickles down to the masses are gone.  Thinks like automobiles will not be invented, same goes with new medicines.  And obviously, tax revenue that the government uses for most of their spending get hit hard!  So naturally the tax increases across the board by 50% or more.

Next now we have a new problem, those that have 2 million to 20 million are now the rich and need to be treated the same as the first wave of rich destruction.  Those that have (now had) 2 million to 20 million will have their money seized by the government.  , This fixes the tax problem, and now these individual are paid the median income amount.

I’m going to stop here because we all know that to continue the destruction of wealth (those that still have 1 million) leads to a communist state and that doesn’t work (look at China and Russia and how they did change to allow capitalism in their society).  North Korea is a great example of a system that doesn’t work, especially when compared to South Korea.

Back to the point that the higher rich levels have been redistributed, what does that mean for society?

  • We all need to pay, oh maybe 60 to 80% in taxes (and in the worst cases all) to support the government (we all know that when the government spends money it’s hard to make them stop spending money).
  • Inventions that are expensive to initially make like Refrigerators, Cars, TVs, Computer, etc…  are no longer created because nobody can afford to buy them because the first models are so expensive that only the rich can buy them  initially.  But at least we get to play plenty of frisbee now!
  • Medical advances stop!
  • Mortality rates climb, because new drugs are being made since the government show down those over priced drug companies.
  • Disaster money disappears
  • Crime increases
  • Businesses stop
  • Society devolution starts.

The thing about being rich is it’s relative.  Unless you are a Gates or Buffett, there is always someone richer than you that makes you feel not poor.  This may be why people like John Stewart and other media performer act that way.  Or perhaps it’s because they get paid to do so.  Perhaps they (the media giants) are all playing us for the fools, because they earn money for doing so.

Thinks of a third world country when you want to see a country without any rich folks.  Shoot, our founding fathers in the US were rich!  If Benjamin Franklin hadn’t gone over to France to woo the French, we would have had the support of the French Army to help us fight the British.

Without rich people, the world would be a much darker place.

Have you ever wondered what it would be like without any rich people in the country?

MR

 

How My Investments Are Changing, Mutual Funds and ETFs Versus Stocks

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I love trading stocks, it’s like playing a game of chess with everybody that is in the stock market all at once.

That said, the majority of my money is in mutual funds and to a lesser extent, ETFs.  ETFs are Exchange Traded Funds and are similar to mutual fund, except they are usually tied to some type of index.  The big advantage ETFs have over mutual funds are their lower fees associated with the instrument since it typically just follows an existing index.

So as often as I blog about how much I love dividend stocks and the creating dividends streams to cover expenses like my dividend lunch experiment, I still have the majority of my money in mutual funds.

Why do I have most of my money in mutual funds and etfs?

Mostly because I’m too busy with other things to give stocks the full attention that deserve.  While most days I keep up and follow them, occasionally, a week may go by where I don’t log onto my brokerage account at all.  Since the stocks that I invest in mostly have a higher beta (this means they are more risky), I don’t want to put all of my money in these volatile stock without constantly monitoring them.

Mutual Fund and ETFs either have a manager managing the funds or are tied to an index of some sort that determines which stocks are in the fund by shadowing the movements of stocks in that index.  This means that if something happens to a stock, the manager will remove it or the investment will drop off of the index.  Neither mutual fund or ETFs are quick, but they will get the job done if  they have to.

Why I’m increasing the amount of stocks I have versus mutual fund and etfs!

One basic reason that my ratio of stocks vs other investments are increasing is because my stocks are appreciating faster.  Another reason is that I’m investing more of my money in them.  I’m still putting the same amount of money in my 401k (this is where most of my mutual funds exist), but I’m also putting money that I now save from paying off my mortgage early into stock investments too.

I’m mostly concentrating my new money saved on dividend yielding stocks, because they are a bit less risky in these roller-coaster stock market days.

Another reason I like stocks is because I don’t have to pay taxes on them until I sell them.  With mutual funds, I usually have to pay taxes on the rollover of stocks within the mutual fund.  That said, since I mainly have index funds, the amount of rollover is low so my tax hit from them is very low.

I find that I don’t believe it has to be one or the other.  Both are investments and should have a place within your investment portfolio.  In addition to stocks, I’m starting to look into other passive income ideas, perhaps real estate, but that’s another topic for another day.

Surprisingly, my portfolio is now only made up of 64% mutual funds and ETFs, where as a few months ago, the percentage was over 70%.  I’m sure it’s a fluke and the mutual fund percentage will rise over 70% again, but is noteworthy…

What percentage of your investment portfolio is invested in mutual funds and ETFs?

MR

 

The Cost Of Being A Top 1 Percent Earner?

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Lately, it seems like the media and world in general, are against the top 1 percent of income earners.

It’s presumed that the fortunate top 1 percent have it easy and they just go to work socialize.  Perhaps they go to the golf course and play 18 holes while the rest of the workers (those lowly 99% of income earners are such tools) slaves away making the money for the top 1%.

Actually perhaps there are a few like that, but they don’t last long and their numbers are very low.  Eventually someone a bit leaner and hungry knocks such slacker off of their perch.  So the image of a top 1 percent income earners does not reflect reality.

What makes me so sure?  I’ve seen the suffering of a friend that made it to the top 1%, here is his story…

Jon was a VP of finance when I knew him.  He was a very friendly guy to great, but behind closed doors, he was much, much more.  If you met Jon, you would think what a nice guy, a family man and overall a class act.  Jon really was a great guy but he was also a businessman with business drive.  He had so much drive that he would stay incredible late working with the then CEO of the company I worked at.  Once I was part of their discussions, and this wasn’t the Jon that the other employees knew.

I consider myself a keen observer, so in my mind I put a few things together and painted a crude picture in my mind what his personal life must be like, and it wasn’t pretty.  Mostly he held it together quite well, and stuck with his huckleberry routine, until one day when we had the classic moral building exercises that always happens at larger corporate businesses (or so it seems).

During this “feel-good” meeting, Jon got up to speak.  He was delivering an excellent speech on going a little bit further than the other guys.  After all, it doesn’t matter if you win the race by a nose or a mile, what counts is that you put the time in and win…

That’s when it happened, Jon started going on and on about the time commitments, when he deviated off course and started talking about not seeing his kids.  A red flag in my mind went off, thinking “Hey, this isn’t part of the speech, it doesn’t fit”.  At that point, Jon continued with his speech, but literally he started crying.  Being a pro, he continued with the speech after jumping back on track.  He used his charisma and polished looks to deliver a speech that appeared to most in the audience that the man just had incredible passion.  But, there are a few of us that knew what really happened.  It was an eye opening glimpse into his 1% life, and honestly since I have kids, I choose my kids.  Even if I had the potential to get into the 1, 5 or even 10% income classes, I wouldn’t want to sacrifice the time that I could have spent with my kids doing things (although blogging is really taking a big slice of that time!).

My friend has since moved on to head up another company as a CEO.  When I knew him, he had just crossed that threshold to the 1% club, but not he is firmly ingrained in the 1 percent group.  I don’t see him much anymore, but I’m sure if I did, he would still great me with his warm, but polished and rehearsed greeting.  I’m sure he still works long hours and cries (literally) about his kids growing up, being raised almost sole by his wife.

So before you think that the top 1 percent group has it so great, think of my friend.  If you do, you’ll see why I’m more than happy to live a more (money and time) balanced life, at least now.  I’ll probably regret it when my friend is vacationing in Europe (lol).  I’m pretty sure he has crossed the threshold to financial freedom already.  Still, unless you’re buffett, you can never have enough money…

I hope you found as much value as I did watching Jon’s story unfold when my old friend gave his speech.

Thanks,

MR

 

Update!  I just read that the top 1% earn 17% of the total income in the US, but pay 37% of all the tax revenue brought in!  Check out this Money.cnn.com article called:  Who are the 1%