Category Archives: Wealth

Ways To Invest Money Once You Have Over 1 Million in Financial Assets

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Okay, it’s 10 years in the future and you’ve already made your first million (I’m so proud of you!)  And now, perhaps you are midway thru working on your 2nd million.

So the question is…. “Do you invest the same way you did with your first million?”  Or if you’d like to think of it this way, “how do you invest differently now that you have your first million under your belt”?

Hmmm, if not for the first million, but how about after you reach your second, or even when you become a decamillionaire?

I have a friend that didn’t change his strategy, so during the downturn, I estimate that he temporarily was down close to $1 million.  I say temporarily because he didn’t panic and pull his money out of the stock market, he let it ride (as I did, but my temporary loss was much smaller because I don’t have 5 million dollars).

Only after the stock market recovered did he talk about how nervous he was.

So, I was thinking, what would I do if I had that much money…

I think I would diversify my money into different asset classes.

  • a small amount into precious metals (gold, etc)
  • real estate as an investment (mostly local, but maybe global too… maybe a REIT)
  • foreign currency (a small speculative amount in emerging countries)
  • definitely US Treasuries bills
  • solid company bonds
  • investments in small established solid businesses, maybe franchises like McDonalds?
  • Crypto?

What other ways would you invest into financial assets, once you have over 2 million in net worth?

MR

Are You Too Smart to Be Rich?

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Is it really possible to be too smart to be rich or successful?

I think that it is entirely possible to be too smart, here are a few cases:

  1. Perhaps those that went to a high caliber college came out with a slight elitist attitude?  I would like to suggest that they make a decision on what they think is correct and not objective data…  So when Johnny, a graduate from a local state college ran the numbers and suggested something different… he gets largely ignored.  After Johnny turns out to be correct, sometimes those smarter than he, still largely ignore his research and conclusion.  Johnny, who knew that he was in the right, finally gets upset and quits…  Then Johnny goes on to start a competing business based on his research and knowledge.
  2. Perhaps another example would be the learned man/woman that just doesn’t have time for trivial matters, they are living for a higher goal.  They are in a perpetual state of learning (or enlightenment), soaking up everything like a sponge!  I have a friend that has a doctorate degree in chemistry.  But he works at a grocery store…  He has been going to college his entire adult life.  As long as they are happy this way, who am I to judge.?.
  3. Perhaps you are smart in certain areas, but can’t communicate those thoughts and ideas.   Nothing discredits a brilliant idea as the inability to communicate your thoughts so that others can comprehend what you are saying.  As a technologist, I have many friends that fall into this camp, including myself to a lesser degree.

Other smart people are held back from being rich because they don’t have the ambition, drive, or focus to do so.  I’ve seen entire families like this.  I think this behavior is learned…  Perhaps they don’t believe that is deserving enough?

There are countless other scenarios… some don’t delegate tasks out or try to do it all, or the inexperienced smarty tries to out-think the wise battle-worn expert.

If you are lucky enough to be able and open enough to identify these personal faults, perhaps you can create a system to work on to overcome such hurdles…

Do you know people like I’m writing about?  How about you, do you know what your weaknesses are?  Do you believe if you try with great focus, you can overcome any obstacles?

-MR

Wealth Tip #5: Increasing Your Financial Savings Delta

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The following is based on my observations and common sense.  However, usually with these wealth series, I base the post off of rich friends that I know of that have over a million dollars.  Now for my discussion about the Financial Saving Delta.

Your Financial Savings Delta is simply:

(Discretionary Income – All Other Expenses) = Savings Delta

“Discretionary Income” is the money from your paycheck that could be in your wallet.  So it’s your Gross income – (Taxes, medical, 401(k) contributiosn, and practically anything else that is automatically taken out of your paycheck).

“All Other Expenses” is all the expenses that you spend your discretionary money on.

It’s a very straight forward simple equation, but knowing it and actually increasing it are 2 different matter!

The 1st way to increase the Savings Delta is to increase the “Discretionary Income” while holding the “All Other Expenses” constant.

 So what are the ways to increase the “Discretionary Income”:

  • Get a part time job in addition to your fulltime job.  If you are a work house, you could instead get another full time job in addition to your 1st full time job.  Yes, I’ve thought about this, but I want to know my kid’s names (plus I love them…)
  • Win at the neighborhood poker night game (I’m good at this, but not much money to win that way, plus the booze costs make it a fun break even event).  I could go bigger scale, but I could also lose bigger too.  Maybe someday I’ll try it out, but for now I’m good.
  • Find a product to sell on eBay.  I’ve been successful with this in the past!  Note that I didn’t say sell your old stuff.  While this is commendable, it’s a limited source of product.  And besides, most often you sell your stuff at a loss vs. what you initially paid.
  • Investment!  Stocks, bonds, real estate, whatever you fancy…  I hope to really expand this area soon!
  • Blogging (lol, to date (almost 6 months) I’ve made $5.00…  That works out to be about a penny and a half per hour of work!  Move over Bill Gates, I’m moving on up!

 The 2nd way to increase the Savings delta is to decrease the expenses that you have. 

This is easier than it sounds!  Here are some ways to do so:

 

It is very important to increase that Savings Delta though, and then invest it!

Can you think of any additional ways to dramatically increase the Savings Delta?

Wealth Tip #4: Invest Money Saved on Food and Other Products

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Okay, I have a Confession to make!!!

I don’t clip coupons, nor does my wife (yeah, I know… here I claim to be frugal, and yet I don’t do this very frugal activity)!  In my earlier post called 10 Millionaire Lifestyle Secrets, I indentify SmartMoney’s secret #2 “I shop at Walmart” secret!  It explains that the $100,000+ income crowd clips coupons.  Now as I said, I don’t clip coupons, but… my grandmother did!  So I’m going to start out describing the system that she used, then I’m going to describe some more modern techniques.

But before that, today, I also learned that one of the bigger blog sites FreeMoneyFinance‘s spouse clips coupons.  The blogger at FreeMoneyFinance fit’s the Secret #2 description very well, and even makes more than that!  Click the following link to read his article called:  How to Earn $100 an Hour (Or Save $100,000 in Your Lifetime).  This FMF article is truly an eye opener and a must read!!!

After using Coupons to save money, calculate how much you saved per month (or week), and pump it from your savings into a brokerage account, bonds or CDs.

 

Now onto the coupons saving methods both classic and modern!

The classic way, the type of system my grandmother used:

Basically she clipped coupons from the newspaper!  Then she had white well worn envelopes with names in the front to them that she would put the coupons into, and they coupons were organized by product name type and date within the envelope.  She then put the envelopes in an accordian style folder.

At first she started this process on the dining room table, but during football season, she would setup her small TV in the dining area.  She would do coupons while my grandfather would classify old coins and put them in sleeves.  She effectively took a negative time consuming activity and made it a positive by doing it while she was enjoying listening (and watching), the football game.

 

Times are different today!

Back when my grandmother clipped coupons, the Internet didn’t have the bandwidth it does today (anyone remember the 2400 baud modems?).  Today it’s possible to do things such as double savings (this is where you can use 2 coupons on the same product.  One from the store and 1 from the manufacturer), and print all kinds of coupons from the Internet!  Since I’m new to this, I can’t vouch for any of the new techniques, so instead I’ll leave you with a great intro to coupon clipping video:

And for you coupon clipper extremists, here is a video about people that really squeeze the old screaming pennies!