Do ya make secret cubbies in the wall?

A freind of mine made a joke about putting a hole in the wall near the ceiling & depositing valuable coins in there. When you need the $ you bust open the bottom of the wall. I dunno – what if a coin gets snagged on a electrical line?

But yes, the point of stockpiling gold & silver is incase you have to cross borders fleeing for your life or to be able to eat.

Sue – yes, I think it’s certain character but I can’t pinpoint it enough to describe.
Good article & interesting discussion.

This is an extremely insightful article into financial mind traps that we get ourselves into. You state that the effects of inflation can be mitigated. How does one go about doing that?

But I think you’re asking something deeper: Is there a way of life, or way of thinking, that lends itself to more prosperity. I doubt there’s statistical data to bear this out, but it sure seems true anecdotally, doesn’t it?

Too little information exists for individual investors. We can’t possibly know enough to make really intelligent decisions. This is why we end up being wiped out–we are the last to learn the truth. Look at the Blue Chip stocks today.

Save your money and focus on your goals. Enter into investments very carefully. There is just too many lies and corruption that are waiting to ensnare us.

People are far too casual about using credit cards or taking on gargantuan mortgages, crippling car payments or outsized student loans. The real problem I think is that once you get on that treadmill you can’t get off. It becomes difficult to save or to even be objective about what you do for a living. Then debt begets more debt, and you’re floating hopelessly.

I knew a successful business man who had no savings, but considered the unused portion of his home equity line of credit to be his “savings”. When it gets to that point, there’s no turning back.

On a side note…

Have you ever had one of those teachers who explained a concept in such a way it just sticks and you remember it years later.

LMAO!!! @ Bill #24 for the “oh shit, the Nazi’s are coming” example.

I will not be able to look at a gold bar without thinking that now…

Far too many people look down on the desire to be wealthy or financially independent. I strongly desire wealth, but my wants have little to do with fancy cars or luxurious vacations.

To me, true wealth would mean financial security for my entire lifetime, including a couple of decades at the end of my life when medical needs may be great. It also would mean leaving a legacy to my children and grandchildren, so they would never have to worry about living out their lives with dignity. And it would mean having the ability to step up for my extended family in times of emergency. For example, if a relative got a horrible disease and ran out of funds, how wonderful if my wealth could assist them.

Also, true wealth would give me the ability to bless others on a regular and generous basis. That would be amazing – for me as well as them.

For many years, my husband and I didn’t have any clear financial goals. We owned a business and were prospering, but never saving any money when we could of. This past year, we have changed our outlook and decided we needed a purpose: 1. save a downpayment to buy a house, 2. invest some of our hard earned money, 3. begin thinking of creative ways to bring in additional streams of income so that we can continue to save money after meeting our goal of purchasing our house.

This is definetly helpful.
thanks-
Little House

Another bonus was around the corner, which would add to that figure. But, by then, I was VERY wary of work, and started questioning what the meaning of work and life is to just save cash in the bank. It was boring. And so, I put 25% ($140,000)down on this two bedroom, two bathroom condo overlooking the park and lit a fire of fear under my arse to make work purposeful again.

The funny thing about debt or a mortgage is that it gave me the motivation to work again. The place still has a mortgage, but it’s much smaller now and is a cash flow rental.

One needs a purpose to work, especially if you don’t require a high standard of living.

RB

Hi Matt. I’m glad that you’re keen to study how to improve your net worth by doing sensible and knowledgeable things through viewing this excellent website, but I feel I have to warn you that time and compound interest are not enough.

Lots of people who retired just after the recent crash, when the market lost a third of its value, all believed in “time and compound interest”.

Now they believe they’ll have to try and keep their jobs and work on into retirement.

I mention this because I don’t want you too to suffer this massive disappointment when its too late to put things right.

Indeed, I guess the point of this article is “diversify into many unconnected things, so if one of them takes a major hit (e.g. stocks) then the others won’t come tumbling down too in unison”.

You may have a great question now – “so where do I put some of the money so I don’t take that significant hit?”

Sorry, I don’t know – the usual mantra is something like:

60% in stocks
30% in bonds
10% in whacky things like fine wine

but with bonds paying so little, you’re putting a significant proportion of your money in a vehicle that will only pay peanuts even after decades.

So if you want to make a higher return then its foolish to avoid the stock market, but the stock market may end up making you weep on the day after you retire.

Please let us all know if you manage to overcome this unsettling conundrum.

Good luck,
KC

One of the dangers is described thus:

“Investment mistakes. As many investors learned last year, poorly structured investment portfolios can be a killer.”

If I have $100k in cash, how should that be invested today so that I can prove to you that I haven’t made that mistake?

Other commenters please give your views too.

If you can’t recommend an ideal structure, what sorts of common mistakes in an investment portfolio would you point to that would prove I was doing things wrong?

How do you know that if I make the changes that you suggest, then my ultimate profit will be greater in the future than if I left things as they are?

Many thanks,
KC

Then again, I could just pay Uncle Sam the 33 cents in taxes and not pay the bank and extra dollar in interest.

I learned from that mistake, but still do not regret the reason for diversification: we had some old stock in only two companies! I put the money in some index funds.

Not everyone who pursues financial success wants a McMansion and Porsche 911.

This is really such a wonderful, wonderful blog.

As we’ve discussed, JD, materialism is certainly an enemy but is arguably best defeated by contentment.

I’ve not read this particular book but anything with the word “millionaire” in the title does not have a firm foundation to speak out against materialism.

“We tend to forget that happiness doesn’t come as a result of getting something we don’t have, but rather of recognizing and appreciating what we do have.” ~ Frederick Keonig

JD keep up the great work. You help me find motivation/knowledge to become financially independent on a daily basis. Thank you.

All these other Enemies are predicated on the person initially having a sufficient income stream to manage or mismanage.

On a river, one can sail a riverboat, in a lake a rowboat, in a stream a canoe — but all your skill is no help paddling a canoe in an inch deep trickle or a dry wash that holds a navigable flow only a couple times a year.

These are all very useful points, but not for all Americans — 10 or 20% cannot benefit in the way money managers would like, from prudence alone.

Noni

Our greatest nemesis has been emergencies, and more specifically, defining an emergency. Often an emergency was simply “failure to plan”. e.g., we are a military family and we know we are going to move, but financially we would react to a move instead of prepare for one!

After 15 years (and 11 moves) we are finally getting our act together. Always meant to earlier, but there were always boxes to unpack…;)

What saved us was NOT being materialistic people who keep up with the Jones’. Easier to do when the status quo of the Jones’ changes with every move… Sure gives you a better, more objective perspective on what is necessary in this life when you move regularly and witness differences in priorities based on where your living, the culture you’re in, etc.

“I’d argue that there’s at least one additional enemy to financial success: lack of purpose. If you don’t know why you’re saving and investing, you have no reason to do so. Without a destination in mind, you cannot set a course. The road to wealth is paved with goals”.

I agree with you and have been mapping goals for awhile now. I’ve had people tell me why am I planning my 40′s in my 30′s that’s weird, and that I should live my 30′s and enjoy. I told them why live my 30′s when I can plan for my 40′s in my 30′s and continue till I see I’m satisfied? I also told them I’m not use to planning my current decade because I’ve always planned it a decade earlier. If my thinking wasn’t this way I don’t think I would be where I am today in my early 30′s. I will always have goals no matter what, and I will always plan my decades a decade earlier. See my analyzations below:

1. I plan 30-39 in 20-29
2. I plan 40-49 in 30-39
3. I plan 50-59 in 40-49

So by time I reach 50 I should be satisified because I wil have already planned it when I was in decades 40-49. It may seem like I’m not enjoying the life since I’m planning my decades in decades the planning shouldn’t be, but in my case when I’m able to reach a decade and actually see the results from the hard work from planning 10 years in advance, then I know it was worth it.