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Managing money

For discussion and debate about anything. (Not a roleplay related forum; out-of-character commentary only.)
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Neu Leonstein
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Capitalizt

Managing money

Postby Neu Leonstein » Sat Mar 30, 2019 7:19 pm

It goes without saying that you shouldn't consider what randoms on the internet say to be financial advice. You should get professional help to look at your specific circumstances and help you out.

But with that said: what do you think are some effective strategies for people to manage their money? One of the big problems we have is, in my view, that a great many people don't really know very much about what to do with money in practice. They make bad choices that lead to them losing it, or missing out on returns or interest they could have had. And because these things compound over decades, by the time retirement rolls around, very few people are even close to having done as well as they could have.

Obviously I'm not asking you to share any personal circumstances, and if you do so, please don't be too specific. But what do you think are the best things people can do to give themselves the best chance to reach their financial goals.

For example, here's one I like (and just to be clear, I'm not the one who came up with this):
  • Every payday (or slightly longer, depending on fees to buy index funds), take whatever part of your income you can spare, i.e. you don't think you'll need to spend within the next couple of years or so.
  • About 100-{your age} per cent of that new money goes into a low-cost stock market index-tracking fund, with as much diversification as you can get.
  • The remainder goes into a low-cost bond market index fund.
  • You don't sell anything unless you really need to access the money.

It's very simple, and over the long term will leave you in a pretty good place relative to your income. The idea is that you don't know what stock or bond markets are going to do ... but you do know what fees are going to be. So you minimise the fees, and lock in an about-average market return using the index funds. And by not reacting to short-term moves you take a lot of our inherent monkey brain biases out.

The reason I like this is because it is so easy that anyone could do it. But maybe you think this is too easy. Maybe you think one can do better by doing something else?
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Saiwania
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Postby Saiwania » Sat Mar 30, 2019 7:43 pm

It is said that saving money is only half the equation. To become rich, you also have to increase your earning potential. If you're too low income, unfortunately- you won't be able to go as far as you want to go. If you have less disposable income with which to invest, you won't get as big of a return at a fast enough rate to really be able to use any rewards.

Maybe it's just me and I'm more tolerant of risk, but I don't like the concept of index funds in general because it is too diversified in my opinion. I don't believe in the ability of Office Depot or Kroger for example, to stay in business for the long term; so why would I want to own any piece of those stocks that aren't doing so well or that I have no direct control over?

I'd want to buy good, solid blue chip stocks (businesses that know how to make money and that have been around for at least more than 5 to 10 years). Businesses that I at least understand or believe in that I can strategically buy/sell as I see fit. You of course, want to buy during a recession and sell during an economic boom if you're satisfied with the return you'd get.

With a mutual fund, it seems to me that the performance of it over the long term; is a true reflection of the quality of the companies I chose to invest in at a given time and thus- I'm more comfortable with that. If it performs poorly, it means I picked companies that suck. If it performs well, it means I chose winning businesses.

Blue chip stocks are more expensive, but it's worth the peace of mind from my perspective, knowing that the stock in question is unlikely to truly go bankrupt but might rise and fall as the years go by but more likely appreciate in value a few decades or so later.
Last edited by Saiwania on Sat Mar 30, 2019 7:55 pm, edited 3 times in total.

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Ifreann
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Postby Ifreann » Sat Mar 30, 2019 7:51 pm

Money is shit and we should abolish it.
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Neu Leonstein
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Postby Neu Leonstein » Sat Mar 30, 2019 7:54 pm

Saiwania wrote:It is said that saving money is only half the equation. To become rich, you also have to increase your earning potential. If you're too low income, unfortunately- you won't be able to go as far as you want to go. If you have less disposable income with which to invest, you won't get as big of a return at a fast enough rate to really be able to use any rewards.

I figured that was obvious enough not to need a separate mention. I'm thinking about ways people can make use of the money they do earn or have, because that's something that anyone can influence very easily.

Maybe it's just me and I'm more tolerant of risk, but I don't like the concept of index funds in general because it is too diversified in my opinion. I don't believe in the ability of Office Depot or Kroger for example, to stay in business for the long term; so why would I want to own any piece of those stocks that aren't doing so well or that I have no direct control over?

I'd want to buy good, solid blue chip stocks (businesses that know how to make money and that have been around for at least more than 5 to 10 years). Businesses that I at least understand or believe in that I can strategically buy/sell as I see fit. You of course, want to buy during a recession and sell during an economic boom if you're satisfied with the return you'd get.

It's two sides of the same coin. Most of the total market return comes from a small number of companies. If you hold the index, you know that you'll be holding those companies, even without knowing beforehand which ones they are.
“Every age and generation must be as free to act for itself in all cases as the age and generations which preceded it. The vanity and presumption of governing beyond the grave is the most ridiculous and insolent of all tyrannies. Man has no property in man; neither has any generation a property in the generations which are to follow.”
~ Thomas Paine

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Neu Leonstein
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Postby Neu Leonstein » Sat Mar 30, 2019 7:55 pm

Ifreann wrote:Money is shit and we should abolish it.

Be that as it may, it currently buys goods and services. So until it is abolished, it is still a topic worth thinking about. Regardless of one's ideology or attitude towards it.
“Every age and generation must be as free to act for itself in all cases as the age and generations which preceded it. The vanity and presumption of governing beyond the grave is the most ridiculous and insolent of all tyrannies. Man has no property in man; neither has any generation a property in the generations which are to follow.”
~ Thomas Paine

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Bombadil
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Postby Bombadil » Sat Mar 30, 2019 9:59 pm

Someone was talking to a theory that you may as well spend as you like and go out deeply in debt, that way you took more out of life than you gave, it's the kind of nihilistic thinking that's all the rage these days.

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Northwest Slobovia
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Postby Northwest Slobovia » Sat Mar 30, 2019 10:11 pm

Saiwania wrote:Maybe it's just me and I'm more tolerant of risk, but I don't like the concept of index funds in general because it is too diversified in my opinion. [...] I'd want to buy good, solid blue chip stocks (businesses that know how to make money and that have been around for at least more than 5 to 10 years).

You can get index funds that track many, many indexes, not just the entire market. There are a number that track only "blue chip" stocks, for example, any of them that track the S&P 500. There are also index funds with various risk tolerances. You won't be surprised that some people like risky companies, and others can't stand them.

Obviously, you can do your own trading if it makes you happy, but the odds favor broad index funds beating you over the long term. I've played very risky stocks, practically day-trading them in some cases, but only in industries I knew extremely well. I made a small fortune, but it takes a lot of work, and I don't do it any more, because the industries I knew well have changed due to new technology and lots of M&A.
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Infected Mushroom
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Postby Infected Mushroom » Sun Mar 31, 2019 12:54 am

What about just buying up tons of land?

I find that once you have a certain amount of land and have the resources/personnel in place to continually lease and manage it all pays for itself

Commercial land is extremely profitable even in jurisdictions with relatively high taxes over them

In my experience, owning a ton of land = ultimate financial safety

...

In some countries where they have very pro land owner laws you can raise the rent to ridiculous levels, once the business using your land gets fed up with your law sanctioned racket, they move out and you get to play again with a new party

The trick is to gradually raise the rents as their dependence on running their business from your site grows and grows
Last edited by Infected Mushroom on Sun Mar 31, 2019 12:57 am, edited 2 times in total.
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Postby Conserative Morality » Sun Mar 31, 2019 2:02 am

How about not saving because that money will serve you much better earlier in life when you can still enjoy things rather than late in life when you are a hair's breadth from death?
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Saiwania
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Postby Saiwania » Sun Mar 31, 2019 2:08 am

If you own a lot of real estate, you can and probably will get hit by property taxes which may be too high as to make it not worthwhile. It is a long term commitment that can make you less mobile because a mortgage is usually required to finance that purchase. If you're rather unlucky, the property you have might become worth less than what you bought it for. But usually over the long term, you can recoup the cost because it will appreciate in value if the local economy is in decent shape and people aren't all moving away.

It isn't as simple as raising the rent as high as you want, the rents you can realistically charge is largely determined by what other people in your area are charging for rents. If the price isn't competitive and your housing amenities aren't good enough, no one will want to rent from you.

Tenants have too many rights in a lot of places, so it is a ton of work to properly vet a prospective tenant so that you don't wind up with a deadbeat, a hoarder, or someone who trashes the interior. Once you accept someone on as a tenant, it is harder to get them out of there if you need them to leave. They get a month's notice or whatever. It is a strict process.

Sure, it's possible to do well with real estate. But it isn't all upside, there comes with it a lot of effort and hassle. It can become a full time job managing that in its own right.

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An Alan Smithee Nation
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Postby An Alan Smithee Nation » Sun Mar 31, 2019 2:11 am

I read a book from 1926 on financial literacy called The Richest Man in Babylon many years ago, which I found useful. Basically save a set percentage of everything you earn, and invest it conservatively and safely. That combined with don't trust financial advisers or stock brokers, avoid investment funds with managers, and always find out what the management fees are.

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Postby Page » Sun Mar 31, 2019 2:51 am

Saiwania wrote:Tenants have too many rights in a lot of places, so it is a ton of work to properly vet a prospective tenant so that you don't wind up with a deadbeat, a hoarder, or someone who trashes the interior. Once you accept someone on as a tenant, it is harder to get them out of there if you need them to leave. They get a month's notice or whatever. It is a strict process.


A person having the right to not be evicted from their home on a moment's notice constitutes "too many rights"? A month is not that long when you need to find a place to live.
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Postby Internationalist Bastard » Sun Mar 31, 2019 2:52 am

I live like shit
It saves me money
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Postby Forsher » Sun Mar 31, 2019 3:50 am

Bombadil wrote:Someone was talking to a theory that you may as well spend as you like and go out deeply in debt, that way you took more out of life than you gave, it's the kind of nihilistic thinking that's all the rage these days.


Well... I tried that last year but unfortunately I'm still alive.

This year I'm doing the same thing but without the extravagant spending since I'm concerned I'll still be around next year too.
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USS Monitor
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Postby USS Monitor » Sun Mar 31, 2019 4:11 am

Conserative Morality wrote:How about not saving because that money will serve you much better earlier in life when you can still enjoy things rather than late in life when you are a hair's breadth from death?


It's not that hard to live to retirement age while still being healthy enough to go out and do stuff.

That's not to say you should never take a vacation while you're young. It's best to find a balance where you save some for the future, but still treat yourself decently in the present.
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The Blaatschapen
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Postby The Blaatschapen » Sun Mar 31, 2019 4:13 am

I earn more than I spend.

It's currently amassing on my bank account. Waiting for me to actually go and buy index funds with it.

Or should I short the Pound?
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Postby Bombadil » Sun Mar 31, 2019 4:27 am

Forsher wrote:
Bombadil wrote:Someone was talking to a theory that you may as well spend as you like and go out deeply in debt, that way you took more out of life than you gave, it's the kind of nihilistic thinking that's all the rage these days.


Well... I tried that last year but unfortunately I'm still alive.

This year I'm doing the same thing but without the extravagant spending since I'm concerned I'll still be around next year too.


Fake it til you make it.. https://www.theguardian.com/us-news/201 ... minal-case
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Forsher
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Postby Forsher » Sun Mar 31, 2019 4:37 am

Bombadil wrote:
Forsher wrote:
Well... I tried that last year but unfortunately I'm still alive.

This year I'm doing the same thing but without the extravagant spending since I'm concerned I'll still be around next year too.


Fake it til you make it.. https://www.theguardian.com/us-news/201 ... minal-case


Not her again!

I spent ages the other night reading way too many articles spending way too much time on her appearance and also the Theranos fraud person's hair.
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Bombadil
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Postby Bombadil » Sun Mar 31, 2019 4:50 am

Forsher wrote:


Not her again!

I spent ages the other night reading way too many articles spending way too much time on her appearance and also the Theranos fraud person's hair.


I do keep seeing stuff on Theranos and I know I should probably get an idea of what happened but sometimes I'm like.. maybe I just don't need to know, and then sometimes I think it's about The Avengers.

Anyway, my advice would be..

1. You can take risks in life, never be afraid to take a risk if you believe in it.
2. Work overseas in your 20's.
3. It's probably worth working out your earnings capacity to better understand the leeway you have in life.

Some of this advice is bullshit really, what % of people have a steady salaried job that allows for judicious thinking around savings, some people are wondering whether to take a bus or walk and save money for later in the week. However I wouldn't start investing until I had a good deal of actual cash sitting in the bank.. and I wouldn't invest in stocks either.

Art is probably a more interesting space than stocks for many varied reasons.
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Forsher
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Postby Forsher » Sun Mar 31, 2019 5:22 am

Bombadil wrote:
Forsher wrote:
Not her again!

I spent ages the other night reading way too many articles spending way too much time on her appearance and also the Theranos fraud person's hair.


I do keep seeing stuff on Theranos and I know I should probably get an idea of what happened but sometimes I'm like.. maybe I just don't need to know, and then sometimes I think it's about The Avengers.


A woman steals Steve Jobs' fashion sense, doesn't look after her hair and in the course of doing this convinces all and sundry that there's a new technology which can run all sorts of medical tests using a drop of blood rather than a substantial sample, which makes the markets go wild and the woman ends up being the head of a billion+ dollar company up until the point whistleblowers reveal the technology doesn't really exist and the company loses all its value.

I think technically there is a technology which is partially functional but it certainly doesn't do what was advertised. There are also rumours the woman artificially lowers the pitch of her voice..

Hmm... that's weird. I could have sworn I saw an article today about how people are spending too much attention on the woman's appearance but I didn't actually read it (as you might have guessed) and now I can't find it. To be fair, a lot of people think the bad hair care is evidence of sociopathy and was part of the entire scam so at least with the articles I was reading most of them weren't really about her appearance... they were more pointing out that sometimes people are just unfashionable, lazy and so on rather than sociopaths. In other words, in order to debunk a popular discussion relating to the fraud, it was necessary to write articles about hair care.

On the other hand, it is also possible to search Theranos on the websites of a major national newspaper and get an article about the new Avengers trailer. Plus Charlize Theron and an article that mentions the word thermos. It's not even about the thermos.
Last edited by Forsher on Sun Mar 31, 2019 5:25 am, edited 1 time in total.
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The New California Republic
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Postby The New California Republic » Sun Mar 31, 2019 5:27 am

Ifreann wrote:Money is shit and we should abolish it.

What shall we replace it with?
Last edited by Friedrich Nietzsche on Thu Jan 03, 1889 13:05 pm, edited 999 times in total.

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The Blaatschapen
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Postby The Blaatschapen » Sun Mar 31, 2019 5:28 am

The New California Republic wrote:
Ifreann wrote:Money is shit and we should abolish it.

What shall we replace it with?


Internet memes.
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The New California Republic
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Postby The New California Republic » Sun Mar 31, 2019 5:33 am

The blAAtschApen wrote:
The New California Republic wrote:What shall we replace it with?


Internet memes.

And I assume that the transactions involving goods or services will involve exchanging pieces of metal with doge faces on them?

...

Wait...
Last edited by Friedrich Nietzsche on Thu Jan 03, 1889 13:05 pm, edited 999 times in total.

The Irradiated Wasteland of The New California Republic: depicting the expanded NCR, several years after the complete victory over Caesar's Legion, and the pacification and annexation of New Vegas and its surrounding areas.
Current President of The NCR: Aaron Kimball.
Current NCR Ambassador to The World Assembly: Colonel James Hsu, NCR Army (Ret.)
.

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Postby Pope Joan » Sun Mar 31, 2019 7:00 am

Never use credit cards, they are a huge drain on income.
If you have credit card debt, pay it off and cut up the cards. It is like earning 23 percent. And ignore the fake come-ons with low introductory rates.
Do not save money. When I started my law practice in 74 rates were great. Now they are pathetic.
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Postby Petrolheadia » Sun Mar 31, 2019 9:06 am

Ifreann wrote:Money is shit and we should abolish it.

I love baseless claims.
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