Friday, August 31, 2012

What we need are some cultural changes

Simple litmus test - the rich are the people who have enough money to persuade the poor (via manipulation of the media or political sponsorships or both) that it is in their best interest to support social, political and economic policies that are diametrically opposed to their own best interests. That is nature's way of telling us that someone has too much money.
All of us are a bit Denyse Jones in at least some way. When we judge others for a large house, expensive shoes, etc., we are suggesting to ourselves that we don't deserve equal judgement for our own actions. The question is how to convert our natural desire to compare into something productive. Is it wrong, Sam, to get a maid? Why? We all earn money and we exchange it for things. Some would rather have a maid, some a more secure retirement, some new shoes. 
Why are you better for not choosing a maid? And we all can earn more money if we work harder. Should the fact that we choose to do so (or not to do so) engender scorn or praise? I don't see why.
No, the only two important facts are:
1) So long as we aren't harming others with our actions, we don't deserve ridicule. Nobody is harmed by my choice to go skiing, so even though it's very expensive, I don't see why anyone should be angry or self-righteous about something that's none of their business. I work an extra job and use free money to ski and eat out. That's my choice. It doesn't make me a good person to work two jobs, nor does it make me bad to ski and enjoy nice food.
2) we should look at others as a way to improve ourselves.

Monday, August 6, 2012

That means there is no money

The whole concept of money V return needs to be re-considered by financial advisers and investors. The returns of the past decade are miserable, even much worse when you deduct the fees.
I believe you'll see individuals take free money V return concept into their own hands. Relying on markets to create a rosy future has been problematic and is out of the advisers and investors control. However, if you focus on what you can control, that is your spending and to some degree your income, you can plan a more reliable outcome for the future. This approach is now very common practice in Japan who haven't seen any market growth for years and no doubt it is beginning to happen elsewhere with personal debt being paid down as a priority and less spending at the shops.
Most advisers don't like this approach as its hard to make money (in the current environment) just on providing good advice, ie they always need to sell an investment to make a dollar.
I am trying to fund myself for a startup idea that four of us friends share. So the goal was to save $50K before we all quit our jobs and took a flying leap of faith - that could last as long as 2 years before it made us a dime. My first reaction was that saving $50K meant no big ticket items. Guess what! I broke everything down and it seemed like what was costing me the most was the small daily indulgences - eating out, coffee, a couple of beers during the week etc. The big ticket items don't even count because the difference between a $15K car and a $20K car seem immaterial over a 3-5 year horizon compared to 2 dine outs every week vs none..