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Rebel Finance is built on the foundation of investing more and working less. The question, therefore, is how do you invest more? The answer is simple: you maximize your earning and minimize your spending. The minimization of spending is summed up into one small and powerful word: “saving”. The less you spend, the more you save and the more you have left over to invest at the end of the month. Step 1: Never Lose Sight of Why you are Doing This Saving money takes work and commitment and it helps to always remind yourself why you are doing it. You are doing this to build a life of financial freedom, independence and fulfillment. This is not going to happen overnight. Get rich quick schemes to do exist – unless you are considering a career in illegal drug or organ donor trafficking. People become rich through hard, continuous and relentless work. The results compound over time. When you decide not to buy that pair of $300 leather boots and invest that money, that small sacrifice will compound into riches over the years and will help you achieve a state of financial freedom. Step 2: Understand how you Spend You need to understand your spending patterns. Given that the majority of modern day spending is done electronically, you have records in the form of bank, credit card and online payment statements. If you pay cash for something, keep a slip or receipt. This sounds like a monumental pain in the arse but you need to see this as an investment in your future financial freedom. Step 3: Categorize Your Spending Once you have your data, organize the numbers by categories, such as gas, groceries and mortgage, and total each amount. Use your credit card and bank statements to make sure you’re accurate—and don’t forget any. I would recommend the following categories (in alphabetical order) 1) Communication – cellphone, internet, fixed line telephone 2) Education 3) Entertainment – alcohol, betting/lottery, digital subscriptions, going out, movies, other entertainment, software/games, tobacco 4) Fees 5) Food – groceries, other food, restaurants, takeaways 6) Household – electricity, furniture & appliances, garden, gas, home improvements, housekeeping, levies & taxes, municipal bill, other household, rent, security, water 7) Insurance – funeral cover, home insurance, life insurance, other insurance, vehicle insurance 8) Loans & Accounts – credit card payments, home loan payments, loan payments, car payments 9) Medical – doctors & therapists, medical aid, pharmacy, other medical 10) Personal and family – activities, children & dependents, clothing & shoes, donations, gadgets, gifts, holiday, personal care, pets, sports, hobbies, tax 11) Savings and investments 12) Transport – fuel, license, parking, public transport, tolls, vehicle maintenance, vehicle tracking Tip: Look for a free spending tracker to help you get started. Choosing a digital program or app can help automate some of this work. Step 4: Budget for Savings Once you have an idea of what you spend in a month, you can begin to organize your recorded expenses into a workable budget. Your budget should outline how your expenses measure up to your income—so you can plan your spending and limit overspending. Be sure to factor in expenses that occur regularly but not every month, such as car maintenance. Here you need to calculate what you spend in a year and then divide that by 12. Be on the look out for other expenses that you pay quarterly, semi annually or annually – like college tuition and insurance. If the expense is paid quarterly, divide by 3, divide by 6 if semi annually and 12 if annually. Step 5: Include a Savings Category in Your Budget If we held the Olympic Games for the world's greatest savers, who do you think we would find on the podium? Singapore takes gold , Suriname (the smallest country in South America) silver, and China the bronze. Honorable mentions go to the Philippines, South Korea, Switzerland and Ireland. Singapore boasts a national savings rate of close to 50 percent thanks largely to the fact that residents pay almost no income tax. Singapore is an outlier, so I would suggest you aim to save 10 to 15 percent of your income. Step 6: Find Ways to Cut your Spending Do not let this make you feel like a loser but you may have to learn to say NO to your friends who want to go out partying every night. Identify nonessentials that you can spend less on, such as entertainment and dining out. Look for ways to save on your fixed monthly expenses like television and your cell phone, too. You can also downgrade on the brands that you consume – instead of Johnnie Walker Black, buy Red. You may also want to grow your hear and beard – imagine the savings in razor blades, shaving cream and barbershop visits! Talking about barbers, here are some ideas for trimming everyday expenses: Use resources such as community event listings to find free or low-cost events to reduce entertainment spending Cancel subscriptions and memberships you don’t use—especially if they renew automatically. Commit to eating out only once a month and trying places that fall into the “cheap eats” category. Give yourself a “cooling off period”: When tempted by a nonessential purchase, wait a few days. You may be glad you passed—or ready to save up for it. Step 7: Do it for the Planet Many of the products we buy are exceptionally damaging on the planet. If you are the kind of person that needs additional motivation to save, and are concerned about the future of the planet, consider the following numbers: This is what you can learn from this information: Lesson 1: cut out red meat and each chicken – not only is red meat twice the price, but it uses substantially more water (a scarce and precious resource). Lesson 2: reduce your chocolate intake – it makes you fat and at the same time skrews up the planet. Lesson 3: consider adopting a vegetarian diet half the week – again veggies and pasta are cheaper than meat and pollute less. Step 8: Consider becoming a Minimalist Minimalism is a movement that focuses on reducing the clutter in your life both in physical objects and in other distractions. People who embrace it find ways to eliminate the distractions from their lives and it opens up more opportunities for them in other ways and areas. Embracing minimalism does not mean that you stop spending money, but it can mean that you spend it on other things and your focus may change from making money to enjoying life. This may be a little extreme for some people, but if you have an addictive and extreme personality and are not a psychopath, this could be your new religion. Step 9: Set Savings Targets One of the best ways to save money is to set a goal, and you need to make the goal attainable. Start by thinking of what you might want to save for— then figure out how much money you’ll need and how long it might take you to save it. Be sure to remember long-term goals—it’s important that planning for retirement doesn’t take a back seat to shorter-term needs. Step 10: Do not Save to Spend, Save to Invest When I hear of people who save money to buy a Louis Vuitton bag, or a skiing vacation to the Swiss Alps, I am horrified. Luxury bags and vacations, in my opinion, are for people that can afford to pay for them cash from their monthly income. I believe the only reason why you save is to invest – or to pay off debt that is keeping your head below water (which makes it a form of negative investing). The objective of saving is to have resources to invest so that you can secure a life of financial freedom in the future. #finance #money #business #investing #investment #entrepreneur #financialfreedom #success #stocks #wealth #trading #realestate #stockmarket #invest #motivation #forex #bitcoin #investor #accounting #cryptocurrency #marketing #wallstreet #startup #trader #personalfinance #entrepreneurship #credit #smallbusiness #goals

Oil is a dirty product and has caused more wars than sexy women and short men combined. In the 1980s, the countries against whom the United States ran the biggest trade deficits were Libya, Algeria, Saudi Arabia, and Venezuela. These countries had the back gold and the U.S., the world's largest consumer needed to protect these interests as a fat kid looks after his cupcake. John Paul Getty made billions out of oil, but it appears that the party is winding down and the cool kids are starting to leave. Ten years ago we have engaged the debate over peak oil theory – the theory that oil is a finite resource that is not replenished. We were locked in the phobia that we would run of oil and would be left stranded on the side of the freeway with our thumbs stuck out and in danger of being picked up by a serial killer or even worse a Republican. This fear has evaporated quicker than a puddle of lukewarm lager in the Australian outback. Oil spills are more frequent that you would like to think. The International Tanker Owners Pollution Federation Limited (ITOPF) is a not-for-profit organization established on behalf of the world's ship owners to promote an effective response to marine spills of oil, chemicals, and other hazardous substances. Any industry that has its federation to clean up its mistakes is neither clean nor responsible – it is a big pile of horse excrement. According to the federation, in the 1990s there were 358 spills of 7 tons and over, resulting in 1,134,000 tons of oil lost; 73% of this amount was spilled in just 10 incidents. In the 2000s there were 181 spills of 7 tons and over, resulting in 196,000 tons of oil lost; 75% of this amount was spilled in just 10 incidents. In the nine years 2010-2018, there have been 59 spills of 7 tons and over, resulting in 163,000 tons of oil lost; 92% of this amount was spilled in just 10 incidents. One incident is responsible for about 70% of the quantity of oil spilled this decade. There seem to be champagne corks popping and cocaine sniffing in the federation. They are in party mode. They take great pride in the fact that a large portion of the oil spilled is isolated to a small number of disasters. They seem to think that as a planet, we would rather have 10 mega spills than 100 small spills. I would say that one spill is one spill too many and the fact that there were 59 spills of 7 tons and over between 2010 and 2018 is a shocking record and the sooner that we can wean ourselves off this noxious liquid the better! So what is going to happen between now and 2050? 1) Cheap Renewables – Turning Electricity on its Head As of 2017, two-thirds of the world's electricity was supplied by fossil fuels. We can expect this number to be turned on its head by 2050 at which point two-thirds of the world's electricity will come from renewables. Wind and solar alone will fire up 50 percent of the world. This will bring to an end the dominance of fossil fuels. Dr. Jack Kevorkian will be arriving in black coats, rubber gloves, and hypodermic needles. Fossil fuels will be tagged, sedated and their lifeless cadavers will be flung into the darkest corners of the world and left to the pleasure of the vultures and tow truck drivers. 2) Total Investment in New Power Generation to 2050 - $11,500,000,000,000! This is quite a sizeable chunk of change and works out to around $255 billion per year. The most interesting part of this total spending is the percentage to be assigned to zero-emissions technology - a total of 87 percent. The bulk of this will be to wind and solar. The Cambridge Dictionary is going to have to change its definition of "blowing hot air" from "empty, exaggerated talk" to "the power source of the future". Return on investment is also going through the roof. By 2030 we will be getting more than twice the renewable capacity for every dollar spent than we got in 2018, and between 2030 and 2050 that number will double again. 3) Solar panels – Sunshine Reggae Solar panels (also known as photovoltaics or PVs for the chronically lazy) are now cheaper than a fake Rolex at a Rastafarian flea market. Between 2010 and 2018 costs declined 84 percent. Between 2018 and 2025 costs are expected to decline a further 52 percent which means that soon the manufacturers of PVs are going to be paying the users to take them off their hands! This is a classic case of supply overtaking demand. This means it will no longer necessary to pawn granny’s Louis XIV chair to install solar panels on your roof. 4) Wind – Cheaper than a Flatulent Swamp Donkey Costs of turbines are down 32 percent between 2010 and 2018. At the same time efficiency is up. If you google "cheaper and more efficient" there are 135 million results. I looked through the first 10 pages and all the results dealt with renewable energy. Not surprisingly there were no results for banks, financial services or government. Solar and wind are now cheaper than building new coal and gas plants in major markets like India, Germany, Australia, China, and the United States. By 2030 we reach the tipping point where this will be the case in almost every market. The reason why this tipping point is not reached sooner is that natural gas prices are softer than a biscuit that has managed to survive 20 minutes in junior’s paddle pool. The explosion of fracking in the Permian basin has brought excess gas online where producers are giving it away to consumers that are prepared to collect it. The other alternative for frackers is to burn the oil – but that tends to get the Green Peacers grumpy. 5) Cheap Batteries – Keeping Housewives Happy since…. The biggest challenge when it comes to renewable energy is that it is linked to the weather. Weather is about as reliable as a relapsing junkie. Battery prices have already declined 79 percent between 2010 and 2018 and prices are expected to decline an additional 67 percent to 2030. Cheap batteries, in addition to pleasuring millions of dissatisfied housewives, will also allow us to store renewable energy until required. Wind and solar will increasingly be able to run when the wind is not blowing and the sun is not shining – that sounds like a line from an Earth, Wind and Fire song. 6) The Electricity Model – Flipping the Light Switch In the old days, when stockbrokers were rich and pedestrians were nervous, electricity systems were structured in a way where large plants ran around the clock and smaller units lent a hand during peak hours. In the future, this is going too turned on its head and cheap renewables will form the base supported by conventional plants running at lower capacities. But what happens if the world enters a Bill Withers scenario where his girl leaves him for weeks and there "ain't no sunshine when she's gone and only darkness every day"? There are limits to what renewables and batteries can do. There is still demand for peaker gas as a back-up. These will be smaller and more nimble installations as opposed to large scale combined cycle gas turbines. 7) Global Power Demand – Lighting Up the World’s Darkness Global power demand will increase by 57 percent in the 30 years to 2050. This equates to a growth of 1.4 percent per year. This growth will be driven by the electrification of emerging markets in Africa, the Middle East, and Southeast Asia. McMurphy, in the 1975 movie "One Flew over the Cuckoo's Nest" had some interesting insight into electrification: "They were giving me ten thousand watts a day, you know, and I'm hot to trot! The next woman takes me on's gonna light up like a pinball machine and pay off in silver dollars!" Emerging markets are going to be lighting up like a pinball machine. Demand in developed markets is expected to be muted or even begin to decline on account of increased efficiency and modest economic expansion. 8) EVs – Driving Demand By 2050 it is expected that 9 percent of total energy demand with come from electric vehicles. Outliers will be countries like Germany where 24 percent of total demand for electricity will be for EVs as they take to the autobahns and drop the pedal. 9) Air-conditioning – Cranking up the 20,000 BTUs Trump turns out to be wrong about global warming which in turn takes him to 0 – 50. Emerging countries in Asia, Latin America, and Africa crank up their aircon during the daytime which will change the intraday load profiles. If you have ever go Monterrey Mexico in July you will find heat that will strip the paint off your tuck box. 10) Coal – The Biggest Loser Coal gets set adrift into the vast ocean of nothingness to be exposed to scurvy, seafaring vultures and marauding Somalian pirates. The global demand for coal is falling. In 2018, 38 percent of the world's energy was generated with coal. The biggest consumers were India and China using coal for 66 percent and 79 percent respectively. It is believed that demand for coal will account for a mere 11 percent in 2050. 11) Asia Pacific – Hey Big Spender Shirley Bassey said it best when she said: "The minute you walked in the joint, I could see you were a man of distinction, A real Big Spender, Good looking, so refined, Say, wouldn't you like to know what's going on in my mind?" The Asia Pacific will spend almost the same as the rest of the world combined in the energy sector as they whip out the Benjamins. China and India alone will spend $4.3 trillion with China accounting for 49 percent and India 29 percent of total regional investment respectively. Seventy-five percent of the cash goes to wind and solar. 12) U.S. and China - Giant Turnips disguised as Kobe Beef. They say that after three days, both fish and house guests start to smell worse than a pair of flannel underpants from the Seven Year War. The two countries that are stinking up the environment the most are China and the U.S. but this is changing. The U.S. is starting to replace aging coal plants with cheaper gas and renewables, much to the distress of Trump. By 2050 coal plants are expected to be scarcer than sobriety in Dublin on St Patrick’s Day. Renewables will reach 55 percent of installed capacity in 2050. China will grow its renewable capacity from 7 percent in 2018 to 46 percent in 2050. 13) The Middle East and North Africa Solar and wind will undercut cheap domestic oil and gas and move to 50 percent zero-carbon by 2050. Oil, on the other hand, will decline to a paltry 7 percent as the oil sheiks trade in their Lamborghinis and tigers for battery-powered scooters and Chihuahuas. 14) Power Emissions - Peaking in 2027 We will continue with our cacophony of sneezing, spluttering, projectile vomiting and nasal trumpeting until 2027. It is on this date that the amount of filth we belch into the atmosphere peaks at 13.6 billion metric tons and then declines by 2 percent per annum until 2050. This is largely due to China going cold turkey on coal. 15) Getting Rid of Coal is not Enough The Paris Agreement aims to limit the global temperature increase to 2 degrees. Removing coal-fired plants will get us closer to 2 degrees but we need to do more. On top of the list would be new zero-carbon technologies that can decarbonize gas on a large scale basis. forecasts provided by Bloomberg New Energy Finance #finance #money #business #investing #investment #entrepreneur #financialfreedom #success #stocks #wealth #trading #realestate #stockmarket #invest #motivation #forex #bitcoin #investor #accounting #cryptocurrency #marketing #wallstreet #startup #trader #personalfinance #entrepreneurship #credit #smallbusiness #goals

Everyone tells you to follow the “smart money.” That is HORRIBLE advice. You should follow the dumb money. Why compete with the smart guys when you can compete with the dumb asses? So where is the stupid money located? To answer this question, we go to the greatest financial fuck up in modern economic history – the Great Recession of 2008. The global banking system almost collapsed when Lehman Brothers went bust in September 2008. The crisis gave us an insight into how different markets operate. It separated the smart money from the stupid money. How do we find the dumb money? I am looking for the market that was the quickest and most efficient to assess the gravity of the crisis, discount all the immediate factors and then project what would happen in the future. Financial markets are discount mechanisms. The process current information and then discount what is going to happen in the future. The markets that reacted quickest are smart and the markets that reacted slowest are dumb. The four major markets are equity (stocks), fixed income (bonds), currency (U.S. dollar) and commodity markets. The fifth market is the derivatives market, but it derives its value from these four base markets. The first market to hit the bottom and then recover was the currency market. The U.S. dollar, as measured by the dollar index, cratered one week after the Lehman Brothers collapse on September 22nd and then rallied 17 percent through to March 5th, 2009. Gold reached its minimum point on November 12th, 2008 and then rallied 40 percent to February 20th, 2009. The third market to hit rock bottom was the U.S. Treasury market. The yield on the 3-month treasury dipped into negative territory for one day on December 4th, 2008. This was a point of extreme pessimism showing that people had lost confidence in the banks and were prepared to pay the U.S. Federal Reserve to look after their hard-earned cash. When did the stock market hit the bottom? Three months after the treasury market. Both the Dow Jones Industrial Average and the Standard and Poor's 500 Index found their bottoms on March 9th, 2009. This is the timeline: 22 September 2008: Currencies (U.S. dollar Index) 12 November 2008: Commodities (Gold) 4 December 2008: Bonds (the U.S. 3 month Treasury) 9 March 2009: Equities (Dow Jones and Standard and Poor’s 500 Index) The time between the smartest money (currencies) and the dumbest money hitting their lowest levels was 168 days, which is almost 6 months. That is the gestation period of a baboon. Many believe that capital markets are linked – that currency traders talk to bond traders, who talk to commodity traders and equity traders. Nothing could be further from the truth. They are like ships passing in the night. Besides, the one market that many believe to be the smartest is, in fact, the dumbest. It is this kind of information asymmetry and gets my heart racing, my palms clammy and my pupils dilating. The Darwin Awards are bestowed posthumously on those people who unwittingly play a key role in their own deaths. One winner was an ice fisherman with a hankering for dynamite. Accompanied by his golden retriever, he drove his new Jeep Jerokee into the middle of a frozen lake. He whipped out a stick of dynamite and his Zippo lighter, lit the stick and hurled it 30 meters out. His best friend obediently sprinted after the flaming stick and proceeded to bring it back and …..boom. The stock market is the lifetime recipient of the Darwin Awards. Reason 1: Democratization of the Stock Market In the old days, stockbroking moved at a different pace. You would park your Rolls Royce and take the elevator to your broker's office. He would open up a box of Cubans, offer you a glass of single malt and talk about the World Series. You would instruct him to buy 1,000 shares of Bethlehem Steel. He would write the order on a ticket and hand it to his errand boy. The errand boy would jump on his bike and pedal over to the stock exchange. He would walk over to the floor broker who would ignore the kid for five minutes as he finished dictating his lunch order to his assistant. The floor broker would then saunter over to the pit and gesticulate to the market maker and execute the order. Today, the barriers to entry in the stock market are low. Any mammal with opposable thumbs, a smartphone and a few dollars to their name can open an online brokerage account with Robinhood. Robinhood is a U.S.-based financial services company headquartered in Menlo Park, California and requires no minimum balance. The address of Robinhood is revealing. This is not a regular broker filled with stuffy old men in pinstriped suits, Gordon Gekko suspenders and unmatched dayglow socks with a copy of the Financial Times tucked under their flabby untoned arms. Robinhood is a fintech company, filled with kids in hoodies, looking to democratize the stock market. This is going to lower the collective IQ of the stock market. For those investors that are prepared to do their homework and apply a few simple principles, this is fantastic news. Reason 2: The Unwashed Masses Love the Adrenaline of Stocks Stocks gyrate more than a White House intern in the 1990s. This volatility attracts the masses. Beyond Meat is a succulent example. This company makes plant-based burgers for the vegan millennials who want to wean themselves off meat to save the planet (environmentalists claim that flatulent bovines pollute more than cars). The stock IPO at $25 in May 2019 and rallied to $235 in ninety days. This is a return of 840 percent. It then declined 65 percent to $85. These savage swings attract a larger number of unskilled investors who are looking for a quick buck. It is this mass of uneducated money that provides awesome opportunities to those investors prepared to do a little homework. Reason 3: The Proliferation in Exchange Traded Funds Exchange-Traded Funds, also known as ETFs, are a rapidly growing industry. The numbers are quite astounding. According to Bloomberg, it took 8 years (2000 to 2008) for the U.S. ETF industry to reach $1 trillion in assets. Going from $3 trillion to $4 trillion took only 2 years (2016 to 2018). According to Blackrock, the New York Yankees of ETFs, global assets under management in ETFs is $4.7 trillion as of 2018. To understand the size and scope of this number, the nominal GDP of the United States was $19 trillion in 2018. China boasted a nominal GDP of $12 trillion, Japan $4.8 trillion and in fourth place Germany with $3.6 trillion (come along now Angela Merkel, it is time to put the foot on the gas). Total assets under management in ETFs was the size of the world's third-largest economy. How does the explosion of ETFs lower the average IQ of the stock market? To explain we are going to use the law of syllogism. A syllogism is a logical argument that applies deductive reasoning to arrive at a conclusion based on two or more propositions assumed to be true. Here we go: Major Premise: Warren Buffett, the greatest investor in the history of humanity, says that diversification is protection against ignorance. It makes little sense if you know what you are doing Minor Premise: ETFs are built on the foundation of mega-diversification. Conclusion: People who invest in ETFs do not know what they are doing. Investing in a diversified portfolio is like going to a roulette table and putting half your money on red and half on black. You are hedging your bets just in case you are an idiot. Diversification is a game of “what if”. In your mind, you are saying: “I like this stock but what if I am wrong? There is a chance that the sum of all my work and research is wrong, so let me buy a whole bunch of other stocks and maybe, just maybe, one or two of those will double in value”. Diversification shows a lack of conviction and belief in your own abilities. It is an admission of defeat before you start the race. ETFs are funds that trade like stocks. The majority replicate an index. In 2019, one of the largest ETFs was the iShares Core S&P 500 ETF with a market cap of around $200 billion. This ETF invests in the 500 stocks that make up the Standard and Poors 500 Index. You cannot get more diversified than 500 stocks in ten different sectors. Exchange-traded funds have also done a great job of attracting trillions of dollars of uneducated money. In Rebel Finance, we love the dumb money. Reason 4: Faulty Cerebral Wiring The human brain does not react well to stress. Neuroscientists have discovered how chronic stress and cortisol can damage the brain and hamper the decision-making process. This could explain a curious phenomenon that often presents itself in stock market investing. People tend to sell their winners and hold onto their losers. They buy a stock, it goes up 10 percent, they think they are geniuses and then take profits. When the stock goes down 10 percent, they hold onto it and pray that it recovers. It then goes down another 10 percent and they start going to mass, lighting candles and sprinkling holy water on their computers. After another 10 percent decline, they hire a priest to do an exorcism but refuse to sell. The stress associated with market loss causes short circuits the parts of the brain dedicated to making rational decisions. This inertia also stems from the fear of realizing a loss because studies have shown that the anguish of losing $100 is far greater than the joy of winning $100. Investors are overcome with the hope that the stock will recover. This irrational behavior opens the door for rational, prepared and dispassionate investors to exploit this arbitrage. Reason 5: Romanticism of Trading All the great Wall Street movies are about trading, making a quick buck and the debauched lifestyle associated with the stock market. People fail to realize that investing should be boring. Paul Samuelson said that investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas. This lack of patience and quest for a quick buck leads to erroneous (read "stupid") decisions.Warren Buffett said that calling someone who trades actively in the market an investor is like calling someone who repeatedly engages in one-night stands a romantic. Buffett also said the stock market is a device for transferring money from the impatient to the patient. Trading causes irrational exuberance. Level headed and dispassionate investors can exploit these irrational decisions to their advantage. Reason 6: Corporations have Become Major Players in the Stock Market Granny used to teach you that money does not grow on trees. With low and negative interest rates in the U.S., the Eurozone, and Japan, it looks like granny could have been mistaken. Imagine a world in which money is free. Banks and investors are throwing cheap money at corporations. Siemens, the German engineering and manufacturing giant, had borrowed 7.6 billion euros with a weighted average coupon of 0.38 percent and a weighted average maturity of 4.25 years. This is according to data from Bloomberg as of November 2019. Siemens would need to pay 29 million euros per year in interest to service this debt. In 2018, Siemens generated revenue of 83 billion euros. Assuming 250 business days in a year, that works out 332 million euros per day. Assume, like most efficient Germans, they work 8 hours a day. That means they make approximately 41.5 million per hour. They can cover the annual cost of this money in 42 minutes. That, granny, is tree-money. So what are companies doing with all this dinero? A large chunk is being used by companies to buy back their own shares. The obvious question is whether this is dumb money? Not exactly, because who knows a company better than that very same company? That, however, is not the point. This massive flood of corporate money into the market creates a bull market that is not based on fundamentals. Stock buybacks boost stock prices, lifts the stock market and sucks more dumb money into the market. This helps to distort valuations. At Rebel Finance, we love market distortions. #finance #money #business #investing #investment #entrepreneur #financialfreedom #success #stocks #wealth #trading #realestate #stockmarket #invest #motivation #forex #bitcoin #investor #accounting #cryptocurrency #marketing #wallstreet #startup #trader #personalfinance #entrepreneurship #credit #smallbusiness #goals

Ask any financial advisor for their top five long term investments, I would wager that the majority would include retirement annuities, your house, and well-diversified exchange traded funds. What would you say if I told you that these were the WORST long term investments? You may think that I have gone bonkers, joined the circus and am now bouncing jelly beans off my belly and pulling live pigeons out of my ear. But let me explain. 1) RETIREMENT ANNUITIES I hate annuities Ken Fisher Retirement annuities are crap investments. The only beneficiary is the annuities salesman. According to billionaire investor Ken Fischer, if you invest $1 million investment it will help to put a kid through private college. The problem is that it is not your kid. It is the kid of the annuities salesman. Fisher says you would be better off cutting a check directly to the salesperson and then investing the balance directly in stocks and bonds. Do not be fooled by the sales rhetoric. Annuity salespeople will regale you with the tax benefits, the power of compounded growth, the discipline of saving (a lie that we have debunked), supporting your dependents and long term stability. If you are financially educated and disciplined, you can do better with direct investments. Annuities are black-box investments – there is no transparency and accountability of results. The fees are bordering on criminal. Moreover, when you retire with that annuity, you will get a stream of income akin to a quaint Scottish brook. You deserve the whitewater rapids on the Zambezi River. 2) YOUR HOUSE Repeat After Me: Your House Is Not An Asset Robert Kiyosaki The American dream is built on homeownership. The 2008 financial has its roots in the 1990s. In 1995, Bill Clinton took time off from using Monica Lewinsky as a human humidor. He rewrote the Community Reinvestment Act. This pressurized banks to lend to low-income neighborhoods and facilitated the rapid increase in subprime lending. Clinton did this to strengthen his political base in those lower-income households. He made it easier for these families to attain the American dream, and thereby increased the probability of being reelected in 1996. Bill is a cunning fox. Homeownership enslaves people financially. According to Zillow, one-third of homes in the United States in 2018 were "free and clear" - they were not encumbered by a mortgage loan. Two-thirds were encumbered. There is nothing like a 30-year mortgage bond to tie you down financially. If you have a mortgage and a job, the pressure to stay in that job until that death pledge has been paid off is immense. Mortgages are the single biggest reason standing in the way of financial freedom. To make matters worse, most people believe their home is an asset. Robert Kiyosaki, in his book Rich Dad Poor Dad, says the asset/liability test is simple. Assets put money in your pocket. Liabilities take money out of your pocket. If you living in a house, and it is mortgaged, you are paying rates, taxes, and interest on the loan. It is a liability. If it is "free and clear" it is still a liability. You still have to pay rates and taxes, not to mention lights, water, and general maintenance. But property prices always go up. That is a fallacy. Americans who bought houses before the financial crisis of 2008 will paint you a different picture. Real estate is like any asset – its price can rise or fall and if you are banking on your house price appreciating in value, then welcome to the world of speculation. Real estate is a very powerful income-generating asset, but it is only an asset when it generates income and puts money in your pocket. 3) EXCHANGE TRADED FUNDS "There is a manifest destiny for ETFs. That they are the structure people will use to get exposure to securities in the future, and mutual funds will be banished to the dustbin like typewriters have been replaced by computers. It's just a better technology and so it will come to replace funds over the next 20 years." Matt Hougan The growth in exchange-traded funds (ETFs) has been exponential. It took 8 years (2000 to 2008) for the U.S. ETF industry to reach $1 trillion in assets. Growing from $3 trillion to $4 trillion took only 2 years (2016 to 2018). According to Blackrock, the New York Yankees of ETFs, global assets under management in ETFs is $4.7 trillion as of 2018. To understand the size and scope of this number, the nominal GDP of the United States was $19 trillion in 2018. China boasted a nominal GDP of $12 trillion, Japan $4.8 trillion and in fourth place Germany with $3.6 trillion (come along now Angela Merkel, put your back into it). Total assets under management in ETFs was the size of the world's third-largest economy. So what do I hate ETFs? I think ETFs are fantastic instruments for the financially illiterate. They are funds that trade like stocks. Most ETFs track stock market indices. The Satrix ETF listed on the South African Stock Exchange tracks the JSE Top 40 index. The ETF exposes you to great South African stocks like media giant Naspers, Standard Bank, mining group BHP, luxury goods company Richemont, cell phone company MTN and paper company Mondi. The ETF acts like a diversified portfolio and therefore is an inappropriate tool for financial freedom. Buffett said diversification is for people who don’t know what they are doing. Buffett himself recommends that average investors invest in low-cost ETFs. Rebel financiers are not average investors. The objective of rebel finance is to help you attain investment mastery through education and coaching. #finance #money #business #investing #investment #entrepreneur #financialfreedom #success #stocks #wealth #trading #realestate #stockmarket #invest #motivation #forex #bitcoin #investor #accounting #cryptocurrency #marketing #wallstreet #startup #trader #personalfinance #entrepreneurship #credit #smallbusiness #goals

Most people manage their finances based on a list of financial lies. These lies have been passed down through the generations and now form part of a body of understanding known as "conventional wisdom". The fact that everyone believes something is not sufficient reason to believe that it is right for you. The ancient Greeks believed that the earth was flat. Let's take a look at how conventional wisdom is working out for us: a typical cow in the European Union receives a government subsidy of $2.20 a day. The cow earns more than 1.2 billion of the world's poorest people. If this is where conventional wisdom has taken us, the time has come to find a path less traveled (Robert Frost). One of the biggest financial/money lies out there is that you should save religiously for retirement. Let me explain why this is one of the biggest financial mistakes you can make and how, instead of providing you with a gateway to financial freedom, will only serve to enslave you further to a self-serving financial industry that has no interest in your well-being. Longevity will Kill You In the 1900s, the average life expectancy for males in the U.S. was 46.3 years and 48.3 years for women. By 2018, the average had almost doubled to 80 and 84 respectively. While living longer may sound awesome, consider the financial implications of longevity. To do so, we need to delve into the dark, murky and often misunderstood world of the actuary. After the dot.com bubble burst in 2000, I had the pleasure of leading a team of 20 actuaries in the financial engineering department of a life insurance company - it was not nearly as much fun as it sounds. Actuaries build powerful mathematical models to predict mortality rates. Pension and healthcare companies use these rates to calculate how long they will financially support their customers. The longer people live, the greater the financial strain brought to bear on these companies. The longer you live, the more likely you will outlive your money. Pensions became popular in World War II as a means to "pay" workers more due to salary freezes. Today, pensions are a multi-trillion dollar industry. There are public pension funds and there are private pension funds. Public pension funds are regulated under public sector law while private pension funds are regulated under private sector law. In some countries, the difference is clear. In other countries, it is more nuanced in that private pensions are also regulated by public regulators. As of 2018, the largest pension fund was the Federal Old-Age and Survivors Insurance Trust Fund and Federal Disability Insurance Trust Fund (collectively, the Social Security Trust Fund or Trust Funds) managing $2.9 trillion. That is the nominal gross domestic product of the United Kingdom, the world's fifth-largest economy. The largest pension funds in the world collectively managed $18 trillion which is one trillion shy of U.S. gross domestic product. Pensions are financial monsters. Up until the 1980s, most pensions were defined benefit schemes. They guaranteed a fixed payment to the participant on retirement. This was back in the day when doctors were endorsing cigarette brands, sunscreen was an item of furniture and we lived under the constant threat of the nuclear mushroom cloud. Also, interest rates were in double digits and pension fund managers did not need to be singularly talented to match their assets and liabilities. In 1987 and 2000, the markets taught us the painful lesson that crashes were no longer a once-in-a-generation occurrence. Financial engineering, derivatives, and technology injected new levels of volatility into markets which triggered red flags in actuarial models. Pension funds realized that it was dangerous to continue guaranteeing benefits in this volatile world and moved away from defined benefit to defined contribution schemes. This meant that retirement benefits were no longer defined by the pension's ability to generate returns. Benefits were now based on contributions. Pension’s waved the white flag and retreated liked frightened hyenas with their tails between their legs. How often have you come across the following advertising message from pension companies: “Most people will not have enough money for retirement - you need to start saving more and earlier? You need to live below your means and save more”. This is genius marketing. Fear is a powerful motivator. In fairness to the pension companies, this is not a ruse. Most people will outlive their pensions because the formal pension system is no longer capable of looking after the interests of their clients. Many blindly believe that the people managing their retirement savings know what they are doing. I have spent 25 years inside the finance industry, working in and with banks, insurance companies, and pension funds. Pension managers are underwhelming at best. The smart ones typically leave the mainstream organizations to start their own hedge funds and family offices. The mediocre ones stay and are looking after your cash. Here is a list of reasons I believe your retirement savings are not in the right hands and you need to make radical changes now. Reason 1: Pension Fund Returns are in a Long Term Systematic Decline and are Heading towards ZERO. Investment management is a relative game. Performance is measured against a benchmark. If you do better than the benchmark you are rewarded. If you do worse, you are subject to a public lashing. An African parable talks of two men walking through the bush and come across a hungry lion. One man leans over and starts to tie his shoelaces. The other says there is no way he will be able to outrun the lion. The man tying his laces looks up at his companion and says: "there is no need for me to outrun the lion, I just need to outrun you". In the modern pension world, consultants and regulators benchmark and compare the living crap out of fund performances. They publicly rank returns for all to see. It is a constant beauty pageant – the swimsuit competition where everything is laid bare. To maintain their sanity, managers adopt a simple strategy: if they take too much risk, they are ranked top one month and bottom the next month. No-one likes volatility. Investors want Goldilocks returns - not too hot and not too cold. The internal dialogue of a pension fund manager is as follows: "I will follow my peers and aim to be just above the middle of the pack. I will reduce my exposure to risky assets like equities and increase my exposure to less risky assets like bonds". Bonds are also known as fixed-income instruments and are less risky than equities. Pension funds are the world's biggest buyers of bonds. Bond returns are linked to interest rates. In 1981, if you bought a newly issued 10-year United States treasury bond and held it until maturity, you would have earned 16 percent without any risk. The United States Treasury bond is considered to be the safest financial instrument known to man. At the start of 2020, this yield had plummeted to 1.8 percent. This return is as exciting as a doctoral thesis on the lavatory habits of the Lithuanian pygmy gnat. You now need to understand the financial theory of the "least dirty shirt". Finance is a relative game – you do not need to be smart or fast, you just need to be smarter or faster than your competitor. A return of 1.8 percent is crap, but how does that compare with the rest of the world? In January 2020, 23 developed countries were paying less than 1.8 percent on their 10-year government bonds. Switzerland was the worst of the worse with a return on -0.55 percent according to Bloomberg. Is that a typo? If you bought a Swiss government bond in January 2020 and held it until maturity, you would have earned a negative yield. You were paying the Swiss government to look after your money. This is like going to the bank, asking for a loan, and the bank pays you the monthly installments. But this is not the most horrifying data point – there are two more. Switzerland is not the only country paying a negative interest rate on 10-year bonds – there are seven more including Finland, Belgium, and Austria. And here is the joker that will kick you in the nuts – Greece, which is not well known as being the bedrock of financial stability, paid a return of 1.3 percent which was 50 basis points below a United States Treasury. The financial world was more distorted and disfigured than a Picasso painting. If we continue down this rabbithole, pension returns will approach zero and will dip into negative territory. Your pension is going to get smaller and you will outlive your savings. You, therefore, need to rebel now. 2) Never Fear, Wall Street will Find a Solution After law school, I was faced with two options: become a lawyer and make the world a better place, or become a banker and make the world a perfect place. My philanthropic subconscious caused me to choose the latter. For me, the northern star was the trading and investment side of banking which is referred to as “Wall Street”. This world idolizes Gordon Gekko, in his suspenders, smoking Cuban cigars, swigging single malt whiskey and living by the credo that greed is good. I thought Wall Street was a collection of super-smart and successful individuals who can shape and move world markets. I thought it was the "smartest" money in town and wanted part of the action. Then along came the financial crisis in 2008 which almost lead to the extinction of urbanized humanity. This may sound extreme but consider the facts: when Lehman Brothers collapsed, the global banking system almost froze. If an A-rated bank in the most regulated market in the world could fail, what is the probability of smaller banks in less regulated markets going the same way? When banks do not function, bread companies cannot buy wheat, and farmers cannot buy silage to feed their cows. Payments are made through banks. When there is no food, urban humanity ends. What will New Yorkers do – go to the Central Park Zoo, shoot a grizzly bear, skin it and then fire up the barbeque? I don't think so. This fragility of urban survival built on credit cards and Whole Foods is the reason why cryptocurrencies exist. Santoshi Nakamoto – a person or group of people more camera shy than the Loch-Ness monster invented bitcoin and the blockchain. Santoshi was terrified by the prospect of living in a world in which life depended on dim-witted and greedy bankers who were not wired to make decisions for the greater good. Santoshi, therefore, created a currency that could operate outside of the formal banking system. This is the Reader’s Digest version of what the financial crisis taught us about the people who have their filthy hands all over your money. Lesson 1: Wall Street is Not the Smart Money Do not be fooled by the fancy Swiss watches, Italian sports cars, and Hermes ties. Most bankers are untalented. Most Wall Street banks were on the wrong side of the 2008 financial crisis. They lost trillions of dollars and required governmental CPR. Howard Hubler (Howie to his friend) was the biggest loser. Howie was a bond trader at Morgan Stanley. He racked up losses of $9 billion – that is 9 with 9 zeros. That is a staggering amount of money for one individual. Given that finance is a zero-sum game (if Howie is losing 9 billion, somebody must be making 9 billion), where was the smart money amidst all this turmoil? The winners were eclectic hedge funds working under the radar in dark offices poring over CDO prospectuses, and Goldman Sachs – the one Wall Street bank that always comes out on top. Howie landed on his feet. After being fired from Morgan Stanley, he set up his own advisory firm into which investors with short memories invested more than $1 billion. A track record of success is not required for a career of raping and pillaging on Wall Street. Lesson 2: Wall Street is Dishonest The planet's most important financial index is LIBOR – the London Interbank Offered Rate. This index has nothing to do with London. It is the interest rate at which high-quality banks lend to each other in U.S. dollars. In 2020, hundreds of trillions of dollars in bonds and swaps were linked to LIBOR. Every day they were valued based on the LIBOR fixing. Prepare for your minds to be blown. Market prices are set by market forces – supply and demand. Most interbank interest rates around the globe are set in this way, but not LIBOR. It is fixed daily based on a survey of 17 banks. Anyone with two fingers and a smartphone can set up a WhatsApp group chat with 17 people. Dishonest bankers got together on WhatsApp and conspired to manipulate this LIBOR fixing. When the survey arrived, each bank knew exactly what the other 16 banks were going to say. This allowed them to set the fixings in their favor. Regulators were lightning-fast to jump onto these miscreants and make swift changes. In 2021, 14 years after these nuggets of truth were revealed, LIBOR will be assassinated and replaced with the Secured Overnight Financing Rate (SOFR). Having the word "Secured" upfront means it will be impossible for Wall Street to manipulate. Lesson 3: Wall Street is Infested with Conflicts of Interest Wall Street specifically, and the financial community in general, is rotten to the core with conflicts of interest. When I was a trader, we had an ongoing joke about how the interests of the bank were always put before the client. If the client ever happened to get a good deal, it was purely coincidental and forgivable. These conflicts of interest are particularly acute in the research that banks publish – the research on which many investors rely when making investment decisions. When a bank analyst recommends you buy a stock, the objectivity of the recommendation is a mystery. The bank may be doing corporate finance work for the company that would cloud the judgment of the analyst. If a bank is underwriting the initial public offering of Uber, what are the chances of the analyst publishing a negative report on the company? There is a better chance of winning the lottery, having a threesome and being struck by lightning in the same afternoon. Conflicts of interest also live in the financial advice banks give to clients. I sold a derivative hedge charging a 100 percent markup on the premium. The hedge cost 250,000 and I charged 500,000. I did this after hearing the client had no ability to value the true value of the hedge. The client was the Catholic Church. There is a special place in hell for derivatives traders, next to Ted Bundy and Jeffrey Dahmer. A client once said to me: "Ralph, you are a nice guy, it is always good to meet you, but going forward, I have decided to change my trading strategy. Every time your bank recommends to buy, I am going to sell". That client is now a multi-millionaire with a house in Monte Carlo. He recently got married to a Colombian supermodel and Beyoncé sang at their wedding. You might say your pension is not run by a private pension firm, but by the government. The line between public and private pension is sometimes vague. Generous employers contribute towards both a private pension and to a public pension. Most public and many private pension funds are facing large unfunded liabilities because they are Ponzi schemes. In the world of Ponzi, new money is used to pay existing investors. Bernie Madoff was the king of the Ponzi - and is now spooning with a 400-pound felon in a prison cell. This is how the Principle of Ponzi is applied to a public pension fund. Assume that there are 1,000 participants in a pension scheme. Of these 1,000, 700 are economically active (i.e. they are working) and are contributing to the scheme and 300 are retired in Florida wearing socks and sandals and playing poker next to the pool. Money enters the pot every month from the 700 workers. Some of that money is used to pay the 300 to help them settle their gambling debts and guarantee a fresh supply of socks and sandals. The remaining cash is used to run the scheme - administration, rent, salaries, telephone, high-speed internet for their Netflix streaming and sundries. The money not spent on these essentials is invested in stocks, bonds, hedge funds, and alternative investments and make up the assets of the fund. For this scheme to keep working, more money must come in than goes out. This is where the wheels start to wobble. As population growth starts to decline - as young couples prefer to backpack around the world and hug the trees in Bali instead of procreating - fewer new people enter the scheme. Sometimes population growth slows down not because of tree-hugging but because of the government – such as the one-child policy in China. The Chinese population will stop growing in 2024. In Japan, the undisputed leader in the inverted population pyramid, the market for adult diapers is larger than the market for infant diapers. Assume that after a decade, only 100 newbies have joined the 700 swelling the number of contributors to 800. However, shortly after, 350 retire and head down to Del Boca Vista in Florida. We now have 650 in Florida and 450 contributing to the scheme. More money is flowing out than flowing in. The fund administrators need to draw on those reserves and government support to cover their unfunded liabilities. And who better than the government to fill gaps? Governments have access to limitless resources. They control the printing press – Johannes Gutenberg is the patron saint of all central banks. They can print money - a power made exponentially more potent by the Nixon Shock. From a financial perspective, the Nixon Shock makes Watergate look like a game of hide and seek. In 1944, the Bretton Woods system of monetary management pegged the major world currencies to gold. In 1971, Nixon decided to unilaterally move the United States dollar off the gold standard in the face of mounting inflation. By 1973, the Bretton Woods system was replaced de facto by the current regime based on freely floating fiat currencies. Before 1971, you could take your paper money to the Federal Reserve and exchange it for gold. After 1971, you could take your money and replace it for the same money of the same value - just on cleaner paper. This is the Nixon Shock and marked the end of financial coherence. Between 1971 to 2019, United States M1 money supply (physical currency and coin, demand deposits, traveler's checks, other checkable deposits) grew from $400 billion to $4 trillion – an increase of 1,000 percent according to data from Bloomberg. This ability to print money represents a substantial disincentive to save. You are holding your wealth in pieces of paper that are continuously devaluing. Governments cannot keep printing money indefinitely to plug these pension gaps. A point of inflection will be reached, and this house of cards will come tumbling down. You do not want to entrust your retirement savings into this precarious paper system. You need to step up and take charge of your financial future now. #finance #money #business #investing #investment #entrepreneur #financialfreedom #success #stocks #wealth #trading #realestate #stockmarket #invest #motivation #forex #bitcoin #investor #accounting #cryptocurrency #marketing #wallstreet #startup #trader #personalfinance #entrepreneurship #credit #smallbusiness #goals

We have all heard about e-commerce. Not many people have heard about recommerce. According to Wikipedia, recommerce or reverse commerce, refers to the process of selling previously owned, new or used products, through physical or online distribution channels to companies or consumers willing to repair, if necessary, and reuse, recycle or resell them afterwards. If you are looking to start, or invest in a business in 2022, you need to understand what businesses are going to thrive in the current world of reduced consumption and demand. We are entering into an age of thrift and austerity. Below is a list of five second hand (or recommerce) businesses that are going to thrive in 2022. 1) Second-hand Clothing By 2028, 13 percent of the clothes in women's closets are likely to be secondhand, up from 6 percent in 2018 according to ThredUp. The secondhand market, which includes resale, thrift, and donations, has grown 21 times faster than the retail apparel market between 2016 and 2018, to a $28 billion industry in 2018, and it is projected to be $51 billion by 2023. The main growth driver there is the resale market, which is expected to quadruple between 2018 and 2023. Sales in the apparel rental market have also surged, becoming a $1 billion industry in 2018 that could reach $4.4 billion by 2028, according to GlobalData. This trend in second hand clothing started before COVID-19. The pandemic is going to accelerate its growth because the younger generations are also concerned about the environment. Clothing manufacturers pollute the environment big time. Secondhand apparel is on track to become bigger than fast fashion within a decade. 2) Used Cars Sales of new automobiles are declining faster than a Korean midsize down a mine shaft. According to information from Statista, new vehicles sales peaked in 2018 at 78.9 million units. In 2019, 75 million new cars were sold. In 2020, 64 million units were sold. In addition to the rise of shared mobility services such as Uber and Lyft, people are starting to question the wisdom of buying new cars. People are starting to the understand the total cost of car ownership: when one factors in finance, maintenance, insurance, parking, fines, taxes, fuel and the stress of having to share your lane with millions of psychopaths unless you are doing big mileage it may work out cheaper to ride-hail than to buy. 3) Pre-Loved Watches In November 2019, the New York Times ran an article “Secondhand Is Moving Up in the Watch World” (https://nyti.ms/2WNWLAA). The article quotes the following stats. The Luxury Goods Worldwide Market Study by the management consultants Bain & Company calculated that the personal luxury goods secondhand market would be worth 22 billion euros ($24.2 billion) by the end of 2018, and has grown by an average of 9 percent every year since 2015. The pre-owned watch market already is worth $16 billion annually, according to an estimate by Jon Cox, an analyst at the financial services company Kepler Cheuvreux. Mr. Cox said pre-owned represents almost a quarter of the overall watch market. Yet its retailers say their market segment is still in its infancy. 4) Used Capital Equipment The global response to COVID-19 was impressive: closed borders, travel bans, paralyzed supply chains, and export restrictions. Given that the virus started in China, and given that China has been at the centre of the world’s globalization in the past 20 years, some have questioned whether this could be the end of globalization. In April 2020, Forbes issued a piece questioning whether the post coronavirus world may be the end of globalization. (https://www.forbes.com/sites/kenrapoza/2020/04/03/the-post-coronavirus-world-may-be-the-end-of-globalization/#496d092e7e66). Foreignpolicy.com speaks of a world with a different and more limited version of global integration (https://foreignpolicy.com/2020/04/17/globalization-trade-war-after-coronavirus-pandemic/). How will this new version of globalization affect access to new capital equipment? You need to identify those markets most likely to be affected and find ways in which you can source used capital and equipment in order to fill the gaps. #lifecoach #motivation #lifecoaching #coaching #love #mindset #coach #inspiration #selflove #life #success #selfcare #lifestyle #mentalhealth #mindfulness #personaldevelopment #entrepreneur #goals #happiness #meditation #loveyourself #healing #motivationalquotes #lifequotes #positivevibes #fitness #businesscoach #motivationalspeaker #business

COVID-19 is ripping through the global economy like an F5 tornado. This financial uncertainty is causing money stress levels to spike off the Richter scale. According to the American Psychological Association (APA), money is the top cause of stress in the United States (https://www.apa.org/research/action/speaking-of-psychology/financial-stress). As we face this scenario of low visibility and high anxiety of the future, there are five things high-value men are doing about their personal finances. Thing 1: They Don't Hold Too Much Cash in the Bank Every financial crisis is different. COVID 19 is different to 2009, which was different to the dot.com crisis of 1999 etc. One thing that most crises have in common is the Pavlovian response of central banks to these crises. They cut interest rates in the hope they can electrocute the economy back into coherence. Cheaper money nudges consumers to borrow money. As interest rates move closer to zero in some countries and deeper into negative territory in other countries, the return on your bank cash savings start to look ugly. 1) Cash is a paper asset that has no intrinsic value Ever since the world moved off the gold standard in 1971, cash stopped being an asset and turned into a liability. Before 1971, you could take your bills to the central bank and exchange them for the equivalent value in gold. Now, if you go to the central bank, they will just give you newer paper of the same value. This paper is nothing more than an IOU backed by the full faith and credit of that bank, and one thing we learned after the 2008 financial crisis is that high quality banks can fail. 2) Interest rates are at record lows We are living in a world in which interest rates are at record lows. More than 16.5 trillion US dollars of bonds were paying NEGATIVE interest rates as at the end of 2021. A negative interest rate means that if you invest 101 today (for example), you will receive 100 when the bond matures. This is nuts – it means that you are paying the bond issuer to look after your money. 3) Missed opportunities When you lock your money into a savings account, earning record low returns, there is an opportunity cost (in addition to an inflation cost). So instead of saving money, look to invest the money and make that money work for you. Thing 2: They Owe the Banks MORE than the Banks Owe Them John Maynard Keynes, the third most famous Briton after David Beckham and Mr Bean, said that if you owe the bank $100 it is your problem. When you owe the bank $1 million, it is the banks problem. In 1988, when Trump bought New York's famed Plaza Hotel, he paid $407.5 million. He got a $425 million loan. "If the world goes to hell in a handbasket, I won't lose a dollar," Trump bragged to a reporter. While I hate to use Trump as an example of sound financial engineering, I have to give him kudos for this brag. In times of uncertainty and low interest rates, you would be a fool not to leverage up. Debt is not Lucifer. Financial advisers have spent decades vilifying debt. In the 17th century, Christian's believed that the Catholic Church was the antichrist. In the 18th century, the French believed that it was Marie Antoinette after she told the starving masses that if there was no bread, let them eat cake. In the 19th century it was Napoleon, 20th century Adolf and Joseph (nice name for an ice-cream) and 21st century, the mention of DEBT caused people to lunge for the holy water. Not all debt is bad and not all debt is good. There is good debt, bad debt and ugly debt. Let’s start off with the ugly. Some credit cards charge north of 30% APR but this does not deter some people from maxing them out and then using another card to pay that one off, and so on until they get into a satanic spiral of debt. Smart people pay on a monthly basis the amount they need to avoid interest which means they can get up to 40 days of free money. Now for the bad debt. This is when people borrow against the equity in their home. This turns your home into a liability - because it takes money out of your pocket as you make the monthly payments without receiving any income. Your only hope is that the house price appreciates - but that means getting into the game of property speculation. Now you have the good debt. This is where you use the debt to buy assets that generate rental income. The interest on the debt is tax deductible and the debt allow you to generate cash flow which puts money into your pocket. The key here is using the debt to acquire high quality assets that generate a reliable cash flow. Thing 3: They Invest in the Stock Market There are two reasons high value men invest in the stock market. Firstly, it is very accessible, and secondly, it is one of the greatest generators of wealth on the planet, yet only a small percentage of people exploit it. This is what high-value men do. Step 1: They Relax We are terrified of the stock market because of its wild and volatile swings. In the short term (days and weeks), the market can be crazy. Over the long term (months and years), it is more predictable and benign. High-value men relax, are patient and take a long-term view on the stock market. Step 2: The Make Monthly Contributions – Annual Consultations Every month, they commit to investing a minimum amount of cash into the stock market and they only check their account statements once per year. Step 3: They Choose a Low-Cost ETF An ETF is a powerful financial tool. It is a share that owns many shares. One of the world's most popular ETFs is the Invesco QQQ. If you buy one share in the QQQ, you become the owner of 100 of the world's biggest technology companies - including Apple, Microsoft, Amazon, Tesla, Facebook, Google etc. Step 4: They Invest At Least $100 a Month To understand how extremely attainable $100 per month is. I did a quick Google search on what $100 can buy you these days: Eight or ten movie tickets, 10 months of Netflix, four or five new movies on DVD, fifteen used DVDs at a yard sale, lunch for four at a fairly nice restaurant, 40 cheap burgers or 90 candy bars. Over the past 30 years, the Standard and Poors 500 Index has delivered compounded returns of approximately 10 percent. So how much would your 30-year religious investment in this broad-based US stock index yield? The answer is $226,048. That is a lot better than investing in a savings account or Treasury bonds. How much would you need to invest every month to be a millionaire in 30 years, 20 years, 10 years and 5 years? Assuming the same total returns of the Standard and Poors 500 index, here are the monthly investments that will yield $1 million after the stipulated period 30 years: $442 20 years: $1,316 10 years: $4,881 5 years: $12,913 #finance #money #business #investing #investment #entrepreneur #financialfreedom #success #stocks #wealth #trading #realestate #stockmarket #invest #motivation #forex #bitcoin #investor #accounting #cryptocurrency #marketing #wallstreet #startup #trader #personalfinance #entrepreneurship #credit #smallbusiness #goals #thegreatlockdown

Rebel Finance is built on the foundation of investing more and working less. You will notice that I said “investing”. This is an action verb in the continuous tense. It is an ongoing and continuous process. Many people do not invest because they are under the false impression is that the only way to invest is through large lump sum amounts. So they set off on an investment project religiously putting money away into a low or no interest savings account until they have accumulated enough money to invest. There are two problems with this approach. Firstly your money is laying idle in that account. It is sitting on the couch, binge watching Netflix and getting lazy. It should be in the gym, pumping iron and sweating for you. The second problem is that the money in your savings account is vulnerable to unplanned withdrawals. In moments of carnal weaknesses there is always a temptation to dip your sticky little fingers into the savings jar. For this reason, you need to get into the investing mindset. In the same way that it is important to set short term savings goals, you also need to invest smaller amounts continually and consistently. Now you need to invest your savings into a assets that meet the following requirements: 1) they accommodate small monthly contributions 2) they provide easy liquidity – your investment can be liquidated quickly and without penalty 3) they are transparent – you have pretty good idea as to how they generate revenue 4) they have a long track record of delivering inflation beating returns In my opinion, the assets that best comply with these four requirements are publically listed companies, or the stock market. It is easy to create a debit order off your bank account to commit to a monthly investment into the stock market. Secondly, most stocks are liquid. Thirdly, listed companies need to disclose their financial information every quarter and finally, the stock market is an inflation beater. . Over the past 30 years, the Standard and Poors 500 Index has delivered compounded returns of approximately 10 percent. This is better than a poke in the eye with a blunt stick and one needs to take into account that this return includes three major stock market crashes – the dot.com bubble bursting in 1999/2000, the collapse of Lehman Brothers and the Great Recession of 2008, and the Coronavirus pandemic of 2020. So what is the plan? Step 1: Relax The stock market brings out the worst in us because we believe it will get us rich quick. Most people are terrified of the stock market because it exhibits wild and volatile swings and this is true – in the short term. The stock market, over the longer term, tends to be more predictable and benign. Your first step is to recalibrate your opinion of the stock market and take a long-term view. You need to be patient and you need to be religiously disciplined in your investment. Step 2: Monthly Contributions – Annual Consultations Every month, you need to commit to investing a minimum amount of cash into the stock market and you are only allowed to check your account statement once per year. Step 3: Choose a Low-Cost ETF I am not a huge fan of ETFs because they are too diversified and at Rebel Finance we discourage investors from committing their money to overly diversified instruments (https://www.rebel-finance.com/post/three-reasons-you-should-never-invest-in-a-well-diversified-portfolio). But we also understand that not everyone has the desire or time to analyze individual stocks, which means an ETFs can be a powerful financial tool. I would recommend a broad-based country or global ETF such as the SPY or IVV. Step 4: At Least $100 (or your local currency equivalent) a Month All you need to do is invest $100 per month. To understand how extremely attainable $100 per month is, I did a quick Google search on what $100 can buy you these days: Eight or ten movie tickets, 10 months of Netflix, four or five new movies on DVD, fifteen used DVDs at a yard sale, lunch for four at a fairly nice restaurant, 40 cheap burgers or 90 candy bars. So how much would your 30-year religious investment in this broad-based US stock index yield? The answer is $226,048. That is inordinately better than investing in a savings account or Treasury bonds. How much would you need to invest every month to be a millionaire in 30 years, 20 years, 10 years and 5 years? Assuming the same total returns of the Standard and Poor’s 500 index of 10% as we have seen over the past 30 years, here are the monthly investments that will yield $1 million after the stipulated period 30 years: $442 20 years: $1,316 10 years: $4,881 5 years: $12,913 That’s not bad going. #finance #money #business #investing #investment #entrepreneur #financialfreedom #success #stocks #wealth #trading #realestate #stockmarket #invest #motivation #forex #bitcoin #investor #accounting #cryptocurrency #marketing #wallstreet #startup #trader #personalfinance #entrepreneurship #credit #smallbusiness #goals

Identity theft is defined on Wikipedia as the deliberate use of someone else's identity, usually as a method to gain a financial advantage or obtain credit and other benefits in the other person's name, and perhaps to the other person's disadvantage or loss. The person whose identity has been assumed may suffer adverse consequences, especially if they are held responsible for the perpetrator's actions. Identity theft occurs when someone uses another's personally identifying information, like their name, identifying number, or credit card number, without their permission, to commit fraud or other crimes. This is what you need to do to prevent this from taking place. 1) Safeguard your Identification Number This is the master key to your data which means you must guard it as best you can. This means that you need to be careful with all documents that may contain this number. If you need to dispose of such a document, it is important to shred it before throwing it in the trash. 2) Be on the Lookout for Phishing and Spoofing You need to be aware of suspicious emails requesting personal information or prompting you to download attachments. Pay close attention to the email address. A Gmail or Hotmail address is a clear red flag. Also, pay careful attention to the grammar and autography of the mail. Most criminals were not schooled in the classics and the finer details of English grammar. Fraudsters are now also taking to the phone and fishing for data they can use in their criminal activities. Often the caller will pose as a bank or a government official. You can ask for their number indicating your desire to call them back to verify their number. Their reluctance to do so is another red flag. 3) Use Strong Passwords and Add an Authentication Step People are negligent and lazy when it comes to choosing passwords, and hackers know this. And given that the same human creativity that goes into avoiding hard work is not channeled into the generation of passwords, it is a good idea to use a password manager. A password manager is a computer program that allows users to store, generate, and manage their passwords for online services. A password manager assists in generating and retrieving complex passwords, potentially storing such passwords in an encrypted database, or calculating them on demand. Go onto Google to find free password managers. These managers will help you to avoid the common mistake of reusing passwords. Google has a pretty solid password manager if you are an Android user. Adding an authenticator app can reduce your risk. You may think that security questions make your accounts bulletproof. Think again! Our private lives are not as private as you think – especially if you are a social butterfly on social media. We inadvertently reveal a great deal of personal information. A common security question is the name of your first pet, and we love to post pictures of our beloved four-legged friends. 4) Make Use of Bank Alerts Your financial institution is as interested as you are in terms of preventing identity theft. This is not because they are concerned about you, but they are concerned about themselves and all the hassle of having to investigate fraudulent transactions and the possibility that they will need to compensate you. For this reason, they will allow you to opt in to receive alerts (SMS and/or email) when transactions go through your account or when you spend on your credit card. It would be foolish for you not to avail yourself of this service. 5) Become a Shredder Once you take the trash outside of your house for collection, it is the public domain. Dumpster diving and trash picking aren't illegal by itself in the US. A U.S. Supreme Court Decision in 1988, California vs Greenwood, found that garbage was public domain when left in the ‘outside curtilage’ of a home or property, i.e., meaning that those placing trash by the curb have no reasonable expectation of privacy. Criminals are not below going through your trash looking for bank account details, ID numbers, and any other personal information that can be used to steal your identity. It is for this simple reason that you need to become a shredder and I am not talking about a musician who plays a very fast, intricate style of rock lead guitar. I am talking about a shredder of personal documentation. 6) Ditch the Leather Wallet and Go Digital The use of physical wallets is in decline. Millennials aren’t just preferring a paperless future. They’re expecting a world where all money is going to be digital. One in four does use Google Wallet, PayPal, Square Cash, or Venmo to pay friends or get paid. As technology continues to make digital wallets more secure, convenient, and affordable, expect more and more Millennials to go cashless. According to PNC’s website (www.pnc.com), digital wallets may help to reduce fraud. The data stored in mobile wallets are encrypted, meaning your actual card account numbers aren't transmitted while making a payment. Mobile wallets use random payment codes that cannot be used again and often rely on certain security features, including biometrics, to authorize a payment. Furthermore, your full card account number isn't displayed anywhere in a mobile wallet, meaning prying eyes won't be able to capture your card number for future use. Also, your transactions are covered by the same security and privacy protections as your physical cards. 7) Bulletproof Your Mobile Devices Given that our financial and personal lives are so concentrated on our mobile devices, it makes sense to pay attention to the security on your phone. The most important advice is to keep your device locked. Configure your phone to quickly time out due to inactivity. Another key piece of advice is to use your bank’s smartphone app (as opposed to their mobile phone website) to transact. Old school people like myself prefer to use the website. Bankrate.com says that online banking is less secure than a bank’s mobile app. “Some banks that have multi-factor authentication on their mobile apps don’t provide the same capability on their websites. Well-designed mobile apps don’t store any data, and you’re less likely to hear about a virus on a smartphone.” 8) Revise Your Accounts Regularly At least weekly, you need to go into your bank accounts and check your transactions. You need to be on the lookout for irregularities. This can potentially be a problem if you have joint accounts with a spouse or partner because the other party could interpret this as "checking up " on them and imposing some form of economic abuse. Money is a sensitive topic in most relationships due to the inequality of earnings. If the husband is the income earner and is always checking the transactions of the wife, this can be seen as a sign of financial aggression. The topic needs to be discussed openly and the wife needs to understand that identity theft is common and steps need to be taken to minimize the risks. 9) Request Frequent Credit Reports Some credit companies allow you to download a free credit report. The absence of irregular transactions in your account does not necessarily mean that you have not been a victim of identity theft. Regularly, you need to check your credit report. Numerous credit companies offer free reports and these reports will reveal if there any unauthorized transactions are being executed in your name. So what needs to happen for you to be vulnerable to identity theft. In other words, what needs to happen for you to become vulnerable to identity theft. 1) Lost or Stolen Wallet The most common way to lose control over your identity is losing your wallet which contains your ID card, credit cards, debit cards, and the condom that has been in there since high school. You want to keep photocopies are all your credit cards on hand in a secure location for this eventuality so that you can cancel your cards as soon as humanly possible. If your wallet is lost or stolen, you need to be on high alert for identity theft. You want to revise your account more regularly and access regular credit reports from the credit bureaus. 2) Using Public Wi-Fi Public WIFI places you at risk. Many people are under the false impression that public WIFI that is password protected is secure. That is not the case because the password is available to the public. These hotspots allow hackers to position themselves between you and the connection point. So instead of talking directly with the hotspot, you're sending your information to the hacker, who then relays it on. The hacker has access to every piece of information you're sending out on the Internet: important emails, credit card information, and even security credentials to your business network. Once the hacker has that information, he can — at his leisure — access your systems as if he were you. Hackers can also use an unsecured Wi-Fi connection to distribute malware. One way to make your connection more secure is through a virtual private network (VPN) connection. Even if a hacker manages to position himself in the middle of your connection, the data here will be strongly encrypted. Since most hackers are after an easy target, they'll likely discard stolen information rather than put it through a lengthy decryption process. Also, enable the "Always Use HTTPS" option on websites that you visit frequently, or that require you to enter some kind of credentials. Turn off sharing from the system preferences or Control Panel, depending on your OS, or let Windows turn it off for you by choosing the "Public" option the first time you connect to a new, unsecured network. Finally, keep WIFI turned off when you are not using it – this will also help to lengthen the life on your battery. 3) Data Breaches Yahoo found itself in the middle of the biggest data breach in history. More than 1 billion accounts were compromised in 2013, but this breach was not made public until 2016 and was most likely unrelated to the 500 million records stolen in 2014. Yahoo blamed the largest breach in history on hackers working on behalf of a government. Hackers invade databases holding sensitive information. Almost everyone has been affected by a data breach. These are beyond your control – you are at the mercy of the data security of the institutions with whom you do business which means it is not much you can do about this. 4) SIM Card Swap A SIM swap scam — also known as SIM splitting, simjacking, sim hijacking, or port-out scamming — is a fraud that occurs when scammers take advantage of a weakness in two-factor authentication and verification in which the second step is a text message (SMS) or call to your mobile phone number. To reduce this threat you can do some of the following. Firstly, avoid providing online services with your cell phone number – there is no reason why they should have it. Secondly, in your two-step authentication, try not to use your phone number – and email is better. Thirdly you can use a prepaid sim card given that it is not tied to a name or another ID. Finally, try to unlink your phone number from accounts where possible. This final point is easier said than done but is worth a try. 5) Revealing Personal Info Do not EVER give out personal data in response to an email or call. Enough said! 6) Skimming A credit card skimming device reads the magnetic stripe on your credit or debit card when you slide it into a card reader at an ATM, gas pump, or another point of sale. The skimmer then stores the card number, expiration date, and cardholder's name. These stripes even appear on chip-enabled cards. Skimmers are typically installed at unattended credit card readers – such as gas pumps (most prevalent in the US). So how do you go about detecting a credit card skimmer? Check for any loose parts. Inspect the credit card reader before using it and be suspicious if you see anything loose, crooked, or damaged. Skimmers also work at ATMs through cameras that are recording you enter your pin. Also, look at the keyboard to see if it has been tampered with. 7) Phone Scams Whether live or automated (so-called robocalls), scam callers often pose as representatives of government agencies or familiar tech, travel, retail, or financial companies, supposedly calling with important information. It might be good news. (You're eligible for a big cash prize! You've been preselected for this great vacation deal!) It might be bad. (You owe back taxes. There's a problem with your credit card account. Your computer is infected with that virus you've been hearing about.) Whatever the issue, it can be resolved if you'll just, say, provide your identification number or make an immediate payment. Here are a few tips to avoid falling for these schemes. Firstly, do not answer unrecognized numbers. Many cell phone providers provide screening for potential fraud or spam calls. Make sure that these services are activated. Secondly, do not call back one-ring calls from unknown numbers. Thirdly, do not provide any personal information and most certainly do not offer to make any payments. Finally, ask for a website or a phone number, and "offer" to call them back when you have had time to think about what they are offering. They will resist this response and they will pressurize you to take action than on the phone. That is a great cue to hang up the phone. 8) Looking Over Your Shoulder You have seen movies that feature pickpockets who can remove the wallet from your inside jacket pocket without you realizing it. Fraudsters are talented individuals. They can learn a password just by watching your fingers as you key it in. We tend to let our guard down when in retail establishments – it could be the dopamine associated with retail therapy. Store attendants can also be sloppy about leaving your card on the counter while they are bagging your purchase. A healthy degree of paranoia is warranted in this day and age so you need to keep your wits about you at all times. Most stores these days do not require you to hand your credit card to the attendant. Most readers are partially covered to keep part of the keyboard out of people not directly in front of the reader. Having said this, there is no harm in being aware of your surroundings and being on the lookout for suspicious-looking characters. 9) Malware Malware is the collective name for several malicious software variants, including viruses, ransomware, and spyware. Shorthand for malicious software, malware typically consists of code developed by cyberattackers, designed to cause extensive damage to data and systems or to gain unauthorized access to a network. How can you minimize the impact of malware? Firstly, you can install anti-virus software that will protect you from malicious software. Secondly, you need to frequently update your software to prevent hackers from taking advantage of vulnerabilities in old and outdated software. Thirdly, do not open suspicious emails or attachments; and do not click on suspicious links on web pages. Finally, back up your data to the cloud (like Google Drive) regularly so that if you do come under attack, your data can still be accessed post-attack.

Question: Most people dream of retiring early and living a life where you are not dependent on anyone financially. You are in a position of complete self-sufficiency. You do not rely on a boss/master/institution to pay you a monthly check. It also means that you do not need to work. You could spend the next year, five years, ten years, or twenty years fishing, playing golf, surfing, hiking through the Himalayas, or traveling around the world on a motorcycle – and you would have a sufficient flow of passive income to fund your activities. Is it possible to turn this dream into a reality, and if so, what do you need to start doing today? Answer: There are lots of great points in that question. Let us unpack them. Firstly, let's talk about retiring early. It may be hard to believe, but there are plenty of people that love their jobs. Also, there are lots of people that love working and for them, a rapid withdrawal from the workforce is scary because they do not know what they will do with their spare time. Working is not necessarily a bad thing, provided that it is fulfilling and meaningful. Too much free time can be a death sentence and a gateway to depression and anxiety. In my opinion, active retirement is the goal. This active retirement will look different to different people. It may encompass some work – either for remuneration or philanthropic – but I would never advocate a retirement exclusively dedicated to leisure. Human beings are designed to be active. Secondly, it is possible to retire early – and by early I mean before the age of 50 (taking into account that the normal retirement age is 60 and the average life expectancy is 62 for males and 68 for females). Question: Before you kick off with the 5 points, can you give us some idea as to how it typically takes someone to get to the point where he can retire starting from zero? Answer: I am not a huge fan of the word “retirement” because it is associated with old people in retirement homes. I prefer to talk about financial freedom. This is the life you perfectly described in your introductory question. The journey to financial freedom is long and hard. It is fraught with danger and temptation at every turn. It is a marathon, but not a normal marathon. The route is not well signposted, the road is not well paved and the course is not flat. The odyssey requires determination, discipline, and stamina. In terms of time frame, I work for 25 years for people with no investment savings. These are people with a net asset value of zero. The sum of the things they own is equal to the sum of things they own. Question: so you need to start off by calculating your net worth. How do you go about doing that? Answer: It is a relatively simple calculation made up of two steps. You start off with your assets. You need to include anything you own which has a positive monetary value. When it comes to placing a value on your assets, you need to be conservative. You also need to differentiate between the market price of an asset and the sentimental value you might attach to that asset. You will need to be mega realistic and even more conservative on your asset valuations: · Cash and money in the bank · Your home’s current resale value · Investments – mutual funds, college savings accounts, shares, retirement fund · The current market resale value of your car · The re-sale value of personal property - jewelry, household items Then we move over to your liabilities. These are all your financial obligations, loans, or debt which must be paid. Liabilities tend to be easier to value because they tend to be defined in monetary terms: · Your outstanding mortgage balance · Personal loans · Car loans · Credit card balances you still need to pay off · Student loans We are now in a position to calculate your net worth. It is the difference between your assets and your liabilities. You need to total up your assets and total up your liabilities. If your assets are greater than your liabilities, you have a positive net asset value. If your liabilities exceed your assets, you have a negative net worth. Question: So you are saying that for someone that someone with absolutely no savings can become financially free in 25 years? Answer: That 25 year period is the maximum period and worst-case scenario. You can get there far quicker. It all depends on how you play the following five variables. You will recall that to be financially free, you need to start doing five things today. Let's kick off with thing 1. You need to understand your financial DNA. The test is simple – are you a spender or a saver? Financial freedom is a process, an evolution. It requires you to become an investor. If you are a spender, you first need to become a saver. That is the biggest jump. Once you have become a saver, the transition to an investor is a small step. Question: What factors determine whether you are a spender or a saver? I presume your parents and society had an important role? Answer: Absolutely. Your upbringing is crucial in determining your relationship with money. If your parents were reckless with money and spent it before it came in, and then had to scrape through the rest of the month, you too will probably adopt similar habits. Millennials, the generation that is widely accepted as having been born between 1981 and 1996, tend to be spenders. Their parents are the baby boomers. The baby boomers were the hippies who grew up in the 50s and 60s. They wanted it to be easier for their kids so they spoiled them. A 2015 PWC survey showed that only 24 percent of millennials have the basic financial knowledge and only 27 percent seek financial advice on saving and investing. Generation Z, on the other hand, was brought up by generation X who are products of the stress and turmoil of the seventies and the eighties. The collapse of the Berlin Wall, the assassination of Indira Gandhi, Chernobyl, the Challenger explosion, the launch of Fox Television, and the Exxon Valdez oil tanker belching 240,000 barrels of oil into the ocean. Socially, the 1970s saw a spike in divorce rates. The confluence of all these factors created a cynical, pessimistic, and hardnosed generation. This has had a profound impact on their kids. The Zs, like their parents, are more financially literate at a much younger age than previous generations. This is thanks largely to the financial anxiety that the Xs have passed down. The Zs are also more likely than millennials to save a good chunk of their change. They are more likely to use budgeting apps like Mint and Acorns. They also stay out of debt. They would rather rent assets than buy them. Other factors that affect your spending patterns are culture and society. For example, Americans are colossal spenders while the Chinese are Olympic savers. South Africa is NOT a nation of savers. In 2019, the national savings rate was -0.1% of GDP. This makes us a nation of dissavers – we spend and borrow more than we save. It has to be said that in 2013, the rate was -2.5%. So we are improving, but we are still in negative territory. Question: I am sure social media also plays a role in our spending patterns. It has done a sterling job in equating happiness with physical possessions and lavish experiences. Sumptuous mansions, Italian sportscars, first-class airline tickets, expensive gadgets, and shining jewelry creates the impression that happiness can only be achieved through spending. It has never been more challenging to keep up with the Joneses. Answer: The social pressure to move away from saving and into the camp of spending is immense but as with all trends, there are counter-trends. This counter-trend comes in the form of minimalism as more people realize that spending does little to enhance human happiness. Question: So once you know your financial DNA, I presume that you need to break your spending patterns and learn how to save. Over time, it becomes more and more difficult to change a habit because that habit has become more natural to who we are and how we act. And research shows that we automatically favor what is familiar to us—even if we know it's not to our benefit. The challenge is creating a new normal, which involves behavior change. Surely this is an extremely difficult thing to do. Answer: It is not difficult – all you need is a little guidance. Here are my top 10 savings tips. And the cool thing is that some of these tips will make you happier and healthier: 1: don’t buy a house – rent or share. Your house is not an asset. 2) don't buy a car – rent or share (carpool) or use public transport. Fewer cars on the road mean less traffic and cleaner air. 3) lower your utility bill – install LED light bulbs and turn odd the geyser (cold showers are good for you) 4) cancel your gym membership – get outside and run, hike, do push-ups in the park, use the public outdoor gym. 5) become a vegetarian – veggies are cheaper than meat, and cows pollute more than cars 6) buy second-hand clothes. It is cheaper and you will reduce the carbon footprint of clothing manufacturers 7) buy generic medication – as good as non-generic and a fraction of the price 8) drink less bottled water – more expensive than tap and you can help save the oceans 9) become a minimalist – sell you excess stuff. If you haven’t used/worn it in the past 3 months, and don’t plan on using it in the next 3 months, sell it (or donate it). 10) become a chef – eat in instead of eating out in restaurants Question: There is some drastic stuff on that list. Einstein said that "insanity is doing the same thing over and over and expecting different results." To realize different results, you need to do different things. These are incremental changes. From what I am hearing, it seems that there is no silver bullet or get-rich-quick scheme. To become financially free, you need to make incremental changes that compound over time. Set numerous achievable goals. A fraction of a percent changed every day, compounded over many months and years will yield outstanding results. So what do you do with all these savings? Answer: That leads us to step 3. Pay off your bad debt, and by BAD debt I am not talking about debt that you have fallen behind on. I am talking about debt that is not being productively used. Question: Interestingly, you make this distinction. Financial advisers are terrified of debt. Get out of debt NOW. Let's put the numbers into perspective. The global debt or bond market is three times larger than the global equity market. Debt makes the world go round. Without debt, and without credit, the world’s economy will not grow. Any economic growth plan that is worth something will focus on ways in which small and growing businesses need access to credit. How can we differentiate between good and bad debt? Answer: Bad debt is debt used to finance activities that do not generate any cash flow. For example, taking out a loan to go on holiday, or remodel your home or to increase/decrease the size of a body part. Then, we have good debt. This is the debt that is used to acquire assets that generate cash flows. A loan to buy an apartment or a piece of heavy equipment that is rented out is inordinately good. Good debt is a powerful tool in the attainment of financial freedom. The bottom line is that what determines whether debt is good or bad does not depend on the interest rate. If you borrow money at 30 percent, but invest it and get a return of 40 percent, that is good debt. Goodness or badness is determined by how the proceeds of that debt are put to work, and not by the interest rate. Question: So where do you stand on credit cards. The US politician Elizabeth Warren said that credit cards are like snakes: Handle ‘em long enough, and one will bite you. Are these pieces of plastic really as evil as many people make them out to be? Answer: There are two payment options on your monthly credit card statement. The first is the minimum payment. Credit card companies pray you to choose this. It allows them to charge usurious interest rates disclosed in small print on page 89 of your contract. There is another option which is the payment to avoid interest. This is a thing of beauty. It will settle the balance at the cutoff date of the card. The cutoff date is normally ten days before the payment date. If your cut of date is the 20th, your payment date will most likely be the 30th. If you buy a Louis Vuitton bag on the 21st, you will only need to pay for that necessity on the 30th of the following month. You are the recipient of 39 days of FREE MONEY. I don’t care where you from, but that is a great deal. The banks make no money out of you in terms of interest. They may charge an annual membership fee but this is all the blood they will be sucking from your veins. Question: so how do you get out of your bad debt? Answer: I would suggest making use of the debt snowball method. The strategy assumes that your debt is not consolidated – which means that you owe money to more than one party – more than one bank credit card, a few store cards, and possibly even a loan from Shady Larry from around the corner. Start with the Smallest Debt First This goes back to the law of the jungle. Predators focus their efforts on separating the weakest member of the herd. You are this predator and the weakest is that debt of a couple of hundred dollars you owe on your Amazon credit card for a village of garden gnomes you bought after a drinking game with your mates. Once the smallest debt is paid off, one proceeds to the next larger debt, and so forth, proceeding to the largest ones last. This method is sometimes contrasted with the debt stacking method, also called the "debt avalanche method", where one pays off accounts on the highest interest rate first. Question: Why are we not paying off the most expensive debt? Answer: This strategy wants to keep you motivated so that you can build momentum in your debt liberation method. It may be that your largest debt is also your most expensive. Let's assume you go after this debt as Edmund Hillary went after Everest. If you are not in good financial shape, by the time you reach the base camp, you are going to be suffering from altitude sickness and crying for your mother. So instead of going after Everest, let's start off with Kilimanjaro and then work our way gradually up to the Himalayas. The basic steps in the debt snowball method are as follows: Step 1: List all debts in ascending order from the smallest balance to the largest. Step 2: Commit to paying the minimum payment on every debt. Determine how much extra can be applied towards the smallest debt. Pay the minimum payment plus the extra amount towards that smallest debt until it is paid off. Note that some lenders (mortgage lenders, car companies) will apply extra amounts towards the next payment; for the method to work the lenders need to be contacted and told that extra payments are to go directly toward principal reduction. Credit cards usually apply for the whole payment during the current cycle. Step 3: Once a Debt is Paid in Full... ....add the old minimum payment (plus any extra amount available) from the first debt to the minimum payment on the second smallest debt, and apply the new sum to repaying the second smallest debt. Step 4: Repeat until all debts are paid in full. In theory, by the time the final debts are reached, the extra amount paid toward the larger debts will grow quickly, similar to a snowball rolling downhill gathering more snow, hence the name. Question: Ok, so just to recap. We kicked off looking at becoming a champion saver and using those savings to pay down our bad debt using the debt snowball method. That sounds fantastic, but I think that we need to address the elephant in the room. I understand that R1 saved is R1 earned, but at the end of the day saving is a defensive strategy, and you cannot do anything of this unless you are earning money. When are we going to start talking about the earnings variable in the equation? Answer: You are right on cue, my friend. Point 4 focuses on maximizing your earnings potential. School teaches you to focus on your weaknesses. But you are no longer in school. This is life and life is all about maximizing your talents and to hell with your weaknesses. When water flows downhill, it flows around the obstacles, not over them. The best way to optimize your earnings capabilities is by starting your own business. However, not everyone is an entrepreneur, so let's start by helping you find your perfect job. A lot of people find themselves in dead-end jobs going through the motions. People spend about 1/3 of their adult lives working. If you are in the wrong job, that can be soul-destroying. Question: So how can you avoid being in the wrong job that is gradually destroying your soul? Answer: Go online. There are many free personality tests – make sure that the job you have, or applying to, fits your aptitudes. Once you know this, you need to find the perfect job, write a great resume so that you get the interview, and then nail that interview. I really do not have a great deal to add on this point, but one thing that young South Africans are acutely aware of is the fact that the formal job market is shrinking. This is a global phenomenon. This trend started before the pandemic with technology starting to displace human beings. Question: The futurist Yuval Noah Harari speaks about the future of irrelevance. In the past, people were concerned about employer exploitation. Harari says the future challenge is not exploitation but relevance. We must now face the threat of irrelevance as automation, artificial intelligence and big data displace traditional employment. Answer: Technology is forcing redundant workers and job market entrants into a corner where the only option is to start a business. Also, as technology revolutionizes the economy and cycles of change shorten, people need to continuously reinvent their skillsets. The days of studying a career and dedicating your professional life to this one career are over. You will need to acquire new skills and embark on a journey of continuous learning. In this world of constant flux, softer skills such as emotional intelligence, communication, and negotiation skills, and the ability to sell will stand out. So too will the skill of financial literacy and the ability to create opportunities outside the world of big business increase in importance. Question: So instead of entrepreneurship is an option for future generations, it may become mandatory? Answer: I think we need to brace ourselves for a world in which there are less formal and traditional employment and outsourcing and freelancing becomes more prominent. Just look at how businesses have changed over the past 20 years ago. You would have your accounts, human resources, payroll, marketing, lead generation, etc. Today, many companies can outsource these functions which reduces their cost overheads and enables them to only pay for the work that is done. The website Fiverr is testimony to this new trend. Fiverr is an Israeli online marketplace for freelance services that was started in 2010 and is now worth over $6 billion. For example, you are a freelancer offering translation services. You register on their website and create a gig where you offer to work for $5 per 100 words translated. People looking for these services will check out your profile, how previous clients have ranked you, and then decide whether or not to hire you. You can get a website built, get help with digital marketing, get legal and business counseling, etc. Fiverr has grown into the Amazon of digital services. It would be hard to find a more transparent marketplace. There is no way to hide and all the sellers are stripped bear but there is another problem other than the intense and brutal competition. Many digital services are now being automated. Question: So given that everything is digital, services can be offered from anywhere in the world. All you need is an internet connection. So let's say that someone is working in a full-time job but does not feel fulfilled and is looking to make a leap into starting a business. Maybe what he or she could do is get a side gig of Fiverr while still in full-time employment? Answer: Absolutely. You may love your job but hate your employer. You may be a financial adviser in a large brokerage house. Test the waters to see if some of your largest clients would move with you if you decided to jump ship. Set up a side gig as a prelude to making the jump. In 2017, CNN reported that 44 million Americans have a side gig they run in parallel with their full-time job. Perhaps you have a good nose for real estate. Instead of plowing your savings into a money market account, acquire a couple of high-quality apartments, and rent them out. Start to develop a stream of income that is independent of your formal employment and see how it pans out. If you a wizard on social media, set up a gif on Fiverr to help with their social media marketing campaigns. You don't need to storm into your boss's office and plonk down your letter of resignation right away. Question: The biggest issue that many young people face today is their limited access to capital. How can you start a business if you have no capital? Answer: Nathan Latka wrote a great book "How to Be a Capitalist Without Any Capital: The Four Rules You Must Break to Get Rich". It is no longer necessary to have the capital to launch your career as a freelancer and start to generate a stream of income that is independent of your formal employment – or even why you are at university. The digital world has opened up a new world. Independent work is developing quickly as digital platforms create large-scale marketplaces for workers to connect with buyers of services. On one hand, they allow for workers’ wishes of being independent and managing their time to be fulfilled. On the other hand, they give work to a large share of the population who’s unemployed or inactive and want to work. Furthermore, they also help businesses to find people with specialized skillsets for short-term projects. Question: the coronavirus pandemic is also forcing more people to do more things online which is providing an additional boost to the digital economy. Take a company like Zoom Video Communications. It provides videotelephony and online chat services through a cloud-based peer-to-peer software platform and is used for teleconferencing, telecommuting, distance education, and social relations. The stock is listed on the NASDAQ exchange and was trading at around 100 bucks just before COVID. In six months, it was trading at over 500. What do you think about digital products as a way to maximize your income on the road to financial freedom? Answer: Who would not be lured into the appeal of digital products? They cost “nothing” to make – apart from your time which means that your markup is astronomical. We are talking about software, ebooks, videos and courses, podcasts, and video production and games. I have personal experience with ebooks. They are extremely simple to produce and market. You can use Kindle Direct Publishing and then sell them through Amazon. What a fantastic idea. It is estimated that there are 310 million active Amazon customer accounts worldwide, 90 million of which are Amazon Prime members who spend an average of $1,300 per year on the platform, with the remaining 220 million non-Prime members spending an average of $700. You would be an idiot not to tap into this gold mine. But here is the problem – do you know what the competition is like on Amazon? It is estimated that there are 6 million eBooks on Amazon. Clearly, you don’t compete against everyone. If you write a financial self-help book, you are not competing with Fifty Shades of Grey. My best eBook “Everything You Know About Finance is Wrong” was #2,902 in Motivational Business Management. In the entire eBook universe, I was ranked #1,483,968 in the Kindle Store as at the end of October 2020. I briefly jumped into the top million in June but that was short-lived. My point is this: I sold less than 100 copies of this book and I was in the top 25 percentile of the Kindle Store Community. This means that more than 75 percent of all books on Kindle sell less than 100 copies IN TOTAL. It is brutal out there. I did everything right – careful keyword research, ad promotions, free copies, heavy marketing on social media (LinkedIn, Facebook, and Instagram) and these books just did not move. This market is just too crowded. People that post videos on YouTube about how to make millions out of eBooks are full of shit. They made nothing so they became coaches because they recognized it as a more profitable alternative. Do not fall into this rabbit hole. Question: People are so used to free stuff. I did a little research on online courses. I went to Google and did a search for "free online courses". Before doing this, I expected to see a couple of million results AT THE MOST. I was not even close to being in the ballpark. In fact, I was in a different galaxy floating through an eternity of nothingness. There were almost 6 BILLION results. In this sea of freebies, what is the chance that you will be able to charge for your courses? Again, I am not saying that it cannot be done, but it is not easy to build a business model out of this. Answer: I have written four books. The first three: "Everything You Know About Finance is Wrong", "12 Investment Revolutions" and "Trilogy of Capital Assets". I will be the first to admit that these books were a solid effort. They were not greatly written, but they were above average. I did my very best to write them in a way that they would be accessible to a wide audience and they provided some solid advice. I then discovered that the average person is not an avid reader unless you can condense your message into 140 characters. Social media seems to have reduced the attention span of the average person down to a couple of minutes. The solution, therefore: video. Between March and May of 2020 – during the hard portion of the coronavirus lockdown – I dedicated my time to condensing these three books (150,000 words) into a series of videos. The total running time of these videos was in the region of 20 hours. Each video ran for about 20 minutes and included my beautiful face in the bottom right-hand corner and a series of PowerPoint slides. I quickly accepted that they were not the finest batch of audio-visual content, but firmly believed that I would sell them for R9.99 per video. I went out and promoted them on my social media (I have about 3,000 connections on LinkedIn and a couple of hundred on Facebook). I accept that I am not a social monster but I have a fair sprinkling of social connections. I was not able to sell a single video – so in the spirit of lockdown, I decided to give them an away. Even that was not greeted by a deluge of demand. The point that I am trying to make laboriously and tangentially is that selling online courses is not as easy as it sounds given the amount of free content available. Granted, a large portion of this content is crap, but there I no shortage of high-quality material. The Khan Academy is a good case in point. Khan Academy is an American non-profit educational organization created in 2008 by Sal Khan, to create a set of online tools that help educate students. The organization produces short lessons in the form of videos. The bulk is focused on school education (algebra, calculus, physics, etc.) but they are also starting to encroach on my space (personal finance). The Bill and Melinda Gates Foundation has donated $1.5 million to the academy, and Bill uses some of the 10,000 free videos to educate his own kids. The Khan Academy sets the bar relatively high. It is one of the many examples of how free online courses are making it increasingly difficult to monetize educational content. It is impossible to talk about online courses without reference to Udemy – the elephant in the room. In the same way that China had a deflationary impact on global product prices with their cheap labor at the turn of the 20th century, so too has Udemy generated downward pressure on online courses. Udemy is an open marketplace where anyone can teach anything and charge for their courses. Udemy course prices start relatively low: $10 for new users. The most expensive courses on Udemy are currently $199.99, although you can often find coupon codes online with savings of up to 90%. This means that almost nobody pays the full ticket price for a Udemy course. You may argue that although you are earning a few cents on the dollar ticket price, you have access to a massive market. They claim to have 35 million students, 57,000 instructors providing courses in 65 languages. Udemy claims to have had 400 million enrollments. There are 130,000 courses available. So how do instructors get paid? If you bring the student onto your course (through a special code you provide that student), you will receive 100% of the fee paid. That is fair enough. If the student finds you on Udemy, you receive 50 percent of the cost. If a student takes a course based on a Udemy paid advert, you receive 25 percent. Unless you are a mega influencer, in which case you probably have better things to do with your time than making instructional videos, the bulk of your revenue will be shared with Udemy. Given the competition, it is unlikely that this business model is going to generate a strong stream of passive income. Question: So that is a little depressing. If the digital world is so competitive that it is difficult to make a good living there, what would you suggest? Answer: I think it is important to make one point very clear. Online is here to stay, there I no doubt about it and your business strategy must have a very important online/digital component. I am a fan of digital, but I think you need to make your offering very specific and not try and tap into the global audience where the competition is just too intense. My suggestion is to do the following. Identify key global business trends and then find ways in which they can be applied in your region/community/sphere of influence. Question: in other words you need to have a very specific business strategy. So instead of offering a global subscription service on how to exercise your dog, you offer a dog walking service in your suburb by teaming up with the local vets and building up an email database of potential local customers? Answer: That is exactly what I am saying. That taps into a global trend. Younger generations are shying away from getting married and they are having fewer children. Question: I recall reading an article on millennial.com entitled: Pets vs. Parenthood: Why Millennials Are Owning Pets Instead of Having Kids. Young Americans may be less likely to be homeowners or parents of human children, but they are leading in their rate of pet ownership. The $69 billion pet industry has already grown three times larger than its size in 1996, and Millennials are fueling the increase. With 44 percent of Millennials remaining unsure if they want to start their own family, it makes sense that their Instagram feeds may be more full of fur babies than tiny humans. Answer: The biggest mistake when it comes to investing in businesses is that people look for the wrong things. They look for exciting, sexy, glamorous, and popular businesses. The same is true when it comes to starting their own businesses. There is nothing glamorous about walking a bunch of crazy dogs and having to pick up their poop behind them. But as you grow, you can hire people to do the job. The business has low overheads – you don't need to rent an office. You do not employ the dog walkers – they are freelancers. Your biggest cost is marketing which you can do online on a small budget. Question: You mentioned global trends in business. Disruption is everywhere. Businesses and sectors are being disrupted like never before. Technology, disintermediation, and the climate are making previously dominant companies vulnerable, while startup companies run by millennials in hoodies are becoming increasingly dominant. While all this is happening on a micro level, on a macro level we are also seeing a shift in global power from the west to the east. Failure to identify, understand, and exploit these changes will be fatal for any entrepreneur. Businesses fail principally due to their inability to anticipate changes. Charles Darwin said that it was not the strongest of the species that survives, nor the most intelligent. It is the species most adaptable to change. Can you walk us through key global trends that entrepreneurs need to be aware of? Answer: Let me rip through them for you. The first is the move from fossil fuels to renewable energy. South Africans are all too aware of load-shedding and how it impacts our lives. Eskom needs to open its grid to third parties. The solution is not to go out and build new coal plants. It is expensive and pollutes the atmosphere. When Eskom opens up their grid, smaller producers can find a piece of land, set up some solar panels, and sell their output to Eskom. The second trend is the growth in demand for second-hand clothing. By 2028, 13 percent of the clothes in women's closets are likely to be secondhand, up from 6 percent in 2018 according to ThredUp. The secondhand market, which includes resale, thrift, and donations, has grown 21 times faster than the retail apparel market between 2016 and 2018, to a $28 billion industry in 2018. It is projected to be $51 billion by 2023. The main growth driver is the resale market, which is expected to quadruple between 2018 and 2023. Sales in the apparel rental market have also surged, becoming a $1 billion industry in 2018 that could reach $4.4 billion by 2028, according to GlobalData. By 2028, 4 percent of a women's closet will consist of subscription and rental products. You can get slightly used high-quality items at a fraction of the cost of their newer counterparts. Not only is buying used good for your finances, but it is also good for the planet. Clothes companies are massive polluters and any activity from your part to reduce demand for their polluting products is one step towards healing the planet. Question: So a good business going forward could be selling second-hand clothes online or setting up a physical store selling second-hand clothes. I presume the stats you mentioned were for the US but we are seeing the emergence of a similar trend here in South Africa. What is happening in terms of financial services? Answer: The financial services sector is under threat and on the top of the list of potential victims are the banks. The Millennial Disruption Index reports 71% of millennials would rather go to the dentist than listen to what banks tell them. Question: Why has traditional banking not captured the hearts and imagination of the average man? Answer: In 2008, banks lost their biggest asset and that is trust. They lost the trust of their clients and technology companies moved rapidly to fill the gap. Since the financial crisis, the number of financial technology or fintech companies has increased exponentially. They are moving aggressively onto the turf dominated by the traditional banks and cherry-picking the most profitable segments. Before 2008, banks were mildly successful in incorporating technology into their services via online banking and call centers- most of which were located in New Delhi. After the crisis, regulators tightened the rules in an already overregulated market. While banks were obsessing over compliance, tech companies were entering a phase of mega-innovation. Consumers were exposed to a world of hailing a taxi from their phones, being pampered with same-day delivery on Amazon. Technology companies identified this gap and started to fill it with sweet sweetness. As of 2019 Facebook boasted numerous banking licenses and was experimenting with its own cryptocurrency. Amazon was experimenting with student loans. Alibaba was running one of the largest money market funds in the world and WeChat (the Chinese version of WhatsApp) was doing 820 million wire transfers during the Chinese New Year. If you trust Facebook with photos of your newborn baby, will you not trust them to handle your finances? Question: What has been the role of cryptocurrencies in speeding up the rate of change in the banking system? Answer: Cryptocurrencies, blockchain, and crowdfunding have now made possible a life without banks and the world is rejoicing. If you want to transfer money or pay accounts, crypto accounts allow you to do so. If you want to borrow or invest money, you can go to crowdfunding sites like Moneytree or Lending Club. If you want to buy and sell stocks or mutual funds, you can do so through apps like Robinhood. Question: So how do you make money from this disruption? Answer: Finding what is broken in the finance industry is not difficult. Make a list of all the things that piss you off about your bank, stockbroker, pension company, insurance company, and financial services company. Then find companies that are working tirelessly to solve these pain points, or start your own company that will focus on filling these gaps. Question: So let's do a quick recap because we have covered a huge amount of ground already today and we still have not reached the killer punch. We are talking about five things that you need to start doing today to attain financial freedom - or using the old terminology, retire early. We looked at understanding your DNA and how it is important to transform yourself from being a spender to a saver. We spoke about eliminating debt and also we spoke about maximizing earnings. The only thing is that we still have not arrived at the most important part. Saving and working hard is all very well, but how is that going to take us into a life of financial freedom? Answer: That was a great summary. Points one to four will lead to a situation in which you earn more money than you spend. The question now is what do you do with this surplus money. You need to become an investor. I think Robert Kiyosaki put it best in his book “Rich Dad Poor Dad” when he said that instead of working for money you need to make money work for you, and the way that you do this is by becoming an investor. It’s a lie that you need to have lots of money to invest in the stock market. You can invest small amounts regularly. In your journey to financial freedom, you need to invest your monthly savings into the stock market. Many people manage to save, but then they invest their savings in the wrong place. They put this money into a low risk, low return fund, or instrument for their retirement. After all, this is your nest egg – the money that you will be using in your twilight years when you have more hair growing out of your ears and nose than growing out of your head. Advisers encourage you to be conservative and play it safe. This is bad advice. While it is true that as you approach retirement you need to ratchet down your risk, in the years and decade leading up to retirement you need to strap on the turbocharger and grab your helmet. To understand the implications of saving for retirement, let us do the numbers. Savers normally invest in funds and instruments where the returns are linked to interest rates. In the 1990s, deposit rates in South Africa were between 15 and 20 percent. Today, this rate has plummeted to around 5 percent. Let us now understand the impact of this structural downward shift in interest rates on the returns for savers. If you had saved R500 per month, at an interest rate of 20 percent for 25 years, how much would your savings be worth? The answer is R4.2 million ignoring tax and inflation. If you save R500 per month, at an interest rate of 5 percent, how much will your savings be worth in 25 years? The answer is R298,000 ignoring tax and inflation. That is brutal! Imagine saving religiously for 25 years and not having enough money to buy a new VW Polo! You need to Invest for Retirement. One of the things I like to do is to train people on how to become a master investor replicating the strategies of market gurus like Warren Buffett. But let’s assume you do not have the time or the inclination to embark on this quest. Let me share with you a simple strategy that you can implement today. Step 1: Relax The stock market brings out the worst in us because people think they can use it to get rich quick. Most people are terrified of the stock market because it exhibits wild and volatile swings and this is true – in the short term. The stock market, over the longer term, tends to be more predictable and benign. Your first step is to recalibrate your opinion of the stock market and take a long-term view. You need to be patient and you need to be religiously disciplined in your investment. Step 2: Monthly Contributions – Annual Consultations Every month, you need to commit to investing a minimum amount of cash into the stock market and you are only allowed to check your account statement once per year. Step 3: Choose a Low-Cost ETF Not everyone has the desire or time to analyze individual stocks, which means ETFs can be a powerful financial tool. I would recommend a broad-based country ETF like the Satrix 40. Step 4: At Least R1000 a Month All you need to do is invest R1,000 per month. To understand how extremely attainable R1,000 per month is, I did a quick Google search on what R1,000 can buy you these days: ten or twelve movie tickets, 6 months of Netflix, four or five new movies on DVD, fifteen used DVDs at a yard sale, lunch for four at a fairly nice restaurant, 40 cheap burgers or 90 candy bars. Over the past 25 years, the JSE All Share Index has delivered compounded returns of approximately 12 percent. This is better than a poke in the eye with a blunt stick and one needs to take into account that this return includes three major stock market crashes – the dot.com bubble bursting in 1999/2000, the collapse of Lehman Brothers and the Great Recession of 2008, and the Coronavirus pandemic of 2020. So how much would your 25-year religious investment in this index yield? The answer is almost R1.9 million. That is inordinately better than investing in a savings account. Now, let's assume you can afford to invest R2,000 per month – you will have R3.8 million after 25 years. If you invest R5,000 per month, R9.4 million. If you invest R10,000, R18.8 million which would effectively make you a dollar millionaire. Question: That is simple stuff. You really do not need to be an investment genius to make money in the stock market. Let's now look at the other side of this positivity. What would you say are the three biggest mistakes people make when it comes to investing for retirement? Answer: One of the biggest mistakes is being afraid of risk and avoiding the stock market. The stock market is one of the greatest generators of wealth on the face of the earth. Having said this, many people avoid the stock market for two reasons. Firstly, they think it is too dangerous. Most people are terrified of the stock market because it exhibits wild and volatile swings and this is true – in the short term. The stock market, over the longer term, tends to be more predictable and benign. Your first step is to recalibrate your opinion of the stock market and take a long-term view. Secondly, they are under the misconception that you need to very super smart and dedicated to investing. In reality, you do not need to be an expert in stocks to become financially free – a basic understanding will suffice. This is what you need to know. A stock market is a place where you can invest in thousands of public companies. Also, the risk is your friend. If there is no risk, there can be no return – it is simple as that. The second mistake is investing in a retirement annuity. I hate annuities. Only one person makes money from a retirement annuity and that is the annuities salesman. According to billionaire investor Ken Fischer, if you invest $1 million in an annuity you will put a kid through private college. The problem is that it is not your kid. It is the kid of the annuity's salesman. Fisher says you would be better off cutting a check directly to the salesperson and then investing the balance directly in stocks and bonds. Do not be fooled by the sales rhetoric. Annuity salespeople will regale you with the tax benefits, the power of compounded growth, the discipline of saving (a lie that we have debunked), supporting your dependents, and long-term stability. If you are financially educated and disciplined, you can do better with direct investments. Annuities are black-box investments – there is no transparency and accountability of results. The fees are bordering on criminal. Moreover, when you retire with that annuity, you will get a stream of income akin to a quaint Scottish brook. You deserve the whitewater rapids on the Zambezi River. The third biggest mistake is a lack of patience. Impatience (noun) - the tendency to be impatient; irritability or restlessness. What causes impatience? Impatience is triggered when we have a goal and realize it's going to cost us more than we thought to reach it. Impatience is the single biggest obstacle to financial freedom. We are living in an age of instant gratification, same-day delivery, and super high-speed internet. We complain about being forced to wait for 40 minutes for takeoff on a transatlantic flight. We have lost sight of the fact that modern-day air technology allows us to travel from New York to London in 6 hours. In the old days, it took weeks by boat and there was always the chance that if you did not die of scurvy, you were attacked by pirates or crashed into icebergs. I Googled “long term stock investing” and came up with 269 million results. I then Googled “stock trading” and came up with 4 billion results. Why is it that trading yields 1,400 percent more results than investing? This is no surprise because trading is sexier than investing. The objective is the extraction of short-term profits. Day trading or scalping has taken off over the past ten years. To answer this question, you need to answer the following: when it comes to money management, do you want sexy or do you want boring? Do you want Marilyn Monroe in the Seven Year Itch or Fred the accountant? In a perfect world, you want your chef to be French, your sports car to be Italian, the driver in the lane next to be non-Italian, your watch to be Swiss and your policeman to be British. What about money management? There is a great quote from Paul Samuelson. Investing should be more like watching paint dry or grass grow. If you want excitement, take $800 and go to Las Vegas. Question: It is interesting what you say about sexy investments. Investments should be simple, boring, and predictable. Sure you have great stocks like Tesla that have done exceptionally well recently, but these stocks are rare and they do expose you to a great deal of concentrated risk. It is better to spread your risk over several different companies when it comes to investing for retirement. So let me try and summarize the five things you need to start doing now to be financially free in 25 years. Firstly, you need to understand your financial DNA – whether you are a spender or a saver. Secondly, you need to work on becoming an Olympian saver. Thirdly, the first destination of your surplus saving must be destined to paying down bad debt – debt that is not generating a reliable stream of income. Fourthly, you need to work on maximizing your earnings power – be in your job or as an entrepreneur. This in turn lays the foundation for the fifth step which involves becoming a disciplined and master investor. It needs to be noted that all five action steps are not building blocks – they need to take place simultaneously. To end off, I would like to touch on the topic of wellness. The chat-up until now has been dominated by money and would be easy to fall into the trap of believing that money is a source of happiness and fulfillment. Could you give us a few parting thoughts on this? Answer: Financial freedom requires changing your relationship with money. When you work for money, money becomes your master. It rules your mind, your actions, and your desires. When money works for you, you are flipping that relationship. You are now the master. You are in control. Money works for you and you in turn work for a higher purpose. You need to find that higher purpose. It could be to provide for your family or give back to your community or your country. It could be to free up your time to pursue what you find meaningful. Also, you want to do business with people that share your values. If money is your why, it will become an endless source of anxiety. You will never have enough. I have traveled to several Central American countries and I love speaking to taxi drivers. There is always an election somewhere and I like to understand how the taxi drivers select their candidates. They often choose the wealthy candidate under the belief they will steal less. In reality, the rich almost always steal more. If you have one million, you want another million. If you have one billion, you want another billion. The thirst for money is insatiable. If money is your why, you will never be satisfied. A Harvard study set out to understand the secret of happiness. It analyzed a large group of people over the decades. It was not a snap survey on a random sample. It selected two groups and then followed the evolution of their lives over a long period. The findings from the study were fascinating. For over 75 years, the study tracked the physical and emotional well-being of two populations. The first, known as the Grant study, analyzed 456 poor men growing up in Boston from 1939 to 2014. The Glueck study followed 268 male graduates from Harvard's classes of 1939-1944. The multiple generations of researchers analyzed blood samples, conducted brain scans (once they became available), and dissected self-reported surveys, as well as actual interactions with these men. The researchers found that professional success was not a source of fulfillment. The more people progressed up the corporate ladder, the more money they had, the more assets they acquired, and the more complicated their lives became. With this increased complexity came increased anxiety and with this increased anxiety higher stress levels. Also, they found themselves less fulfilled. They were, however, able to overcome this sense of emptiness by immersing themselves in their jobs. They filled their days with professional activities and their weekends with social engagements that left no time for reflection. The Harvard study showed the most fulfilled and happy people were not the most successful. The people who felt the strongest human connection to their community, their friends, and their families felt the most fulfilled.

The key to financial freedom is making money work for you instead of working for money. Financial freedom means you are not dependent on anyone financially. You are in a position of complete self-sufficiency. You do not rely on a boss/master/institution to pay you a monthly check. It also means that you do not need to work. You could spend the next year, five years, ten years, or twenty years fishing, playing golf, smoking pot, surfing, hiking through the Himalayas, or traveling around the world on a motorcycle – and you would have a sufficient flow of passive income to fund your activities. That is the goal, but how do you get there? There are two kinds of income – active and passive. Active income is the fruit of your labor. It is the remuneration you receive after putting in a hard day of work. When you start off your journey, 100% of your income is going to be active. The first step is to draw up a budget and understand how much you earn and how much you spend – and move into the territory where you earn more than you spend. That excess income needs to be invested religiously. You eventually want to reach the point where you have invested enough that the returns of these investments (passive income) are sufficient to sustain your lifestyle. The question that now needs to be asked is where do you invest this surplus income. The first term you need to learn in the wonderful world of investing is “asset class”. Investments are divided into asset classes. Asset Class 1: Stocks/Equities (commonly referred to as the stock market) The stock market is one of the greatest generators of wealth on the face of the earth and the more you know about it, the better. Having said this, you do not need to be an expert in stocks to become financially free – a basic understanding will suffice. This is what you need to know. The stock market is a place where you can invest in thousands of public companies. What does it mean to “invest in a company”. All companies need funding. They need cash and access to funds to operate. The way in which a company is funded is known as the company’s “capital structure”. Companies have access to two broad sources of funding – debt and equity. Debt is money lent to the company (most commonly by banks) and equity is the capital provided by the owners of the company. This allows us to create this simple formula: Total Capital = Debt + Equity When you buy 1 share of Amazon on the stock market, you become an equity holder in Amazon. You become an owner of a very small slice of that company. How small? Amazon has issued approximately 500 million shares. When you buy 1 share of Amazon, you are the proud owner of 1/500,000,000 of the company. What does it mean to be an equity holder or owner of a public company? Lets start off by explaining what you are not. 1) You are Not the Boss Your single Amazon share does not entitle you to walk into Amazon offices, boss people around and demand a corner office. Those responsibilities rest with the companies management. Jeff Bezos happens to the largest shareholder in Amazon (with approximately 11 percent of the outstanding shares as of 2020) and is also in the management committee. However being the largest shareholder does not necessarily entitle you to run the company. Steve Jobs was fired from Apple, nothwithstanding holding a considerable equity stake in the company. The same happened with Travis Kalanick of Uber. 2) You do not own the assets of the company As an investor in a company, you own a portion of the company (no matter how small that portion is); however, this doesn't necessarily mean that you own property of the company. You will recall that the capital structure is made up of debt and equity. Debt is the money that the company borrows from banks and other lenders. The debt holders have the first claim on the assets of the company. As a common shareholder…. You possess the right to share in the company's profitability and gains from its stock price appreciation. If you had invested $1,000 in Amazon when it was listed on the stock market in 1997, it would be worth almost $1.6 million today (Oct 2020). Shareholders may also share in a company's profits by receiving cash or stock payments from the company—called dividends. Common shareholders can also influence a company's management by voting to elect the board of directors, who appoint the CEO. If a company issues new shares to the public, current shareholders have the right to buy shares before they're offered to new shareholders. Owning equities is an exceptional source of passive income. There is nothing more passive than investing in great companies run by great people, and sitting back as the gains come rolling in. Few would disagree that 2020 was not a complicated year for financial markets. The coronavirus wrecked havoc through capital markets with numerous companies, such as Hertz. Some companies have turned the challenges of COVID 19 into opportunities and have added huge value to shareholders. Tesla is one that stand out. The stock was trading at close to $100 at the beginning of 2020 and by the end of the third quarter (end September 2020), the stock price had increased more than four-fold to $420. For more on stock investing: English: https://www.rebel-finance.com/invest-in-the-stockmarket Spanish: https://es.rebel-finance.com/invest-in-the-stockmarket Asset Class 2: Bonds You will recall that the capital structure of a company is made up of equity and debt. We have already dealt with the equity portion – now is the time to deal with the debt portion. When companies are created, they need cash. They need to be funded. If you start a business today, it is likely that you will invest money in the company. In addition, you may invite friends and family to invest in the company. These initial investments are equity or ownership interests. As your company grows, you may tap out the resources of your friends and family, and you may decide to take your company public on the stock market. You will invite strangers to invest in your company. They will do so via the stock market and you will be accountable to them to maximize the return on the investment. These shareholders can at times be demanding, pushy and a general pain in the rear end. It is therefore nice to know that shareholders are not the only source of funding available to you. Another common option was your local bank. You would draw up your business plan, extract urine, blood and DNA samples, put your pride in your pocket and walk into the branch. After hours of humiliation and relentless begging, the bank manager’s secretary would let you go into his office and pitch your business. If the bank manager agrees to lend you the money, you are able to plough that money into your business safe in the knowledge that the bank is not an owner of your business. The loan does not entitle the bank manager to have any say in the day to day running of your business. In the same way that large companies list on the stock market, so too can they borrow money in the bond market. Instead of asking for more money from the bank, they issue bonds in the public market where anyone can buy them. When you buy a bond, you are effectively lending money to the company. You are acting as a banker. For more on bond investing: English: https://www.rebel-finance.com/invest-in-bonds Spanish: https://es.rebel-finance.com/invest-in-bonds Asset Class 3: Real Estate There is no shame in being turned on by bricks and mortar. It appeals to all the senses – you can see it, touch it, smell it, taste it and even hear it, especially when filled with tenants. Real estate is an almost perfect form of passive income. It offers many money-making opportunities: flipping condos, renting multifamily homes, crowdfunding rentals and real estate investment trusts. The list goes on. Residential real estate investments are the most common forms of real estate investing. These include single-family homes, condos, and townhouses that can be re-sold or rented out for a profit. Rebel Finance focuses on passive income. Therefore, we are not going to focus on real estate flipping. Flipping is not passive. We are going to focus on rentals. Airbnb and the sharing economy has added a new dimension to real estate investing. You can buy a condo in Tulum, Mexico, slap some paint on it, install an indoor swing, loft the bed and put a rug on it and create a meditation space, and bingo – you will find hippie Americans willing to shell out $100 per night. Property rentals are beautiful. John Keats, in his poem 'A Thing of Beauty' proclaims that a thing of beauty is a joy forever. Beauty never passes into nothingness. Our earth is replete with innumerable natural objects full of beauty. Keats wrote this poem while sitting outside a beautiful block of council houses in Bethnal Green. He was inspired by the flow of rents he could extract from these assets. Twelve Cardinal Rules of Property investing: English: https://www.rebel-finance.com/post/twelve-cardinal-rules-of-property-investing Spanish: https://www.rebel-finance.com/post/12-reglas-cardinales-de-la-inversi%C3%B3n-inmobiliaria Asset Class 4: Start Your Own Business A small business is an amazing way to serve and leave an impact on the world you live in. Small businesses are the backbone of any economy, but starting your own business is risky. You need to abandon the secure environment of monthly paychecks, employee health care plans, and paid vacations, and lunge into an environment where you are the boss and you become the provider of this security to your employees. Seven Steps to Start Your Own Business English: https://www.rebel-finance.com/post/7-steps-to-starting-a-business Spanish: https://www.rebel-finance.com/post/quieres-empezar-tu-propio-negocio #finance #money #business #investing #investment #entrepreneur #financialfreedom #success #stocks #wealth #trading #realestate #stockmarket #invest #motivation #forex #bitcoin #investor #accounting #cryptocurrency #marketing #wallstreet #startup #trader #personalfinance #entrepreneurship #credit #smallbusiness #goals

The journey to financial enlightenment and freedom starts with a little math and accounting. We are going to start you off with a "financial physical" – you are going to draw up your own personal balance sheet. For many people, the mere mention of the words “balance sheet’ would send them into a deep coma. Before you go nodding off, be assured that this exercise is more interesting than you think. We are going to draw up a list of your personal assets and liabilities, and use that list to calculate your net worth. We are going to use the conventional definition of assets and liabilities because later on in the training we are going to rip up the rule book and provide a modern definition of assets and liabilities. Open up a spreadsheet and let the games begin. This spreadsheet is going to serve as your personal financial scorecard. It will give you an indication of how you are performing down the road to financial freedom. Step 1: Assets In this part of the analysis, you need to include anything you own which has a positive monetary value. When it comes to placing a value on your assets, you need to be conservative. You also need to differentiate between the market price of an asset and the sentimental value you might attach to that asset. Your Jennifer Aniston restraining order that you framed and hung in your guest toilet may be worth $5,000 to you, but on the open market, it may not be worth more than a couple of dollars. You will need to be mega realistic and even more conservative on your asset valuations: Cash and money in the bank Your home’s current resale value Investments – mutual funds, college savings accounts, shares, retirement fund The current market resale value of your car The re-sale value of personal property - jewelry, household items Step 2: Liabilities These are all your financial obligations, loans, or debt which must be paid. Liabilities tend to be easier to value because they tend to be defined in monetary terms: Your outstanding mortgage balance Personal loans Car loans Credit card balances you still need to pay off Student loans Step 3: Calculate your net worth It is important to work out the difference between your assets and your liabilities. You need to total up your assets and total up your liabilities. If your assets are greater than your liabilities, you have a positive net asset value. Financial freedom is obtained by having far more assets than liabilities. Negative net asset value is when your liabilities exceed your assets. You can start to increase your net worth by: Gradually increasing your assets Decreasing your liabilities by paying off debts. Doing both at the same time Why is this an important exercise? To stay on top of your financial goals, it is a good idea to update your personal balance sheet every quarter or at six-monthly intervals. Motivation is obtained when progress is witnessed. If you can see your net asset value increasing in value, it produces a positive mindset which can be turned into positive momentum. #finance #money #business #investing #investment #entrepreneur #financialfreedom #success #stocks #wealth #trading #realestate #stockmarket #invest #motivation #forex #bitcoin #investor #accounting #cryptocurrency #marketing #wallstreet #startup #trader #personalfinance #entrepreneurship #credit #smallbusiness #goals