Let's talk finances

PumpDumpPumpDump · 2015-01-11T17:59:26+00:00

You'll get lots of stupid advice on this subject, from people who don't have any money or are just crazy. I'm in my thirties and nearing a couple of million in net worth, so here's real, simple advice to get there, too:

(1) Start early. Compound interest is your friend.

(2) Save at least 10 percent of your income, preferably more.

(3) Get an emergency fund of at least six months to a year's living expenses in cash. Just leave it in your bank account or some other form that is liquid so you can immediately access it if needed.

(4) Don't try to game the market. Just stick it in index funds that track major market indexes and leave it there. Make sure the fees are low - high fees are how parasites suck away your money. So do taxes if you trade a lot. Vanguard is the best option right now, but Fidelity has some good funds too.

(5) Don't use a financial planner. They're parasites, and will encourage you to do things that generate fees for themselves but don't help you.

(6) You want your allocations to be around 90% stock type investments / 10% bonds when you're starting out. I have a mix of mostly S&P, then some more small cap / mid cap, then some real estate and international indexes. As you get older, put more money in bonds.

(7) DON'T PANIC. This is the single most important piece of advice. The stupidest thing you can do is panic and sell a bunch of stock when the market crashes. It will happen, probably three or four times during your life. Guess what? A couple of years later, it will have recovered, and the only people who lost money will be the morons who sold when it was low. It's buy low, sell high, not buy high, sell low. Just look at the most recent crash. The Dow was at 6,500 and I was pumping money in while the dumb money was selling. Here's the reality: if the Dow was going to crash down to 2,000 or something, we're all screwed anyway. That's zombie apocalypse levels, and the whole system would meltdown and anything you have would be worthless anyway. So don't worry about it, have some balls, and stay the course.

(8) Don't believe the people who think you should stuff all your money into mattresses or the Iraqi dinar or gold or whatever crazy investment scheme they have. "Oh, but the economy / Wall Street is a scam for the rich and powerful!" Yes, it is. And what do the rich and powerful do? Own a lot of stock. There's a reason the government put all its efforts into saving the stock market first in 2009/2010, not helping the average person. If you can't beat 'em, join 'em. If you have a lot of stock, you're benefiting from all the corporate efforts to squeeze out labor in favor of profits. Those are your profits now, you have a cut. That's your government now, you own shares in its masters.

(9) As you get older, put more money into bonds. You need this because of the buy low, sell high rule. Once you're actually using your money to live off of, you'll be selling parts of your portfolio each year. Bonds are stable, stocks go up much more over time but they fluctuate. If stocks just crashed, you want to sell bonds to live off of. If stocks are partying like it's 1999, you want to sell stocks to live off of and refuel the bond portion you sold in down years.

10) You can safely live for 30 years off by withdrawing around 4% of the starting value of your portfolio in the first year, adjusting the amount you withdraw each year upward for inflation. Just keep that in mind for planning, and for how much you need. Use #9 to make this even safer, as well as other techniques, i.e., cut your spending some in years where the stock market is down, overshoot with your initial amount.

11) Once you retire, the first few years are by far the most important in terms of whether your portfolio will last under the 4% rule. If you withdraw a bunch of money in a bear market in year 1-3, it makes it harder to recover and creates a risk you'll run out in the later years. So be careful about that, and maybe go in with some extra money to cover the first few years so you don't need to take anything out of the portfolio itself.

SmegRimmer · 2015-01-11T16:39:57+00:00

This is going to sound like nothing, but it can be huge.

A lot of hobbies are money suckered. Find one you can make a little money from, even if only to keep it self sufficient. Like woodworking? Build stuff and sell it. Like going to garage sales and rifling through other people's shit? Figure out which items are underpriced and sell them online. Anything, as long as it makes back some money. Worst case scenario, your hobby is "cheaper" than it otherwise would be. best case, you start a new business for yourself.

More likely it's self sufficient and brings beer money. Can't complain about that.

omg_cats · 2015-01-12T07:09:00+00:00

Lot of overly complicated advice here from people trying to look smart. Here's the basics:

Starting a new job is the time to negotiate salary. Get the most money you can in the beginning. Pretty much everywhere will offer you lower and promise raises. Don't fall for it.
You almost always need to change companies to get a big raise, so start looking for a new job after 2-3 years.
Put in 100% effort at the office, always. Get noticed. If nobody's noticing, quit.
Have a liquid emergency fund of 6-12 months living expenses.
If you have debt > 6% interest, pay it off before investing in ANYTHING. Paying off high interest debt is a guaranteed return.
Your credit score is your worth as far as banks go. Don't fuck it up. If it's fucked up, repair it. Get on credit karma to know where you stand.
Never, ever, ever carry a credit card balance month to month. Use an Amex card to pay for everything during the month and pay it off in full. Amex has good rewards and most of their cards don't allow you to carry a balance so it's good discipline built in. The Costco Amex is great.
Once debt is paid off: Max out your tax-sheltered investments: 401k & IRA. Do this first. Don't invest in anything else until these are at the legal max.

Here's the truth: until you have all those items checked off, which 95% of you don't, all the forex/stock market/precious metals/Bitcoin/rentals bullshit is a waste of time. These are the absolute minimums. Once they're done, THEN take some money and make "real" investments.

Slydermv · 2015-01-11T21:23:24+00:00

Best way it reduce time to retirement, become financially independent or increase your savings (whatever your goal may be) is increase your savings rate.

Check out this blog:

http://www.mrmoneymustache.com/

With a family of four he effectively retired in his early 30's. The family spends about 25k a year.

While you might not make it to his level of frugality, there is great insight in the blog in terms of the way to think about money and shit you need versus shit you don't need. Honestly a 8 dollars star bucks a day costs you 3k a year and compounded over 10 years at 7% - 50 fucking grand (over 30 years it's like over 300k)!

By make some changes that don't affect my lifestyle at fucking all... I save about 50% on my income a year (I mean shit like installing programmable thermostats, making my own coffee in the morning, bringing my lunches to work, etc.)

Investments (this is Canadian):

http://canadiancouchpotato.com/

Pay down high interest debt first, invest into tax sheltered accounts second, then non registered after.

Mutual funds, financial planners, blah blah blah are a fucking scam set up to leech off your hard earned dollars charging over 2% for "actively managed investments" that rarely if ever beat the markets long term. It take o little work it's ridiculous. Set up an online brokerage. buy 5-7 ETF's that cover Canadian (cause I'm for Canada), US, International stock indexes, and bonds ETF's that do the same. Add money and re-balance once a year. The above blog has model portfolios that average over 10% rates of return after MER's

http://www.forbes.com/sites/greggfisher/2013/08/28/in-mutual-funds-is-active-vs-passive-the-right-question/

Invest you money, re-balance once a year, switch to a higher rate of bonds versus equities as you age, and don't freak out when the market drops.

Real Estate is good as well to diversify, but I have not dipped my hands into it so I'll let someone else who has explain.

BeekersBeaker · 2015-01-11T19:24:09+00:00

Advice for someone who's in college and looking to get ahead of the game:

If you haven't started investing, do so now. Even if it's only what seems like a small amount of money. Open a Roth IRA with a low cost company (my pick is Vanguard, but the specific company does not matter as long as they don't charge lots of stupid fees), and put what you can scrounge up into a super low cost index fund. Either S&P 500 or total market index, doesn't matter as long as the fees are ultra low, far less than a quarter of one percent. Starting to see a pattern here? Fees are important over the long term, and you're investing for the long term.

Okay, you have some money invested now. Two things. One, that money is no longer eligible to be spent on things until you are independently wealthy, or until it's the only thing keeping you from sucking dicks under a bridge for cash. Once you are under a bridge with a dick and a twenty in front of you, by all means, bust out the check book. Two, add to your pile. The most important thing you can do early on is add to the pile, and learn where it should be invested as you go (there are slightly better places to be than 100% in a total market fund, but it's the best place to start with a small amount of money). For motivation, look at an investing calculator. It adds up a fucking lot faster than you might think.

yummyluckycharms · 2015-01-11T20:37:12+00:00

Lets boil it down to the bare minimum people....

Financial success requires three steps:

1) Earning money at a job

2) Saving said money (investments)

3) Reducing expenditures (personal finance)

Right now Op you are kinda asking about all three, which means you are going to get overwhelmed by volume and range of answers.

Addition: Since you are starting off, you are should be looking for simple to implement solutions. Remember - most people will only have about 500k- 1 million when they retire - and that includes their house. Be realistic in your goals and that way you wont be disappointed.

crazydave1979 · 2015-01-11T21:22:03+00:00

easiet way to live a comfortable life??

live within your means, its that simple

pilledwillingly · 2015-01-11T22:17:48+00:00

Stay away from hobbies involving cars, boats, jetskis and motorbikes. Condoms, and lots of them. Back yourself. If there's a $10,000 training package that increases your lifetime employability by 5%, probably worth looking into it.

emblasochist · 2015-01-11T22:50:31+00:00

The well rated comments listed so far are pretty good generic financial bits of advice, but for RP specific financial advice:

1) Find a career that is stable that you can grow in skills, and every 2-3 years, find a new company and a new position higher up the ladder to shoot for.

2) Learn to negotiate, and build a reputation for being strong-willed, but not wrong. When you go into a negotiation for a promotion, people will see that you've got a history of taking a position, and that stance resulting in your team, your division, your company making a lot of money.

3) Figure out what your financial priorities are; a house, fine clothing, fancy cars, expensive whiskey, whatever, then work towards them.

4) Learn to value your time investments in people and activities and how to put a value on your time. Once you know how to evaluate what your time is worth, set a minimum value you will accept for your time, and cut out anything that doesn't earn that value for you time. Do not maintain interactions with someone who does not at least contribute to you the time and resources you invest into interactions with them.

5) Share your financial goals with your relationship, but not your assets. If things turn sour, you don't end up in court fighting to keep your hard earned money, clothes, cars, house, or anything else. If, on the other hand, your relationship looks like it's heading toward marriage, get a prenup, and make sure you specify what assets you consider yours, what assets are your partner's, and what is to be shared.

6) Be aggressive in keeping on top of your career, and demand that your partner does the same; the moment one of you stops working towards your goals if you haven't already achieved them, the moment the relationship starts to die.

Gotmilkyy · 2015-01-11T20:16:24+00:00

Definitely agree with you. I rarely visit the sub anymore without sorting by top (day/week/month). Even then you get rape cases and what I overhead on the news that my mom insists on watching.

I'm not saying there's anything wrong with those posts, but TRP is over saturated with it and most of the comments are satirical and therefore don't help anything.

When I see one now I don't even bother clicking it. I stick to the FR's and Illimitable man's theory posts. Big ups to that guy, so much knowledge.

blackhawks93 · 2015-01-11T23:18:16+00:00

Buy good health insurance with a high deductible and start working out. The best way to save money is to lead a healthy lifestyle and also don't neglect an awesome diet.

RPREALITY · 2015-01-11T17:47:54+00:00

Historically the S&P500 has averaged about 10% but this is an arithmetic mean, not a geometric mean (.1+0.08+0.12/3, instead of 0.10.080.012, which is how compound interest works).

The reason I bring this is up is because the major indices are at an all type high now due to the Keynesian games the fed in the US are playing.

An index is a basket of stocks in a fund, this is called diversification. The way you can value a stock is via the dividend discount model: Price at time 0 = Dividend forecast in 1 year / (Required return - growth rates). With the fed keeping rates basically at 0, stock prices are blown up at the moment and the indices are at all time highs (the Keynesian's see this as a good thing, lol).

So just be weary about jumping into the index funds as 'safe bets' right now.

I like the idea of putting a little bit of money into silver at the moment, it's a gamble but one I think is well worth it.

For your average person, a passive investment strategy is best. Very few fund managers outperform the markets each year consistently and they are the big dogs. Get into some index funds and opt in for dividend reinvestment. Just be aware that the indices are at all time highs now, so it probably is not the time to buy now. Also stay away from bitcoin, way too much volatility and it was basically a pump and dump, the ship has sailed.

edited to make my thoughts on silver more clear, I am definitely not suggesting you dump all your money into it. Is it so undervalued currently that dropping a few hundred or a couple of grand into it might make sense? I think so, because of the potential upside.

analt223 · 2015-01-12T01:27:43+00:00

Good dividend paying stocks. Taxed at 15% only (heh heh) is key. I make about 60k a year before taxes. I put the max amount possible into my 401k, and try to put about 1,000 to 1,500 a month into dividend paying stocks. Some of the high yield ones pay almost 1% a month. But even stocks that pay about 5% a year in dividends is much much better than anything you will get the old fashioned way sadly.

My passive income is about $850 a month now. More than enough for my monthly rent. Now im working on getting dividend income for my cell phone, gas for my car, and internet covered.

As a few others have suggested, cheap hobbies are key too. I go to garage sales all the time. You occasionally meet some kinda cute milf or something to practice flirting with too which can be fun. I used to be huge in collecting retro video games (video games get way too much hate on this subreddit btw, as long as you arent some WoW addict and can learn discipline video games are great), but the market got too demanding around 2009 and not enough supply. So I quit doing that. But the point was that it was cheap entertainment. Can not stress that enough.

AlchemyPhoenix · 2015-01-12T04:14:36+00:00

One tip I have to offer: be prepared to change companies and cities. If you really want to maximize your earnings, it has been well documented that people get larger raises when jumping to the next ship than when simply doing their job well and hoping they are noticed when the annuals come around:

http://www.forbes.com/sites/cameronkeng/2014/06/22/employees-that-stay-in-companies-longer-than-2-years-get-paid-50-less/

I have managed to double my income in two years by switching companies, then switching my job within a company twice. It required me to move three times, so now I'm playing catch up in terms of my social life, but being well-founded financially means that once I get a good group of friends and some inertia with women underway, I'll be better off for it in the long run.

Gbombay90 · 2015-01-12T04:37:03+00:00

[permanently deleted]

lukins · 2015-01-12T10:15:18+00:00

Bachelor Pad Economics. Worth the minimal cost to get. It as an absolutely red pill way to look after your finances. Discusses the recommended case of not getting married, but also discusses how to handle your finances if you decide to do so. I read it and highly recommend it.

YourShadowScholar · 2015-01-12T10:55:35+00:00

Some advice on how to actually make money would be more interesting than this personal finance copy/paste =/

Night--Writer · 2015-01-11T22:17:15+00:00

Great advice all around, so let me share some anecdotal evidence. Some of the best advice to get me 'on the board' (as my friend calls it) walked out his door with $20 in his pocket and turned it into 50k in savings within two years (Drug dealer at the time). He's naturally one of the most Red Pill people I've ever known. What does 'on the board' mean? It's your first 10k.

Lots of people envision the lavish life, but they live paycheck to paycheck as they buy a new car or a new apartment. Some have maybe 5k in savings, because to them that's a lot.

I took my buddies advice as he told me to save my first 10k before I think about anything else, after that I was on the board (monopoly reference in a way) and could actually start using that money to make money. This also lets you know the value of what it took to get that first 10k. My buddy is now taking his savings and is running a legitimate company where he takes his profits and puts it back into the business- he's doing phenomenal too.

But for me, in a few months I'll almost triple that 'on the board' number in savings and it's taken about 15 months to do it. Now I can spend a little here and there on myself- but my eye is still on the bigger picture. The next big thing for me is how I will invest that money. But for people who are broke as shit, living paycheck to paycheck, right now you need to 'get on the board'. Once you're there then the financial advice will actually apply to you (exceptions apply).

TL/DR: You need capital first- at least 10k. If you're not on the board right now with at least 10k, then work and save until you're on it.

Mire_Lurker · 2015-01-12T03:00:28+00:00

Wow guys. Amazing material. This has sparked my interest and looks like the key to being location independent and earning. I'm loving the stuff about Term deposits and compound interest.

Basically if you build the right account with enough cash in there it's a 'Mini-job' that can give you passive monthly/yearly/quarterly income.

My question is this if it's so easy why doesn't everyone do it? Is it just a discipline thing or what?

favours_of_the_moon · 2015-01-12T13:35:16+00:00

https://geiststeuerung.wordpress.com/2014/04/18/financial-planning/

"Many people on RedPill subreddits have requested that I do a post on financial planning. I thank you for your interest, and I now have time to do so, and am happy to oblige.

The first thing you should do is set aside 10% of every paycheck. Everytime you get paid, you should put 10% aside. Now, this is a hyperinflationary phase, so it is not a good time for “saving,” per se. However what I recommend is to put that money into commodities, primarily precious metals."

zephyrprime · 2015-01-12T15:54:59+00:00

Redpill is primarily about women. Redpill knowledge in general on the internet is primarily about politics. The reason you don't hear us talking about finances much is because most good financial common knowledge that most people fail to apply because they are short sighted idiots with no will power. There isn't nearly as much financial knowledge that is secret forbidden knowledge and hence redpill.

tombreck2 · 2015-01-11T17:32:37+00:00

Compound Interest is insane:

If you put in $10,000 in an account and leave it then in 25 years at 10% avg. profit it will have $100,000 in it while making $10,000 onwards per year.

photovoyeur · 2015-01-11T17:10:54+00:00

I'm studying forex at least two hours a day (i'm graduated in economics and already familiar with some concepts), in June i'm gonna start with a virtual/simulated account and maybe in the next year i will drop some money on it

zerohistory · 2015-01-12T15:38:05+00:00

I'm in my early 40's. So here is some hard won advice:

You will never make as much money as someone working in Finance. Get a job at an IB. Highly suggest you get into trading. Work there until you become a MD or at least an ED.
If you can't get into the finance work. then build a startup. Focus on a cashflow strong business. Money solves most problems before you die. Money is a life line.
Build financial independence by i) building a safety fund (keep it a fucking secret from everyone) ii) live at least 30-40% below your salary. Lower if possible. iii) put that 30-40% in equities. Learn how to buy options. If you want safety buy put options against your portfolio. You'll thank yourself later.
At some point, same a small amount to invest in other startups. a small amount to a few firms may have a 0% success rate but it could really be impressive. Do this when you are hitting your numbers.
Focus on building assets that will provide you financial independence. Check out the reddit. It is pretty good.
Learn that you can grow a business two ways. You grown 0-1 or 0-N. the first is innovative tech. the second is more offices, more cities, more countries. A simple business x 10 offices is serious money. Figure out where to take your business (if you aren't in finance!)
Never lead with your wallet. Spend money if you want to but focus on experiences rather than material items (especially for women).

williamwilliam2 · 2015-01-11T17:17:31+00:00

Modern media and people working in the banking/finance/retirement industry will insist you 'send money to Wall Street' through 401Ks, mutual funds, etc. Then you have a lifetime of fees siphoned off your accounts. Obviously, some money in Wall Street is OK, such as when a company matches your 401K contribution. They will rarely tell you to invest in real estate, collectibles, local business, private mortages, assets to run side gigs, etc.

Real estate: if you have good credit, W2 employment, downpayment, the banks are gifting you a ridiculous low interest rate to set-up income for life. The property doesn't have to be in your area, either. It could be anywhere in the country.

Collectibles: biggest secret among mega-wealthy. Vintage watches, guns, stamps, antiques, classic guitars, etc will double in value every 7-10 years.

Local business: this could be a start-up, but the start-up game is complex. Just local coffee shops, theatres, etc. often have local investors. I've been approached to be part-owners of children sports establishments (v-ball, swimming) because they are highly profitable but need upfront cash.

Private mortgage: this is like online lendingclub, prosper, but you can deal without a middle man, especially if there are assets backing the loan.

Assets to run side gigs: you can rent assets online now, or buy/sell off craigslist with a truck, and if you have time. Many people sell items at low prices because they need money quickly.

TheLife_ · 2015-01-12T03:27:49+00:00

My method is this. Pre-30, there are four things I put money into. Silver, stocks, savings and experience.

Silver - I receive two 1oz coins every year for my birthday and at Christmas time. I watch the market and when the price is low, I'll buy one or two more. I keep a simple spreadsheet to claculate the total cost and average cost of each coin, counting the gifts as $0.00. I won't sell it, per se, but tracking the value is going to give me an asset in the long run I can leverage against.

Savings - I put $100-$200 a month into this, divided up between several savings accounts. Keeping it separate keeps the amounts down, which stops me being motivated to spend it. When the accounts reach a certain amount, I then turn them into term deposits at the bank. It's not gaining much interest, but it's highly stable and highly liquid. It looks good on my financial profile when going for a loan and again will help to provide leverage in future loan requests.

Stocks - Not a lot of money goes in here. I'm mostly dabbling and turning it into a hobbie. I've only just opened the account up and have begun setting up some watch lists, mostly in the tech sector. This is probably the least important part of my method, but is tied intrinsically to the single most important part.

Experience - The most important part of a pre-30's financial plan. Get into a bit of debt and learn to manage it. Go out and get educated. Spend money on courses, licenses, renting, holidays. Gain skills and interests. Spend money on your car/bike. Start and fail a business. Your financial situation can recover from setbacks at this age, and you will gain a lot of confidence playing the entreneur role. I have a personal loan I used to buy a motorbike, a credit card which is recovering from being maxed out, and am building a student loan to get a degree and a diploma.

My 1 year goal is to finish my studies (completely achievable) and next year I plan to start a business.

FallenHighSchoolJock · 2015-01-11T21:55:13+00:00

Making money just to get women is a fools game and will leave you unfulfilled. Focus on your mission and doing what you love or what means a lot to you and try and be successful in that field. You'll be a lot happier than if you score some golddigger who'll just divorce rape you. This shouldn't be relevant to TRP. If you want advice on money go to /r/personalfinance

CommodoreSillyPants · 2015-01-12T10:34:32+00:00

Mess around with stocks. You can set up an account with scottrade with only $500. You'll make some bad trades starting out but then you'll figure it out and gain a steady income off it.

I started with $500 in my account about 9 months ago, and now I'm pretty damn near 6 figures.

tyranus89 · 2015-01-12T02:56:03+00:00

Lately, TRP has turned into this ... sex focused sub about spinning plates

Look at the sidebar. Directly under "Welcome to The Red Pill":

The Red Pill: Discussion of sexual strategy in a culture increasingly lacking a positive identity for men.

420butfukkk · 2015-01-12T03:18:18+00:00

Read "Rich dad poor dad." Here's a very brief overview of the book: buy assets, don't buy liabilities. Assets are revenue generating objects that put (hopefully) more money in your pocket than they took out. Liabilities take money out of your pocket and put nothing back in.

I_HaveAHat · 2015-01-12T09:35:45+00:00

As a 20 year old, what can I do at a min. wage job and schooling to secure funds for the next couple of years, until I can get a real job?

llcjer · 2015-01-11T16:38:27+00:00

Not sure how many people will agree with me on this, but it's important to start accumulating physical gold and silver while prices are at these low levels. As a college kid, silver is probably your best bet. Find a coin shop in your area and buy 1 oz at a time regularly.

YouTube: Peter Schiff Was Right

Title	Let's talk finances
Author	[deleted]
Upvotes	212
Comments	186
Date	January 11, 2015 4:25 PM UTC (11 years ago)
Subreddit	Posted in /r/TheRedPill
Original Link	https://old.reddit.com/r/TheRedPill/comments/2s2hsz/lets_talk_finances/
Archive Link	https://theredarchive.com/r/TheRedPill/lets-talk-finances.27847 https://theredarchive.com/post/27847

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