Free Money Management Advice.

[AuxBatOn]

Or just use some of the money you are making to enjoy life now for you and your family. You won’t be in your 30s/40s forever. Money isn’t everything.

Not that this applies to you, but whenever I have heard this in the past, it's from someone leveraged to the max, making minimum payments on their boat, truck and ATV. Eventually they get old and the tank is empty. Their kids won't help because they learned their money management skills from their parents. Then those of us who were frugal with our money, earning passive income see our taxes go up because we need to "Save our Seniors".

Sorry if this sounds like an attack on you- it wasn't meant to be directed at you personally.

I don’t advocate spending beyond your means but spend within, save a little and have fun throughout life.

My focus is more on the “now” than the future but again, balance is key.

FWIW, I don’t own an ATV or boat. They don’t bring fun for me. I like travelling and skiing. So we save up and when we have enough money set aside, we use it (rather than save it all) on a trip with the kids.

[complexintentions]

It's a nice thought of rookiepilot to offer free financial advice, but the problem is - those who would actually listen are probably already aware of what he speaks of, and the rest won't change their habits or thinking anyway, they're too busy trying to figure out how to get more credit to buy more useless shit. But for what it's worth:

- Agree, strongly: avoid debt. It may in some circumstances be defensible, but in the vast majority of situations it's just a millstone around your neck.

- If you are one of the few who actually invest (by this I don't mean gamble, or plow a ton of debt into a house and call it "investing"), keep ruthless watch on your fees. Most Canadians invest in shitty mutual funds with the highest MER's in the world and have zero clue how much that is costing them over the course of their investment life. Math is hard, after all.

- Paying for advice CAN actually be a good idea, BUT! only if your net worth makes it worthwhile. As stated the absolute vast majority of "advisors" are simply salespeople with dubious knowledge and negligible financial education. Truly professional advisors will have heavy recognized credentials, experience, reputation - and won't necessarily be cheap. If they are genuine, they will, however, over time bring you far more wealth than you have compensated them with. The 22 year old flogging mutual funds at TD is not who you take advice from - even though it's "free".

- Above all, educate yourself. Money is akin to a language. A minority are fluent in it, but most people are pathetically illiterate. Learn it yourself, or hire someone who speaks it expertly. Actually, either way, learn the basics yourself. Unless you enjoy being poor.

Pro tip: being good at flying airplanes doesn't automatically mean you're a good investor.

[rookiepilot]

I don't think the advice was saying don't enjoy life, but enjoy in moderation because leaner times are coming.

Correct. And money isn't everything by far. I pursued financial security so it Wouldn't be everything. Money is a tool, nothing more. I wanted to be in a position where that tool worked for me, and not me a slave to it.

Hence, buying used, as one example of moderation, can save a fortune. Why not?

Like Aux, I'm not huge on boats, but I do love to travel and now do a fair bit of that volunteer teaching, which I love doing, too. I counted once, I think I've been to over 40 countries. Money, as a tool, simply buys time and freedom.

[rookiepilot]

Gold is interesting here to me, as a small percentage, because it's washed out and there isn't that much interest. Small means 5-10% in my view.

rookiepilot, are you talking 5-10 of one's total portfolio invested in precious metals?

At the most. I want to get paid, (through dividends) so I like other types of defensive investments for this. One area I like is US health care, cause it's counter to the economy and the demand is endless in an aging society. As an example.

[rookiepilot]

Some really good advise. I will add that avoid credit card debt at all cost, understand how compounding interest works.

Exactly. It's toxic death that keeps people in bondage. Go cash for everything except a house if one can.

[rookiepilot]

It's a nice thought of rookiepilot to offer free financial advice, but the problem is - those who would actually listen are probably already aware of what he speaks of, and the rest won't change their habits or thinking anyway, they're too busy trying to figure out how to get more credit to buy more useless shit. But for what it's worth:

- Agree, strongly: avoid debt. It may in some circumstances be defensible, but in the vast majority of situations it's just a millstone around your neck.

- If you are one of the few who actually invest (by this I don't mean gamble, or plow a ton of debt into a house and call it "investing"), keep ruthless watch on your fees. Most Canadians invest in shitty mutual funds with the highest MER's in the world and have zero clue how much that is costing them over the course of their investment life. Math is hard, after all.

- Paying for advice CAN actually be a good idea, BUT! only if your net worth makes it worthwhile. As stated the absolute vast majority of "advisors" are simply salespeople with dubious knowledge and negligible financial education. Truly professional advisors will have heavy recognized credentials, experience, reputation - and won't necessarily be cheap. If they are genuine, they will, however, over time bring you far more wealth than you have compensated them with. The 22 year old flogging mutual funds at TD is not who you take advice from - even though it's "free".

- Above all, educate yourself. Money is akin to a language. A minority are fluent in it, but most people are pathetically illiterate. Learn it yourself, or hire someone who speaks it expertly. Actually, either way, learn the basics yourself. Unless you enjoy being poor.

Pro tip: being good at flying airplanes doesn't automatically mean you're a good investor.

Agree with the above. Money is a language, and it can be learned. Sadly, Complex is right, but I took a shot. Maybe one or 2 will get it that didn't before.

Investing to me means buying the best quality merchandise I can find, in whatever asset class I'm involved in. This means patience. So if it's a Gold stock, or anything else, I don't buy the (promoted ) crap. I buy the best, hopefully when it's on sale and no one wants it. It's a business to me. Who is the best? Look at the management. This isn't that hard.

Look, as a case study, at WJA. They are confused now, IMO. Now pull up the stock ( should've shorted it). Things happen for a reason. Investors have lost confidence in WJA, at least right now.

For most people, ditch all mutual funds, get into ETF's, find (this is the hard part) a really good Fee only -- (key word ) -- financial adviser. Independent. Fees are toxic in these funds. And the funds are 99% mediocre at best.

An adviser whose not advertising, but hard to get into see. One who is ALSO a humble student. You will learn a lot.
Investing is like flying. Too much arrogance will eventually get one harshly punished. Very common in many financial advisers, who think their letters actually mean guaranteed wisdom.

Toilet paper. One would do better finding an adviser who is an expert on betting strategy. Poker, risk, backgammon, bridge. Probability theory.

I'm serious, although this won't make sense to most people.

I have no letters, no degree. Couldn't afford it, as a kid back then. However I have what I would consider a pretty advanced degree in probability theory and betting strategy. Though study.

--------

If you can control debt rigorously, avoid investing in the speculative crap, get top quality advice, do some self eduction, and eliminate the expensive mutual fund fees, you will be way, way ahead of most people.

---------

Oh, the age old question: why do the Rich get richer, poor get poorer? Luck? Connections?

Patience. The rich are very patient.

They like $80,000 pickups too. But they will wait until the next recession, when those pickups, boats and planes are all for sale at rock bottom prices. Think about that.

The smartest real estate investor you've never heard of, Sam Zellman, who happens to be a billionaire is largely in cash today. Think on that, too. I can tell you a lot of similar stories, but they are all from people rarely, or ever on TV.

You will not get rich watching BNN.

Yet there are seminars galore on real estate investing from salespeople promising to make me rich.

I wonder who I should listen to?

[maturepilot83]

There's nothing like hearing two flight instructors bragging about their pickup trucks while holding down a job that can barely pay off their student loans....

[rookiepilot]

This is sobering. Don't be this guy. Doesn't have to be this way.

http://www.cbc.ca/news/canada/calgary/c ... -1.4726410

[ahramin]

It's a nice thought of rookiepilot to offer free financial advice, but the problem is - those who would actually listen are probably already aware of what he speaks of, and the rest won't change their habits or thinking anyway, they're too busy trying to figure out how to get more credit to buy more useless shit.

Actually I think many of those trying to figure out how to get more credit simply have never had the opportunity to stop 5 minutes and do the math. When my wife had extra money lying around she usually let it pile up until it got over three or four thousand and then would put a couple thousand on her condo mortgage. She didn't have any kind of plan, just thought it was a good idea. So I sat down in front of a spreadsheet with her and showed her that while less than half of her regular mortgage payments went towards the principle, on the extra payments 100% went towards the principle. Suddenly she got a lot more serious about extra payments. She simply had no idea because no one had ever explained it to her.

Same thing with my friend who bought a new car on credit. She didn't want to spend more than $20 000 and was really happy to get a new Mazda 3 for under that. Her monthly payment was 262 for 84 months. She already had those two numbers, but when I multiplied them together and got $22 000, she said that couldn't be right because they told her the purchase price with everything included was 19 something.

Or the guy NPR interviewed who borrowed $500 bucks and paid $50 a month to roll the loan over for several years because it was cheaper than paying back the $500.

Think about kids who see ATM machines and think that the way to get money is to go to the machine and it gives you some. Everybody explains to those kids that you have to work to make money to put into the bank before the ATM will give it to you, but how many go their whole lives without anyone explaining the difference between a low monthly payment and a low purchase price? We'd have a lot less debt out there if we simply educated our kids on simple things like putting aside ten to twenty percent of all money coming in directly into savings as well as more complicated basics like compound interest.

[rookiepilot]

A,

The reason is no one has a motivated interest in teaching these principles. The banks make a fortune off of CC interest payments. The whole economy is based on expansion of consumer debt. No one will ever discourage this.

It's a travesty this is not a required high school course. (Money management principles)

15 year mortgage, (yes that was mine once) 3 year car loan max.

If I can't hack it on that, I don't want it, should be a benchmark.

I suggest everyone should calculate total interest paid on different loan terms. It's shocking on a mortgage. This should be required disclosure on loan documents, but the industry fights disclosure tooth and nail. Look at the fight over disclosing mutual fund fees.

[ahramin]

Well already we don't agree . Under many circumstances for many people I think a 35 year mortgage is fine, but there is no way I would ever borrow money for a car.

[TheStig]

A,

The reason is no one has a motivated interest in teaching these principles. The banks make a fortune off of CC interest payments. The whole economy is based on expansion of consumer debt. No one will ever discourage this.

It's a travesty this is not a required high school course. (Money management principles)

15 year mortgage, (yes that was mine once) 3 year car loan max.

If I can't hack it on that, I don't want it, should be a benchmark.

I suggest everyone should calculate total interest paid on different loan terms. It's shocking on a mortgage. This should be required disclosure on loan documents, but the industry fights disclosure tooth and nail. Look at the fight over disclosing mutual fund fees.

Great thread Rookie, very useful. I couldn't agree more with the post quoted, thanks for input.

[rookiepilot]

https://www.forexlive.com/news/!/merkel ... s-20180704

She's right, BTW.

[flyingjerry]

It's a nice thought of rookiepilot to offer free financial advice, but the problem is - those who would actually listen are probably already aware of what he speaks of, and the rest won't change their habits or thinking anyway, they're too busy trying to figure out how to get more credit to buy more useless shit.

Actually I think many of those trying to figure out how to get more credit simply have never had the opportunity to stop 5 minutes and do the math. When my wife had extra money lying around she usually let it pile up until it got over three or four thousand and then would put a couple thousand on her condo mortgage. She didn't have any kind of plan, just thought it was a good idea. So I sat down in front of a spreadsheet with her and showed her that while less than half of her regular mortgage payments went towards the principle, on the extra payments 100% went towards the principle. Suddenly she got a lot more serious about extra payments. She simply had no idea because no one had ever explained it to her.

Same thing with my friend who bought a new car on credit. She didn't want to spend more than $20 000 and was really happy to get a new Mazda 3 for under that. Her monthly payment was 262 for 84 months. She already had those two numbers, but when I multiplied them together and got $22 000, she said that couldn't be right because they told her the purchase price with everything included was 19 something.

Or the guy NPR interviewed who borrowed $500 bucks and paid $50 a month to roll the loan over for several years because it was cheaper than paying back the $500.

Think about kids who see ATM machines and think that the way to get money is to go to the machine and it gives you some. Everybody explains to those kids that you have to work to make money to put into the bank before the ATM will give it to you, but how many go their whole lives without anyone explaining the difference between a low monthly payment and a low purchase price? We'd have a lot less debt out there if we simply educated our kids on simple things like putting aside ten to twenty percent of all money coming in directly into savings as well as more complicated basics like compound interest.

This is key: The cost of money.

The ominous "debt" can actually be a great tool.

For example. If you have $20,000 saved up to buy a car and the current financing offer is 0% for 84 months. It's a great idea. Provided the $20,000 is invested elsewhere. Always say yes to free money!

[rookiepilot]

This is key: The cost of money.

The ominous "debt" can actually be a great tool.

For example. If you have $20,000 saved up to buy a car and the current financing offer is 0% for 84 months. It's a great idea. Provided the $20,000 is invested elsewhere. Always say yes to free money!
[/quote]

Disagree. "Free is never free". Ever.

2 reasons: People do not have the discipline required to invest instead, and I'd rather hammer the car dealer for a much better deal, on a cash basis. Or buy used.

Then borrow some money, invest it if you're disciplined and know how, and the interest is then tax deductible.

[squash junky]

Similar to what I try to tell young people if they want to hear
-pay off yr house
-don't live beyond your means
-and....uhhmmm Don't get divorced
-Don't ever get a car loan.
Helped me to be able to retire at 50, 5 yrs ago.

Interesting enough I cannot get a credit card since I don't have a credit rating The private banker says he will take care of it, but we just put it on my wife's name and I get a partner card.

[flyingjerry]

This is key: The cost of money.

The ominous "debt" can actually be a great tool.

For example. If you have $20,000 saved up to buy a car and the current financing offer is 0% for 84 months. It's a great idea. Provided the $20,000 is invested elsewhere. Always say yes to free money!

Disagree. "Free is never free". Ever.

2 reasons: People do not have the discipline required to invest instead, and I'd rather hammer the car dealer for a much better deal, on a cash basis. Or buy used.

Then borrow some money, invest it if you're disciplined and know how, and the interest is then tax deductible.

Both of your reasons are legitimate. I'm just starting my career and here's my logic if I was faced with the decision. (totally open to any criticism)

I just started flying for money this year. I assume that over 5 years my salary should go up. Let's assume I make $2500/month which increases $250/month/year and currently have $20,000 in my bank account.

Scenario 1: Buy car with cash, negotiated dealer down to $18,000 cash deal
Monthly Income = $2500 - $4250 - no car payment
Car Value after 7 years = $4194 (20% dep/year)
Net 7 year position = ($18,000) + $4194 + $2000 (money in checking account)= ($11,806)

Scenario 2: Buy car at 0% financing loan
Monthly income = $2500 - $4250 - car payment of $238/month (total $20,000)
Car value after 7 years = $4194 ($0 owing)
$20,000 investment at 10%/year = $38,974
Net 7 year position = $38,974 (investment principle + interest) + 4194 (equity in car) - $20,000 (car payments) = $23,168

So by my logic, I would "save" $34,776 by buying the car on a long term financing plan and investing the cash. In the beginning the $238/month car payments would be a bit of a struggle but should be nothing unmanageable by cutting out a few starbucks and dinners. As the salary goes up the fixed car payment becomes a relatively smaller portion of my income and becomes easier to manage while the whole time that $20,000 has been appreciating.

[rookiepilot]

Jerry,

I've offered an alternative which is a more defensive choice. Buy used for $9-10,000?

Apart from that, (you can borrow to invest) how do you know you will make 10% per year? Or any positive return?

Just asking.

[digits_]

Both of your reasons are legitimate. I'm just starting my career and here's my logic if I was faced with the decision. (totally open to any criticism)

I just started flying for money this year. I assume that over 5 years my salary should go up. Let's assume I make $2500/month which increases $250/month/year and currently have $20,000 in my bank account.

Scenario 1: Buy car with cash, negotiated dealer down to $18,000 cash deal
Monthly Income = $2500 - $4250 - no car payment
Car Value after 7 years = $4194 (20% dep/year)
Net 7 year position = ($18,000) + $4194 + $2000 (money in checking account)= ($11,806)

Scenario 2: Buy car at 0% financing loan
Monthly income = $2500 - $4250 - car payment of $238/month (total $20,000)
Car value after 7 years = $4194 ($0 owing)
$20,000 investment at 10%/year = $38,974
Net 7 year position = $38,974 (investment principle + interest) + 4194 (equity in car) - $20,000 (car payments) = $23,168

So by my logic, I would "save" $34,776 by buying the car on a long term financing plan and investing the cash. In the beginning the $238/month car payments would be a bit of a struggle but should be nothing unmanageable by cutting out a few starbucks and dinners. As the salary goes up the fixed car payment becomes a relatively smaller portion of my income and becomes easier to manage while the whole time that $20,000 has been appreciating.

You don't have to subtract your 18 000 in the net 7 year position in scenario 1. You end that year with 6194 CAD, which makes the difference much smaller.

An investment with a 10%/year profit, consistently, is not easy to do.

The real solution? Buy a 4000k car cash and invest the 16k.

[digits_]

Well already we don't agree . Under many circumstances for many people I think a 35 year mortgage is fine, but there is no way I would ever borrow money for a car.

When would a 35 year mortgage ever be fine?

In Europe there have been experiments with multi generation mortgages. To reeeeeeally screw over your kids!