Patient and Disciplined Saving

When to Build Cash!

As a small retail investor it is important to take a patient and disciplined approach to your money. You have to attempt to maximize your ability to buy low and sell high.

In this spirit you have to watch out for getting caught up in market momentum. It truly is a lot of fun to watch as the market hits new highs and want to throw more money into it. However, that is the time to be disciplined.

You must realize that if the market is hitting records then prices are high. Experience has taught me that is the time to enjoy what I’m seeing but also to put new money into cash. I do that because at some point there will be down days, some of them big, where I’ll have a better entry point to maximize the power of my dollars.

Therefore, don’t automatically move with the herd. Know that there will be many many more lucrative entry points to buy things that you have been following than on days when the market is at record levels. That is when you want to be ready with available cash.

On another note, if you are looking for a gift for the young reader in your life, you can find some great children’s books on Amazon. Just go to these links The Desert Fairies of Oylara, The Rainforest Fairies of Oylara, and The Artic Fairies of Oylara and order them.

Additionally, check out this very cool podcast on Spotify called Gen X Dad and his Gen Z Teens. Entertaining!

Finally, check out some pretty cool music on YouTube if you have a few minutes: Introduction , Mosh, Smoke, Watch Out , and First Day Out. Enjoy!

Rule of 72

Every investor and borrow absolutely must know and understand the Rule of 72.

The Rule of 72 is a simple math shortcut that can be used to quickly figure out the amount of time it will take for money to double at a fixed rate of interest. The way it works is easy. All you have to do is divide 72 by your interest rate and the result is the number of years it will take your money to double. For example:

72/1 = 72 years, 72/3 = 24 years, 72/6 = 12 years, 72/9 = 8 years

It is easy to see that you always want your money to grow at a higher interest rate. But the Rule of 72 shows how even just 1%-2% make a huge difference in how quickly that money will grow. Just going from 1% to 3% made the money double 48 years earlier!

So, shopping around for the very best interest rate that you can get for your savings is absolutely worth the time and effort. Simply sticking money is a low rate savings account as your primary savings investment is a dead end. A typical savings account that is paying 1% interest will take 72 years to double. That is not where you need to be!

But, there is more good news about the Rule of 72. It works in the reverse as well to tell you how much a higher interest rate is hurting you when you borrow. To find out how much your debt will double over time you simply divide 72 by the interest rate that you are paying. With the national average interest rate for credit cards in the ballpark of 20% your debt will double every 3.6 years (72/20=3.6). So, again, work just as hard at finding the lowest interest rate you can for your debt as you do for finding the highest interest rate that you can for your savings!

Finally, the Rule of 72 has one more useful feature. It can help you figure out the interest rate that you will need based on the number of years that you have left to save. You simply do this by dividing 72 by the number of years left to save. For example, consider if you are 30 and have $50,000 in savings currently. If you are planning to have $1,000,000 to retire at 65 the interest rate required for you is 2.05% (72/35 = 2.05%). So, the Rule of 72 is a pretty awesome thing to know!

As always, if you are looking for a gift for the young reader in your life, you can find some great children’s books on Amazon. Just go to these links The Desert Fairies of Oylara, The Rainforest Fairies of Oylara, and The Artic Fairies of Oylara and order them.

Additionally, check out this very cool podcast on Spotify called Gen X Dad and his Gen Z Teens. Entertaining!

Finally, check out some pretty cool music on YouTube if you have a few minutes: Introduction , Mosh, Smoke, Watch Out , and First Day Out. Enjoy!

Make Your Money Work For You!

The most important thing that you can do for yourself and especially for your children is to get your money to work for you.

The way to do that is through the magic of compound interest.

Compounding interest is one of the most powerful forces in existence but it takes time.

The earlier that you can plant that initial deposit nugget and start the process the bigger the payoff will be.

Twenty years is the rough target timespan when growth starts taking off and it gets fun to watch.

So, getting started as early as you can is the key.

Even if it is only $50 to $100 a month, it can turn into a life changing amount if you can just give it the time it needs.

If you can give it 40 years you will be rich and if you can give it 60 years you will make your entire family wealthy.

It is math.

Sixty years seems like an impossible and unrealistic timeframe to just let money sit and for many it is if we are already adults.

But that is where we can give our kids a advantage.

When they are young even just opening a savings account will help start the process that can grow into a bigger deposit that can be transfered into a low cost index mutual fund later.

That is what I’ve done with my kids.

So, get something started today even if it is just opening a savings account to start building an initial deposit to put into a more robust investment later.

Make your money start working for you now so that it picks up the heavy lifting for you later down the road.

To see the math of what growth can look like check out my previous posts.

Additionally, check out this very cool podcast on Spotify called Gen X Dad and his Gen Z Teens. Entertaining!

Finally, check out some pretty cool music on YouTube if you have a few minutes: Introduction , Mosh, Smoke, Watch Out , and First Day Out. Enjoy!

Saving Takes Patience and Discipline!

Making money is hard. Saving money I will argue is even harder. It absolutely takes a discipline and patience that just does not come naturally for everyone.

If you want to make money one of the most important things that you can do is to work really hard. If you are willing to put the time and the work you can absolutely make money. Often you can make quite a bit of money. It can be great. The challenge comes when you perhaps want more time to yourself, or you exhaust yourself, or you face an injury or health problem. Then it can be challenging to just work more or harder.

Savings on the other hand requires a willingness to sacrifice today for the future and the patience to not interrupt that which you have sacrificed. In other words, you have to be able to take money that you have available right now and put it aside for as long as you possibly can. That is saving.

Charlie Munger famously said that you have to give your savings a long road to let the magic of compounding interest to do its work. By far the most difficult part of this entire process is getting started. Creating the initial nest egg is where it takes the most discipline and requires the most patience as it will not grow quickly at the beginning. You will also have many other things that will challenge you for those resources. You have to have the discipline to put the short-term aside and keep focus on the long-term where the true rewards are!

So, work on being as disciplined as you can and you will be rewarded later when it really matters!

Additionally, check out this very cool podcast on Spotify called Gen X Dad and his Gen Z Teens. Entertaining!

Finally, check out some pretty cool music on YouTube if you have a few minutes: Introduction , Mosh, Smoke, Watch Out , and First Day Out. Enjoy!

Market Down Days Are Buying Opportunities!

Buy low and sell high! Easy to say and really really hard to actually do. We love to watch our investments go up and hate to see them go down. It is well documented that people often do the exact opposite of what they should do when it comes to buying and selling stocks. They get very excited when the market is going up and that makes them want to buy. Then when the market goes down they panic and sell at the worst possible time. Hence, they end up buying high and selling low.

How do you change that? First, don’t try to time the market. As a retail small investor you will always lose at that game. Rather, think about what the title says and you will mostly be fine. It will at a minimum keep you from buying and selling at the worst extremes. Just be disciplined enough to enjoy the up days in the market through observation if you are looking to buy knowing that there will be a down day soon where whatever it is that you want to buy will be at a better price. Do the opposite if you are looking to sell. Simple as that.

Finally, just in my investment timespan I’ve watched the stock market go from around 4000 to over 39,000. Betting on the U.S. has been a fantastic bet. Things are actually only looking brighter for the U.S. going forward because of geography and demographics. Get into the market but do it with a guiding principle to do your very best to buy low and sell high.

Additionally, check out this very cool podcast on Spotify called Gen X Dad and his Gen Z Teens. Entertaining!

Finally, check out some pretty cool music on YouTube if you have a few minutes: Introduction , Mosh, Smoke, Watch Out , and First Day Out. Enjoy!

Don’t Get Greedy With Inflated Stocks!

There really aren’t any shortcuts to true wealth and security. There are people who win the lottery but that is not an actual plan but rather random luck.

Right now I’m watching a stock crash that simply had no business being at the price level it was. That stock is DJT. It started trading last week at an extremely elevated price driven by his political supporters but reality is rapidly kicking in. There just is simply not way that a company with approximately 4 million in revenue and 50ish million in debt is worth a billion dollars much less 8 billion dollars. That is truly foolish.

You have to put aside your emotion when investing and attempt as best you can to make rational decisions. And, while there may be moments to go with your heart on small investments, that is never the way to go with money that you need or cannot afford to lose.

Many people are going to lose on this stock. It is going to continue to go down significantly. There are not enough small investors that support Donald Trump to save this stock at its elevated levels. Do not try and catch a falling knife. This stock is definitely headed below $10 dollars and likely much more than that. It simply does not make money as a business. Until that somehow changes don’t get caught up in greed.

Additionally, check out this very cool podcast on Spotify called Gen X Dad and his Gen Z Teens. Entertaining!

Finally, check out some pretty cool music on YouTube if you have a few minutes: Introduction , Mosh, Smoke, Watch Out , and First Day Out. Enjoy!

People Are Living Longer. Your Money Must Work Harder!

The average lifespan for all people has been going up. This is due to better technology and huge advancements in health care. Despite the blip downward caused by the Covid pandemic, we are all living longer.

That is great news! However, it comes with its own challenges.

A big challenge is not having enough money once you retire. The fear of running out of money after retirement is a real fear for many people. And, while many governments have pension schemes for older people, it often is not enough on its own. Most government pension schemes are based on augmenting money that one has saved over their lifetime.

Most government schemes are also not adapting to the realities of the demographic future. Countries are aging rapidly putting pressure on these public schemes in the form of benefits, but are not supported by the number of current workers that is needed to maintain the benefits. These public pension schemes are not going to continue in their current form.

Therefore, you have to do more to ensure a good retirement for yourself. I recommend on this blog to get started early and treat your retirement preparation as something close to a job. You must pay attention and be an active part in preparing for your future as an older individual. There are significate tools like compounding interest that are incredibly powerful, but they take time. The earlier you can start the more powerful they become and the harder they will work for you.

So, do not delay. Get thinking about your retirement and your retirement goals and start being proactive in shaping your own future. You will not regret the time and effort that you put in right now.

Additionally, check out this very cool podcast on Spotify called Gen X Dad and his Gen Z Teens. Entertaining!

Finally, check out some pretty cool music on YouTube if you have a few minutes: Introduction , Mosh, Smoke, Watch Out , and First Day Out. Enjoy!

Don’t Ignore Your Investments!

As a small investor you should always be focused on the long-term. You should work on developing your patience and discipline so that you are not panicking at every bit of bad news that comes out and therefore making emotional decisions that are probably going to hurt you more than help you.

Rather, trust that you made an investment for the right reasons and are in it for an appropriate amount of time. I use that phrase rather than a generic long-term because not everyone has the same definition for long-term in regard to every one of their investments. Not every single investment needs to be held until cashed out in retirement. There certainly may be other reasons to sell well before then.

Yet, as a small investor our time horizon needs to be substantial, otherwise you are a trader and that is definitely not my area of expertise.

That said, just because the time horizon we are looking at is significant doesn’t mean that after the investment is made that we should then ignore it. No! You should still look at it on at least a weekly basis. I personally will look at my portfolio at least every other day.

I make very few changes annually to my portfolio. However, I look at it a lot not because I want to see the daily ups and downs, but rather I want to stay attuned to any changes of information that could affect that investment.

Examples include accounting issues (HUGE Red Flag), changes in market conditions, changes in corporate strategy, and changes in company products among other things. I’ve had all of these issues to consider. A pharma company had a major drug recall, a tech company had a major new product fail, an aircraft company had a new aircraft that crashed because of their design. Those are all reasons to reconsider that investment, but you have to be paying attention.

You also have to be aware of how the company is reacting to new market conditions. A famous example is how the introduction of the automobile crushed the buggy whip/carriage/saddle industry. Those were large companies that seemed solid right until they weren’t.

Therefore, you need to pay attention to your investments! Don’t let yourself be caught off guard thinking that you never need to do anything until retirement.

Additionally, check out this very cool podcast on Spotify called Gen X Dad and his Gen Z Teens. Entertaining!

Finally, check out some pretty cool music on YouTube if you have a few minutes: Introduction , Mosh, Smoke, Watch Out , and First Day Out. Enjoy!

Good Financial Literacy Book

I came across a book entitled How Money Works: Stop Being A Sucker by Tom Mathews and Steve Siebold.

It was actually given to my family by my wife’s coworker.

After reading it I definitely think that it is a great book for all young people and anyone else looking to add a little knowledge about money.

It is any easy read at just over 100 pages and not overly technical at all.

I finished it in less than a day.

While I’m happy that there was nothing new in it for me, I still really enjoyed it and am going to have my kids read it.

It is certainly a good introduction for people starting their independent financial lives.

I also think that it is a great place to start to find other areas of personal finance that interest you so that you can do a deeper dive to educate yourself.

To me it also reinforces the message that we have to start our children’s financial lives earlier because time is by far the most important thing that we have when it comes to money.

We don’t have to be perfect or take uncomfortable risks if we use time effectively!

So, check out the book and pass it on if you like it.

Additionally, check out this very cool podcast on Spotify called Gen X Dad and his Gen Z Teens. Entertaining!

Finally, check out some pretty cool music on YouTube if you have a few minutes: Introduction , Mosh, Smoke, Watch Out , and First Day Out. Enjoy!

The Rule Of 72

Every investor and borrow absolutely must know and understand the Rule of 72.

72/1 = 72 years, 72/3 = 24 years, 72/6 = 12 years, 72/9 = 8 years

Additionally, check out this very cool podcast on Spotify called Gen X Dad and his Gen Z Teens. Entertaining!

Finally, check out some pretty cool music on YouTube if you have a few minutes: Introduction , Mosh, Smoke, Watch Out , and First Day Out. Enjoy!