Tempis Fugit & Letting Sleeping Investments Lie

Well, it's been a few months since I posted here! I promised a video, and here I haven't even put the darn thing up!

To be honest, I've been really swamped with schooling (welding, which is going along quite nicely), and keeping up with the social groups I've joined in the last few months. So, lets just get on with one of my favorite topics: Money.

Over the last few months, going to school, I haven't had any money to invest, and I have been hesitant to sell any of my investments as they have been both paying dividends, and rising in value. Don't fix what's not broken, right?

So I come to my point of the day:

If you are comfortable with your investments, or you can't think of a really good reason to sell them, then Do Not Sell Them!

I have made that mistake in the past, feeling so embarrassed that I didn't even mention it in this blog. I lost about $300 (a mere rounding error for some, but a good chuck of money for me!) when I sold low because I was SCARED.

Unfortunately, as in life, the brave and the bold walk away with the prize.

So the moral for today is:
1. Research your investments thoroughly
2. Follow a contentious plan
3. Keep to the course!

Do you have any topics you want me to tackle?
Let me know by dropping a comment below!

So you want to be rich.

So you want to be rich, eh?

Well, this may come as a bit of a shock to the trust-fund babies in the back row, but most of the 'rich' in North America (which I personally define as having over $500,000 in net worth), do not come by their money by ways of inheritance or gifts.

Actually, the largest majority of the rich are working class folks such as your tradesman neighbour.

Ye of little faith, check out 'The millionaire next door'.

Although this book is a little old, having been published in 1998, I personally believe that many of the tenets within have held true.

By working a steady job, earning a decent wage (much like most trades will provide), early in ones life, living below ones means, and investing patiently, I believe that anyone can retire at an earlier date, and with more assets then most.

For example, we can take a person such as myself:

Age: 26
Occupation: I.T. - soon to be Welder
Expected Wages:
   I.T. - ~$40,000 /year
   Welder - ~$45,000 / year + Overtime

I will work hard and make $50,000 take-home, with raises of ~$2000 /year as I gain experience and education.
I will invest as much as comfortable (~$25,000 + $1000 /year)
I will seek investments that are >2% dividend yield.
If I realize a return of ~4% after inflation (~3%), I will see a growth of ~7%.

Over the next 14 years, this investment will grow to over ~$733,000!

This means that when I am 40, I will have 3 quarters of a million dollars to my name.
Does this take into account taxes? No.
Does this take into account large raises or significantly higher wages? No.
Does this take into account market volatility (up or down)? No.
But, it does show that if you have the balls, and some luck, you can be rich before you're 40.

Will it be easy? No.

But it is possible, and as a wise man once said:

"The first hundred-thousand was hard. After that, it got easier."


----

Want to see the math in action? I've posted the results of my spreadsheet calculations below, and also ran them out to the usual '40 year' working period:


Bonus Calculation Chart:

Year	Invested	Rate Of Return	Result
1	25000.00	0.07	26750.00
2	52750.00	0.07	56442.50
3	83442.50	0.07	89283.48
4	117283.48	0.07	125493.32
5	154493.32	0.07	165307.85
6	195307.85	0.07	208979.40
7	239979.40	0.07	256777.96
8	288777.96	0.07	308992.42
9	341992.42	0.07	365931.88
10	399931.88	0.07	427927.12
11	462927.12	0.07	495332.01
12	531332.01	0.07	568525.26
13	605525.26	0.07	647912.02
14	685912.02	0.07	733925.86
15	772925.86	0.07	827030.68
16	867030.68	0.07	927722.82
17	968722.82	0.07	1036533.42
18	1078533.42	0.07	1154030.76
19	1197030.76	0.07	1280822.91
20	1324822.91	0.07	1417560.52
21	1462560.52	0.07	1564939.75
22	1610939.75	0.07	1723705.54
23	1770705.54	0.07	1894654.92
24	1942654.92	0.07	2078640.77
25	2127640.77	0.07	2276575.62
26	2326575.62	0.07	2489435.91
27	2540435.91	0.07	2718266.43
28	2770266.43	0.07	2964185.08
29	3017185.08	0.07	3228388.03
30	3282388.03	0.07	3512155.20
31	3567155.20	0.07	3816856.06
32	3872856.06	0.07	4143955.98
33	4200955.98	0.07	4495022.90
34	4553022.90	0.07	4871734.51
35	4930734.51	0.07	5275885.92
36	5335885.92	0.07	5709397.94
37	5770397.94	0.07	6174325.79
38	6236325.79	0.07	6672868.60
39	6735868.60	0.07	7207379.40
40	7271379.40	0.07	7780375.96

Want to use this spreadsheet for your own calculations? Comment below and I'll e-mail it to you!

Giving a Friend Permission to Spend

I have a friend at work who fulfills any and all of his wants, on a whim.
Whenever he has more then a $100 in his chequeing account, he immediately liquidates it on a want.
If there isn't quite enough to cover the want, then it goes on a credit card.

This would be a decent, if future-less life strategy, if he paid off his credit card every month, and had no debt.
The problem is, he has nearly $30,000 of debt in a line of credit.

He will come to me asking for advice on his most recent want.
I tell him the same thing every time.

1. Make an emergency fund of $1000.
2. Set a small monthly amount (~$100) for discretionary spending.
3. Pay off the debt with everything left over after necessities.

He does not follow this advice.
Instead, he will come back to me for more advice.
Then I realized something.


He is asking for permission to spend!


I  I think this is why we have such a strained friendship at timesonly give him permission to spend a the small discretionary budget, and. Personally, I don't feel a need to spend money all the time; I am usually happy with inexpensive or free diversions.

It has gotten to the point where I can't even bear to speak to him about money anymore.
Everytime I tell him to save money and pay off his debt, he will leave depressed.
Worse yet, he will come back to see me again with a new toy in hand, happy as a clam.

He knows that this is not a healthy pattern of behavior, but he continues never-the-less.




What can we do to help this wild spendthrift?

There isn't much we can do directly.

But, we can make our frugal lifestyle seem better and better every time we see them.

We can also show them a calendar that states exactly when you're planning to retire, and how it is many years (maybe decades!) before they even thought possible.

Then, explain that the date keeps inching earlier and earlier due to our good habits, and putting windfalls towards it.

Leading by example, we can help those without the natural willpower to save and invest.



EJ