Monday, May 7, 2018

Speech links: How to be rich

Mr chairman, fellow toastmasters and guests.

Recently I was enjoying my jet-setting hobby of visiting international airports.  I was sitting in the departure lounge at Singapore airport when a man walked up to me and said "Hi Sean, how are you".  It was Thomas; we had inadvertently booked onto the same flights back to Hawkes Bay.

WE got into a conversation about money, and Thomas asked a questions that I thought was both insightful and pertinent.  He said "Sean, "", and this is almost a direct quote, he said "Sean, how can I be as rich and good looking as you?".  So I told him.  As you can see he is already much better looking.  Afterwards I thought "That's good advice, I should take it" and also "I have to do a speech next week, I should tell everyone".  So here I am.

I would like to introduce you to Harold Pollack.  Harold is a blogger and podcaster.  A few years ago he was interviewing someone about the personal finance industry, the financial equivalent of used car sales.  He said “Isn’t the industry’s fundamental problem that the best advice for most people would fit on an index card, and it’s available for free at the library?”.  They laughed and moved on.

Once the interview was published, people started asking.  They said "Harry, where is the index card" and "Pollock, you pillock, show me the card."

So Harold took an index card, wrote down his 9 rules and posted a photo online.  The rest is viral history.

1                     strive to save 10 to 20 percent of your income.
2                     pay your credit card balance in full every month.
3                     Put 3% into Kiwisaver or similar (NZ version) max out your 401(k) and other tax-advantaged savings accounts. 
4                     never buy or sell individual stocks.
5                     buy inexpensive, well-diversified index mutual funds and exchange-traded funds.
6                     make your financial advisor commit to the fiduciary standard.
7                     buy a home when you are financially ready.
8                     insurance. Make sure you’re protected.
9                     do what you can to support the social safety net.

I promised to tell you how to be as rich as me.  But I'm not rich.  I have a wife and 2 teenage children who are expensive to keep.

I am not trying to be rich, I am aiming for something else: Financial independence; having enough investments that I don't need to work.

To be financially independent, you need to meet 2 criteria:
  1. Have 25 x annual expenses in savings and investments
  2. Spend less than 4% of your saving/investments each year
If you can meet these criteria, then your investments should last at least 50 years.

Closing thoughtsMoney is like sex.  
We like it, but we don’t really talk about. it 
We all think we know what we are doing, but most of us don’t.  
We all think that everyone else has more than we do.
And like sex, the more you learn about it, the easier and better it gets


1 comment:

Alister Christie said... is giving me a 403 Forbidden. Interesting post.