Why Debt Welchers Are Admired

Greek Crisis, Santorini Church

Santorini, Greece

By voting “NO,” the Greek people have rejected austerity measures by the EU in order to receive bailout money to pay off their debts. It’s as if Greece gave a big middle finger to the EU!

It’s great that at least the people were able to vote on their future. You can see the jubilation in their eyes after the results were announced. However, the immediate consequence of the vote is an enormous amount of economic pain as foreign investors pull out, the stock market crashes, banks stop lending, retirement savings get trashed, and unemployment soars even higher. Ah, the sacrifices we make to stay free!

Unfortunately, all of us investors who have nothing to do with Greece will suffer as well. If you haven’t reviewed your asset allocation this year, I highly encourage you to do so today. The US stock market could easily correct by 10% as capital flees riskier asset classes.

The Greek people are not completely to blame for their economic woes. They simply operated in the confines of an inept government that promised too much. Voting for a politician who promises to give you a tax cut or allows you to retire by 50 with a lifetime pension makes logical sense. Who wouldn’t vote for such benefits?

Despite the upcoming difficulties for the Greek, we can look on the bright side. With close to a 200% national debt to GDP ratio, the Greek have been able to live way beyond their means for a very long time. And if you can get a debt haircut when it’s finally time to pay up, then all the better! Surely Portugal, Italy, and Spain are thinking of ways to gain more favorable debt terms with the EU as well. 

Creating A More Defensive Investment Portfolio With Bonds

Defensive Portfolio With BondsWith Greece and Puerto Rico on the brink of bankruptcy, stock market volatility has returned. Even US Treasury bonds have sold off with the 10-year yield moving from 1.7% to 2.4% due to a strengthening labor market and signs of inflationary pressure on the horizon. Usually US bonds rally and yields decline during times of uncertainty.

Due to such headwinds, it’s getting incredibly difficult to make healthy returns in the stock market. We’re going through an adjustment period as we always do when the Fed plans to raise interest rates. Yet, should they raise soon given the unrest abroad? The US Dollar has already strengthened to 1.10 USD:Euro from 1.4 USD:Euro in 2014.

If I were Fed Chair Janet Yellen, I’d wait to raise interest rates until 2016 at the earliest. Europe will hopefully get their act together by then! This post will review my Motif Investing portfolio and discuss what I plan to do next. Feel free to chime in.

Scraping By On $500,000 A Year: Why It’s So Hard For High Income Earners To Escape The Rat Race

Living Paycheck To Paycheck On $500,000 A Year

Help! I’m drowning from all my money!

I’ve highlighted in a previous article how living off $200,000 a year in an expensive city is really just an average lifestyle. In this article, I’ll discuss how one couple is living paycheck to paycheck while making a combined $500,000 a year.

$500,000 a year is a level which I think is considered rich. Anybody who thinks otherwise has no concept of financial reality. Even the government almost agrees after compromising by raising the income level for when the highest marginal tax bracket kicks in to ~$400,000 from $200,000.

Although making $500,000 a year may sound like a Herculean task, you’ll be surprised to know there are plenty of regular folks who hit the half million mark every year. This article will discuss how many folks who earn a large income won’t be retiring any time soon. 

Gay Marriage Rights, Financial Benefits, And Tax Penalties

White House In Rainbow Colors Celebrating Gay MarriageHere are Justice Anthony Kennedy’s words after the Supreme Court voted on June 26, 2015 that same sex couples have a constitutional right to wed. Justice Kennedy was the swing vote.

No union is more profound than marriage, for it embodies the highest ideals of love, fidelity, devotion, sacrifice, and family. In forming a marital union, two people become something greater than once they were. As some of the petitioners in these cases demonstrate, marriage embodies a love that may endure even past death. It would misunderstand these men and women to say they disrespect the idea of marriage. Their plea is that they do respect it, respect it so deeply that they seek to find its fulfillment for themselves. Their hope is not to be condemned to live in loneliness, excluded from one of civilization’s oldest institutions. They ask for equal dignity in the eyes of the law. The Constitution grants them that right.

When Did Being Rich Become So Evil?

Evil eyes. When did wealth become so evilWith good intention, I proposed one way to help level the playing field through a Wealth Identification Program run by our all-powerful government. By identifying wealthy people who got wealthy through 100% luck (born into wealth), we could empower decision makers to make more informed choices when deciding between equally qualified candidates. Whether a decision maker chooses to help the less lucky is entirely up to their discretion.

The Wealth Identification Program could also put pressure on life’s lucky winners to use their finances to give back to those who need help the most, while pushing themselves to see what they can achieve on their own. Imagine being born with the gift of Mozart, but never realizing your full potential because you didn’t have to. Having money from the start can limit motivation!

With a public wealth ID program, the fortunate will tend to give more and try harder to maximize their potential. After all, when the the boss is not around, why do anything at all?

Why Invest In Certificates of Deposit (CD) When Rates Are So Low

Porsche 911 Carrera 2013

CDs let me rest easy. Roughly 10% of my net worth is in CDs and other stable instruments currently yielding a blended rate of around 3.5% in 2H 2015. Even with rates so low, if I invest $250,000 at 2.3% I still earn $479 a month, which is a very nice chunk of guaranteed change for someone who no longer works for a living.

There are times when the 10-year yield might be yielding less than a similar duration CD. Look to invest in CDs to take advantage of such a spread. For example, the 10-year bond yield might yield 2.1%, while you can find 7-year CDs yielding 2.3%.

New Retirement Planning Calculator By Personal Capital

Retirement Life Infinity Pool, Bali Indonesia

Hanging Gardens Resort Ubud, Bali

Do you really know how much you need to retire? A lot of people like to throw out random numbers without really doing the math. One million dollars is a nice round number that often gets brought up for retirement. Unfortunately, $3 million is the new $1 million thanks to inflation in rent, property prices, tuition, automobiles, and food.

Even if you come up with a retirement number, chances are high that your number will change due to unanticipated life events. Maybe you’ll become unemployed for a year and draw down most of your savings. Or maybe you’ll find an amazing new job with a 50% pay raise. Maybe you’ll end up having triplets due to the latest $20,000 IVF procedure when you were hoping for just one baby. Who knows? Life has a great way of keeping us on our toes.

What we need is an interactive retirement calculator that is dynamic, has multiple adjustable variables, and also incorporates real data. Let’s first have a look at some current retirement concerns by the public at large. 

The Digital Nomad Lifestyle Is Worth Living

Digital Nomad Lifestyle, Pulau Redang, Malaysia

Taaras Resort, Pulau Redang, Malaysia

When the world seemed to be ending between 2008-2010, the digital nomad movement took off. Without strong job prospects, people took to the internet to earn a living half way around the world in cheaper locations like Thailand, The Philippines, Malaysia, and Vietnam. For $1,500 a month, you can live like a King or Queen!

So what can digital nomads do to make money online? They can work as a freelance writer, designer, or techie. They can run a drop shipping business that doesn’t hold inventory. They can run an online course or come up with a product to sell. Or they can run an online media company that generates advertising revenue. In short, there are endless ways to make money online. And if your target revenue is only $1,500 a month to live a great lifestyle, then the possibility to live such a life style is higher than you think!

For almost four weeks, I pretended to live the digital nomad lifestyle while traveling to South Korea, Malaysia, Cambodia, and Taiwan. All I needed was internet, and thank goodness internet was everywhere to be found. Over some scrumptious mangoes, I hosted our semi-annual board meeting in Kuala Lumpur, and got to discussing all the takeaways about running a business abroad.

The Health Benefits Of Early Retirement Are Priceless

Game OF Thrones Mance Rayder

One stressed out King Beyond The Wall

Mance Rayder, The King Beyond The Wall once said, “The freedom to make my own mistakes is all I ever wanted.” After three years of being away from Corporate America, his words have never rung more true.

If I wanted more money, I would have stayed in my investment banking job for the rest of my career. But I longed for the freedom to choose after my 13th year. Being absolutely free is priceless. Unless you love what you do, it doesn’t matter how much money you have if you’ve still got to take direction from someone else.

But besides glorious freedom, there are also incredible health benefits I’ve noticed after leaving the permanent workforce. Let me share some with you.

Can Financial Samurai Be The Next Billion Dollar Financial Technology Company?

Financial Samurai LogoDo you know what’s fun and free? Dreaming BIG! As kids, we use to daydream all the time. I fantasized about being a professional tennis player who’d compete in tournaments around the world via a private jet until I realized I couldn’t even make it to All-State, just All-District. It was only until the age of 32 did I start dreaming again.

When Ariana Huffington sold The Huffington Post to AOL for $315 million in 2013, The Smoking Gun, and several other sites reported that Ariana only received $21 million, or ~6.6% from the sale. $21 million isn’t chump change, but that’s a far cry from the original sale price.

Meanwhile, Michael Arrington, founder of TechCrunch sold his site to AOL in 2010 for only $40 million (includes incentives). 2010 was a bad time to sell anything – stocks, real estate, businesses, you name it. But because he owned an estimated ~80% of the site, Mike walked away with around $32 million, or 50% more than Ariana even though TechCrunch sold for 85% less than HuffPo!

It’s amazing how two vastly different sales prices can result in two surprisingly different windfalls due to company ownership structures. It often takes an army of employees and capital to build something massive. I’m not looking for fame, but I’m starting to wonder whether it’s time to once again rekindle the dreams of great fortune.

Whether you know it or not, you the FS community, is instrumental in the continued content production here. I struggled for years not wanting to do anything but travel and play because years ago I finally found “enough.” But thanks to your continued support and encouragement, I’ve kept on going. People keep asking whether I will ever run out of material to write. The answer is always “never,” because there’s an endless amount of things to talk about. If you can speak forever, you can write forever.

A new adventure on Financial Samurai may begin by the end of 2015, and I’d love to get your input once more. I’ve been seriously thinking about this topic since the beginning of the year. In fact, I’ve been sitting on this post since January, going through things in my head.