What Kind Of Car Should The Mass Affluent Buy?

Moose - A Land Rover Discover II Getting Fixed

Moose On The Operating Table

We previously described the mass affluent class by income, wealth, and investable assets. Mass affluent is essentially a subset of the middle class that’s well educated and upwardly mobile due to their education and optimism. Given you’re reading a personal finance site for fun and education and I’m writing personal finance articles, let’s all consider ourselves mass affluent with upside potential! Hooray!

After 10 years of owning the same car, I’ve decided to finally buy something new within the next six months. There are a number of problems with Moose, a 2000 Land Rover Discover II, including:

• Warning lights on for the traction control, hill decent, and ABS.
• Check engine light is permanently on.
• Sunroof doesn’t open or close.
• Heated seats don’t work.
• No Bluetooth.
• CD changer doesn’t work.
• Front passenger seat no longer adjusts due to broken motor.
• Cigarette charger doesn’t work, which means I can’t charge my mobile devices on long road trips.
• Brakes are mushy even after changing them two years ago.
• Not sure if the airbags work since they haven’t had their 10 year service.
• Gears don’t connect once every 50 starts for some reason. Have to turn him off, wait for 10 seconds, and turn back on to reengage the gears.
• Two balding tires that cost $200 to replace each.

Other than these 12 problems I can think of, Moose runs like a champ!

Over the past three years I’ve spent about $1,100 buying him a new alternator, a new serpentine belt, a tune up, and fixing a massively leaking fuel pump. If there is one more problem that costs over $500, I’m sad to say that I’ve got to let him go. It’s hard to do because he’s been so good to me. Moose has never broken down, not even in the worst Tahoe snow storm. If I’m ever in an accident, I feel safe that Moose will hold up better as well.

I’m starting to fear that I’ll one day get stranded somewhere when Moose experiences some transmission glitch. I know all I have to do is call roadside assistance and wait 45 minutes for a boost or a tow, but that’s not ideal if I’m rushing somewhere. If you have an older car, getting roadside assistance for several bucks a month is the best thing ever. I did leave my lights on several times before and roadside assistance came quickly to give me a jump.

I’d love to finally find a new vehicle that has all the creature comforts that many people for the past five years have taken for granted. You know, like being able to plug in your mobile phone to listen to some tunes. I’ve come up with a list of vehicles I’m considering for myself and for the mass affluent. Let me know which particular car or category you’d choose and why. 

Increasing Passive Income Through Leverage And Arbitrage

Sunset in San Francisco, Golden Gate Heights

Priceless View Of The Sunset In Golden Gate Heights, San Francisco

Earlier in the year, I had a nice conversation with a well-known San Francisco angel investor about risk and reward. I had a chunk of money coming due from an expiring 5-year CD and I wanted to get some advice on what to do with it. I asked him whether he would be leveraging up or paying down debt in this bull market. He responded, “Sam, I always like leveraging up. It’s how I made my fortune.” This angel investor is worth between $50 – $100 million dollars.

Of course you can’t just leverage up into any old investment. The investment has to be something you know fairly well and has a good risk/reward profile. The only thing I have confidence leveraging up on is property. Everything else seems a little bit like funny money.

Although I quit my job a couple years ago to try my hand at entrepreneurship, I’m a relatively risk-averse person because I’ve seen so many fortunes made and lost over the past 15 years. If I was risk-loving, I would have done what so many brave folks do nowadays and quit as soon as I had a business idea, instead of methodically moonlight before and after work for three years before negotiating a severance. The breakfast sandwich guy I used to go to for 10 years while I was working told me he was worth $3 million dollars during the dot com boom in 2000. I went back for old times sake last month and he is still there!

Despite my risk-aversion, I do believe money should be used to increase the quality of your life and the people you care about. As a result, I did something recently that might seem financially risky, but I think the move actually lowers my financial risk profile now that I’ve had a chance to fully process the situation.

I finally found my panoramic ocean view Golden Gate Heights home! A room with a view has been on my bucket list forever. But it never occurred to me to look in San Francisco, despite being so close to the ocean because I thought such homes would be unaffordable. San Francisco already has the highest median single family home price in the nation at $1 million. To add on a panoramic ocean view would make prices outrageous, or so I thought.

It’s the same curmudgeon as never asking out a super model because you think she or he will say no. You’ve just got to ask and I’m sure you’ll be delightfully surprised once you try.

After spending months aggressively looking for my next ideal property within my budget, I found a view home for less than half the cost of my existing home on a price/square foot basis. How is this possible you might ask? The farther west you go from downtown and the established neighborhoods, the cheaper prices are in general (see the graphic I created in The Best Place To Buy Property In San Francisco Today). But the farthest away you’ll ever be is 7 miles because San Francisco is 7 X 7 miles large. Given I’m only going into a downtown office two times a week, I don’t mind the extra 15 commute. To be able to watch the sun go into the ocean every day for the rest of my life is priceless.

Are You Smart Enough To Act Dumb Enough To Get Ahead?

Are You Smart Enough To Be Dumb Enough To Get Ahead?The smartest people in the world are listeners, not speakers. If all you’re doing is speaking, how do you learn anything new?

There was once this portfolio manager I covered who had this uncanny ability to make you feel uncomfortable without saying anything at all. He had a poker face when you spoke to him, and when he felt like changing expressions, he’d go from solemn to smiles in a millisecond. We nicknamed him Crazy Eyes. It turns out that he was literally a genius with an IQ over 160. He also consistently beat his index benchmark for eight years in a row and made millions because of it.

The earliest examples of acting dumb to get ahead starts in grade school. You know what I’m talking about. Those kids who were too cool to study and too cool to sit still in class as they flicked spitballs from the back of the room. These kids weren’t just acting dumb, they really were dumb.

When you purposefully waste your opportunities growing up, you’re not only disrespecting your parents, but also the millions of other kids around the world who will never have the same opportunities.

This post will do the following:

1) Argue why acting dumb is a smart move to get ahead.

2) Provide some tips to help you look and seem a little dumber than you are.

3) Share three personal examples of how acting duhhh, has helped in work, stress management, and relationships.

Ways To Add More Income To A Retirement Portfolio

More Income In RetirementLike chasing the fountain of youth, nearly every retiree seems to be searching for the answer to one question:

“How do I add more income to my portfolio?”

We all want the perfect income-popping strategy, don’t we? Maybe in this case we’re looking for that fabled money tree, or the fountain of cash my kids tell me must be attached to my wallet.

Here’s the wrong approach. I call it “Single Product-Based Strategies”

When people talk about adding income to their portfolio (especially with brokers), salespeople naturally turn toward products, bringing you a dog and pony show about “THIS product that would boost your income stream the most!”

This discussion ends nowhere good, and could easily wreak havoc on your portfolio. Take a look:

Income Portfolio Styles Chart

Here’s the problem: the “which single product is best” approach most often leads to a single asset-heavy portfolio. Under the wrong conditions (like a bad year for the market or for your budget) this mistake sinks your retirement income strategy. If you buy stocks, you don’t want to have to touch them when the market tumbles (and it will).

If you buy real estate you don’t want to be stuck waiting for your property to sell. If you buy bonds you don’t want to harvest them three days before the ex-dividend day to make a house payment.

If you’re worried about income, you want a machine that’ll weather storms, not one that’s built on a single investment type. Let’s get building.

The Best Way To Get Rich: Turn Funny Money Into Real Assets

Funny Money

POOF! Funny Money Be Gone

The US stock market is on fire right now and everybody is getting rich – well, everybody who decides to save, invest their savings, and take some risks. For everyone else, this bull market is a disaster because everything gets much more expensive when everybody gets rich.

The first stock market meltdown I ever experienced was the 1997 Asian Financial Crisis. International college students from countries like Korea and Indonesia had to drop out because the Won and Rupiah depreciated so much, making tuition unaffordable. Construction cranes stopped moving in Bangkok and the IMF had to bail out the entire region. Of course some people made a killing in the downturn when they swooped up assets for pennies on the dollar. But most people lost their shirts.

Then when things really started getting good again in 1999, the NASDAQ collapsed in the Spring of 2000. I only experienced one brilliant year of mega exuberance after college before the floor fell out in March 2000. Many people in finance lost their jobs and then 9/11 happened. I remember seeing my stock portfolio go from $3,000 to an absurd $200,000 in six months, and then lose about $40,000 in a couple weeks when B2B stocks started imploding.

Where does all the money go? It’s all funny money! I remember thinking. Paper millionaires who exercised their stock options early and didn’t sell not only lost everything, they also owed huge tax bills as well. The government always wins.