The Cost Of Traveling To Asia: Time For Another Business Trip!

Angkor Wat, Cambodia by Linda Russell

Angkor Wat, Cambodia

Much of Financial Samurai’s culture is about bringing various worldwide perspectives to financial topics we care about. If we can assemble the best aspects of each culture onto one site, we could create a valuable resource of wealth and happiness for millions.

From 2011 – 2014, I traveled to Europe for several weeks at a time to understand the happiest people on Earth. We looked into more sensitive topics such as combatting apathy and whether it was so bad that America was turning into Europe with higher taxes, increased welfare, and an overall larger government presence.

I could go back to Hawaii or Lake Tahoe for a vacation, but I’ve decided it’s time to return to a region where I spent the first 13 years of my life. It’s been four years since I’ve been back and I’m curious to see how things have changed.

On this business trip, I’d like to research the following questions:

* Why are the Chinese so dominant in business in Malaysia? Malaysia is mostly made up of Malays, Chinese, and Indians with several rules favoring Malays. I wonder if those rules still exist. Are countries around the equator less productive? Or is this some type of misconception? I grew up in KL from 1988-1991 and want to better understand the country now as an adult. 

* What is the latest sentiment about China from the Taiwanese? When I lived in Taipei from 1984-1988, there was a lot of fear that China would invade Taiwan and take the country over. Now that China and Taiwan have prospered so greatly over the past 25 years, do they dare disrupt their fortunes over politics?

* How do South Koreans feel about the situation in North Korea? What is the existing attitude of South Koreans towards Japan and the United States? Are the family empires (chaebols) gaining or losing their significance? How is the manufacturing industry competing so well against Japan’s manufacturing industry? I’ve only been to Seoul once, but Seoul seemed like a dirtier, more chaotic version of Tokyo. Korean culture is the one culture I’ve never been able to fully connect with. 

Become An Accredited Investor: Private Companies No Longer Want To IPO

Investors shut out of private investments if not accredited

Investors shut out of private investments

Do you know what the market capitalization was of Microsoft when they went public on March 13, 1986? A mere $500 million (~$1 billion in today’s dollars). If you had bought just 100 shares of Microsoft at the $21 offering and rode it all the way up to its peak in 1999, you would have cashed out for $1.4 million. Of course the stock came tumbling down and then back up. But you’d still have around $1 million bucks today. Not bad.

I remember working on the syndicate with my US colleagues during Google’s IPO back in 2004. We took the company public at a $23 billion market cap. Meanwhile, Facebook went public in 2012 at a $100 billion market cap. See a trend here? Companies are going public later and later in the game, meaning the public is getting less and less of the upside benefit!

The people who are getting rich are 1) Private institutional investors such as the hedge funds, venture capital funds, venture debt funds, and private equity funds, 2) Accredited investors who are able to invest in such private funds, and 3) The employees qualified enough to get jobs at these hot startups. Everybody else is shut out!

Seeing if we can balance the scale is one of the main reasons why I decided to consult with Sliced Investing. Sliced Investing is lowering the bar to let more investors gain access to private company deals and private investment funds that were never available to the public or regular accredited investors before. For example, I never would have imagined being able to invest as little as $20,000 into Lyft’s latest fundraising at a $2.8 billion valuation. What’s $2.8 billion when Uber raised money at a $48 billion valuation last year? Working intimately with private companies over the past couple of years has really opened my eyes.

Is It Better To Be A Full-time Employee Or Contractor (Freelancer)?

The freedom of being a contractor is enticingAccording to a survey conducted by independent research firm Edelman Berland and commissioned by the Freelancers Union, more than one in three workers – 53 million Americans – is now freelancing. By 2020, more than 40% of the American workforce, or 60 million people, will be freelancers, contractors and temp workers, according to a study done by Intuit in 2013.

Chances are high that you are currently a contractor or have thought about giving up your full-time job to be a contractor. When I left Corporate America in the Spring of 2012, I thought I’d never return. But in November 2013, I received an opportunity to contract for 25 hours a week, and here I am 18 months later still consulting! The X Factor I did not anticipate about building a large personal finance blog is that other companies would be interested in hiring me for my online content knowledge and services.

In this post, I’d like to discuss the differences between a full-time employee and a contractor. Some of you have told me that you never want to be a contractor because you don’t want to be treated poorly; like an outsider. While it’s true that as a contractor, you might not be treated as one of the team, there are plenty of other benefits that make the decision to contract or go full-time surprisingly difficult.

Which States Are Best For Retirement?

Retiring In Hawaii

Hawaii, obviously?

America is amazing because we’re free to relocate anywhere in the country that suits our desires. A lot of people scoff at the idea of just moving because of family and job responsibilities. But when you can take a plane anywhere in the continental US in under six hours, telecommute from home, and FaceTime with people you care about, why wouldn’t you at least give moving to a nicer place a shot? There are even plenty of flexible job opportunities by the sharing economy that can help pay the bills during a transition.

The best states to live in have a combination of low taxes and incredible weather. California is awesome, but our taxes are horrendous and we’ve still got a budget deficit! Hawaii is also amazing, but food and housing are also costly. At least Hawaii’s sales tax is only 4-4.5% and pensions are state tax-free.

I’ve been to a large majority of the 50 States and spent 10 years on the East Coast before moving out West in 2001. I’m totally biased for California and Hawaii so I enlisted FS reader, Steve from Green Diet to help me put together an unbiased assessment of our country based on cost of living to see which states are best for retirement. 

Buying Structured Notes For Downside Investment Protection

Hedged Upside With Structured Notes

Are your investments hedged?

We could be in another financial bubble, but nobody really knows when a correction will take place. You might not even care if your investments decline by 20% or more over a year time frame if you are looking to invest over the next several decades. But alas, none of us will live forever, and nobody really likes to experience downside volatility. Sooner or later, we’ll have to deploy our capital for life, leisure, and charity. Not everybody wants to leave a financial legacy to raise spoiled kids!

One of the strategies I’ve taken to protect against downside risk is to buy various structured notes based on different indices like the S&P 500, Euro Stoxx 50, and the Russell 2000, or buy single stock structured notes of specific companies. Not only do I regularly rebalance my portfolios, I also consistently dollar cost average every month. You’ll be surprised how big a fortune you can create after just 10 years by methodically applying these two financial practices.

Structured notes are derivative products that usually provide hedged returns. In this post, I’d like to explain to you another recent structured note I bought to help illustrate how structured notes work. I buy all my structured notes through a Citi Wealth Management account. My other investment portfolios include: a Rollover IRA, a SEP IRA, a Self-Employed 401k, and a Motif Investing portfolio. 

What Type Of Investment Property Should I Buy? Single Family Home, Condo, or Multi-Unit

Amazing Property Overlooking The Ocean

Buy property for lifestyle

For years, I sort of regretted buying a single family home in San Francisco instead of a multi-unit property.

Even though the idea was to grow into this four bedroom home, it felt wasteful during the meantime with only the two of us. So I finally decided to rent out the ground floor bedroom to a middle school teacher for below market rent. I’ve always had a soft spot for teachers, and it felt good helping someone who made less than $36,000 a year find a place in a good neighborhood within walking distance from work.

With the money I spent on buying the house in 2004/2005, I could have bought a two-unit building with a 1,300 sqft, 2/1.5 apartment upstairs and a similar size 2/1.5 apartment downstairs. I could have lived in one unit and rented out the other unit for maximum efficiency and profits, perhaps to the tune of an extra $150,000 – $300,000 over 10 years. Furthermore, having smaller units would provide more flexibility to accept new job opportunities – like the large offer in NYC I turned down – because of my perception at the time that it would be easier to rent out a 2/1.5 condo vs. a 4/3.5 SFH.

Then I rented out my whole house and had a change of heart.

Are We In Another Financial Bubble? Valuations Look Stretched

Stock Market and Real Estate Market Bubble PoppingOf course we are in a bubble! When you’ve got people with no professional financial experience giving investment advice, you better believe we’re in a bubble. Online investing advice by non-finance professionals is the modern day version of shoe shine boys giving stock tips prior to the crash of 1929. Always understand the background of those who give investment advice before considering their counsel.

Even after 20 years of investing and working in the finance industry, I always feel uncomfortable giving any sort of investment advice because I’ve had way too many losses partly thanks to multiple boom and bust cycles. Furthermore, everybody’s risk tolerance and money making abilities are different. The best thing we can do is have an appropriate asset allocation to ride out the waves.

The good thing about bubbles is that the greater fool game can last for much longer than expected because we humans are GREEDY, GREEDY, GREEDY!

The largest criers of the word “BUBBLE!” are those who have the least amount at stake. Perhaps they sold their real estate, stocks, or businesses before 2012 and are now kicking themselves. Maybe they are still graduate students with a lot of student loans to repay. Or maybe they are retirees or early retirees who can no longer take full advantage of a heated economy. Whatever the case may be, when the largest complainers of a bubble start getting back in, you know danger is imminent.

Let’s at least all agree that we’re in the second half of a bull market and the bubble will eventually burst. Maybe we’ll only correct by 15%-20%, unlike 2009’s 50% ass-kicking. But eventually, that year or three of pain will come!

Is Buying A Stock Coincidentally Before An Acquisition Insider Trading?

Insider Trading Jail CellOn Saturday, July 16, 2014 I played in a tennis tournament with a partner that worked at Trulia, an online real estate company. He just got his job and was explaining to me how the company makes money through its ad placements for Realtors. If you’ve ever wondered why companies like Trulia and Zillow have done nothing to lower selling commission rates from 5%, it’s because real estate agents are their clients. Asking how a company makes money or plans to make money is always my number two question after understanding what the company does.

We had a really fun time playing against Berkeley Tennis Club across the bay. After getting home, I decided that I was going to buy Trulia stock because I liked their business model, the stock had corrected somewhat, I was bullish on the real estate market, and it seemed like a prime takeover target. I was set on buying $50,000 worth of the stock on Monday, July 18.

For some reason, I got too busy that Monday and didn’t execute my order before 1pm PST. Mondays and Wednesdays were my consulting days for one of my ex-clients. I forgot about buying Trulia that entire week until I saw news after the close on July 28, 2014 that Zillow was acquiring Trulia for $3.5 billion in stock at a 25% premium! Damn! I could have made $12,500 in just a couple weeks!

What a shame. Or how fortunate. Let me explain.

Does A Good Credit Score Really Matter Anymore?

Does a high credit score matter anymore? Most don't careA couple mortgage refinances ago, I almost screwed myself because I had an $8 judgment against me from my local utility company that crushed my credit score by ~100 points. I thought I had an excellent credit score of 780, and I did, when I first started my 100 day refinance hell. But when my refinance bank pulled my credit report again around the 90th day, my TransUnion score plummeted to 680.

My mortgage refinance was delayed by another 10 days as my bank investigated the situation. Thankfully, everything turned out fine in the end. Since that time, I decided to regularly check my credit score once a year like I check my latest insurance coverage and health coverage. It’s good practice given it’s estimated about 5% of credit reports have errors as well.

Given I finally got rejected from my latest mortgage refinance attempt by Chase, I’ve begun to question whether a credit score has any meaning anymore. You see, I never missed a mortgage payment on this particular mortgage, and my latest credit score showed a 787. Anything above a 740 is considered excellent, and good enough for the best rate by major lenders.

How To Invest And Profit In A Rising Interest Rate Environment

Rising Interest Rates, Raygun Rocketship, by Nan Palmero

Rising Rates? Photo of Raygun Rocketship by Nan Palmero

After 34+ years of declining rates, you now believe that interest rates are finally going to start increasing. After all, the Fed Funds rate is at 0.25% and the 10-year yield is at ~2%. How much lower can they go?

I’m in the camp that interest rates will stay low for years to come because of the following reasons:

* Information efficiency
* Economic slack
* Contained inflation
* Coordinated Central Banks
* The growth of China and India and their continued purchasing of US debt
* The growing perception that US dollar denominated assets are the safest assets in the world
* A 30+ year trend of declining rates that is telling us we’re more adept at managing inflation with each new cycle that passes

But let’s say I’m wrong. Let’s say rates start rising aggressively? Where should one invest? What else should one do? To answer these questions, let’s first look back at history and get smart!