Financial Samurai

Imagine two similar investors, Leslie and Bob.

• They each retire with a $500,000 portfolio.
• They each withdraw 4% of their portfolio in the first year of retirement, then adjust that amount upward each year to account for inflation (as measured by the Consumer Price Index).
• Their portfolios are identical: 60% in Vanguard Total Stock Market Index Fund and 40% in Vanguard Total Bond Market Index Fund, rebalanced at the end of each year.
• The only difference is that Leslie retired at the end of 1994, and Bob retired at the end of 1999.

The Result? Read more…

This is a guest post by the Lean Life Coach who writes at Eliminate the Muda! [mooda] about how to improve life and personal finance through the application of proven business management techniques that originated with great Americans such as Henry Ford and Benjamin Franklin.

Fighting to Survive

Would you gargle with a floor cleaner?

Originally invented in 1879 as a surgical antiseptic, Listerine was later diluted and sold as a floor cleaner. The Lambert Pharmacal Company, maker of Listerine, was not a wild success, selling a little more than $100,000 per year of their concoction. In 1921 Jordan Wheat Lambert initiated a new marketing campaign advertising Listerine as a cure for “cronic halitosis.” In less than 7 years annual revenue exploded to $8 million.

Just as a small side note, “Cronic Halitosis” was a fake medical term! No doubt, a few of us have an occasional issue with bad breath, but it was not considered a major societal issue until this groundbreaking marketing plan. Not only did the Lambert Pharmacal Company create a new product they even created a new medical term that is commonly accepted to this day.

The objective of any business, big or small, is not only to make a profit but also grow. Doing so requires a focused approach towards obtaining and more importantly retaining a customer base. This of course requires marketing and advertising.

Years ago a company would develop a single marketing campaign and blast it to the world at large; “Buy our widgets.” A successful campaign might be profitable for decades while a failed effort could doom a company.

How Far Will They Go? Read more…

This is a guest article by one of the community’s most well regarded bloggers, Flexo from Consumerism Commentary. Flexo is currently on a ten-day, ten-venue tour.  You can follow him on Twitter @Flexo.  Please enjoy and share your thoughts!

Three of my friends experienced difficulties in their lives around the same time, about ten years ago. I’ll call them Alex, Brian, and Chris. Each had their own problems to deal with, but they chose to ignore their difficulties and search for easy answers that focused on short-term solutions rather than long-term success. Before long, their lives erupted in chaos. That chaos helped them make positive changes, but the outcomes would have been predictable to anyone paying attention.

Alex worked for a non-profit organization since the day he graduated college. It was a great job and he loved his work. He could have chosen any career with his wide variety of talents and his strong aptitude. Alex had the potential to earn signficiantly more money than he would while working for that organization, but he knew since high school he wanted to move his life in this direction. Living with this job was difficult, however.

Alex chose to remain in an apartment near his friends so he commuted three hours total every day. For his meager salary, he worked 80 hours a week including weekends. Even if he wanted to earn extra income on the side, he had no time because his life was completely consumed by his job. And it continued to affect him financially, unable to afford rent, food, and basic necessities.

After a late night at the office, Alex returned to his apartment and found all of his belongings removed from the bedroom and piled in the living room. He hadn’t paid his rent for a few months, nor did he communicate his problems, so the unofficial landlord kicked him out. Read more…

The following is a guest post by long time reader and entrepreneur, Investor Junkie!  IJ writes about how we should stop our complaining, and realize we are wealthier than the large majority of the world.

If you live in the United States, you are wealthy beyond what most others dream of. Your salary is 99% higher than of the world population.  Visit areas like India, and Africa, and you’ll see what real poverty looks like. If you moved there, you could live like a king! Don’t believe me?  Visit Global Rich List and plug in your yearly salary.

So what exactly does it mean to be wealthy anyways?  It’s all relative to the environment you live in. What might be considered below the poverty level in the USA ($22,050 for a family of four), might be considered well off when living in say Uganda.  According to the Global Rich List even at the US poverty level, you still make more money than 89% of the world.

If you look at the Wikipedia chart, you will see the USA has the most wealth compared to any other country (including Japan). No other country comes close to the USA.  So while you may not feel wealthy comparative to what you see in the media, you still are better off than 99% of the world population.  In terms of average income,  the USA is only 13^th in the world, but we still have more stored wealth than any other country.

Stop complaining that you can’t afford that new Lexus you lust for. Many people around the world don’t even own a car! They get from place to place by bicycle. It’s true you may not live like a rock star, famous actor, or business titan, but you live better than most.

Most people in the United States have: Read more…

David by Michelangelo

Here’s a guest post from Ryan at Planting Dollars.  I was intrigued by one of his comments of “failing forward” (not falling forward) and asked him if he’d be interested in writing a guest post about the topic.  Please enjoy and visit his site afterwards.  He has my envy of living in Hawaii and pursuing his dream of being a shark photographer!  Best, Sam

Have you ever noticed that some of the most successful people in the world seem to just naturally fit in their role? It’s as if they’ve been perfectly sculpted to be the best actor, businessman, or even blogger.

I have a secret to tell you… It’s because of their previous experiences… The one’s you didn’t see before they became wildly and unbelievably successful. These people are actually the biggest failures in the world! But shhhhh, I didn’t tell you that…

Don’t believe me? I want you to try something… The next time you talk to a successful person simply ask them this question:

“What failures have you experienced on your journey towards being where you are today?”

They’ll probably talk your ear off for hours and you’ll begin to realize this: They’ve just swung the bat of life a few more times and eventually hit one out of the park.

SCULPTING A MASTERPIECE Read more…

I’m always searching for new ways to make money and regular reader, Joel (aka CreditCardChaser) provides some very unique insights on a new asset class, domain names!  I remember back in 2000, Korea.com was sold for $5 million bucks to the government and I thought gosh dang!  After reading this article, hopefully we’ll all have our own success in something so potentially lucrative. Enjoy!  Sam-urai

Chances are that when you read the term “domain name investing” you immediately have the following questions pop up:

1. Umm [insert embarrassed pause here], what exactly is a domain name anyway? Do you mean like a website? (No)
2. What in the world is domain name investing and why should I care?
3. How would I go about investing in domain names in the first place?

My goals for this article are to show you that: A) Domain names have inherent value B) Domain names can potentially be a great asset class to invest in and C) Give you some practical guidance on how the domain name investing process works.

Domain Name Definition Read more…

Molly & Will in Supastar

Last week was pretty busy.  I traveled to three cities and saw 10 different clients with one of my senior colleagues, Jim.  Jim, aka Superstar, is 45 years old, has his PhD in Economics, and could probably retire now if he wants to.

Jim is a great speaker who engages his clients with insightful anecdotes.  At 5 foot 5 inches tall, Jim stands more confidently than his stature would suggest.  With a staff of 30 people serving his every wishes, Jim never has to worry about not getting his way.  He’s a meticulous man with particular demands, which leads us to our little adventure.

MR. CHAIRMAN Read more…

We Don't Need No Medicine!

I’m pleased to bring you a guest post by faithful reader and commenter, Larry Ludwig (bio below).  He writes a thought provoking piece about challenging the norm of becoming debt free.  You’ll be smarter after reading this, guaranteed!  Enjoy, and as always, feel free to debate away!  Rgds, Financial Samurai

You’ve heard the financial gurus like Dave Ramsey perform pasectomies on his show and Suze Orman with her numerous “I have 50k in debt” guests.  The gurus all say, debt is bad, credit is evil, and being debt free is nirvana, yada yada yada.  While I do think as a whole Americans have too much consumer debt, the goal of being completely debt free is actually a terrible idea. Let me be specific: buying things that depreciate with debt is bad, that big screen TV, new clothing or car.  Most of the financial gurus do not make this distinction and make all debt to be “evil”.

I believe Rich Dad/Poor Dad Robert Kiyosaki has said it best, “There is good and bad debt and being debt free is more risky than having good debt.”.  Now before you go off on my recommendation of Robert and his questionable background, I believe his statement is sound and correct.

The primary reasons are:
•    Opportunity Cost
•    Asset Allocation
•    Inflation
•    Tax Deductions
•    Arbitrage
•    Leverage

Read more…

Wall Street Bull

The following is a guest post by Elaine of Apprentice for Life. Elaine worked on Wall St. for 15 years after business school and provides some interesting thoughts on the much debated topic of Wall Street pay.  Elaine is a self-proclaimed “Lady of Leisure” (LoL) who enjoys traveling the world and experiencing life to the fullest.  I know Elaine personally, and she is one of the best examples of someone who has studied hard, worked hard, practiced good savings and investing habits, and decided to walk away on her own terms.

Please feel free to ask Elaine anything on the topic of Wall St. too, including the getting in and out process!  The topic of Wall St. pay will build steam especially as we head into the home stretch of the year when pay is determined.  Enjoy!

Wall Street Pay Regulation – How to Create a Win-Win Situation

Much has been written and debated over whether the government should regulate Wall Street bankers and traders’ compensation. The proponents and the detractors each have valid arguments to support their thesis. It is all but certain that some form of government regulation will be in place sooner rather than later. At the end of the day, the biggest question remains will the regulations work? The government can mandate certain rules to be met but as we all know, rules can be broken or circumvented. So here are my thoughts on how the Fed can help create a WIN-WIN situation: Read more…

My Victory Sign

One of the main reasons why I returned my Macbook was because I failed to get published on Wise Bread before my return policy ran out.  I figured why not have this goal in order to justify spending such a large some of money?  After all, a writer needs his tools!  Well, I’m excited to announce that my guest article on Wise Bread is now live!  Better late than never.

Please enjoy reading: “Knowing When To Walk Away – Financial Planning For An Unknown Ending”

A snippet: “People have a notion that they must amass a certain amount of money, no matter how long it takes, before they can retire. But what if it took you 40 years of work to reach $1 million, and the very next year you died?”

A special thanks to Senior Writer Linsey Knerl at Wise Bread for accepting my guest post submission and taking the time to edit.  Linsey was always so responsive, even in the wee hours of night when I was pounding away and asking her questions.  Thanks for the support Linsey.  You rock!

Please follow me and Oprah over at Twitter @FinancialSamurai.  It’s getting addicting!

Keigu,

Financial Samurai

“Slicing Through Money’s Mysteries”