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. 

How Europeans See Money Differently From Americans

Stonehenge Sideways View

After almost finishing my loop around Stonehenge, I stumbled across a French woman who was lying on the ground sideways. She adjusted herself a little bit to get more comfortable, but paid no attention to fellow tourists wondering what she was doing.

She made me want to lie down sideways as well to see what she was seeing. I didn’t because I felt a little silly copying her in broad daylight. So instead, I took this picture and tilted my phone. Perhaps you are now bending your head sideways or lifting your laptop sideways to see what she sees.

What do you see?

Get A Free Financial Consultation With Personal Capital

Personal Capital Financial Advisor Over the years, a number of you have asked me to write a review about what exactly goes on with a free financial consultation with Personal Capital. Common questions include: Is the consultation really free? Is the consultation a high pressured sales call in disguise? Will I get something out of it even if I don’t sign up? Is it worth it?

The short answers to the questions are: Yes, the consultation really is free. There’s no high pressured sales tactics, just an understanding they’d like to work with you if you’ve found them helpful. You can continue to use their free Financial Dashboard if you don’t hire them. Yes, you will definitely get some good tailored advice and the opportunity to pick someone’s brain who sees and advises on multiple different types of financial situations for multiple different types of people. And yes, spending time getting a review of your finances for free is worth it since it gets you to review your financial situation at the very least.

I sat down with Patrick Dinan CFP®, a Personal Capital Financial Advisor over the course of 1.5 hours and two sessions, which I’ll now share with you in this post I spent about four hours putting together. The post shall provide transparency on the advisory service process as an insider.

My goals for the meeting were three fold: 1) To understand what a prospective client goes through during the call to advise on a better experience, 2) to understand Personal Capital’s value proposition for the 75-95 bps under management a year they charge and 3) learn what specific advice they could give me, a personal finance enthusiast who has been in the business for 15 years.

I’m sitting in a unique position given I’m very familiar with Personal Capital’s free financial tools as a DIY user for two years before I joined as a consultant to help build out their online content six months ago. I’ve gotten to know some of Personal Capital’s financial advisors and I’ve also sat in on various important meetings with the CEO, CPO, COO, and CMO to get a better understanding of the products and their desired messaging.

An important takeaway I’ve gotten from working more intimately with Personal Capital is that Personal Capital is a Registered Investment Advisor (RIA) who has a fiduciary duty to do what’s in your best interest. They are registered with the SEC, and are not a broker dealer. Broker deals only have a “suitability standard” for their clients, not a fiduciary standard, whereas RIAs have a much stricter fiduciary standard. For example, if you want to invest your entire $500,000 retirement portfolio in Apple after you dreamt Steve Jobs reincarnates, Personal Capital won’t let you because that violates your risk parameters and is not in your best interest.

A broker dealer, on the other hand, would probably also advise against such an aggressive move, but if push comes to shove, they could execute the transaction. The more a broker churns your portfolio and puts you into higher fee mutual funds, the more s/he gets paid so long as you don’t leave. But no matter how much your portfolio turns over with an RIA, the firm gets paid a fixed percentage of assets under management. The main way a RIA gets paid more is if you’re happy and your assets continue to grow. Interests are better aligned. 

Proof Banks Caused The Financial Crash: The Cancer Of MORE

Room With A ViewApplying for a mortgage in 2014 has truly been one of the most eye-opening financial experiences ever. I now know why many consumers had absolutely NO CHANCE in making sound financial choices when it came time to borrowing money from banks before the crisis. Consumers are still being led astray today.

Roughly 25% of homes nationwide are purchased for cash, probably due to the difficulty of getting a mortgage, institutional investors, and a rise in cash rich baby boomers looking to downsize. In San Francisco, the cash buying figure is closer to 35%. I told myself many times during the mortgage qualification process that I would just pay cash. But I soldiered on and swallowed my pride because a 2.5% rate for a 5/1 Jumbo ARM was just too enticing to pass up.

The Three Jar System Of Money To Discuss Our Financial Insecurities

Three Money Jars by Colleen Kong

Three Money Jars by Colleen Kong-Savage

Greetings from London! I’ll be away until July 1. In the meantime, please enjoy the following guest post from illustrator and writer Colleen on her insecurities with money. Perhaps you have some financial insecurities as well you’d like to share in the comments section. 

I was going to write a post about kids allowances. How much do people give their kids these days? Do they tie allowances to doing household chores? Are kids allowed to spend their cash on whatever they want? That’s what I was going to write about, except I was bored before I even began typing.

When I surveyed some friends on Facebook, nobody would say what the going rate for allowance was in their household. People just ignored that first question and moved on to tell me that they don’t tie allowance to chores because they want to teach their kids the intrinsic value of pitching in to take care of the home together (a few found payment for chores more effective—you gotta admit picking up dog poo IS a nasty job worth at least 50 cents).

I wanted to know how much people paid their kids. Surely that’s not a touchy subject like asking individual ADULTS how much they make at their jobs. But the ten people who responded to my survey either did not or would not say. I figured I’d start asking my son’s friends, feeling a little sneaky about getting the answer from the horses’ mouths, but the first friend deftly dodged the question (I asked her twice), so I figured maybe it wasn’t such a great idea being a nosy body, especially when I wasn’t all that interested. I did learn about a three-jar system some folks use to teach their kids money management: a jar to keep cash for Saving, a jar of cash for Spending, and a jar of cash for Giving. I never heard of that before, so I did find THAT interesting.

Cash, dough, bread, greenbacks, cabbage, moola. All these names, but talking money is a big fat taboo. Why? I’m curious about the salaries of friends and acquaintances, but I will never ask the specific number. The question is not meant to be asked. But if we can agree that money does not define who we are, and a salary figure is only one factoid among many that describe us, then why is the subject of personal finance so loaded? Wait, let me take off these rose-colored glasses… Despite the niceties, we know society is still judgmental, and we are insecure about our self-worth. We don’t want to be judged. Not only that, we don’t want to be taken advantage of.

How do we judge thee by thy money? Let me count the ways. In fact let’s use the three-jar system for fun. I’m going to fill each jar with common hangups, neuroses, and prejudices that surround the the topics of Savings, Spending, and Giving.