Financial Samurai

Slicing Through Money's Mysteries

Search Results for: vcsy

The Bull Market Checklist To Living Your Best Life Today

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Perhaps I’m confusing some positive things that are going on with my life, but I haven’t felt this good about the current state of the markets since 2007. Sure, everything went to hell the next couple of years and mass carnage ensued. But that’s neither here nor there.

As of right now, we are living in the best of times. If you’ve been a Financial Samurai reader for at least a year or are a reasonably savvy investor, your net worth should be hitting new record highs. In turn, the amount of investment income you’re generating in order to live free should also be generating new record amounts.

With the Fed now firmly on our side, investors have gained new confidence in taking on more risk. Further, we can all earn risk-free money in our savings accounts at an interest rate substantially higher than the 10-year bond yield (2.4% vs 2.0%).

This double win is rare.

I’d like to offer up some thoughts on how to invest and spend in a bull market to live a better life. Because goodness knows, the good times can’t last forever.



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Top Financial Moves To Make When The Economy Is Great

Nine Financial Moves To Make When The Economy Is Great

The US economy is celebrating its 10th year anniversary of a bull market in 2019. The economy is strong, investors are making money, and employees are getting paid.

With the Fed now firmly on our side, investors have gained new confidence in taking on more risk. Further, we can all earn risk-free money in our savings accounts at an interest rate substantially higher than the 10-year bond yield.

We’re talking 2.4% in an online savings account with CIT Bank, for example versus only 2% for a 10-year bond. But the great thing about CIT Bank is that your money market account is completely liquid. There is no principal price volatility.

This double win of being able to get a higher savings rate and potentially higher risk asset returns is rare.

Here are nine things to do when the economy is doing great.



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How Financial Samurai Became A Multi-Millionaire

How Financial Samurai Became A Multi-MillionaireSam started Financial Samurai during the depths of the financial crisis in July 2009 to make sense of all the chaos.

Today, Financial Samurai is one of the largest independent personal finance sites in the world with over 1.5 million organic pageviews a month.

Sam helps people everywhere achieve financial freedom sooner, rather than later through personal experience, his expertise working in the finance industry for 13 years, and through story telling.

Here’s his story about how he become a multi-millionaire in his 30s.

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How Mostly Luck, Not Skill Made Me A Multi-Millionaire By 40

How Luck, Not Skill Made Me A Multi-Millionaire By 40

Becoming a multi-millionaire has more to do with luck rather than skill. We can say we worked hard to achieve our success. But if you really look deeply into your so called self-made success, you’ll realize that a large reason was due to luck.

Heck, being born in America or being able to live and work in America makes you lucky since you’ve 4.5% of the world’s population gets to do so. We’ve got thousands of people by the day trying to come to our great country but can’t.

Too many of us deemphasize our luck and overemphasize our skills. I’d like to break this cycle by sharing my own wealth progression timeline. I estimate that 80% of the reason for becoming a millionaire was due to luck.



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Best Online Brokers To Invest Your Money For Retirement

Dear Investor,

The average investors should allocate roughly 80% of their investable assets into low-cost ETFs and index funds. Time in the market and continuous dollar cost averaging are much more important than trying to pick the next hot stock.

I’ve worked in the Equities department of two major Wall Street banks since 1999, and I’ve seen three boom and bust cycles. The people who got taken out on a stretcher were the ones who bought stock on margin and panic sold. The people who are now seeing record high portfolio values are those who stuck with investing for the long term.

For the remaining 20% of your portfolio, taken an active approach to investing because if you never take any risks, you’ll never receive any outside reward. When I was 22, I bet almost my entire liquid savings at the time on a stock called VCSY. Within six months, my position went from $3,100 to almost $200,000 due to the craziness for internet stocks at the time.

I sold the stock at around $150,000 and parlayed the proceeds into a downpayment for a $580,000 property in San Francisco a couple years later that is now worth $1,200,000.

By the age of 28, I became a millionaire due to aggressive savings and investing. Now at the age of 40, I’m worth over $10,000,000 and earn roughly $250,000 a year in passive income. You can’t get wealthy by just being a scrooge. You’ve got to own assets that appreciate over time!

The Best Online Brokers

The best online brokerages are rated based on the following criteria:

  • Platform
  • Technology
  • Ease Of Use
  • Cost
  • Accessibility

Wealthfront – The Original Robo-Advisor

Wealthfront – Based in the San Francisco Bay Area, Wealthfront is the original robo-advisor and launched in 2011. Its board includes Dr. Burton Malkiel, professor of economics, emeritus and senior economist at Princeton University.

He is most known for authoring the classic finance book, A Random Walk Down Wall Street, now in its 12th edition. Wealthfront charges just 0.25% to manage your money, with the first $15,000 free using my link.

Sign up for Wealthfront for free and have them construct a model portfolio for you.

TaxableInvestmentMix10Read the full Wealthfront review here.

Personal Capital: Best FREE Financial Software

Personal Capital – Personal Capital has the best financial tools for investors and people who are the most serious about planning for a healthy retirement. You can easily x-ray your portfolio for excessive fees, get a snapshot of your asset allocation by portfolio, track your net worth and plan for your retirement. Personal Capital is free and should be used by all serious investors looking to retire comfortably.

Personal Capital Free Financial Tools

Read the full Personal Capital review here.

The middle class is falling behind because they are not saving enough, taking on too much debt, and not investing enough in stocks. Too much of middle class net worth is tied up in property too. I strongly recommend investors start diversifying their net worth and taking a balanced approach to investing in stocks, real estate, bonds, and risk-free assets like CDs.

Related Posts:

The Proper Asset Allocation Of Stocks And Bonds By Age

The Recommended Net Worth Allocation By Age And Work Experience

About the Author: Sam has been investing his own money ever since he opened an online brokerage account in 1995. Sam loved investing so much that he decided to make a career out it by spending the next thirteen years after college working at Goldman Sachs and Credit Suisse Group. During this time Sam earned his MBA from UC Berkeley with a focus on finance and real estate. 

FinancialSamurai.com was started in 2009 and is one of the most trusted personal finance sites on the internet with over 1.5 million organic pageviews a month and growing. Financial Samurai has been featured in leading publications such as The Wall Street Journal, Bloomberg, and The LA Times. 

The First Million Might Be The Easiest: How To Become A Millionaire By Age 30

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How to become a millionaireGrowing up in a middle class household made me strong. My parents always drove beaters and frowned upon ordering anything other than water when we went out to eat.

I knew my parents were not rich because their incomes were in the public domain as foreign service officers. As a result, I made a conscious choice in high school not to attend one of the two private colleges that had accepted me in order to save money. Instead, I went to William & Mary, which cost $2,800 – $3,200 a year in tuition from 1995-1999.

We were by no means poor. We just pulled up to parties in a paintless 1976 Nissan Datsun alongside Audis, Mercedes, and BMWs for the four years we lived in Kuala Lumpur, Malaysia between 1986-1990. I was quite mortified as a kid I’ve got to admit.

I knew nothing of expensive shoes because I had none except for my wealthier friend’s hand-me-down Air Jordans that were two sizes too large. I couldn’t even afford a camera or a Nintendo game system. We led comfortable lives, but didn’t have more than we needed.

I was always curious about my wealthier friends. Many of their parents were business owners so one day I told my father, I too wanted to be a businessman.

By the time I was 13 I was hooked on every single episode of “The Lifestyles Of The Rich & Famous,” narrated by Robin Leech. A million dollar house and a $40,000 sports car. What a life! I thought to myself in the 8th grade. Might as well give it a go. That’s when I started really hitting the books.

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The Making Of 529 Child Millionaires: A Necessity Due To Soaring Tuition

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With regular contributions, company matching, profit sharing, and conservative returns, many of you will eventually become 401(k) millionaires. But what may be more exciting is if your children become 529 plan millionaires before they even get their first full-time job!

With $1 million by the time your child gets their first full-time job, they’ll be able to live a life of leisure (or purpose). They won’t feel pressured to take a high-paying job they hate just because society says it’s prestigious work. Further, they might feel less guilt knowing their parents didn’t have to sacrifice so much to pay for their private school tuition.

Think about how many more young adults would become teachers, non-profit workers, journalists, and volunteers. Clearly, the world would be a better place if everybody did work they loved. And there is no greater love than being able to help others.

By going the public school route from kindergarten through college, the vast majority of parents who are able to pay private school tuition in the first place, will have accumulated $1 million or more if they diligently save and invest the difference for 22 years.

The Total Cost Of Attending Private School From Kindergarten Through College On The West Coast

Given the tax advantages, let’s use the 529 college savings plan to see what type of contributions or returns are necessary to make millionaire dreams come true for kids. 

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Why It’s Better To Invest In Growth Stocks Over Dividend Stocks For Younger Investors

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Growth stocksDividend stock investing is a great source of passive income. The problem is, with dividend yields relatively low at 2-3% you need a lot of capital to generate any sort of meaningful income. Even if you have a $500,000 dividend stock portfolio yielding 3% that’s only $15,000 a year. Remember, the safest withdrawal rate in retirement does not touch principal. Further, you must ask yourself whether such yields are worth the investment risk.

If you’re relatively young, say under 40 years old, investing the majority of your equity exposure in dividend yielding stocks is a suboptimal investment strategy in my humble opinion. You’ll be hoping for filet mignon for decades while you eat Hamburger Helper in the meantime. When you reach your desired age for retirement, you might just be asking yourself, “Where the hell is the feast?”

Out of the few multi-bagger return stocks I’ve had over the past 16 years, none of them have been dividend stocks. I’m sure dividend stocks will provide over 100% returns if you give them a long enough amount of time. But if you are like me, you’d rather build your fortune sooner rather than later. If I’m going to bother taking risk in the stock markets, I’m not playing for crumbs. When things turn south, everything turns south so there had better be more than a 3% dividend yield and some underperforming appreciation to compensate.

The following article will attempt to argue why younger investors should focus on growth stocks over dividend stocks in a bull market with potentially rising interest rates. In a bear market, everything gets crushed but dividend stocks should theoretically outperform.

A FUNDAMENTAL POINT TO UNDERSTAND ABOUT DIVIDEND PAYING COMPANIES

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Don’t Stop Fortune Hunting – Money Making Opportunities Are Everywhere

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So close yet so far. Giraffe reaching for leaves.

When I was 23 I got lucky, very lucky. No, a Ford agency supermodel didn’t decide to stalk me around Manhattan and show me off to her beautiful friends in case we didn’t work out. Instead, a $3,000 investment turned into $155,000 in two months.

The stock was VCSY a Chinese internet company with a homepage consisting of a simple dial pad. I had no idea what the company did except for the fact that Internet + China in December 1999 sounded like a fantastic idea during one of the greatest bubbles of our times.

VCSY went from around $3 to $6, did an inexplicable 20-for-1 stock split and then went up to around $9. In other words, it went from $3 to $180 pre-split and I had 1,000 shares. The stock’s move was one of the most ridiculous things I’ve ever seen as everybody I knew on the Street started piling into the name. I eventually got out of the stock at around $155 a share, netting a cool $155,000.

I proceeded to do what every foolish 23 year old would do and blow it on things! I bought a 600cc racing bike along with a second hand Volvo 850 GLT. At least I didn’t go out and buy a pound of coke.

The safety of the Volvo was a way to balance out the risk of death during wheely popping attempts on FDR drive at 100mph. With both vehicles came insurance payments and a $300 a month parking bill. Yes, even back in 2000 parking was that expensive in lower Manhattan.

My biggest regret wasn’t actually spending $25,000 on goodies after the financial windfall. My biggest regret was not investing MORE into VCSY! I could have put in up to $20,000 worth in the name because I just received my first stub bonus after starting work in the summer of 1999.

Meanwhile, the ritual of saving more of my after tax paycheck had begun because getting into work before 5:30am and regularly leaving after 7:30pm didn’t seem sustainable long term. Unfortunately, I was too chicken shit to dump everything into VCSY. If I did, the $20,000 could have turned into a cool million! Sob. So close, yet so far from being able to make it rain!

Ever since the spring of 2000, I’ve regretted not taking more risk. I swore to swing for the fences more often with the new found capital. Instead of fulfilling my oath, I decided to cower in the corner like a scared child in the night because the internet bubble began to burst in March 2000.

After a couple $10,000+ down days thanks to reinvestments in B2B stocks like Ariba Technologies I bid the stock market casino sayonara! The one year time period of confusing brains with a bull market was over.

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Are We In Another Financial Bubble? Valuations Look Stretched

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Stock Market and Real Estate Market Bubble PoppingUpdated for 2020 and beyond. 

Of 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!

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