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Understand How Rich Central Bankers Think So You Can Outperform

Updated: 10/08/2022 by Financial Samurai 37 Comments

You might be wondering why rich central bankers remain unrelenting in their desire to raise interest rates. After all, there are plenty of signs individual components of inflation are rolling over.

Given each interest rate hike takes at least six months to have an affect on slowing the economy, the Federal Reserve could easily over tighten, thereby worsening the recession.

Deflation - top components of inflation deflating

American central bankers have the dual goal of maintaining maximum employment and stabilizing inflation. When the labor market is robust, there tends to be inflationary pressure and vice versa.

The NAIRU (Non-Accelerating Inflation Rate of Unemployment) is an estimate of the lowest the unemployment rate can go without leading to rising inflation.

In an ideal scenario, the Federal Reserve would like to see an unemployment rate of between 4%- 5% and an inflation rate of between 2%-3%. In other words, the NAIRU is around 4%, but it changes with the times.

Historically, the Fed has had an inflation rate target of 2%. However, based on where inflation is today, I’m sure they’d be happy if we got to 3%.

The Central Bank’s Role And The Power Of Moral Suasion

An important policy strategy is using moral suasion to get consumers and investors to do what rich central bankers want. Moral suasion is the act of persuading a person or group to act in a certain way through rhetorical appeals, persuasion, or implicit and explicit threats—as opposed to the use of outright coercion or physical force.

For example, even if central bankers believe inflation has peaked and is heading down, they won’t verbalize their beliefs to the public. Because if they do, the public may end up hiring, buying, and investing aggressively again in anticipation the central bank will slow its rate hikes or cut rates in the future. If this happens, it neutralizes the deflationary effects of the central bank’s rate hikes, thereby extending higher inflation for a longer period.

Central bankers are very similar to politicians in that they have a proclivity to say one thing and do another. However, unlike politicians, the effectiveness of a central banker’s actions can be more easily measured given both the unemployment and inflation rates are easily tracked.

The farther away the unemployment rate is from 4%-5% and the inflation rate is from 2%-3%, the more the central bank is failing. Instead of creating soft-landing scenarios, the central bank is orchestrating boom-bust scenarios. And during boom-bust scenarios, more people suffer.

Ideally, we want the peaks and troughs of a business cycle to be as close to the long-run real GDP trend as possible. This way, citizens can better plan their future.

Boom bust business cycle

Wealthy Fed Board Of Governors

Now that we understand central bankers can’t always speak the truth or speak clearly to the public (Alan Greenspan was famous for nonsensical jibber jabber), let’s try to understand how central bankers think.

Jerome Powell, makes $203,500, while other Board members make $183,100, amounts set by Congress. In America, these are top 15% salaries. However, their salaries are not too meaningful as all of them are wealthy.

Our seven Board of Governors of the Federal Reserve are already rich. Fed Chair Jerome Powell was a partner at The Carlye Group, a private equity powerhouse. His net worth is easily over $50 million, and more likely over $100 million.

When you are worth tens of millions of dollars, you are obviously financially secure. No matter how poorly the economy performs, you and your family will likely still be fine. You do not need a day job to live a good life. You already have enough assets to generate a large sum of passive investment income.

Further, once you have mega millions, unless you’re extremely greedy, your focus shifts more towards service and legacy. Do not underestimate the importance of legacy to a wealthy person.

Legacy is why billionaires donate massive amounts of money to colleges to get a building named after them. Even though these colleges already have huge endowments and continue to charge exorbitant tuition rates, some of the richest people can’t help but lust after status and legacy. It’s just human nature.

Banning Of Trading Securities By The Federal Reserve Board

In addition to already being rich, the Board of Governors had a tantalizing advantage other investors did not. It was the ability to trade securities before they made policy statements and decisions.

After many years of public complaining, starting May 1, 2022, members of the Federal Reserve may no longer trade affected stocks beforehand and front-run their decisions. As a result, the opportunity to make millions from this form of insider knowledge has vanished.

The rules “aim to support public confidence in the impartiality and integrity of the Committee’s work by guarding against even the appearance of any conflict of interest,” a statement by the Fed said.

No matter how rich you become, however, it’s hard to suppress the allure of making money in a way most others cannot. This is the combination of greed and the thrill of being able to get away with a wrongdoing. When you have power, you sometimes feel very special.

For example, Galleon hedge fund manager Raj Rajarathnam was worth billions. Yet, he was still willing to trade on insider information provided to him by his pal at McKinsey. You would think the risk of going to jail for 10+ years would be enough to deter such illegal activity.

Trying to get away with something illegal can be intoxicating. At a certain level of wealth, you sometimes believe you are above the law.

The irony is, as investors, it was probably preferable for the Board of Governors to continue to be allowed to trade on insider information. This way, the Governors would be more incentivized to adopt polices that boosted their multi-million dollar investment positions!

Just look at how various American stock indices have performed since the proposed ban was announced at the end of 2021. Since the beginning of 2022, the various stock markets have all gone down. Coincidence? I don’t think so.

Status Increases If You Hit Your Target Objectives

With no incentive to make money via trading, the Federal Reserve Board of Governors is now focussing on status. Its status in the history books will increase if it can get inflation back down to 2-3% without causing the unemployment rate to go up beyond 5%.

Right now, the Board of Governors has mediocre status. In 2020 and 2021, it cut rates too aggressively and unleashed too much liquidity for too long. Partially due to these decisions, inflation spiraled to 40-year highs.

Now, the Board of Governors wants to rectify its mistakes. It doesn’t want to be viewed as the reason for causing so much inflation. But this time, without millions of dollars of personal investments at stake to moderate its decisions, it can now raise rates as aggressively as it wants to and tank the economy and force inflation down.

United States historical unemployment rate
Federal Reserve Economic Data Unemployment Rate

Central Bankers Can Outperform In A Worsening Economy

As the stock market and housing market decline, the Board of Governors and thousands of Fed agency employees get relatively wealthier. They’ve got less exposure to risk assets and more cash.

Further, working for the Federal Reserve is a much safer job than working in the private sector. As more private sector jobs are lost due to a recession, employees at the Federal Reserve outperform.

When you don’t have as much skin in the game, you naturally don’t care as much. Such wealthy people with lots of cash are licking their chops to buy a move-up property at a discount!

I know what I’ve written sounds cynical, but this is the reality of the world. As long as monetary policy and government policy are run by people, there will always be policy errors. It is very hard for anybody to overcome greed, fear, and the desire for status.

If central bankers were not rich, but mostly made up of middle-class people, perhaps their decisions would be more moderate. Maybe, middle-class central bankers would be more empathetic to the majority of Americans who rely on jobs to survive.

But if you’re rich enough where you don’t have to work, and narcissistic enough to want a top government job, then you may not care so much about the middle class. Instead, you’re more focused on your legacy.

If the Federal Reserve doesn’t relent on its rate hikes by the end of 2022, the recession will likely deepen. And because I believe the Board of Governors care about their legacy the most, they will likely become more dovish in 2023. But in case they don’t, you need to raise your cash hoard.

The more cash you have in a deepening recession, the better you will feel. And as more assets sell at bargain-basement prices, you can swoop in and take advantage of the Fed-induced carnage.

The Federal Reserve Is Struggling To Govern Properly

If it isn’t clear by now, it is dangerous to depend on the government or an individual to survive. You must depend on yourself. Politicians have their own agendas. Further, the good graces of an individual will unlikely last forever.

The Federal Reserve Bank literally employs ~400 PhDs and has over 20,000 employees with an annual payroll of over $2.578 BILLION. Yet they still can’t properly manage price stability. Maybe economics is a harder topic than it seems given the endless variables.

Or maybe the Federal Reserve spends too much time on bank regulation. According to one reader who used to work at the Fed, around 18k employees work on the ACH system, auditing banks, local programs, plus administrative areas – HR, accounting, IT, etc. 

Whatever the case may be, don’t fight the Fed and also don’t believe the Fed will make the right decisions most of the time. If they really hike the Fed Funds rate to 4% as inflation comes down, we are going to experience a world of pain. Be prepared.

Federal Reserve Bank Payroll

Depend On Nobody Else But Yourself To Survive

Focus on boosting your cash flow to weather the storm. It is more important than a subjective net worth. No matter how well you do at your job or how much market share your company takes, an unrelenting Fed will break the correlation between effort and reward.

As I’ve recommended in my book, Buy This, Not That, follow an appropriate net worth asset allocation model for your age and risk tolerance. The key is to stick with the framework until the good times eventually return. In the meantime, if you need a job to survive, build your relationships with those who determine your destiny. More layoffs are coming.

Readers, how far do you think the Fed is willing to go to bring inflation back down to 2% – 3%? How much do you think being already rich has to do with how the Fed thinks? Are you raising your cash hoard now, despite inflation still elevated?

If you enjoyed this discussion, pick up a hardcopy of my WSJ bestseller, Buy This, Not That on Amazon. Not only will the book help you build more wealth, but it will also help you tackle some of life’s biggest dilemmas in a logical way.

For more nuanced personal finance content, join 50,000+ others and sign up for the free Financial Samurai newsletter. Financial Samurai is one of the largest independently-owned personal finance sites that started in 2009. 

Why The Ideal Income Is The Student Loan Forgiveness Income Threshold

Updated: 11/10/2022 by Financial Samurai 60 Comments

Have you ever wondered what the ideal income is to live a comfortable life before retirement and after retirement? Well, look no further than the student loan forgiveness income threshold of $125,000 per individual and $250,000 per married couple.

On August 24, 2022, President Biden unveiled a plan to cancel up to $10,000 tax-free in federal student loans for borrowers who individually earn less than $125,000. $125,000 is a generous income threshold given the median household income is about $75,000 in 2022.

For lower-income individuals who received Pell Grants, they will be eligible for up to $20,000 tax-free in student loan forgiveness. You can even get a refund for any payment (including auto-debit payments) you made during the payment pause, beginning March 13, 2020. Finally, President Biden will also extend a pause on federal student loan payments for what he called, “the final time” until December 31, 2022.

The plan could bring relief to over 43 million borrowers with an average of $30,000 debt outstanding. More details from the White House can be found here.

Whether you believe forgiving student loans for individuals making up to $125,000 is right or wrong, we must accept the government has the power to do what it wants. Society is all about giving and taking.

For background, I went to William & Mary and paid in-state tuition because that’s what we could comfortably afford. At the time, tuition was $2,800/year versus $22,000/year for a comparable private university.

Student Loan Forgiveness Income Threshold Is The Ideal Income For Most

The Ideal Income To Earn While Working

The ideal income where making more doesn’t provide more happiness has been hotly debated. But the government has revealed to us the answer. The $125,000 income threshold for individuals and $250,000 income thresholds for married couples reveals to us the upper boundary of who the government views as middle class.

The middle class is the best class because it is the protected class that gains the most favor from the government. The middle class makes enough to live a comfortable lifestyle without the need for subsidies. We’re talking about making enough to own a house, own a car, have two kids, and save for education and vacations.

At the same time, the middle class is always eligible for subsidies, such as student loan forgiveness, stimulus checks, and child tax credits. Why? Because politicians rely on the biggest demographic group in the country to stay in power.

Holding Onto Power

One main goal of a politician is to stay in power for as long as possible. Once you have power it’s hard to let go. Power is intoxicating and can set your friends and loved ones up for life. Power is also the reason why billionaires enjoy buying media companies.

This combination of having your cake and eating it too is one of the reasons why wealthier households like to claim they are also middle class. Learning how to convince people you are middle class when you’re rich is a skill worth learning.

Who doesn’t want to feel like they belong to a larger group the government always supports? Nobody wants to feel persecuted for earning or having too much. We all want to be middle class, whether we truly are or not.

The tricky situation every politician faces, however, is determining what income cutoff is eligible and ineligible for free money. Deciding this income threshold for a redistribution of tax dollars is carefully decided by a team of strategists, economists, and advisers. They didn’t just one day come up with $125,000 / $250,000 out of thin air!

Determining The Income Threshold Is Tricky

If the income threshold for free money is too high, then enough people will start grumbling that politicians are providing tax cuts and free money to the rich. Since most politicians enter the office rich and become much richer after leaving, they don’t want to make it too obvious their policies are also helping themselves and their friends.

If the income threshold for free money is too low, then politicians won’t be able to effectively buy enough support to remain in power. Let’s be honest. The vast majority of people would vote for someone if the candidate promised to give them a free $1,000, let alone a free $10,000 – $20,000. Observe what people do with money not what they say.

We’ve seen this income threshold debated in the past when President Obama wanted to raise taxes on anybody making over $200,00 and any household making over $250,000. In his administration’s eyes, folks who made more were considered rich. Eventually, there was a compromise.

Perhaps due to inflation and an increase in overall wealth, President Biden has raised the income threshold for higher income taxes to $400,000 per individual and $450,000 per household. If the student loan forgiveness plan goes through, then it sets a strong precedent for higher income taxes to come.

The Ideal Income To Earn In Retirement

Given the ideal income to earn while working is between $125,000 and $250,000, then the ideal income to earn in retirement is roughly the same. After all, most of us would love to live the same lifestyle or better once we no longer have to work.

However, the great thing about successfully retiring is that we no longer need to save for retirement. This is one of the biggest realizations many retirees have told me after decades of saving 20% – 50% of their incomes.

When you no longer need to save for retirement in retirement, you free up a lot of cash flow. Further, we should be able to spend 100% of our retirement income or more if we plan to decumulate and not die with too much.

Therefore, the ideal income to earn in retirement is closer to $100,000 per individual and $200,000 per couple. At these income levels, the government will unlikely increase your taxes or cut you out of subsidies.

Finally, retirement income usually comes from investments, pensions, and Social Security, which have more favorable tax rates. Below is a chart that shows you can earn up to $41,675 as an individual and pay no long-term capital gains tax.

Long-term capital gains tax rates

With $100,000 in passive retirement income a year per person, you should be able to live like a king or queen for the rest of your life!

Capital Necessary To Generate The Ideal Retirement Income

If you agree the ideal retirement income is about $100,000 per person in America, then how much capital is necessary to generate such an income level? To find out, we simply divide $100,000 by various rates of return.

To generate $100,000 a year in passive retirement income, you would need the following invested capital:

$10 million at a 1% rate of return

$5 million at a 2% rate of return

$3.33 million at a 3% rate of return

$2.5 million at a 4% rate of return

$2 million at a 5% rate of return

$1.66 million at a 6% rate of return

$1.43 million at a 7% rate of return

A reasonable rate of return in retirement is somewhere between 2% and 5%. The last thing you want to do in retirement is take too much risk, lose a lot of money, and have to go back to work. Therefore, most people will likely need between $2 million to $5 million in invested capital to generate the ideal income in retirement.

I’ve written in the past how having a net worth of $10+ million is the ideal net worth in retirement. It’s what the majority of you voted on. However, based on government analysis of the student loan forgiveness income threshold, $10+ million is probably too much.

You Don’t Need The Ideal Net Worth Or Ideal Retirement Income

Now obviously, not everybody needs to earn $100,000 in annual retirement income to have a great life. We’re talking about the mass market ideal here.

If you’re happy spending $50,000 a year gross per person in retirement, then all you need is $1 million to $2.5 million in invested capital at a 2% to 5% annual rate of return. Plenty of retirees live happily on less if they have no debt and proper health insurance.

If you’re happy spending $30,000 a year gross per person in retirement, then you’ll only need $600,000 to $1.5 million in invested capital.

With the average Social Security payment of around $20,000 a year, you may only need $200,000 – $500,000 in invested capital to generate $10,000 a year in retirement income. Very doable after 40+ years of working.

The cost of attending college and federal support

People Retire In Different Ways

I profiled a woman who retired with a net worth of only $600,000 and relocated to Taiwan to teach English. She started a new life partly because she wanted to escape the money trauma endured in America. So far, she seems to be having a great time living on a lower budget.

On the other end of the retirement spectrum, I profiled a man who gave up a $300,000+ job at 41. He retired with a net worth of $4 million and has two young children. Instead of lowering his household budget, his strategy is to support his wife in her career endeavors.

If you’re able to earn some supplemental retirement income, like I hope all retirees do, then you’ll need even less capital. The supplemental income fills the gap between your retirement income and your desired living expenses.

But more importantly, doing some work that provides meaning and purpose keeps life interesting. Personally, I’m much happier when I have a purpose. Purpose is partially why I continue to publish three times a week on Financial samurai.

Use Government Policies As A Guide To Live A Better Life

One of the reasons why I felt more comfortable leaving work in 2012 was due to an upcoming change in tax rates. There was a new surtax of 3.8 percent on income from investments coming up in 2013. Further, the highest marginal income tax rate was going up to 39.6 percent from 35 percent.

In 2012, I was exhausted and bored with my job. Therefore, it didn’t sound appealing to continue working 60 hours a week and pay more taxes. So instead of complaining, I negotiated a severance and changed my life. As a result, I became happier even though I was making a lot less money.

Never complain for more than a moment. Do something about a suboptimal situation.

Don’t change your life due to upcoming government policies. That’s the tail wagging the dog. Instead, use government policies as a guide to make marginal improvements. Government policies were at most 10% of the reason why I wanted to leave finance.

Marginal Differences In Effort With Different Presidents

With my belief that Obama would remain in office until 2017, I assumed there would be a bigger government safety net. Therefore, it felt safer to take things easier when you don’t have to try as hard to take care of yourself. Worst case, I felt I wouldn’t starve to death with a bigger government.

When Trump became president on January 20, 2017, a part of me felt I needed to work harder. The five years since I left my day job were a nice respite. However, over the next four years, I assumed there would be a shrinkage of the government safety net along with lower taxes. With the birth of my son in April 2017, I decided to step on the gas.

Now with President Biden fulfilling his campaign promises, I feel it is rational to take things down a notch again. Higher tax rates are most likely coming to pay for more government subsidies. Hence, if you’re burned out and making over the ideal income of $125,000 per person, you should feel less guilty taking things easier as well.

Making over $125,000 per person in America won’t make you much happier. Neither will making more than $200,000 per person if you live in an expensive coastal city. In many circumstances, making much more than $125,000 will make you unhappier given the stress and long hours that are often required to make such an income.

The student loan forgiveness program comes at a time when millions of people are exhausted after two-and-a-half years of the pandemic. The next presidential election is on November 5, 2024. If you need a break, utilize the next two years to recharge. At least join the quiet quitting movement and gain back your sanity.

However, in the event the recession deepens, please act rationally to protect your finances. The government can only do so much. In the end, it’s best for you to depend on yourself to win. If free money comes your way, rationally take it and be thankful. If not, you never expected it in the first place.

Update Nov 11, 2022: A federal judge rules that President Biden’s plan to cancel hundreds of billions of dollars in student loan debt is unconstitutional and must be vacated. Sorry folks. No student loan forgiveness after all.

Reader Questions And Action Items

Readers, what are your thoughts about the student loan forgiveness program? Do you think the income threshold of $125,000 per person to receive student loan forgiveness is appropriate? If not, what do you think is a more appropriate income threshold, if any? What do you think is the ideal income while working and in retirement?

If you enjoyed this discussion, pick up a hardcopy of my WSJ bestseller, Buy This, Not That. Not only will the book help you build more wealth, but it will also help you tackle some of life’s biggest dilemmas in a logical way.

For more nuanced personal finance content, join 50,000+ others and sign up for the free Financial Samurai newsletter. Financial Samurai is one of the largest independently-owned personal finance sites that started in 2009.

How To Befriend Politicians So You Can Do What You Want

Updated: 10/01/2021 by Financial Samurai 11 Comments

The more money you have, the more you can do what you want. The more power you have, the more you can do what you want as well. Perhaps ideally, you have so much money and power that you’re able to consistently be above the law.

Here at Financial Samurai, we’re able to help readers build wealth over the long term. Sometimes we get lucky by calling bottoms in the short term. But what Financial Samurai isn’t capable of doing is directly giving you power. Then again, knowledge is power.

With all the double standards that have involved politicians since the beginning of time, I’ve got a solution for all of us to become more free. Befriend more politicians.

After all, if you can’t beat politicians, you might as well join them.



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How Rich Do You Have To Be To Attend The Met Gala?

Updated: 10/01/2021 by Financial Samurai 32 Comments

The Met Gala is an annual fundraiser for the benefit of the Metropolitan Museum of Art’s Costume Institute of New York City. If you want to attend, a ticket costs $35,000 and a table costs between $200,000 – $300,000. However, even if you have the money, you might not be able to go.

Anna Wintour, Editor-in-Chief of Vogue and Gala chair since 1995, controls a tight guest list of around 600 people. These people often include celebrities, artists, politicians, and obviously very rich people.

Given tickets cost $35,000 and up, I thought it’d be fun to calculate the minimum amount of rich you need to be to attend.



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Invest Like The Richest Members Of Congress To Make Big Returns

Updated: 03/29/2022 by Financial Samurai 33 Comments

One of the great things about being a member of Congress is having power. The more power you have, the more influence you have. And the more influence you have, the more money you can make.

Most senators, representatives, and delegates make a salary of $174,000 per year. However, the speaker of the House makes $223,500 per year. And the president pro tempore of the Senate, majority leaders, and minority leaders in the House and Senate make $193,400 per year.

These are healthy salaries that come with fantastic benefits. But in no way do these types of salaries create mega-millionaires out of members of Congress during their time in office. Instead, it’s their outside investments that make them way richer than the average American.



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How To Convince People You Are Middle Class When You’re Actually Rich

Updated: 11/30/2022 by Financial Samurai 94 Comments

As the wealth gap continues to widen, it may be beneficial to learn how to convince people you are middle class when you’re actually rich. Otherwise, you might become target enemy number one when the revolution comes!

To get things out of the way, I feel rich. Not only do I feel rich, but I also have enough passive income to be time rich. Being time rich is my favorite form of wealth.

After chronicling my journey to financial independence since 2009, there’s really nowhere for me to hide. Hopefully, people will give me some credit for all the years of hustle since graduating from college in 1999.

To avoid the guillotine, my hope is that consistently writing free content 3X a week to help everyone achieve financial independence will be appreciated. After all, I’ve got nothing to sell, except for a severance negotiation book, which many readers have said gave them the courage to change their lives for the better.

Even when many large media sites put up a paywall during a global pandemic, Financial Samurai stayed free. My goal has always been, no matter your level of wealth, to provide access to anybody looking to improve their personal finances.

Besides, as a minority, there should be more leniency as well when the uprising comes. It’s cool to be a minority nowadays. That is, unless Asians are considered not enough of a minority worth fighting for. In which case, please have mercy!



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The Four Different Ways To Spend Money By Milton Friedman

Updated: 08/09/2021 by Financial Samurai 56 Comments

Back in 2010, I first addressed the four different ways to spend money by Milton Friedman because I was frustrated by how much I was paying in taxes. I was regularly working ~70-hour weeks and faced an ever-higher marginal income tax rate. I was burning out and needed a change.

Who knew that two years later I would negotiate a severance and permanently leave the well-paying finance world behind.

In 2021+, I’m much happier because I no longer have to work or work nearly as much, don’t make as much, and don’t pay as much in taxes. I was able to successfully quit my maximum money potential to live free!

With likely higher taxes and higher spending on the horizon with Joe Biden and Kamala Harris in power, it’s worth revisiting the four different ways to spend money by Nobel prize-winning economist, Milton Friedman.



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I’ve Seen The Future And It Looks So Bright

Updated: 08/22/2022 by Financial Samurai 72 Comments

I've Seen The Future And It Looks So Bright
Copenhagen Sunrise

Part of creating great wealth and happiness is anticipating the future, understanding the future, betting on the future, and adapting to the future. Well I’ve seen the future and it looks so bright.

With President Joe Biden in power until 2024 at least, the government will be getting bigger. Taxes will be going up and there will be a larger social safety net.

Thanks to trillions of dollars of stimulus and an accommodative Fed, the best time to retire may be under a Democratic President! Why keep grinding so hard if your taxes are going to go up? Not me. No sir.

After a long pandemic, it’s time to take things easier. Otherwise, we’re all going to end up burned out and miserable.

The Future Of America Looks Like Europe

America will become more like Europe. And that’s not a bad thing given the top 5 happiest countries in the world all hail from Europe.

We just need to be careful not to be Europe in its existing form where too much debt torpedoes our entire economic livelihood. But even if we go overboard, there will always be the Federal Reserves of our greatest nations to help us out. As the world police, they owe us!

Given America is becoming more like Europe, I decided to go to Europe and see for myself what our future might be like. You thought I was just going on a 2.5 week vacation to inject $10,000 into the Eurozone to help save the world didn’t you?

Au contraire mon frere. My main purpose was to conduct some front lines investigative reporting to provide readers with unique, real-time insight into how to live and prosper over the next four years!

The funny thing about seeing the future is that I originally wrote this post in 2012 and talked about President Obama. Now that we’re in 2021, it seems like all my predictions hav come true. And, we’ve gotten rich as a result!



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A Self-Publishing Book Scam That Took Down A Greedy Politician

Updated: 03/17/2021 by Financial Samurai 8 Comments

Many of us are now looking for viable ways to make money from home. One way is by self-publishing a book. During my research I came across a fascinating self-publishing book scam every crooked politician would be proud of.

I’m assuming that the more dire the economy gets the more scams there will be. The same thing goes with the more free stimulus money that gets pumped into the economy. When desperation increases, it’s just human nature to do shady things.

However, right before the pandemic began, there was this fascinating self-publishing book scam I came across. On February 27, 2020, ex-Baltimore Mayor Pugh was sentenced to three years in federal prison and three years of probation for a fraud scheme involving a children’s book series.

Trouble for Pugh began when The Baltimore Sun reported the University of Maryland Medical System bought 100,000 copies of Pugh’s book, Healthy Holly for $500,000.

100,000 is quite a lot of copies for a children’s book. The University of Maryland Medical System would need to have 1,000,000 young students to potentially justify a 100,000 buy.

If I sold 100,000 copies of How to Engineer Your Layoff in one tranche, I’d use some of the $9.7 million in gross profits to charter a Gulfstream 700 to Hawaii to see my family. We’d rent a beachfront mansion and live the good life until an effective vaccine ever becomes available.

OK, enough fantasizing for now. Let’s go back to the self-publishing book scam.



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Survival Of The Richest: Why Some Support Indefinite Lockdowns

Updated: 01/14/2021 by Financial Samurai 165 Comments

One of the main reasons why I’ve turned more cautious on stocks is due to a growing number of extended lockdowns around the country.

However, investing is all about beating expectations. I had been secretly hoping most of the country would reopen by June 15, after roughly three months of staying at home. Unfortunately, in 2021, there are still country-wide shelter-in-place orders!

The economic destruction so far has been immense. Keeping the economy closed for much longer than three months feels like an extreme overreach by our politicians.

We’ve slowly gone from locking down in order to flatten the curve to locking down indefinitely until there is a vaccine for COVID-19. What happened to locking down until there is enough hospital bed and ventilator capacity? The healthcare system is no longer overwhelmed. Tens of millions of lives are being ruined.

If Congress successfully passes another massive stimulus package with enhanced unemployment benefits extending through the end of the year, we know that lockdowns around the country will be extended. Be mentally prepared for what’s to come.

In an effort to provide different perspectives, I reached out to folks who support indefinite lockdowns to fight the coronavirus. Their stories will also help explain why the stock market has held up so well, in spite of so much economic disaster we hear in the news on a daily basis.

If you’ve been on the fence to support keeping the economy shut for longer than three months, perhaps these stories will persuade you to help minimize the risk to our essential workers. Or, maybe these stories will have an opposite effect and piss you off. Perhaps we’ll find a middle ground.



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