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Does Bernie Madoff Win In The End?

Updated: 07/19/2021 by Financial Samurai 13 Comments

There are press reports that Bernie Madoff has cancer and doesn’t have many years left to live. If this is the case, does Bernie win in the end? For decades, Bernie has been pilfering his clients for millions, and living far beyond his wildest dreams.

Bernie Madoff’s $450 Million “Win”

Let’s say that through an honest living, he could have made $50 million over the past 30 years of work.  However, through his devious ways, he makes $450 million more. Even though he’s in jail now, and spends 5 years before he dies at age 76, doesn’t he come out ahead despite getting the book thrown at him?



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Everybody Is A Financial Genius In A Bull Market

Updated: 08/28/2020 by Financial Samurai 7 Comments

In a bull market, everybody is a financial genius. Although I sold 75% of my Tesla holding at $888/share, I’m glad I held onto the rest. Otherwise, I’d feel like a real dummy!

Over at one of my favorite blogs, “Get Rich Slowly”, site owner JD writes how he successfully invested more money in the stock market earlier this year.  He wasn’t bragging, he was just stating a fact. JD is very influential, especially given he has 68,000 subscribers!

What’s interesting to note is the commentary that follows his entry.  There are about 125 posts so far on the topic today alone.  Not bad, considering the 75% commentary range is between 60-90.  

After reading every single comment here at home, it surprises me that over 80% of the readers have outperformed the S&P drastically and have made a lot of money.  80% compares favorably to studies which show that only 6% of active fund managers outperformed the S&P 500 over the last five years!

In one of the greatest stock market turmoils in our lifetimes, apparently the majority at GRS didn’t lose much money, didn’t capitulate at the bottom, and made some timely investments earlier this year to ride the rocket ship! Financial genius might be very common.



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Be Your Own Venture Capitalist And Build A Broad Portfolio

Updated: 09/24/2018 by Financial Samurai 6 Comments

By the time Baidu, the “Google of China” went public, Venture Capital firm Draper Fisher’s 28% stake was worth over $1 billion dollars by the end of the trading day. Not a bad return considering their likely sub-$50 million investment just years ago! In a world full of strikeouts, it just takes one home run to win a ball game.

The Financial Samurai reader is savvy enough to know that strong work ethnic and good morals are key pieces of the success puzzle. Sometimes you just need to be in the right place at the right time. When Venture Capital firms fund startups, they are looking to take equity stakes in companies in a robust industry, lead by visionaries who can execute towards enormous profit potential. The majority of investments go bust, and the successes often take years and tons of selfless involvement before returns are seen. Eventually, the exit strategy is for their investment to get acquired or IPO.

We have the opportunity to be our very own individual venture capitalists everyday. Many of us may take for granted the people we meet, but not you. After all, all it takes is one billionaire to give you one million dollars before you’re rich right? Receiving an opportunity is what it’s all about. You’re reading this post essentially because like me, you want to be financially independent sooner, rather than later. The ability to be financially independent by 40 is the reason why we work so hard now. If the deadline was 20 years longer, where’s the fun and challenge in that?

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Government Employee Entitled to A $100,000,000 Bonus!

Updated: 09/24/2018 by Financial Samurai 18 Comments

Yes, I know I’m being a tad bit facetious here, but not really. After getting US$45 billion in government aid, the US government and we the people of America own roughly 36% of Citigroup. The interesting debate is whether Citigroup employee, Andrew J Hall should be paid his $100 million bonus as described in his contract.

Most initial responses are with a vehement “HELL NO!” Who on earth deserves to get paid that much, people must think. However, what if Andrew Hall was responsible for bringing in $1 billion in revenue? Is it so egregious to pay the man responsible, a 10% cut? After all, $900,000,000 sure does employ and pay for many other Citigroup employee’s salaries! Should Citigroup risk not paying their star, and his team of employees for the overall sake of the firm and shareholders? As one colleague aptly put it, “RB, we live in America not North Korea!”

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Survey Says: Get 1,300 on Your SAT’s and a 3.9 GPA And You’re Set For Life!

Updated: 02/06/2021 by Financial Samurai 12 Comments

I came across an intriguing article with a secret on getting set for life. Study hard, get good grades, nail your SATs, and get into one of the top 20 schools. Or if you weren’t scared off by the college admissions scandal, you could bribe your way in. But of course only you can decide if taking that level of risk is worth it.

The New York Times highlighted PayScale’s survey of 1.2 million college graduates. They reported how much money they made right out of school and 10 years after graduation. Would you feel set for life with these salary ranges?

Set For Life Graduate Salary Statistics

If you look at the picture, it’s interesting to note that the majority of schools are: 1) Private Schools, and 2) Highly Ranked in US News & World Report and other popular college rankings.

The average SAT and GPA scores of these 20 schools are roughly 1,300 and 3.7, respectively. Hence, one could argue that the key to making a six figure income 10 years out of school is simply high test scores and good grades!

As such, it behooves all incoming 9th graders to recognize their grades accumulate from 9th to 12th grade. Don’t mess up your child’s chances of getting into Dartmouth, UPenn, and Yale if you want them to be set for life.

Set For Life In The Long Run

I really used to think education was not very useful since we forget much of what we learn. But, as I grow older, it becomes apparent that many of the most successful people we know have been very well educated.

Barack Obama went to Columbia for his BA, and Harvard Law School. George Bush Senior went to Yale, and even Bush Junior went to Harvard. Say what you will, but anybody who becomes the President of the Free World is successful in my eyes. In the long run, the cream rises to the top, be it whip cream or sour cream.

For the sake of argument, let’s say elite schooling is the only way to a healthy six figure income. The trick is to manipulate little Johnny and Emily to recognize during middle school or earlier they can goof up all they want. But, once the 9th grade hits, they’ve got to buckle down.

I remember when I was in 7th grade, my buddy’s older brother told me exactly this. He said, “Squirt, you can be a goofball all you want and annoy me on our bus ride to school, but you better not mess things up in high school or else you’re going to be a loser.”

His words are still quite clear in my mind 20+ years later. He scared the hell out of me, and I stopped trying to be cool and sit in the back of the bus with him. I also stopped shooting spitballs through straws which was a nice milestone.

Help Your Kids Get Set For Life

Any parents out there, I would just tell it to your kids straight. There’s only one chance at life so they might as well work as hard as possible to get the best perceived education one can afford.

The reason why private education costs so much is simply because parents are willing to pay for it. College tuition is essentially inelastic. The preceived value of a Harvard degree is tremendous.

Whether you learn something more or not is not the debate. All the text books are generally the same. It’s all about perception, and the admission into a club which will open doors for you or your children. The perpetual motion of education has already been set, you just have to play the game.

With tuition at these schools hitting $30,000+/year, there is often an unfair advantage for already well to do families. The good thing is that many of these schools have hefty endowments with need base scholarships, and more often than not, rewards will be given to bring this cost down.

There’s No Shame In Getting Financial Aid

Hence, don’t be deterred from applying to schools out of your price range. You never know what type of aid you will receive and if you don’t apply, you’ll never know whether you’ll get in. It’s even possible to get financial aid with a multiple six figure salary!

When I was in HS, I felt so guilty for my parents that I just applied to the local state schools. They were government employees, and didn’t make a lot of money. I sometimes wonder whether I would have been able to get in.

The article also goes on to highlight that the degrees with the highest salaries include: Aerospace Engineering, Chemical Engineering, Computer Engineering, Electrical Engineering, Economics, and Physics.

Coincidence these majors don’t sound easy, probably not. It really is too bad that Social Work, Music, and Education are at the bottom of the list for salaries. If I were President, I’d pay these professions the most!

Related: Bankers, Techies, Doctors, And Lawyers: You’ll Never Get Rich Working For Someone Else

Nothing Is A Guarantee

Sure you want to be set for life and want the same for your kids. But, alas nothing is guaranteed. You could go to the top school in the nation, quit your job and end up broke and alone. On the other hand, there are countless examples of people who didn’t go to any of the schools in the survey, who’ve done incredibly well for themselves.

Heck, I went to public school for High School and College and turned out ok… I think. But, when people from these schools continue to dominate the senior management positions at many of America’s leading firms, we may be at a disadvantage if we want to reach the very upper levels of the firm.

Look around at your managers. It’s not a coincidence that if Boss X went to Cornell, Boss Y right under Boss X also went to Cornell. You can take this analogy further to people in terms of sex and race. People like to be around people who are most similar to them. Just look around, and you’ll notice the “coincidences.” It’s just human nature, and it is what it is.

Many of us who are already working and didn’t got to a top school may ask, “I can’t rewind my life and go back to 9th grade, RB, so what now?” The good thing is that once you enter the work force, your success is largely up to your own performance (see “Rich People Try Harder: True or False?”)

Get Set For Life With An MBA

If you feel that performance alone isn’t good enough, look into part-time graduate programs (see “To MBA or Not To MBA“) or full time graduate programs.

No question many of us have had different economic upbringings and different maturity profiles while growing up. The way I view grad school is that it’s a second chance to try again if you’re unsatisfied with the first go around. You’ve got your entire life to work, contrary to the title of this blog!

Another thing to note is that going to a local grad school may often yield better dividends than a higher ranked school e.g. going to UCLA if you work in LA may carry more weight than going to Columbia, same thing goes for going to University of Wisconsin if you live in Madison and so forth.

Nobody really knows how successful one will be in their careers. All we can do is work hard, work towards harmonious relationships, and arm ourselves with as many weapons possible to combat in the work jungle.

Related: The Secret To Your Success

Readers, what are your thoughts on the relationship between expensive elite private schools and your ultimate success in your career? I especially would like to hear stories of triumph proving all these survey’s wrong.

Recommendations

Learn More, Make More Money. Here are some additional resources I’ve put together that will help you on your financial journey to earn more, save more, and hopefully double or triple your income!

  • Take advantage of free online financial tools: Free Wealth Management
  • Explore my top financial products recommendations
  • Learn how much you should aim to have saved in your 401(k) by different ages. The numbers could surprise you.
  • Look beyond your salary and start earning passive income. Here are the best passive income streams I recommend.

Refinance your student loans today. Check out Credible, a student loan marketplace that has qualified lenders competing for your business. Credible provides real rates for you to compare so you can lower your interest rate and save. Getting a quote is easy and free. Take advantage of our low interest rate environment today!

Regards,

Sam

How High Can Unemployment Go Before We Derail?

Updated: 02/20/2020 by Financial Samurai 9 Comments


The S&P 500 index has rallied 40%+ from its March 2009 low, and is up 8% Year To Date. Despite this solid performance, unemployment has surged to 9.7%, and many forecast the increase will continue until 11-13% unemployment. We’ve got 12% unemployment here in California already.

The question I have is: How high can the unemployment rate go before the bull market derails? Is the level 15%, or is the level as high as 20%? I cannot imagine being unemployed and desiring employment in this market. There’s just so little out there and the competition is tremendous. For those who are already employed, things seem hopeful that with earnings rebounding from 2008 and less people to pay, 2009 could be a big year.

Is the market currently being driven by the “90% employed” segment of the population who thinks the other 10% doesn’t really matter to the economy’s bottom line? With consumer spending consisting of 70% of GDP, how can we ignore the fact that 1 out of every 10 are not working, and likely another 10% are underemployed and looking for more work to survive? Am I looking backwards, since unemployment is a lagging indicator, and the stock market is a leading indicator?

Unemployment rate in America

It absolutely perplexes me that euphoria is back in the markets. We shouldn’t be surprised if we double dip in 2020, and see a long drawn out recovery until mid 2010. Personally, I’m raising cash by pulling money out of the market. We’ve had a great rebound and I don’t want to get greedy.

Readers, where do you think unemployment levels are heading and what are your arguments if you think the markets are going higher?

Learn how to negotiate a severance and be free from a job you hate!

Keigu,

Financial Samurai – “Slicing Through Money’s Mysteries”

The Less You Have, The Less You Lose

Updated: 02/04/2021 by Financial Samurai 2 Comments

The less you have, the less you lose. This is the upside attitude of not having a lot of money.

In October of 2008, Warren Buffet lost about $9.6 billion on paper. Put it another way, that’s a freaking a lot of money! To also put it another way, in my chase to match Warren’s wealth, I caught up to him by about $9.599 billion dollars.

Many of us have lost a lot of money in this market, but we could have lost more if we were already very wealthy. I am absolutely positive that it hurts much more for some poor rich CEO losing $50million of his net wealth, vs us losing $50,000 of our own.

Build Your Wealth Carefully

Now is absolutely the best time to be relatively young and buy all the assets we can. And since we have such a wonderful opportunity, it makes wasteful spending that much more expensive because of the potential returns down the road.

Who knows whether we are going to double dip in the 2nd half as unemployment marches to 11%+. What I do feel strongly about is that if we don’t buy some distressed asset now, we are going to be kicking ourselves in 20 years.

Personally, my sites are set on a vacation property in Nevada, Lake Tahoe. I hope to pick up a foreclosure that is 50% off of peak values, and that can provide a 8% rental yield vs. the current government risk free 10 year treasure of 3.54%. In 8-10 years, I plan to move there and pay 0% state income tax, vs. 9.6% here in California.

Then again, buying rental properties today makes a lot of sense because interest rats have come way down. In 20 years, I think we’ll be glad to have accumulated assets today. Our children will be proud of us!

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The less you have, the less you lose. But the more you have, the more you need to stay on top of your finances!

Planning for retirement when paying for private grade school - The less you have, the less you lose
Link up your accounts and see whether you’re on track to retirement in great shape or in poverty

Related: The Top Financial Products For Financial Freedom

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