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The Top Financial Samurai Articles Of 2013

Updated: 03/29/2021 by Financial Samurai 22 Comments

Here are the top Financial Samurai articles of 2013. 2013 was a great year because it was the first full year after I left my day job in finance for good. I’m updating this post eight years later in 2021 to see how far I’ve come.

2013 Was A Productive Year

I’m always curious to figure out which are the most read and most commented on articles of the year. The determinants are based on search engines, social media, and what you the community decides to share. With over three million page views for the year, the results are a partial reflection of society.

One of my biggest goals as a writer is to entertain and educate at the same time – no easy task when it comes to a subject as dry as personal finance! Each article takes anywhere from one hour to 10 hours to create. So if you like an article please help share them over social media or e-mail them to your friends.

I’ve gone a little overboard with the number of articles highlighted because each one is like my baby. There are a lot of subtleties scattered throughout my articles that are easy to miss. They are like out of place stones in a garden acting as markers for remembrance when I’m old.

Out of the roughly 180 articles published in 2013, I’ve curated 35 of the most viewed and discussed. Please enjoy!

Top View Financial Samurai Articles Of 2013

1) Explaining Why The Median 401(k) Balance Is So Low – People really want to figure out what’s wrong with America’s favorite retirement savings plan. It would make sense if you don’t want to work forever you should be saving a ton more money, but that’s not happening. The article shares case studies from various economic groups on what derails people off of my recommended 401(k) amount by age chart.

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2) How Much Should My Net Worth Or Savings Be By Income –  There’s a handy dandy chart based on an income multiplier to determine your net worth or savings. The chart should serve as a good guide no matter how much you make, what your work experience, or your age.

3) The Average Net Worth For The Above Average Married Couple – The article provides three main guidelines to determine the average net worth for financially conscious married couples. There’s an interesting discussing on spousal relationships for each of the three scenarios that got readers going. Everybody thinks they’re above average, but we know that’s statistically impossible.

4) Recommended Net Worth Allocation By Age Or Work Experience – It’s not enough to just save money. You’ve got to also invest your money to hopefully provide a positive real return. This article breaks down my thoughts on stocks, bonds, real estate, risk free assets, and your X Factor. See also: The Proper Asset Allocation Of Stocks And Bonds By Age.

5) The First Million Might Be The Easiest: How To Be A Millionaire By Age 30 – This article talks about champagne dreams and caviar wishes for those who want to strike it big in their 20s. I make an argument that it might be easier to get rich when you’re younger because you have more energy, more enthusiasm, less cynicism and are less scared of taking risks.

6) Which Is A Better Investment: Real Estate Or Stocks? – A candid comparison between the two most commonly invested asset classes. My personal preference is for real estate because it’s less emotional. I like the tangibility of real estate, the tax benefits, and the ability to make improvements.

7) How To Better Management Your 401(k) For Retirement Success – Despite the 401(k) being a woefully light retirement instrument, it’s still one of the largest retirement assets for the middle class. I show readers how to create different retirement scenarios in order to plan better.

8) How To Pay Little Or No Taxes For The Rest Of Your Life – After paying six figures in taxes every year for a decade, I decided to go John Galt and protest government waste. If you’re sick of paying taxes and getting very little in return, then this should be one of your favorite articles.

9) Benefits Of Converting A 401(k) Into A Rollover IRA – After leaving my job in 2012, I converted my 401(k) into an IRA. It was one of the best moves because a rollover IRA provides more flexibility and tons more investing choices. The risk is that you become hooked on trading.

10) What Does Early Retirement Feel Like? The Positives And Negatives – Here’s a candid assessment of early retirement life the first year in. Not everything is great. I may do a follow up article every year or two to see if my feelings change over time.

11) How To Build Passive Income For Financial Independence – An update 1.5 years after writing, Achieving Financial Independence One Income Slice At A Time. The new article starts to incorporate the X Factor into the passive income equation. I really try to get into the nitty gritty of passive income with a discussion on mindset, action items, and charts. The next update will probably be in a year and show how I’ve reallocated my CD assets.

12) How Do People Live On Less Than Six Figures In Expensive Cities Like NYC? – To live comfortably (not luxuriously) in places like Manhattan, San Francisco, Hong Kong, London, Paris, and Tokyo, you’ve got to make at least $100,000 a year. I spent a week with my buddy who makes a little over $100,000, and after maxing out his 401(k) which equals ~17% of his salary, he’s left with little to no disposable income every month. I’m still waiting for people who live on less to highlight their budget in a guest post if anybody is interested.

13) CD Investment Alternatives: Why I No Longer Invest In CDs – My 10+ year run in methodically allocating ~30% of my savings into long term CDs is coming to an end because rates are pathetically low. The 10-year bond yield is at roughly 3% while a 10-year CD is only at around 2.5%. This makes absolutely no sense, and I don’t recommend CDs anymore. I’d much rather keep my money in a 1% online money market account that is fully liquid and invest in a muni fund or P2P.

14) Horrible Jobs That Can Eventually Make You Rich – Bad jobs builds character. The worse the jobs, the more you’ll appreciate your future work. The more you appreciate your work, the better you’ll do, the happier you’ll be, and the more money you’ll make until you eventually burn out and contemplate the meaning of life.

15) Subsidy Amounts By Income Limits For The Affordable Care Act – There are four charts to highlight subsidy amounts for Obamacare for singles, couples, a family of three, and a family of four. The charts clearly show how much the government will help you out on a sample Silver Plan. Obamacare is still going through massive growing pains, but it’s a gift for entrepreneurs, people who work at jobs they hate just for their health care, and early retirees.

** The most viewed articles of the year tend to be the ones that get published earliest in the year because they have more time to be viewed.

Top Financial Samurai Articles Of 2013 By Number Of Comments

These are the fun, personal, highly opinionated, and sometimes antagonizing articles I’ve written. The articles in this section exclude the most read articles above which all have plenty of comments as well. If I don’t have a good mixture of eclectic articles to go along with the more educational type articles, I’d probably burn out much quicker and turn this site into a soulless product review only site that will make me rich. It takes a lot of work to keep on going when you’re not getting paid directly for your writing.

1) Feeling Down And Out In This Perfect World (189 comments) – I invited everyone to my pity party, and it looks like a ton of people came! I like to capture the sad moments because I’m seldom unhappy for some reason. My mind is wired to be an optimist, probably because I saw a lot of suffering growing up overseas. Looking back on times of sadness makes me appreciate the present more. I had just returned from a fantastic four week trip to NYC and Europe and fell into a funk, much like a hangover after an all night rager.

2) The Rise Of Stealth Wealth: Ways To Stay Invisible From Society (119) – It’s all about keeping things low key in 2014 after such a huge increase in stocks and real estate in 2013. The gap between the haves and the have nots is getting out of hand. There are protests every week in San Francisco against techies for driving up rental prices and evictions due to their high salaries. I’d like Stealth Wealth to be our theme for the new year.

3) Proof Your Weight Is Mostly Genetic And Not Your Fault (111) – Who knew people were so sensitive about their weight given all we’ve been doing is getting larger while economy class keeps getting smaller. The people who were most offended by this article spend the most time working out. How dare I take away their efforts in getting fit? I firmly believe that all of us have a genetically determined weight band that we will naturally fluctuate in between. How else do you explain a 400+ lb inmate or an obese baby? Why do most diets and exercise routines fail to keep the weight off? Once we accept mother nature, we become more compassionate towards those who are not in shape according to society. More importantly, we begin to love ourselves just the way we are!

4) Why Do People Like To Reveal Their Income? (100) – I am an old soul with old school values working in a new age industry. It’s odd to see people who make much more than the median or average income for their area or age group constantly flaunt how much money they make. Bragging is such a turn off. Why would you want kidnappers and murders at your doorstep? Why would you want to attract more competition? When did we become so insecure and insensitive to the suffering around us? Those who are really wealthy have no need to frequently announce their wealth to the world.

5) The Net Worth Rule For Car Buying (100) – There was so much raucous over my 1/10th Rule For Car Buying (115 comments) from people who can’t afford to buy cars that I figure I might as well introduce a new rule for people who can afford cars! Some of the comments are so filled with hate they are amazing! I love cars just as much as the next fella, but it’s a financial epidemic how much people are blowing their money on depreciating assets. Imagine investing the $35,000 you paid for a car into the stock market a year ago. You’d now have around $40,000 – $48,000!

6) The Best Way To Save A Ton Of Money (100) – I was considering buying a new car, laptop, watch, and shades, but decided not to spend a dime thanks to intense shaming by the community. For anybody who wants to save a lot of money, announce your desires to the public and watch them flog you into frugality.

7) A Correlation Between The Number Of Credit Cards One Has And Net Worth (94) – Three credit cards, no more if you want the best bang for your credit card buck. Folks who have a ridiculous amount of credit cards are playing little league and will never build a large amount of wealth. There’s also a one question survey filled out by over 600 individuals you should answer that tests my thesis.

8) My Fear Of Becoming A Father (90) – A short article that talks more specifically about my fear of becoming a father to a daughter. The dynamics seem very awkward, especially when the daughter becomes a teenager. I love all the feedback from the parents.

9) The Average Canadian Household Net Worth Is Huge! (85) – Who knew Canadians are so wealthy? Another great datapoint that shows there’s way more money out there than we realize. We also recently discovered the average inheritance left by Australians is $501,000! Everybody thinks the US is the wealthiest country in the world until they see how much the Singaporeans, Canadians, French, and Scandinavians are making and leaving. Socialism is a plausible means to a brighter future!

10) Why It’s Better To Invest In Growth Stocks Over Dividend Stocks (80) – Dividend stocks are absolutely fine. I’ve got a good chunk of dividend stocks in my main retirement portfolio, but that’s because I’m retired and want more income and less volatility. If you are relatively young (sub 35) or don’t see yourself retiring for another 25+ years, I’m a much bigger fan of growth stocks with reasons laid out in the article. Just don’t confuse brains with a bull market!

11) How To Get A Rich Man To Marry You (80) – Women privately ask me this over e-mail or when we’re out for drinks all the time once they find out I write about personal finance. I literally see twinkles in their eyes as they start day dreaming of the day while sipping on their Cosmopolitans. The article provides very candid insights on how rich men think in order for women looking for rich men to better relate. I’m confident this article will succeed in creating harmonious relationships for people with means or your money back!

12) Build Your Financial Nut – 401(k) Contributions Matter Less Over Time (80) – Everybody needs to get on a savings warpath so that their financial nut will one day return more than their annual income. It is the absolute greatest financial feeling in the world when you get to think to yourself, Why work when my money is making more for me than I could make myself? A simple chart highlights a cross over point.

13) How Much Should I Have Saved In My IRA At Various Ages (78) – A guideline article which seems to have caught a good amount of discussion. I use basic math to build my two charts, so I’m not sure why there’s so much debate. But when you’re lagging behind, you’ll find ways to come up with excuses.

14) Why Are Asians Ignored By The Media, Research Institutions, And Politicians? (76) If Asians are out-punching their weight in terms of representation in elite universities, leadership roles, and wealth, shouldn’t the media, research institutions, and politicians spend more time learning from Asian cultures in order to help everyone? Why does the media continue to focus on the negatives in society? Why don’t think tanks come out with a white paper on the five things Asian parents do that differentiate themselves from other minority groups? There are some really good charts in this article.

15) How To Stop Haters From Hating You (75) – I’ve searched for haters ever since elementary school to provide more motivation. It’s really easy to hang loose if both your parents are from the islands. Haters help make me feel more alive and I really enjoy it. If nobody is hating on you that means nobody cares. But if you’re tired of the haters then this article will help. I’ve provided one very simple, but effective strategy to get haters off your back.

16) The Main Reason To Do And Not To Do Your Own Taxes (75) – I introduce the acronym FOCK to the world. If you like to FOCK, you should love to do your own taxes.

17) Don’t Stop Fortune Hunting – Money Making Opportunities Are Everywhere! (75) – A article with a National Geographic front cover worthy picture! A story of how I made a lucky return on one stock in six months and then promptly stopped looking for the next five years because I got scared. If you are still young, keep on looking for that next home run. If you don’t, you’ll regret it.

18) How To Improve Your Credit Score to 800 Or Higher (75) – 2013 was the year I finally broke a 800 credit score after 17 years worth of credit building. I’ll show you specifics on how you too can join the 800 club full of beautiful people and unicorns. They even have LED TVs and free Cuban cigars in the bathroom stalls.

19) My Poorest Friend Is One Of The Richest People I Know (65) – A short article about my friend Jabir who is 35 years old, hasn’t worked for two years, and sufficiently provides for his wife and daughter. They live in a rent controlled apartment with his mother. He gets to do what he loves every day for free, which is play tennis. Whenever he hits a winning shot on the court he says, “For Obama!” Besides reselling iPhones when they first come out for a profit, I’ve recently learned he drives an Uber car at night. Thank goodness for technology disruption!

20) Is Not Wanting To Be Rich Selfish? (62) – Maybe society has it all wrong. Maybe the rich are generous, thoughtful, and kind. If you are rich you can donate a lot more money to charitable causes. You’ll certainly pay a hell of a lot more taxes which gets redistributed to help others. If you are rich you can provide more opportunities for your kids. It’s no problem taking a family trip to India for a month to witness immense poverty and provide your children with more perspective. If you don’t have to worry as much about money, you have more time to help others.

Top Financial Samurai Articles Of 2013 Conclusion

As I look back on this vintage year, I see many of the posts still rank the best today in the search engines. I wrote with intensity and hope. I plan to continue such success for another 10 years.

For 2014 I’m going to attempt to write shorter articles that are more punchy, more educational and simpler since that’s what seems to do best on the internet. I tend to write too much because I know I’ll forget some details in the future if I don’t write them all down. Financial Samurai is partially my journal after all.

I’ve also noticed it’s much easier to convince people to be frugal than convince people to take action to make more money even though you can only save so much. The largest personal finance blogs in the world are all about frugality. Making money takes patience, discipline, studying, and risk which are all not fun things to do. We want simple to follow instructions and magic elixirs so that’s what I will attempt to give.

STARTING A INCOME PRODUCING BLOG

It’s been around six years since I started Financial Samurai and I’m actually earning a good passive and active income stream online now. The top 1% of all posts on Financial Samurai generates 31% of all traffic. The average age of the top 1% posts is 2.3 years old. In other words, there’s a lot of passive income being created.

If you enjoy writing, creating, connecting with people online, and enjoying more freedom, see how you can set up a WordPress blog in 15 minutes like mine. You never know where the journey will take you!

Travel blogger income and expense statement
A realistic travel blogger’s income statement anybody can follow

Sign up for my free Financial Samurai newsletter here. Also, check out my top financial products page to find the best products for your finances.

Banner by photographer and designer Jai Catalano.

How Do People Live On Less Than Six Figures In An Expensive City?

Updated: 01/27/2022 by Financial Samurai 305 Comments

Have you ever wondered how people can live in an expensive city on less than six figures? I wondered this all the time as someone who has lived in New York City and San Francisco for over 23 years.

I first started my career in New York City as a financial analyst from 1999-2001 at GS. My base salary was only $40,000 and I could only afford to share a studio with a friend! It was an amazing time, but boy was it hard to save money.

Thankfully our salaries were raised in the second year to $65,000 after Wall St. decided to pay new first year analysts $55,000 instead of $40,000. Still, a base salary of $65,000 wasn’t much to write home about when one-bedroom condos were selling for 5X.

In 2001, I moved to San Francisco for a raise and a promotion. Back then, San Francisco felt dirt cheap compared to Manhattan. I could either get 30% more space for the same money or buy the same place for 25% less. Therefore, in 2003, I decided to go long San Francisco real estate.

The key to living in an expensive city is to get your housing costs under control. Once you have your housing costs below 20% of your gross income, you should start to thrive.

New York City Is Fantastic, But Expensive

New York would be the greatest city in North America if it weren’t for three things: 1) Tough weather for half the year, 2) Never ending crowds, and 3) outrageous prices!

A decade later, I went to New York City to visit my buddy I shared a studio with for two years. He had been looking to upgrade to a two bedroom condo with his future wife. But he was taken aback by the then ~$1.5 million price tag. He said they just might move out of the city instead.

Back in 2001, my friend had bought a one-bedroom condo near the U.N. for only $325,000. The value of his condo is now over $750,000. If a condo owner who saw his property’s value grow by 130% can’t even afford to comfortably upgrade to a two bedroom, can you imagine what a renter during this same time period is thinking?

So it really got me thinking. How do people live a comfortable life in an expensive city like New York without making six-figures a year? Let’s find out.



Read More…

The Financial Samurai Value Proposition

Updated: 01/02/2021 by Financial Samurai 41 Comments

Financial Samurai is one of the leading independent personal finance sites in the world. Started in 2009, Financial Samurai’s mission is to help readers achieve financial independence sooner, rather than later. Let me share with you The Financial Samurai value proposition and why you should sign up for my e-mail distribution list and free newsletter.

The Financial Samurai Value Proposition

1) The Joy of Communication

Interaction with all of you is what makes Financial Samurai so much fun. I tend to respond to the large majority of comments where there are questions.

Even if you don’t have questions, I like to drop an occasional note of observation and thanks. I’m not going to sit in a high chair far above and not interact with you readers. Hence, if you have questions, feel free to ask, and I’ll get to them as efficiently as possible.

2) Writing based off firsthand experience

99% of the posts are written by me and I do not employ staff writers or ghost writers. I’ve got a large backlog of posts that are ready to be published, including several good ones from Financial Samurai readers which I’m sure you’ll find interesting.

The whole point of having a blog is to share your own views and opinions, otherwise, you might as well just read a newspaper don’t you think? I also welcome all well-written guest posts from the community.

I’ve found that nobody cares more about your writing than yourself, which is why I tend to lose interest in sites that employ too many voices.  You’ll be amazed at how many sites employ ghost writers by the way.

3) High quality writing.

I’ve been a writer for over 30 years. Online, I’ve written over 2,000 articles and have guest written for dozens of the leading financial website in the world. Further, I have a book deal with Penguin Random House in 2021.

Nowhere else on the web will you find personal finance content written in an easy to understand, helpful, and entertaining fashion. Because I don’t employ freelance writers, there is a real authenticity on this site.

4) Great entertainment

I get easily bored, which is why I will only publish something that I find relatively entertaining. It’s impossible to always have the most riveting content on the web. That said, even the most mundane things like raising your credit score can be told through an experience that will incite emotion.

Furthermore, I will keep the topics forever changing. My focus is on real estate, health, insurance, taxes, retirement, government and relationships. There will seldom be a dull moment on Financial Samurai if I can help it. Thank goodness there are so many crooked politicians and companies out there!

5) High Integrity

I don’t depend on online income to survive because I have enough passive income to support my desired living expenses. Therefore, I can more readily speak my mind. I simply care less about what other people think because I am beholden to nobody.

If you wrong me, like PG&E wronged me, I have no qualms about pointing out the injustices even if that means a lack of sponsorship in the future. The true power of having financial freedom is being able to speak your truth and live the life the way you see fit.

6) Firsthand Experience

I’m not pontificating on what things would be like, or how things could be. I’m sharing with you my experiences and telling you what I’ve learned after 13 years working in finance, two years working in financial technology, and six years producing personal finance content on Financial Samurai.

If I don’t know about something, and find the subject interesting, I’ll ask someone who does know to share their thoughts. Because I own a home, have rental properties, invest in stocks, invest in bonds, and invest in private companies, there is always going to be a ton of investment content that we will discuss. Maybe we’ll all be able to make some good returns as a result.

Because I pay a crap load of taxes, hate taxes, and think the government is made up of crooks, we will constantly have philosophical debates on how to improve our country. Because I worked at McDonald’s making $3.25 an hour and worked a lot of other low paying jobs since high school, I empathize with those who are financially struggling (See: Spoiled Or Clueless? Try Working A Minimum Wage Job As An Adult).

As a manager in the workplace, you will gain career perspective on how to get ahead and blow yourself up. Finally, as a person who has lived in 7 different countries, and visited 50 more, you will find a diversity of cultural viewpoints to help expand the mind. I hate racism, bigotry, and ignorance.

7) Financially Independent

One of the main underlying goals of reading any personal finance site is to figure out how to achieve financial independence. If someone could teach me how to retire early with real money and never have to work again, I would pay them a lot because time is priceless! Good thing for you, I’ve mathematically figured it out and have shown you how to realistically retire by 40 or 45 if you want to.

Whether you take the leap of faith, it’s up to you. When you work due to the joy of your work, and not because you need the paycheck to survive, that is a great feeling.  It’s the same way I felt getting my MBA. Grades didn’t matter, just the learning.  

Hopefully by reading Financial Samurai, you will get a glimpse into the way someone who is financially independent thinks about things.

Financial Samurai 2021 Passive Income Streams - Financial Samurai Value Proposition

8) High Quality Readers

We have the best personal finance readers on the web. Just spend time reading the comments and reading the FS Forum to see for yourself. It’s a virtuous cycle where good content attracts good readers who attract more good readers. I’ve learned so much from all of you, as I’m sure many of you have learned so much from the community as well.

A large majority of us have moved beyond the basics of personal finance and are looking to maximize our lifestyles, super-charge our investments, optimize our taxation structures, see the world, and have a frolicking good time in the process!

We will indulge a little more than average in some of the luxuries life has to offer. There’s no point making money if you don’t spend it. Check out details about the typical Financial Samurai reader!

The Financial Value Proposition Helps You Slice Through Money’s Mysteries

I am a big fan of the personal finance and lifestyle blog community. So in essence, I am like all of you readers. I like to be entertained while learning something new in the process. Those sites that can offer such a combination are the sites that keep me coming back for more.

I hope the Financial Samurai value proposition encourages you to stick around and share my work. The global pandemic has made focusing on our personal finances even more important. Sign up for my e-mail distribution list and free newsletter so we can navigate these turbulent times together.

If You Want To Start Your Own Site

I never thought I’d be able to quit my job in 2012 just three years after starting Financial Samurai. But by starting one financial crisis day in 2009, Financial Samurai actually makes more than my entire passive income total that took 15 years to build.

If you enjoy writing, connecting with people online, and enjoying more freedom, see how you can set up a WordPress blog like mine in under 30 minutes with my step-by-step tutorial. It’s cheap and easy to start. You never know where the adventure will take you!

Pro Blogging Income Statement
You can start your site for next to nothing and potentially make a lot of extra income. This is a real example.

The Financial Samurai Value Proposition is updated for 2021+.

Should I Invest In China? A Top Down And Bottoms Up Perspective

Updated: 03/13/2021 by Financial Samurai 46 Comments

Chinese flag on a light pole

Before you invest in Chinese stocks, get up to date on the CNY currency aka RMB. The Ren Min Bi (RMB) has a managed peg to the USD which currently stands at roughly RMB6.5:$1.

The RMB has appreciated by a couple percentage points every year for the past decade and there are no signs of such appreciation abating.

You know how I always write that everything is relative in finance? Well, the relativity of a massively depreciating Yen and a continued strengthening RMB has never become so apparent as it is today.

A weak Yen and a strong RMB pose a problem for China because Japan is its largest trading partner in the region at 7% of total exports. The largest export partners for China are the US at roughly 17%, the EU at 16%, and ASEAN at 10%.

China’s Two Main Goals

Before you invest in Chinese stocks, be aware that China has two main goals: 1) to ensure strong domestic economic growth to provide enough jobs for its 1.2 billion population which continuously migrates to urban centers from the countryside, and 2) to be taken seriously by the world. I cannot tell you how important respect is in eastern culture.

As a Communist country with millionaires and billionaires, managing social happiness is priority number one. Although an annual 7.7% GDP sounds wonderful compared to a 2% US GDP growth rate, such high levels of growth are necessary to prevent social unrest. Take what happened at the height of the Occupy Wall Street movement and multiply the anger by 100 to get an idea of the repercussions of a growing unemployed population that lives at home with their parents until marriage.

Old Attitudes Towards The Japanese Die Hard

Nikkei225
Huge rally in the Nikkei 225

When I studied abroad in Beijing for six months in 1997, I discovered an enormous hatred for the Japanese largely due to the horrific crimes of the Nanjing Massacre.

What’s worse, Japanese history books have refused to acknowledge such atrocities occurred. It was only until 2005 did then Prime Minister Koizumi apologize to China for its WWII aggressions that killed at least 300,000 Chinese. Unfortunately, Japan was 68 years too late.

The friends I met in 1997 are all in their 30s and 40s now. I’ve kept in touch with a couple of them and their attitudes against the Japanese are still the same. The difference now is that they hold managerial positions whereas back then, we were all powerless students with only hope to contribute.

There is a deep seated drive for so many Gen X Chinese to beat their Japanese counterparts in everything they do. I don’t think such hatred will disappear until a new generation grows up. Now imagine the hatred of the Japanese by those Chinese in their 50s and up. Things take time to change.

If Japan is working voodoo economics and benefitting at China’s expense, there is absolutely no way China will stand idle. Keep this in mind when you’re looking at Chinese stocks.

China Will Bring Out The Canons To Insure Growth

USD-YEN
Depreciation of the Yen

There’s clearly been a slowing of the Chinese economy with the latest 1Q13 GDP reading coming in at 7.7% vs. 8% expected, and the HSBC PMI index coming in at 50 vs. expectations of 52.

The stock market has reflected such a slowing with a 10% drop in 2013 so far based on the China ETF, FXI which holds the largest Chinese stocks that have a blended P/E average of around 9.

China down 10% while the US and Japan are up 15% and 20% year to date is embarrassing. The one thing investors should be able to count on is for the Chinese Central Government to more or less deliver on its economic promises because they cannot afford not to.

One of the longest running jokes amongst economists who follow China is that China can manufacture any economic figure they want. For example, stated inflation is only around 5%-6% a year. Anybody who lives in China knows that the real rate of inflation for food, housing, and income is well into the double digits. The paradox is somewhat like here in the US, only many times worse.

Government Intervention

If Chinese stocks begin cratering because investors are too fearful of collapsing home prices, the Chinese government will simply lower reserve requirement ratios for banks, speak to their local government heads to expedite infrastructure spending, and report to the market that everything is alright.

Command economies are fantastic for getting things done efficiently. Why do you think there’s been such a difference in the pace of improvement between Communist China and Democratic India? The red tape and corruption in India is stifling to progress!

To ensure over 7.5% annual GDP growth to maintain social stability, China must simply manage fiscal and monetary spending. China has a current-account surplus of over $200 billion with foreign exchange reserves of some $100 billion dollars. These levels as a percentage of GDP have come down over the years, implying a more normalized economy, yet these figures are still enormous to allow for more supportive economic policy if needed.

There are no ridiculous stalemates in China like we have here in the US with Congress. If China wants to get something done, they will.

China Index ETF
China ETF FXI Performance 2018

Chinese Stocks I’m Buying

One of the biggest benefits of rolling over my 401(k) into a IRA is flexibility. With an IRA, I can buy whatever I want, and what I want to buy are Chinese stocks at the moment.

My investing style: Aggressive, speculative, mispriced growth, risk-Loving, “no bet, no win” attitude.

Previous stance: Social media bubble will collapse, mentioned in my predictions post for 2012 written in 2011.

Current investor sentiment: Risk-on with fear of a pullback during the summer.

Central bank stance: Dovish, accommodative, willing to do whatever it takes.

Risks: Regulatory, accounting peculiarities, demographics, social unrest from a much sharper economic slowdown than expected, high local government debt, corruption, stocks are in a downtrend despite high GDP growth.

Experience: Lived in China, traveled to China many times, met with management, listened to their conference calls, met with analysts, and understand the internet and social media space.

Goal: Capital appreciation and to consistently beat the S&P 500 index for as long as possible.

Chinese Stocks Target List:

* Baidu (BIDU) – Often dubbed “The Google Of China,” Baidu is down roughly 45% in the past two years as competition in search heats up. Unlike Google, Baidu does not have the whole Android operating system. Baidu still commands roughly 80% of the total online PC engine market share, but competition is increasing with the likes of Qihoo who went from 0% to a 12.5% market share in just one year.

Non-gap operating margins fell to 39% in the latest quarterly results, a 7% QoQ decline as the company ramps up expenditure in mobile and software. The stock trades at roughly 17.5X trailing consensus estimates after trading as high as 99X in the past. Its competitors are trading at roughly 25X earnings.

With Baidu having just recently missed its latest quarterly revenue and earnings on 4/25, I’m a buyer because the company is still expected to grow earnings by 40% despite it investing heavily for the future. I like stocks that get punished for investing in future opportunities while holding lots of cash. Mobile is a huge and necessary expenditure, but at the cost of lower margins. I look at the growing percentage of traffic coming to Financial Samurai as proof of the necessary shift. Target: $110. Current price: $85. Downside: $70.

* Sina (SINA) – Sina is down roughly 60% from its highs as the euphoria over its Weibo platform (Chinese Twitter) dissipated. Sina is having a tough time monetizing Weibo just like Twitter is having a tough time monetizing its platform. That said, Alibaba (Chinese eBay/Amazon cross) announced a 18% stake for $586 million in Weibo, valuing the entire platform at $3.3 billion compared to Sina’s current market cap of around $3.7 billion. Alibaba has some 500 million users and such a tie-up could do wonders into monetizing Sina’s 45 million or so active daily users.

Sina’s main business is through advertising and is very much like Yahoo. With Twitter’s current valuations rumored at $8-10 billion (albeit with a much higher daily active user base), and talks of Twitter potentially going public end of this year or in 2014, I think the market will focus on Twitter-like companies like SINA. Target: $70. Current price: $55. Downside: $40.

* RenRen (RENN) – RenRen is very similar to Facebook and requires real name registered users unlike its competitors. The stock IPOed at $18 in May 2011 to much fanfare ahead of Facebook’s own IPO which turned out to be a dud. RenRen has since lost over 80% of its value as it continues to lose money every quarter. It’s getting hammered in gaming, video, and by other social networks like Tencent. We all know what happened to Friendster, MySpace, and Digg. If you aren’t first, you’re last in the social media space.

The good thing about RenRen is that it has $2.40 in cash per share. In other words, out of its estimated $1.08 billion market cap, $850 of that is in cash. The problem is the company used to have over $1 billion in cash after the IPO as it burns money to figure out how to finally make money. RenRen is my most speculative punt stock given the market cap and lack of earnings. It’s either going start making money after its two years of investments and acquisitions, or do a management leveraged buyout (MLBO) if it trades below cash value in my opinion. Target: $4. Current price: $2.75. Downside: $2.30.

* iShares FTSE China 25 Index Fund (FXI) – As mentioned previously, FXI is an ETF that tracks China’s largest, and most liquid names. FXI is a low cost way and less volatile way to get broad market exposure to the economy. Even though we are heading into a historically slow period for the equity markets between May-August, it’s clearly “RISK-ON” again for US investors at least. As a US investor, I’m looking for laggards. What happens in developed US, will be repeated in developing countries like China if regulation doesn’t get too much in the way.

I expect the Chinese economy to re-accelerate in the second half of the year as output catches up with domestic demand. Monetary policy will continue to be very accommodative and any type of real estate bubble scenario will be well managed. With China underperforming by a 25% spread vs US equities YTD 2013, buying FXI looks attractive. Target: $45. Current price: $37. Dowside: $32.

X-FACTOR: One thing that could become very beneficial for Chinese securities listed in the United States or anywhere outside of China is the opening up of domestic Chinese investors to overseas markets. Domestic Chinese investors can only invest in a volatile A-Share market, commodities, real estate, and bank deposits. The main reason for such restrictions is due to capital flight. China will slowly ease restrictions if it wants to continue to develop into a legitimate capital market and such a flood of Chinese money could find its way into Chinese ADRs listed here in the US or many of the H-share names listed in Hong Kong.

China FXI ETF Chart
FXI down about 10% in 2013 YTD and hasn’t gone anywhere in two years

Invest In What You Know, Chinese Stocks Or Not

In a “risk-on” environment, investors will naturally search for laggards. The collapse of the internet/social media space over the past couple years has come true and current levels look attractive. I’ve done all the due diligence I can as a retail investor. Furthermore, I understand the fundamentals of the internet and social media business as someone who intimately operates in the space. Even with writing this post, there is no guarantee that I will make money in my Chinese equities positions. This is the beauty of the markets!

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When there is so much uncertainty in the world, you absolutely must stay on top of your finances. Whether you want to invest in Chinese stocks or low-risk ETFs, understand where your risk exposure is. Stay on top of your cash flow. Personal Capital’s free tools will help you bring calm to the chaos. Sign up for free here.

Good Advice On How To Better Manage Your Own Money

Updated: 09/24/2018 by Financial Samurai 38 Comments

Waialae Golf CourseFor two decades I’ve been managing my own money. It all started when I saved up $3,000 from random minimum wage jobs to open up an online trading account under my father’s guidance. This was in the early 90’s when Charles Schwab first came out. One time I bought a company which I thought sold software, but was actually a bank! Clearly, I had no idea what I was doing. Thankfully, when you start off with only $3,000, the most you can lose is $3,000.

When it takes you several summers at $4 an hour to squirrel away $3,000 only to see half of it vanish in a matter of months due to poor investment decisions, you kind of curse the world. But, you also learn from your mistakes so you can minimize the experience of feeling that dull knife slicing through your financial security. Losing money early on taught me the importance of managing money.

Although the financial crisis of 2008-2009 certainly gave my net worth a massive uppercut to the chin, I didn’t panic. I just started this site and have more than doubled my net worth since then as everything has more than recovered as well. I credit net worth diversification to surviving the crisis and not jumping off a bridge when the S&P 500 hit 666. I also credit my childhood stupidity.

In this article, I want to provide the best advice on how to manage your own money. We will talk about fundamental principles as well as mental states you should accept if you want to continue growing your wealth over the long term.

THE RIGHT MONEY MENTALITY

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How To Stop Haters From Hating You

Updated: 02/15/2021 by Financial Samurai 65 Comments

Lucky Penny by Untemplater.com

This post teaches you how to stop haters from hating you so much. Haters are everywhere. The more public or successful you are, the more you will attract haters. You don’t even have to do or say anything bad. You will inevitably get a hater if you achieve any type of success.

Since Financial Samurai has been around since 2009, this site attracts a fair amount of haters. Even if only 0.01% of the visitors a month hate this site, that’s still 100 haters a month on one million visitors.

I’ve personally been on the receiving any of many racists comments. I’ve also been attacked by the very own people in the financial independence community.

But through it all, I continue because the hate is only a tiny minority of the feedback I get. Overwhelming, the feedback is positive.



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The Best Of Financial Samurai 2012

Updated: 12/20/2019 by Financial Samurai 26 Comments

Financial Samurai In Mayan TempleIt’s reflection time here at Financial Samurai. I’d like to go over some of the most visited posts by search, the most commented posts, as well as other posts I think are worth highlighting. I wrote over 200 articles in 2012, so there’s a lot to sort through!

I’ve done my best to be as helpful as possible on important subject matters such as investing, retirement savings, and career moves. We’ve got one life to live, so we might as well get our finances in order to live it to the fullest!

The theme of this site is to slice through money’s mysteries to achieve financial independence. I’m not one to shy away from providing my own opinions when I feel strongly about a subject. If I think you are wrong, I will tell you so and provide reasons why. I hope you do the same because that’s the best way we can learn.

It’s important that Financial Samurai never turns into a factory site with neutered content. I started Financial Samurai in 2009 as an outlet for my frustrations about the financial crisis. I hope none of us ever revisit such times, although our government is doing their best to bring us there with the budget debacle! If I ever hire staff writers, I will make sure they come with their own thoughts and not be afraid to challenge conventional wisdom and defend their positions.

Without further ado, let’s recap the year 2012!

Top Five Most Read Posts Written In 2012 On Financial Samurai

1) How Much Should People Have Saved In Their 401Ks At Different Ages? (168,422 views, 431 comments) – A positive sign visitors are taking the initiative to understand whether they are on track for retirement. Although I do not think the 401K is enough for most people to live off in retirement, it’s a big portion of the retirement puzzle. I get the sense that despite the growth of our government, more people are coming to realize they should only depend on themselves.

2) What Income Level Is Considered Rich? (108,232 views, 147 comments) – The term, “class warfare” was bantered around a lot during the Presidential campaign, pitting the wealthy against the not-so-wealthy. People wanted to find out what income level started to make people “evil.” There’s so much hatred towards people who have more. Hopefully this post helps provide some perspective that cost of living is very different across the country.

3) The Average Net Worth For The Above Average Person (81,800 views, 233 comments) – Taking things one step beyond income to find out what above average people have in terms of net worth. Everybody believes they are above average, but that’s mathematically impossible.

4) Definitions Of A Middle Class Income: Do You Consider Yourself Middle Class? (76,300 views, 106 comments) – With so much talk from Obama and Mitt about how they plan to take care of the Middle Class, everybody is wondering whether the candidates are talking about us!

5) Don’t Get Fired Or Quit, Get Laid Off Instead (42,283 views, 143 comments) – There’s tremendous dissatisfaction in the workplace. Studies show that less than 50% of workers are happy at their jobs and a full 25% hate their jobs. The economic downturn of 2009-2010 created pent up demand for those who want to move, but couldn’t. As the economy continues to get better, I forecast a surge of people looking to find more meaning in their lives by taking the leap of faith and doing something they truly want to do.

* For reference, the most read post was written two years ago and received over 450,000 views in 2012.

Top Five Most Commented Posts Of 2012 (Outside The Top Five Most Read)

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The Best Way To Lose Weight And Become Debt-Free

Updated: 03/11/2021 by Financial Samurai 64 Comments

Best way to lose weight and become debt free

The best way to lose weight is easier than you think. Let me explain after wearing the same size 33″ jeans since 1999.

Yesterday was one of those perfect gastronomic days. For breakfast, there was all you can eat fruit and pastries. For lunch, some deliciously “low calorie” Greek baked spaghetti with garlic bread you see to the left. To top off the evening, a bone-in filet mignon, with baked potato with the works, blue cheese wedge salad, and a couple glasses of pinot noir from Napa Valley.

All told, I probably consumed some 5,500 calories worth of food! I didn’t feel incredibly sick to my stomach (OK, maybe a little bit!) because I made sure I played an hour and a half of tennis before dinner. It was actually a wonderful experience since I normally eat half as much. When I was in the cab ride home, I had an epiphany.

Perhaps the reason why there are so many large folks in America is because people purposefully gorge themselves in order to lose weight! 

Eating great food is such a wonderful pleasure that it’s irrational not to.  It trumps any negative feels about packing on weight otherwise we wouldn’t let ourselves go. 

Furthermore, the reason why there are so many people in debt is because it’s just so rocking fun to spend money you don’t have! Finally, it feels great once you pay back that debt! Double pleasure going both ways is why there is such a correlation.

The Best Way To Lose Weight: Gain Weight

Let’s say you are mildly obese at 5 feet 11 inches and 230 lbs. You enter into a weight loss competition with your fellow 5 foot 11 inch pal who is also slightly overweight, but weighs in at 180 lbs instead.  Back in college, both of you were lean 160 pound fighting machines.

The goal is to lose 10% of your body weights in 3 months i.e. 23lbs for contestant #1 and 18lbs for contestant #2.  Going from 230lbs to 207lbs is clearly MUCH easier than going from 180lbs to 161lbs.  Yet, 10% is 10% and contestant #1 is calling contestant #2 a chicken for trying to bend the rules.

Hence, if I were a betting man, I’d bet on the contestant #1 (230 lbs) all day long!  The mildly obese person not only will have an easier time losing weight, he’ll get to brag to his opponent and all his friends that he lost a whopping 23 pounds!  He’ll gain a renewed sense of self esteem even though at 207 pounds, he’s still a little hefty.

Meanwhile, the 2nd contestant, despite getting down to the 160-170 level is a loser even though he looks fitter than contestant #1 at 200-210.  The next time there is a weight loss competition, you bet your big buns that contestant #2 is going to gain a massive amount of weight so he can win!

The Big Downer

Here’s the real kick in the nuts for the contestant #2.  Not only does he lose the weight loss challenge, he also misses out on all those years he could have gorged himself on tasty food! 

Eating is such a wonderful experience as I was kindly reminded of last week.  To be able to eat to your heart’s content is a luxury unlike no other.

Contestant #1 was able to overindulge for years after college and gain 70 pounds. He enjoyed all of his meals, never felt guilty enough to do anything, and seldom ever had to work out. 

Now, contestant #1 can also capture the glory of losing weight, because it’s so much easier to do so when you are so much heavier.

Related: The Ideal Weight Pisses Me Off

Debt Reduction Is The Same Game Plan

You may be wondering what this weight loss shenanigan has to do with personal finance and I’ll tell you.  The parallels to gaining weight to lose weight is the exact same reason why people go into debt to get out of debt! Think about it for a bit.

How awesome is it to spend all this money which isn’t yours to go on vacations, drive fancy cars, and have fine things?  You’ll spend years enjoying the good life with other people’s money until your natural instincts kick in that you perhaps need to stop.  It’s exactly why most people don’t keep gaining weight forever.

The day you decide that living the high life is over, you challenge yourself to get out of debt.  You start a journal, a blog, a budget.  Whatever it is, you start something that will get you out of debt. 

The more in debt you are, the greater the feeling once you finally do get out of debt. You are rewarded both ways for irresponsible financial habits and as a result, you may very well gain some weight and get into debt again!

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Planning for retirement when paying for private grade school
Link up your accounts and see whether you’re on track to retirement in great shape or in poverty

This post was originally published on October 25, 2010 and updated on July 29, 2020. I was annoyed at how difficult it was to lose weight and how some people got so much praise for losing so much weight. I’m about 168-170 lbs still, which is not bad. But I could lose about 10 lbs.

Only The Poor or Super Rich Say “Money Can’t Buy Happiness”

Updated: 08/25/2021 by Financial Samurai 209 Comments

Whoever said, “money can’t buy happiness” is either poor or wealthy beyond their wildest dreams. The incessant amount of studies by researchers trying to prove money can’t buy happiness is simply a result of the researcher’s own poverty or unhappiness.

Because they are financially mediocre, it seems researchers are trying to console themselves that it’s OK not being wealthy.

Generally, researchers have a higher sense of self because they have more educational training. Hence, it tears them up when they see other “lesser beings” make more than them. Meanwhile, those who continue to highlight research stating that money can’t buy happiness are trying to justify their own financially unspectacular selves as well!



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The Curse Of Making Too Much Money And Not Pursuing Your Dreams

Updated: 08/12/2021 by Financial Samurai 178 Comments

Photographer With Big Lense

There is a curse of making too much money that I want to talk about. So many of us are caught up in this cycle of wanting to make more and more. This desire is making us unhappy. We need to learn to let go.

The luckiest people on earth are perhaps those who don’t make a lot of money. They’ve got very little downside and can really pursue their childhood dreams.

Imagine if from the moment you graduated college, you landed a plum corporate job that paid just enough to keep you motivated, but not enough to enjoy your freedom.

The longer you work the more you realize there’s really no escape, because there’s simply too much at stake. This is the problem that plagues my friend, Lyndon.



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