I was bemused reading this bit by Khoi Vinh about the Scourge of Coffee. As one who doesn't partake of caffeine (no, not a religious reason or anything like that, just lost taste for the few caffeinated drinks I once liked), I found it quite amusing.
And reading it, I ended up glad that I ended my investment in Green Mountain Coffee, despite making a decent amount of money from it.
I do wonder about K-Cups and similar systems, though. I can certainly see the attraction for a business, where you might have people wanting a wide range of beverages. But I've heard that many people use them at home, as well, and I don't understand that at all. I would think the cost would preclude that making any sense at all (I figure the extremely rich, who wouldn't care about the cost) could instead hire a butler, or something similar, to take care of coffee for them).
Showing posts with label money. Show all posts
Showing posts with label money. Show all posts
20140325
20110206
Having the Answer
I heard this interview with Gordon Murray when it first played, on December 17th. I was impressed with him, particularly when he talked about his disease (he has a brain tumor that eventually took his life exactly one month after that). But I forgot about his book entirely by the time I got home that day.
But I had it suggested to me again last week, and ended up ordering it. The book is very small; only sixty-six pages. I read the entire thing between the two games earlier today.
As you'd expect, it doesn't get bogged down in details, but it is very good at conveying the important details. If you want more details, the Random Walk book I talked about previously has most of them.
But this one also talks about a few other issues, such as what to look for if you go searching for a financial adviser. That section was very good, and mentioned a couple of things I probably would not have thought about on my own.
It also went over diversification and styles of investing (active vs passive). Those parts weren't as good (to me, at least), but were still interesting. One important point in that section was on rebalancing, and how that helps you maintain your preferred risk profile. Again, useful.
I think this book is a fantastic introduction to investing; it really does hit the important points without a lot of fluff. And, being so short, it can easily be finished in one sitting.
Dunno if I'd recommend it for people with significant experience (almost certainly not, if the parts I mentioned don't sound useful), but I definitely would for anyone starting out.
Update: Forgot to mention... You might notice that that link to Random Walk is for a new edition of the book that came out last month. I haven't looked at it, but I might try to find it. Unfortunately, I doubt the library will have it. *sigh* It'd be cool if it addressed the issues I mentioned.
Update 2: Just checked the library; they have the new edition on order, and I'm first in the hold queue. Dunno how long that'll take, but it looks good.
But I had it suggested to me again last week, and ended up ordering it. The book is very small; only sixty-six pages. I read the entire thing between the two games earlier today.
As you'd expect, it doesn't get bogged down in details, but it is very good at conveying the important details. If you want more details, the Random Walk book I talked about previously has most of them.
But this one also talks about a few other issues, such as what to look for if you go searching for a financial adviser. That section was very good, and mentioned a couple of things I probably would not have thought about on my own.
It also went over diversification and styles of investing (active vs passive). Those parts weren't as good (to me, at least), but were still interesting. One important point in that section was on rebalancing, and how that helps you maintain your preferred risk profile. Again, useful.
I think this book is a fantastic introduction to investing; it really does hit the important points without a lot of fluff. And, being so short, it can easily be finished in one sitting.
Dunno if I'd recommend it for people with significant experience (almost certainly not, if the parts I mentioned don't sound useful), but I definitely would for anyone starting out.
Update: Forgot to mention... You might notice that that link to Random Walk is for a new edition of the book that came out last month. I haven't looked at it, but I might try to find it. Unfortunately, I doubt the library will have it. *sigh* It'd be cool if it addressed the issues I mentioned.
Update 2: Just checked the library; they have the new edition on order, and I'm first in the hold queue. Dunno how long that'll take, but it looks good.
20110204
Save Early, Save Often
One thing all get-wealthy and financial-intelligence books will tell you is to save early and save often. I wonder if they understate the save early part.
To demonstrate, consider this example. If you save $1k/yr every year between age 20 and 30, earning 8% interest, you'll end up with $157k by age 60. On the other hand, if you save $1k/yr every year from 30-60, earning the same interest, you'll only end up with $122k.
Let me repeat that, just to emphasize how important it is. Starting ten years earlier, but only saving one-third the amount of money, you will still end up with 29% more money at age sixty. And remember that that gap will grow the farther out you want to take it.
To push this home even harder, if you up the rate of return merely to 10%, the numbers increase to $306k and $181k. This is almost a 40% gap.
It's also worth noting that a mere 2% increase in annual growth comes close to doubling the final amount, in the 10-year savings plan. This is the miracle of compound interest. Make it work for you, rather than against you (which is what happens with excessive borrowing).
One way that I've done so is that I've always put 10% of my salary away in my 401(k), even back when I had just graduated, and it seemed silly. This actually served a double (or triple) purpose. It got me started saving, and it got me used to having less cash on hand. As a side bonus, it saved me a little bit on taxes.
Some years later, I did a similar thing when I was planning on buying my first house. To get used to having less cash on hand, I split my direct deposit so a couple hundred (of every paycheck) went into an index fund while the rest went into my bank account. As a nice side effect, it helped me efficiently build up that down payment.
To demonstrate, consider this example. If you save $1k/yr every year between age 20 and 30, earning 8% interest, you'll end up with $157k by age 60. On the other hand, if you save $1k/yr every year from 30-60, earning the same interest, you'll only end up with $122k.
Let me repeat that, just to emphasize how important it is. Starting ten years earlier, but only saving one-third the amount of money, you will still end up with 29% more money at age sixty. And remember that that gap will grow the farther out you want to take it.
To push this home even harder, if you up the rate of return merely to 10%, the numbers increase to $306k and $181k. This is almost a 40% gap.
It's also worth noting that a mere 2% increase in annual growth comes close to doubling the final amount, in the 10-year savings plan. This is the miracle of compound interest. Make it work for you, rather than against you (which is what happens with excessive borrowing).
One way that I've done so is that I've always put 10% of my salary away in my 401(k), even back when I had just graduated, and it seemed silly. This actually served a double (or triple) purpose. It got me started saving, and it got me used to having less cash on hand. As a side bonus, it saved me a little bit on taxes.
Some years later, I did a similar thing when I was planning on buying my first house. To get used to having less cash on hand, I split my direct deposit so a couple hundred (of every paycheck) went into an index fund while the rest went into my bank account. As a nice side effect, it helped me efficiently build up that down payment.
20110130
Learning to Get Rich
As can be seen by some of my earlier posts, I've been giving a lot of thought lately to money.
The most recent book I've finished (there's another, tangentially related one, that I haven't finished yet), is a classic called Rich Dad, Poor Dad. I bought this one a long, long time ago (maybe as much as ten years), and forgot about it until it showed up on top of a pile when we moved (well, when I unpacked my books, which was significantly after the move itself).
After reading those other two, I thought I'd work through this one, as well, and see what I thought of it. Aside from the parts where he talks about taxes, where he discusses them like they're a suckers game, I thought it was very good.
Mostly it talks about learning to make money, and learning to learn about finances. It discusses cash flow a little bit (more than I had seen before, though I think I already understood the concept well enough not to really get anything out of it directly), and mostly talks about building your assets.
When you boil it down to essence, it's largely saying that you need to save your money. And, what's more, save it somewhere where you can make more money off of it. He talks a lot about making your money work for you (which, for me, leads to some rather odd mental images), but it is an important idea.
One thing he implies, but never says explicitly, is that, over the long term, a conservative investment strategy (say, putting all your money into bonds), is actually a losing one. To carry his analogy further, it always works, but doesn't work very hard.
But the biggest, and most important part, is that he continually talks about improving your financial literacy. And that's definitely very important. You do need to keep learning, and improving yourself. This is largely why I've been reading books like this. I'm not sure if I'll find anything to make myself more money (I doubt either of the other books mentioned will), but I'll find out more about how the world operates. And occasionally I will find things to make money directly (I might have, in this book; definitely there are some things worth exploring).
Another thing that he keeps coming back to is how working for a big company will never get you to come out ahead. You might do pretty well, but you can easily just find yourself stuck in the rat race, where you make more money, only to spend more. Just like in the Millionaire book, don't get sucked in to buying status symbols if you really want to get ahead.
He also talks about finding advisers who can help you, and about how to deal with them. That was another part that's likely to be especially helpful to me, as I'm really bad about that part. In fact, I think I'll look around to see if there are any good books about that.
Anyway, there were only two things I disliked about the book. The first, as I mentioned, was the treatment of taxes as a sucker's game that is to be avoided whenever possible. The author's father lamented that the biggest problem with the country (and this was back in the fifties or sixties, it sounded like) was the huge gap between the rich and poor. Well, the way the tax laws have been manipulated since then has resulted in that gap absolutely exploding in size. If it was a concern back then, then it's pretty much a terminal condition now. And it's that attitude of taxes being a sucker's game that has made things get that way.
The other is that, when he talks about assets and liabilities (and that's a really good section, if that isn't second nature to you already (and it was, to me, even though I never thought about it in those terms)), he says that he doesn't consider a house (as in, principal residence) to be an asset. There's a tiny kernel of truth in there; something along the lines of not spending the limit of what you can afford to buy your home. But it still doesn't work; just look at the definition of asset he gives several pages later, and you can see how his argument falls on its face.
But as I said, that assets/liabilities section is really well done. The aforementioned status symbols, of course, all fall into the category of liability. And he really drills it home; buy assets, not liabilities. Get the liabilities when you can easily afford them, not when you can barely afford them (or, better yet, don't buy them at all :).
One other thing to consider, though, is that he strongly discourages specialization. Basically, his argument is that specialization makes you very vulnerable to having the rug pulled out from under you. I certainly understand where he's coming from; when I got into my Master's program, I had to decide whether to specialize or not. Basically, you couldn't get into their (or maybe even any) doctoral program without specializing, but you would have to write a thesis. Anyway, I didn't specialize, and I didn't because I didn't want to end up pigeon-holed. And I don't regret that decision.
But the part to be aware of, is that, particularly in technological fields, pretty much all progress is made by people who specialize. So if you really want to drive your field (whatever that field is) forward, you probably need to get that PhD, and specialize. Just be aware of what that does for you, financially. Of course, if you do push things forward, you'll probably make plenty of money (although the odds go up a great deal if you own the company). Basically, I just bring it up as something to keep in mind.
What I didn't know before is that this is but the first in a series of books. I'm going to have to think about whether to buy (some of?) the others. But this book definitely gets a strong recommendation.
The most recent book I've finished (there's another, tangentially related one, that I haven't finished yet), is a classic called Rich Dad, Poor Dad. I bought this one a long, long time ago (maybe as much as ten years), and forgot about it until it showed up on top of a pile when we moved (well, when I unpacked my books, which was significantly after the move itself).
After reading those other two, I thought I'd work through this one, as well, and see what I thought of it. Aside from the parts where he talks about taxes, where he discusses them like they're a suckers game, I thought it was very good.
Mostly it talks about learning to make money, and learning to learn about finances. It discusses cash flow a little bit (more than I had seen before, though I think I already understood the concept well enough not to really get anything out of it directly), and mostly talks about building your assets.
When you boil it down to essence, it's largely saying that you need to save your money. And, what's more, save it somewhere where you can make more money off of it. He talks a lot about making your money work for you (which, for me, leads to some rather odd mental images), but it is an important idea.
One thing he implies, but never says explicitly, is that, over the long term, a conservative investment strategy (say, putting all your money into bonds), is actually a losing one. To carry his analogy further, it always works, but doesn't work very hard.
But the biggest, and most important part, is that he continually talks about improving your financial literacy. And that's definitely very important. You do need to keep learning, and improving yourself. This is largely why I've been reading books like this. I'm not sure if I'll find anything to make myself more money (I doubt either of the other books mentioned will), but I'll find out more about how the world operates. And occasionally I will find things to make money directly (I might have, in this book; definitely there are some things worth exploring).
Another thing that he keeps coming back to is how working for a big company will never get you to come out ahead. You might do pretty well, but you can easily just find yourself stuck in the rat race, where you make more money, only to spend more. Just like in the Millionaire book, don't get sucked in to buying status symbols if you really want to get ahead.
He also talks about finding advisers who can help you, and about how to deal with them. That was another part that's likely to be especially helpful to me, as I'm really bad about that part. In fact, I think I'll look around to see if there are any good books about that.
Anyway, there were only two things I disliked about the book. The first, as I mentioned, was the treatment of taxes as a sucker's game that is to be avoided whenever possible. The author's father lamented that the biggest problem with the country (and this was back in the fifties or sixties, it sounded like) was the huge gap between the rich and poor. Well, the way the tax laws have been manipulated since then has resulted in that gap absolutely exploding in size. If it was a concern back then, then it's pretty much a terminal condition now. And it's that attitude of taxes being a sucker's game that has made things get that way.
The other is that, when he talks about assets and liabilities (and that's a really good section, if that isn't second nature to you already (and it was, to me, even though I never thought about it in those terms)), he says that he doesn't consider a house (as in, principal residence) to be an asset. There's a tiny kernel of truth in there; something along the lines of not spending the limit of what you can afford to buy your home. But it still doesn't work; just look at the definition of asset he gives several pages later, and you can see how his argument falls on its face.
But as I said, that assets/liabilities section is really well done. The aforementioned status symbols, of course, all fall into the category of liability. And he really drills it home; buy assets, not liabilities. Get the liabilities when you can easily afford them, not when you can barely afford them (or, better yet, don't buy them at all :).
One other thing to consider, though, is that he strongly discourages specialization. Basically, his argument is that specialization makes you very vulnerable to having the rug pulled out from under you. I certainly understand where he's coming from; when I got into my Master's program, I had to decide whether to specialize or not. Basically, you couldn't get into their (or maybe even any) doctoral program without specializing, but you would have to write a thesis. Anyway, I didn't specialize, and I didn't because I didn't want to end up pigeon-holed. And I don't regret that decision.
But the part to be aware of, is that, particularly in technological fields, pretty much all progress is made by people who specialize. So if you really want to drive your field (whatever that field is) forward, you probably need to get that PhD, and specialize. Just be aware of what that does for you, financially. Of course, if you do push things forward, you'll probably make plenty of money (although the odds go up a great deal if you own the company). Basically, I just bring it up as something to keep in mind.
What I didn't know before is that this is but the first in a series of books. I'm going to have to think about whether to buy (some of?) the others. But this book definitely gets a strong recommendation.
Subscribe to:
Posts (Atom)