Investing money - reading Rich Dad Poor Dad

[Lion]

Hi guys,
I'm more of a saver than a spender. Have been all my life. Sometimes I wonder what its all for but I know one day I'll need to buy my own property.

Been reading RDPD, what kind of things can I invest in?
My ideal investment would be to start a business with a close friend or family member but nobody I know seems to have the same mindset - that's not to say I've actually declared this myself.

What did you guys start off with and what's good right now?


P.S. I am tempted to buy a nice car that will use 1/4 of my savings - this car will drink more fuel and cost more to run - in RDPD this is a liability but I see it as being:
more comfortable
capable of longer journeys without giving driver fatigue
looks smart
faster - more fun

...than my current ride. I would feel guilt buying it without having an investment to earn more money. I feel like I need to invest first, reward myself last...

Would you buy this kind of car?

 

[CaptainJ]

Hi guys,
I'm more of a saver than a spender. Have been all my life. Sometimes I wonder what its all for but I know one day I'll need to buy my own property.

Been reading RDPD, what kind of things can I invest in?
My ideal investment would be to start a business with a close friend or family member but nobody I know seems to have the same mindset - that's not to say I've actually declared this myself.

What did you guys start off with and what's good right now?


P.S. I am tempted to buy a nice car that will use 1/4 of my savings - this car will drink more fuel and cost more to run - in RDPD this is a liability but I see it as being:
more comfortable
capable of longer journeys without giving driver fatigue
looks smart
faster - more fun

...than my current ride. I would feel guilt buying it without having an investment to earn more money. I feel like I need to invest first, reward myself last...

Would you buy this kind of car?

What I would do is invest the money I was going to buy the car with, then use the earnings from that investment to buy the car.

Invest in Real Estate, don't blow your money on a car when the benefits are tiny compared to the liability and drain on your wallet.

 

[speakeasy]

A car that you really enjoy is like buying an expensive ski trip, safari or concert, it won't make you any money but it's an investment in your life experience. You only live once and you can't take the savings with you when you go. I'm not saying spend money foolishly and not save for the future, but if you think you can survive the expense and still save, and that car will get your adrenaline racing, perhaps there's room for both in your life. There is a healthy middle ground behind being a spendthrift and a miser.

 

[synergy1]

a car depreciates pretty quickly, so financing one at an interest rate is probably the biggest waste of money unless you have the cash up front and need a car to do business.

investments include real estate, equity like company stock, index funds, mutual funds, bonds..anything that can give you a return on investment. Long term expect 6-7% annually. An extreme example of investing would be buffet and Berkshire Hathaway which grew 20%+ annually since the 70's and is worth god knows how much.

Lastly you can invest money via a business. Our business invested 5,000 USD into our academic partner and saw an out sized return of 30,000 USD and a lasting relationship which will net more. This requires significantly more work and skill though and no promises for the future.

 

[Alle_Gory]

A car can be considered an investment if you get a return, doesn't have to be monetary.

Does it get you to work? Does it help when meeting clients? Does it get you laid? Does it get you to places you otherwise could not have gone? Does it help you socialize, get to places to socialize?

I consider it to be a worthwhile investment. I'm assuming a nice reliable car and not a headache to repair like a VW/Audi or a GM.


Now as far as monetary investments, real estate is out of the question unless you have lots of money. Better start with something small like a small business or investing in stocks, currency, options... etc. The higher the return, the higher the risk.

 

[speakeasy]

I consider it to be a worthwhile investment. I'm assuming a nice reliable car and not a headache to repair like a VW/Audi or a GM.

You're way over-generalizing about GM there.

 

[SmoothTalker]

Just wanted to add to Alle Gory's post..

I would strongly recommend not touching forex or options until you know what you are doing very well.

Unlike stocks, forex is a zero sum game. The only way to make money is for someone else to lose it, and in general the vast vast majority of people are losing it.

As for options, they can be used well to manage risk but I don't know if you can consider something that expires to be an investment. It would be trading not investing.

 

[BigJimbo]

I can't believe folks still believe in that stuff. The loan industry is dead. It was a total fraud. You can't just borrow money these days like you could in the 90's.

 

[Alle_Gory]

Just wanted to add to Alle Gory's post..

I would strongly recommend not touching forex or options until you know what you are doing very well.

That's a given. Most people think that they can put money in the stock market and wake up a millionaire like in a cheesy Disney movie. To trade, it requires lots of knowledge, patience and self control the rest is a bit of luck.

As for options, they can be used well to manage risk but I don't know if you can consider something that expires to be an investment. It would be trading not investing.

Investing is putting money forward with the purpose of returning a profit on said money.

 

[Julius_Seizeher]

Finally, a thread to sink my fiduciary teeth into.

In order to make specific recommendations, I would need to have far more information. But I'll run with what you've said.

For one thing, a car is a liability. Such is anything that consumes money without directly replacing it.

I gather that you are considering starting a business, which of course requires capital. But you are also seeking growth. Without knowing how much money and assets you currently possess, nor what your income and debt picture looks like, I suppose I can paint a somewhat nebulous financial picture...

Take a hard look at your current savings, income, and debt. With all these things factored, you first determine an asset allocation strategy. Here are questions you ask yourself:

"What are my short and long-term financial goals?"
"How can I allocate my money to best pursue these goals concurrently?"

Then you determine how much money to flow into debt, how much you need to live on, how much you want to save, and how much you want to invest, whether it is for retirement or capital appreciation.

Ideally, you could be flowing money into debts while maintaining a comfortable standard of living and funding a savings and investment portfolio. Now let's go to the bank: For your living expenses and all expenditures, you need a checking account, and already have one. For your cash savings, my favorite instrument is a Municipal Money Market account. It is basically a glorified savings account, because it is highly liquid, but it also offers greater capital appreciation than any traditional savings, and all growth in a MMM is federal tax-free; Uncle Sam wants YOU to invest in Munis! This is where you would keep $ for starting a business, otherwise lucrative physical investments, a rainy day, etc.

If you are funding a retirement plan or any other securitized investments, here is the way to go: Don't even think about things like forex or commodities. NOW is the time to pull the trigger on Growth mutual funds. All growth funds are going to be filled with the small and midcap stocks that are growing now, and if you want to get really kinky, look at some International Growth Funds. If you have a 401K or any other employer-sponsored plan, get involved with it; contact the fund manager, review your prospectus, know where your money is going. Whether it is in a retirement vehicle or just an equity investment, you want to be in a growth fund now. I know a guy who took a 45K hit on his 401 two years ago; now he has gotten 30K of it back. The small and midcaps are moving now, don't miss the bandwagon!

Also, take a look at your insurance. It's redundant to make gains only to sustain losses through risks that may have been better passed on to an insurance company.

Plan your work, work your plan.

 

[Alle_Gory]

Municipal Money Market accounts are a US thing. He's in the UK.

Here in Canada we have a tax free savings account. Similar. Offers 2% return last I checked.

 

[MikeBrown30]

If you want to buy a car that will hold its value, stick to classic cars. My uncle bought a Ford Falcon XW GT (I think 1967-1970 model?) for $20,000 20 years ago. At the time it was a sh!tload of money, and everyone told him how dumb of a move this was. Fast forward to today, he has fully restored the car, every original part still intact, it is now worth $170,000 +. Yes, it's nice to drive a nice new flashy car, but unless you have millions of dollars incoming continuously, it's not worth it in my opinion.

 

[Quiksilver]

Gold, silver, and hard assets.

 

[Slickster]

I'm in a similar situation.

Time to upgrade my auto but having a hard time justifying it.

A friend at work recently purchased a new sporty car that had me and everyone else drooling. 6 months later he claims that the novelty has worn off quite a bit.

The argument for and against has been going on in my mind for months. At the end of the day I'd say 75% of my driving is going back and forth to work. I have a REAL tough time putting a large sum of money towards that!

 

[theunflushables]

If you aren't sinking loads of money into car repairs or maintenance, drive it to the ground. I have a 98 Chevy Cavalier with 150k+ miles on it and I payed 2,000 for it when I bought it. Yeah its not fancy but it does its job and I don't have to spend money every month on car payments or for the full coverage car insurance. Saves me quite a bit.

 

[speakeasy]

The thing is, there are smart ways of purchasing a nice car.

1) Don't buy new cars. If you want a new car, buy a car that is 2 years old instead. The sharpest decline in the depreciation slope happens in the first couple years. It will still decline, but at less an accelerated pace after that. And at the same time, a 2 year old car that someone leased is as good as a new one. Often will still even smell like a new car if it was well taken care of.

2) Pay CASH for your car. Or save as much cash as possible in your downpayment. If you are financing a car, that 20,000 Honda Civic will end up being a $30,000 Honda Civic when you factor in all the interest you paid.

 

[OzyBoy]

I am trading forex and i have made about 10% in the past few months. This beats any interest i could make from putting it in the bank. If i can keep this up for a bit longer i am going to put more money in it and start making some real money- although i won't get too ambitious. I know you can lose money quite easily if you are not careful but with the way i am trading any losses i make are going to be quite small because of the way i manage risk.

 

[justinsane]

I think this should help get the idea of what real investing is all about:

http://www.colonyinc.com/chairmanscornerblog_feb10.htm#020610

Interesting.

 

[MetalFortress]

I wouldn't buy the cat til I didn't have to try to make excuses to myself for it. Investingwise, I would personally put money in stuff that is in the gutter now, that is pretty sure to come back. I will forever kick myself for not having good investment capital when the credit blood splattered all over the streets a year ago. Banks would have been an excellent investment.

Ford stock is on the cheap now, still. I would buy, because seeing what Ford is doing now, they will be the single most popular automaker in America, by far, in five years or less. Toyota stock is dropping like a rock now, too, but they will come back. They have too good a reputation to go down the way GM and this recent generation of accelerator and Prius brake clusterf??k won't keep them down for long. I would wait on them, though, til the current situation bottoms out, cuz the issue is still getting worse.

 

[MetalFortress]

I wouldn't buy the car til I didn't have to try to make excuses to myself for it. Investingwise, I would personally put money in stuff that is in the gutter now, that is pretty sure to come back. I will forever kick myself for not having good investment capital when the credit blood splattered all over the streets a year ago. Banks would have been an excellent investment.

Ford stock is on the cheap now, still. I would buy, because seeing what Ford is doing now, they will be the single most popular automaker in America, by far, in five years or less. Toyota stock is dropping like a rock now, too, but they will come back. They have too good a reputation to go down the way GM and this recent generation of accelerator and Prius brake clusterf??k won't keep them down for long. I would wait on them, though, til the current situation bottoms out, cuz the issue is still getting worse.