TBD on Ning

Making money from salary is a losing proposition.


If you and your spouse made $200,000 Taxable Income last year from salary, dividends and interest, you paid a $44,263.50 tax bill. The same $200,000 from long-term capital gains, you would have paid $30,000.


Who wants to work for someone else, when investment is more interesting, less time-consuming and more rewarding? If you love woodworking, cooking or something else for its own sake, great! Donate your work to a worthy charity. Meanwhile, stop wasting money in taxes!


Profitable investment takes money and knowledge. Tell your kids:

  • Think hard about not going to college. I know this is heresy. If you are not top 20% High School GPA and already extremely focused and extremely talented in some area, it may be a waste of money to go to college. Think about giving them 1/3 of their "college money" to start a business instead. Do it right: make a plan, run it by a SCORE advisor or someone who has made and lost money for years as an entrepreneur. If it fails, do it again with 1/4 the money. If the 2nd time fails, tell them to live on the remaining money while they intern for free in a highly speculative field where contacts and practical experience matter more than formal education: sales, film production, etc.
  • Start saving tomorrow morning while you still live a thome. Do not move out until you have paid your parents $1,000 and saved enough cash to live on for 6 months. I'm serious.
  • Never buy luxuries on credit. I call it the Inverse Big-Screen Rule: the more people spend on big ticket luxuries bought on credit, the less happy they will be in 5 years.
  • Do not get married (or have children) until you are at least 28. If I have to explain it to you, you would not understand it.
  • Seek immediate financial advice if they ever have to put groceries or other necessities on credit cards. Plug that leak right away, whatever it takes!
  • Cut expenses! Get a roommate, never eat out, carpool, just do it.
  • Learn about an investment area that interests them. Accounting/Finance courses in the evenings at a community college will do just fine for the basics. Then all they have to do is learn the specifics of their investments, whether it's real estate, art, cars, antiques, stocks, bonds, new ventures, film, you-name-it.

Your kids can have it better. Tell them how.




Tags: happiness, money, taxes

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Dallas, old friend. You do put up some interesting posts.

I contend that life is a series of accidents. I'm not rich by anyone's standards. But I think I have a good chance of continuing to live a pretty good life as long as my health holds up. I'm in pretty good shape fiscally and physically, but I didn't get here by putting my nose to the grindstone and living in misery. I persued what interested me. Or, in some cases, what I thought would provide the most interesting life.
All of your advice is very good. Probably as good as any. However, I'm sure there are many other paths to take that could work out in the end. It always depends on what others do. One of your tags is "happiness". How many people would be happy living the way you advise?
I would advise people that if they do not have a dream, If they do not know what they want to do in life, go to school as long as possible. Education is never a waste. However, get your education on the cheap. Go to community college. Join the military and go on the GI Bill. Always look for the cheap way to learn. Education is how you find out what you want to do. Investing is very important, but so is engaging in activities that interest you. You are unique. Do what interests you.

Let's take a look at Dallas opening thoughts. $200,000 in salary would pay more taxes than Long Term Capital Gains. However, Most of todays safe investments pay 3% or less. To make $200,000 at 3% you would need to have $6,666,666 invested. Where did that come from?
Chief, you are absolutely right. Wasn't it Dave Gardner who said, "I don't believe in accidents, I believe in premeditated carelessness." ? In much the same way, I don't believe in luck: I believe in premeditated opportunity.

Happiness is sublimely personal. All the same, I've never known a debt-ridden person who was happy.

Like you, I think we should follow our interests. I'll gladly pay others to sharpen my knives, but I care nothing about getting near a grindstone.

Your point about safe investments having lousy yields is absolutely right. That's why this advice is for very young people - children still at home - instead of others. No one who has already taken on social or moral obligations like marriage or child care should ever put anything before those things, in my opinion. This includes not taking the high risk inherent in situations that have the possibility of high reward. However, there are plenty of ventures that return much more than 3%.

For example, a solid pizza parlor will make 17% GPM, a really good location will turn 20% GPM. You do need an education, but you don't need a degree to run a pizza store. A 17% return doubles your investment in a little over 4 years. So, here we go...

GUIDING PRINCIPLE: Never stop learning, especially when you are not in school.
Age 17-20: get educated (not necessarily in college), live at home, pay cash for your stuff, start your business by asking, as you suggest, "What interests me?" Remember, you can have a business partner. Spreading risk is not a bad idea.
Age 21-26: do not live a miserable grindstone existence, but do not buy luxuries on credit either. Expand your business and get involved with other investors. If you left home with a going concern and $10,000, you should have $22,000 plus the salary draw from the business at age 26.
Age 27-35: Keep learning, seek other investments. Spread it out. Some will fail, but some won't. Keep pushing your original business meanwhile.
Age 35-50: repeat as needed. The math is tedious, but you end with enough cash to be a "sophisticated investor" in the IRS-defined sense at 50, which opens new higher-risk, higher-rewards doors for you.
Age 51: You've had 30 years of experience and education. Put it to work looking at deals. You will be used to the swing by now. Losing $300K won't bother you, and making $1.1M won't drive you to dangerous excesses . Back off the high-risk stuff as you get older, but don't abandon it entirely. Dance more, march less.

I hope everyone reads your advice about cheap education. Once I graduated I never even thought about post-grad...talk about a grindstone, that would have been one for me. However, I have taken at least another 35 sem/hrs of courses in everything from welding to British Lit at various community colleges. I'm not even counting the seminars and Continuing Ed over the years. You are right about education: it's a lift to the spirit and the brain.

I would only add that there's training, and then there's education.
My grandmother taught me to play Gin Rummy: that was training.
Then she won all my lawn-mowing money: that was education.
If you had bought one share of stock in my bank 99 years ago it would be worth about a million today.
At 114 I would need every penny of it.
Dallas, Good clear thinking as usual.
I started college at age 17. I received my BA at age 44. In between I had a couple years trying to get rich in the late 50s uranium boom, 22 years in the army and over 150 semester hours of college credit and many hours of training in subjects dear to the military. I also had numerious part time and full time jobs. Probably the most benificial was training to be an instructor in the military and subsequent experience as an instructor on the staff of that course. That is what I mean by accident. I did not enter that course with the idea of staying there as an instructor. But the opportunity occured and I grabbed it. That experience gave me the platform for success in many othe endeavours. In my humble estimation, the purpose of education is twofold. First, to open the doors to opportunity, and second, to enable you to have a chance at choosing the right door. A graduate degree is only necessary if what you want to do requires one. But, if you can get one without piling up enormous student loans, it never hurts to have one.

Right now, at 73 years old, I am headed to Colorado to attend Bicycle Mechanic training. Why? Because I want too.

So, I echo your advice. Always seek to learn. Avoid unmanageable debt. Try to find a way to do things that you enjoy. Help others along the way. That approach will probably give you a very good chance to live a good life.
Some of the utility stocks pay pretty good return on your money. And it’s about as safe as safe is.
For about $30000 you can get about $400.00 every three months. This will help with the bills and you still have your thirty grand. The value of the stock can also go up/down?
Livestock is good too. Right now is Cows are high, but if they go down you can always eat your stock.
That makes sense..
Life hangs around longer if you only do it one day at a time.

Hi, WL




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