— Enough to cover anyone’s lifetime

Just over a week ago I was asked a question about investing in today’s climate, so I did a video and intended to write a more detailed post in the next day or so, then procrastinated until last Wednesday, and then I was off on another pack-the-backpack spontaneous travel thing, as documented in my last newsletter (free by email).

If all things work together for good, then this delay surely worked out because I now have a whole new laugh to mock, involving a 30-year-old losing people’s billions of dollars.

Yes, it’s a laughing matter.

Sorry not sorry. How many times is shit like this going to happen before people stop chasing just another turn on playing the lottery? I can’t count the times over the last few years I’ve been told about various too-good-to-be-true-or-lasting deals, where you supposedly get a lot of free money. “Money,” I should say.

You know, just because something has better maths doesn’t mean it’s good maths. Lots of stuff is better than shit and that’s not saying much. I’ll speak to crypto and its latest lost-billions fiasco down below. The quote I use in the headline image will tie into that, primarily.

…Everyone is an investor. The difference amounts to what’s the nature of the investment. When people say they invest in stocks, bonds, funds, real estate, startups, et al, they’re just using common lingo to make distinctions, which is fine. But, there are many things to invest in and what I intend to do here is draw the most critical and wide-scope integral distinction you’ll ever consider.

You might be left wondering why you never looked at it like that.

Topics

• The Financial Markets
• Tax Sheltering
  • Story: How My Company Was Penalized For Giving Away Too Much Money
• Real Estate
  • Vacation Rentals: The Sure Big Bucks in R/E!
  • Potential Investment in R/E With Vacation Rental Level Income
• Crypto
  • FTX Fiasco (LOL)
• Entrepreneurship and Geoarbitrage for Max Gains

Since the video is already public, here it is, to be viewed as a scant introduction to this post. If it’s only appetite wetting, feel free to get more. It doesn’t cover much on vacation rentals and almost nothing on crypto, for example. It sets a tone, though.

The membership for unfettered access to everything at all times is $6 per month, $50 per year, or $250 lifetime. I’ve been at this for 19 years this month (03 November 2003 was post #1) so it’s a good bet I’ll be at it long enough into the future to make lifetime the best investment. Plus, the price of membership doubles 01 January 2023 across the board. If you’re thinking of popping for it before then, what better time than now?

The Financial Markets

A lot is known about them by folks in general and that within them there’s a host of alternatives. There are tons of best practices. Let’s list three core best-practice principles.

Dollar Cost Average — This is the fire & forget method where you’re not ever trying to engage in trading. It can apply to almost any investment. All you do is budget a set amount and an interval, typically monthly. So, whatever you’re buying, you do X amount every Y amount of time; like, say, $100 per month, “rain or shine.”

1-2% Investment Capital Maximum — This applies to single investments like individual stocks, bonds, private equity (like a stock purchase outside the public market), an income property (like a rental where that percentage is your cash down payment), etc. So, if you have $50,000 you are using for the purpose of buying individual stocks, $500-1000 is the max in any one stock purchase.

Invest In Value Not Hype — Anything can make money. Anything can lose money. But the safest and most sure bets are in things that are of obvious value to a lot of people. They aren’t sexy like tech stocks, but they stand the test of time. Think commodities (minerals, oil, water, gas, paper, pork, beef, chicken, grains…) and industrial products (tractors, cars, cranes, robotics, machinery, lumber, concrete, steel…) and core services (medicine, law, shipping, rail, trucking, airlift, building…).

…Those three simple things and if you’re young and you set aside a regular amount and stick with it, you will do OK if human civilization itself does OK.

In this vein I think prepping of all sorts is pretty much a waste of time and money. If civilization itself is fucked, chances are you’re fucked too no matter what you’ve put in place. The only ones who come through catastrophes on their own soil such as through the devastation of war are the already hyper rich and they have no need of anyone’s advice or counsel.

…But there’s an easier way.

Invest in Index Funds — The no brainer. Dollar cost average in and it’s brainless. Just forget about it.

Don’t even look at it.

The S&P 500 is hands down the best for that. It’s a dynamic mix of 500 stocks that covers every sector of the economy; and they come into the mix as they meet certain asset and performance criteria and they go out when they fail to meet those criteria. So it’s like a managed fund of the consistently best of the best.

It’s very difficult to beat the performance of the S&P 500 over any significant period of time. Few do, consistently.

Here, neither the 1-2% rule nor the value-investing rule applies, because it’s baked in the cake for you. Taken care of. You can put your entire investment capital into it and you’ll likely do a lot better than most over a 40 year period.

Tax Sheltering

Yes, your 40x(y) thingies, the most common being the 401(k). Then there’s the various Investment Retirement Accounts (IRA, Roth IRA, SEP IRA, etc.).

They all have a bunch of rules attached to them but not hard to follow and all the online brokerages can set you up. For a 40x, it’s your employer that will set it up and nowadays, all the ones I’ve ever seen are linked to an online brokerage where you can do your own purchases of various funds.

Both are the simple man’s tax deferment scheme, work just fine, are well established, and valid as far as the system goes.

The best of the best is the matching 401(k) which, if you’re in the employment game, is essential as a consideration for taking an employment position.

In a standard 401(k) you can set aside up to 15% of your paycheck to go automatically into your 401 account where from there you can allocate it amongst the funds being offered…such as an S&P 500 fund. But that’s not all.

Some companies have MATCHING 401s, which is where they match your contribution by some percentage up to a certain amount of contribution. The most typical is 50% up to 6%, which means 50 cents on every dollar you set aside, up to 6% set-aside. So, for example, if your paycheck is $5000 for the month and you set aside 6% ($300), then you get an extra free $150 that is not taxable until withdrawn from the fund (plus whatever gains), typically in your retirement years.

If there is a matching scheme at the company you work for, you’re a damn fool not to take advantage of it.

Real Estate

Here, and from very hard lessons learned (like losing 100s of thousands in 2008-2010 by walking away from 10 of 11 rental properties), do no more than 1-2% of your wad in any one property and probably, limit total wad-investment in R/E to some percentage.

The experts say 5-10%. At that amount, if a small investor, your access will be limited to purchasing funds that invest in R/E because those amounts will not a down payment make.

Also, never ever ever acquire a rental property that is not cash-flow positive. That means that after all is said and done, after all expenses, they’re less than your rental income over the year. You made some money. So, the income in income-property turns out to be correct. Then, if it appreciates, you sell, and after accounting for the depreciation your tax guy saved you taxes on is paid, you have a bonus.

In the end, I hated it, and I used management companies for every rental property I owned. I didn’t even ever have to talk to a tenant and I still hated it.

And don’t get me started on all the no-money down or even get-money-back from closing big-buck business-opportunity stuff. I’ve wasted thousands on that sort of thing and nothing ever materialized. Sure, I suppose it happens, but the work you have to put in to finding that perfect deal is a lot, near as I can tell. Buying a property with 10% down out of your own pocket and financing the other 10% by means of a 2nd mortgage is damn easy, or at least it used to be.

Just make sure it cash flows.

There’s one aspect of this I loved, ironically enough, and that’s vacation rentals—and what’s ironic is that I dealt with all the tenants personally.

The one property I kept was our own vacation home in the Sierras; Arnold, CA. A place where’s there’s tons of vacation homes. It’s the town’s chief industry, where during the various holidays and long weekends, the population can triple or more. It was also perfect because it’s attractive both winter and summer. Winter was snow activities, including a ski resort 30 minutes further up the hill. In spring, summer, and fall, it’s all manner of touring around the California gold country with all its rich history.

It’s obviously essential for vacation properties that location location location is paramount.

So, by making our own vacation home available to holiday and weekend renters we started making money…a LOT of money compared to what it could fetch as a conventional rental with a constant, long-term tenant. By comparison, I could have made maybe $2000 net per year net as a conventional rental. By renting it out weekends and holidays, I was netting $30,000 per year. It was rented every weekend and holiday of the year, unless we blocked off dates for our own use.

After 2 years with that experience, I got into it even deeper and made a LOT more money. I began in 2013 with a single occupancy contract at a resort in Cabo San Lucas. I literally wrote on a napkin during a presentation/sales pitch at the property to see it would cash flow to the tune of $1000 net per month conservatively. The key was that I already knew the marketing because of my experience with the existing rental.

In short, it exceeded my expectations by up to 100%. That is, I was netting about $2000 per month. So, I bought a 2nd contract in 2014 and that went just as well, so I bought a 3rd one in 2015, making my total capital investment about $150,000. And it was netting $4000-8000 per month depending on the time of year. That’s an enormous-gigantic-humongous payoff.

And it was fucken fun. What a joy it turned out to be dealing with people excited about what you’re offering. And both of my properties were top of the line. The resort in Mexico is 5-star and I can get $3000 per week for a studio. The place in Arnold sported sixty-five 5-star reviews, two 4-star reviews, and nothing else.

Then Covid happened and I went from $120,000 gross revenue per year, to zero revenue over 2 years, but that’s another story and not relevant to the business as a whole.

…I’m looking at something else now, a thing called Here.

Invest in vacation rentals like stocks. Earn passive income from the highest-yielding asset class in real estate with vacation rentals. Get started with as little as $100.

https://here.co/

I have no affiliate relationship and I have not invested. I’m on their email list and nothing I’ve seen so far is in any way eyebrow raising. It’s 100% what I would expect, given my knowledge and experience in this aspect of R/E investing. I will almost certainly toss some few thousands at it as I bring my own personal financial house to order over the next year.

Crypto

Look, just do auto-buys of Bitcoin and Etherium in a small amount weekly. I use Coinbase.

There, that’s all.

In terms of security, learn what paper wallets and hardware wallets are and anything over a few thousand bucks, go to the trouble to use them.

Otherwise, it’s still just Wild West territory fraught with all manner of shenanigans and fraud.

It’s timely and fortuitous that I procrastinated putting this together and when I began hearing about the latest fiasco…the FTX fraud debacle over the last few days…I knew the time had come to get this done, already.

Other Stuff:

…My Previous Patreon About Crypto, All Posts Public. You’ll need to scroll down a bit to get to the crypto stuff, posts in reverse chron. I ramped that up in the fall of 2017 setting out to explain the workings of crypto investing, how-to, etc., along with asset allocation stuff like tiny stakes in all the ICO and Altcoin stuff. By early 2018 it just all seemed ridiculous at a point, beyond simply auto-buying as I wrote up top. The rest is hype, childlike exuberance, and fraud…complete with the old saw that the rules don’t apply anymore, whole new paradigm, and other such peutrid bullshit. Throughout it all, though, Bitcoin has plugged along. It’s standing the test of time. That and Ether are the only things worth paying any attention to.

…You need to understand the FTX debacle even if you have no investments in crypto.

FTX, based in the Bahamas, held about $16 billion in customer assets but had lent about $10 billion of those funds to Alameda Research, a trading firm also run by Bankman-Fried and headquartered in Hong Kong, according to a Wall Street Journal report. Alameda, in turn, had lent out billions of dollars, with some loans secured by FTT, a cryptocurrency created by FTX, according to a Nov. 2 report from CoinDesk.

The value of FTT crashed as FTX faced $5 billion in customer withdrawal requests last weekend, which left FTX facing an $8 billion shortfall, according to Bankman-Fried. Binance, the world’s largest crypto exchange, had said it was selling its $500 million in FTT based on reports of FTX’s loans to Alameda.

https://www.marketwatch.com/story/you-need-to-understand-the-ftx-debacle-even-if-you-have-no-investments-in-crypto-11668184909

…C&C NEWS ☙ Sunday, November 13, 2022 ☙ ALICE IN CRYPTO LAND.

Unregulated crypto was nice while it lasted. Meet Sam Bankman-Fried, 30, the youthful nouveau-riche “founder” of a bizarre Ponzi scheme concealed behind stacks of opaque buzzwords and constructed on a mountain of lies, political shenanigans, deep-state hanky-panky, and of course Ukrainian mega-fraud.

Late this week, the unkempt 30-year-old went from boasting about his $15.6 billion net worth to having “no material wealth,” in about two days.

https://www.coffeeandcovid.com/p/c-and-c-news-sunday-november-13-2022

It’s all fucken funny.

Now, check that Rand quote up top again, do some looking into this FTX thing, and notice how it was promoted by the money-is-evil crowd in the new parlance of the times…‘EXCEPT if your motives are clean and you’re doing all this just to help people.’ That’s the new money laundering.

Entrepreneurship and Geoarbitrage for Max Gains

And now we get to what I really want to talk about.

Your best investment bar none.

YOURSELF!!!

I know, seems a bit trite and flippant. A bit slogan & bromide-ish?

By investing in yourself, what you want, what you know you’ll work hard and competently at—and learn your lessons along the way—you toss out all the rules already mentioned for investing in someone else’s dream.

This is your own. You own it. No more 1-2%. You’re all in at 100%. No holds barred; sink or swim; your money or your life. No diversification or assets allocation. You’re hard-nosed and focussed on that one thing and if it’s not working, you move on and keep moving on until you hear that click.

…I failed at not one, but two entrepreneurial attempt back-to-back to the tune of $50,000 tuition, before the third time’s the charm—when I didn’t have money to pay next month’s rent.

Best of all, it’s wide open. Yes, you can be an employee, investing in someone else’s gig where they need employees and you’re one of them. Then, you can take a portion of your earnings and invest them in lots of other gigs owned by others following their own desires. And so on.

If you follow the rules already laid out, you’ll do just fine. You can retire, draw on social security and your pension, 401, IRA, whatever…sit in the Lazy Boy watching the gameshow channel and other daytime TV, get fat and co-morbid, etc.

It’ll be a blast. I’m sure you’ll have fun.

Or, you can come-hell-or-highwater it and just fucking get something done that’s yours.

I’d offer one piece of critically sound advice: eschew partners and investment capital. They’ll steal it from you, there’s a million examples. If you need investment capital, put your house on the line. Remember, you’re in it to win it, all in, 100%, failure is not an option…all that motivational stuff where it validly applies, finally, because it’s your own ass, this time around.

When it’s your own ass is on the line, it offers added clarity.

Or, you can play it better safe than sorry. Go get a job and if that’s your thing, as least go gold standard and get a government job.

Might as well become a Democrat and vote 100% Blue down the line, too. Why not?

It’s your participation in the process that counts, right? And you’re charitable, too. What sort of hubris puts your dreams and aspirations ahead of those of others…champions and heroes according to your employers, overlords, and installed authorities.

You want to be a good citizen, right?

…And it doesn’t matter if you start a company, risk it all, bust your ass, finally succeed and pay 1000 employees—from which they pay taxes—you’d better have the right attitude and to demonstrate that, you’d better be seen doing the “right” things, heard saying the “right” things—while vociferously and with moral indignance, condemning all the “wrong” things—and spending all your money on the “right” things.

Have you donated to your favorite politically-correct cause, lately?

Do you care about the environment? Are your color-coded trash bins all on display at the weekly appointed time in front of your house? They better be or you hate mankind, and the planet.

How often do you sleep and have sex with non-white and non-binary persons of color? Or, is what you’re saying through demonstrated actions and preferences is that you’re a racist and you love slavery?

So, it’s a tough row to hoe. Not for the faint of heart.

But you can do anything. It’s up to you. If it involves physical things and physical places and spaces, well, you’re typically settling down somewhere. If it’s online, telephone, basically in the digital sphere, then that’s wide open too but with the advantage of being able to be anywhere in the world. You can combine the two. For example, my vacation rental stuff is a physical space in a physical place providing in-person services. But I manage it all online and communications are by email and telephone.

Those who run Drop Shipping, Fulfillment By Amazon, or Amazon Merch business are all online and telephone, but can also be done from anywhere.

And finally, we have geoarbitrage to round it out. The icing on the cake. You’re selling goods or services to Americans, Europeans, or other 1st-world peoples with high relative incomes and by simply maintaining good internet and phone, you can lower your cost of living dramatically. Here in Thailand, I’m at least 5x less cost of living, upwards of 10x in some things.

And right now, I’m finishing off this post using my phone as a hotspot, 3.5 gigabytes of data I bought on my Thai sim for 2 bucks.

So that about covers it. Time to get my Sunday edition of the Newsletter out right on the heels.