Millionaire Dreamer

With high inflation and a crisis in regional banks, a lot of aspiring millionaires are moving their money from the stock market and rushing into savings accounts, money market funds, bonds, and so on.  I can see the rationale.  It is better to get a reliable rate of return than to witness the losses that may keep happening for a year or two in case we see a recession as the Federal Reserve fights inflation.  At least, it will help you sleep better at night, and trust me, I am a big believer in sleeping well (it has tremendous health benefits). Here is a thing to remember, particularly if you are young and do not need access to your funds in the near future.  Look at the chart below (courtesy of CNBC which used data from Bank of America and S&P). As you can see above, if you miss the best 10 days over a decade, your return is just 28% (column 4).  On the other hand if you did absolutely nothing, your return is as high as 17,715% (column 2).  Of course if you can time the market a

There is no denying the fact that the "future is electric."  That said, we have been hearing this for some time now and it will be a long time before all internal combustion engines (ICE) are replaced by electric vehicles (EV).  Since I like to invest in high-growth companies and many of us missed the boat on investing in Tesla, I have been searching for the right company. Legacy automakers making EVs have some advantages You see, at this time, nearly all the legacy automakers are working on and selling EVs.  Companies like Toyota, Ford and GM have another advantage: they have manufacturing plants, testing facilities, dealer network, and service locations.  They know how to manage supply chains, and most of us live very close to sales and service locations of major car brands.  However, right now these companies' slow-growth and in the future declining business of ICE will be a problem.  So, I am reluctant to invest in legacy automakers. In my area, Lucid and Tesla are b

Whether it is YouTube or TikTok or even the Internet, some "expert" has tips on how to hustle, make more money, invest in crypto to get rich overnight, get a side job, etc.  Now if you are trying to go ahead in life, I am all for it.  My focus has always been wealth creation meaning getting rich .  However, what happens when your income goes up, often because you are doing one of the things mentioned above is that people convince themselves that they must now also improve their lifestyle, meaning a better or newer car , fancier cell phone , meals delivered to their homes , subscriptions , etc.  So what ends up happening is that their expenses go up more than their income and they are back to where they were or have actually fallen behind because their expenses as a percentage of income have gone up. The Key to Getting Rich is Saving and Investing Trust me, this is what helped us become a millionaire couple .  Yes, over the years, we have worked hard, gotten promotions/raises,

I spend a lot of time reading because this is the easiest way to learn from smart people.  A book that is not necessarily about personal finance but is remarkable in helping us becoming better decision makers is "The Subtle Art of Not Giving a F*ck" by Mark Manson.  I had heard about this book for some time and my brother-in-law was reading it when I saw him a number of years ago but I finally borrowed it from the library. In case you do not want to read it, here are the top five takeaways: Prioritize what truly matters : The author argues that people waste a lot of time and energy on things that don't really matter in the grand scheme of things. Instead, he suggests focusing on what truly matters to you and letting go of the rest.  I had earlier written about shopping according to your values because otherwise you will end simply responding to commercials and influencers. Embrace pain and discomfort : Manson encourages readers to embrace discomfort and accept the challe

With the failure of banks like Silicon Valley Bank and everyone talking about things like FDIC insurance and so forth, a question that I had never asked before, but was forced to ask is if my investments in a brokerage account safe?  What about 401(K), IRA and SEP IRA? SIPC Insurance Insures Brokerage Accounts Similar to the FDIC, there is a program called the SIPC.  This group provides insurance for investment accounts to the tune of $500,000 for investments of which $250,000 can be in cash.  So a millionaire couple like us is insured for our whole net worth since we have a joint account with the same brokerage. The other thing to remember is if you have more than one account, these limits are for each account.  In fact, to be very honest, we actually have four accounts.  My wife and I each have our IRA accounts, I have a separate SEP IRA account since I am self employed , and then together we have a joint trading account.  So, altogether, we might have $3 million of insurance, whic

You have probably seen the headlines about many wealthy people paying for their homes in cash, either to live or as investments.  Many aspiring homeowners have failed to buy these homes because sellers often prefer all-cash buyers since they do not have to wait for them to be approved for a mortgage(which, if does not materialize in time, the sale is off, and they have to find another buyer). The reason why I think we should always have a mortgage (I do, even though, I have the cash to simply pay down the remaining mortgage on my home and literally own my home outright) is that unless you have a very high mortgage rate, you can get a higher return in the stock market.  That is why I might pay a small extra amount ($100 or so every few months) toward the principal, I like to keep my money invested. What if the interest rates are very high? This is what is happening right now.  In other words, you will pay a very high interest payment per month till interest rates come down to a more nor

If you are not a millionaire yet, you might be thinking that life is easy for us.  Indeed, it is.  However, this post is not about downplaying the challenges of people who are not wealthy and whose finances are in deep trouble due to higher prices. That said, the millionaires are also negatively impacted by high inflation.  In fact, the things that we are used to cost even more in percentage terms because the sellers know that we can afford to pay for the.  So, we buy organic, grass-fed, and pasture raised milk and just because it is 30-40% more expensive than it used to be in 2019, it does not mean we will stop drinking it, but it does impact our finances. Impact on investments: This is where I have seen the most impact.  And as my financial adviser keeps reminding me, if my portfolio goes down by 20% it has to go up by 25% in order to be where I was, and even more in order to be where I could have been if it had not gone down.  Inflation can impact investments in different ways, dep