99% of Buffett’s wealth was earned after his 50th birthday!!

In an era when we’re always looking for the next wunderkind, it’s easy to forgot that most people still make their money over the long-term. For example, Warren Buffett, who is arguably the most successful investor of all time, made 99% ($62.7 billion) of his $63.3 billion net worth after his 50th birthday.

99% of Buffett's wealth was earned after his 50th birthday.

Moreover, 95% ($60 billion) is from after his 60th birthday.

This helps me remember that I don’t have to be a wunderkind by 30 to create generational wealth. I can let consistent investing and years of compound interest grow my money overtime, like Buffet did.

Source: Fool

Looking at the chart below that compares Buffet to other great investors, you’ll see that Buffet doesn’t have the highest returns among his peers, but he has outperformed them in terms of years of profitable investing, which allowed him to most benefit from compound interest.


Among legends, Buffett has the longest track record for beating the market.

Make compound investing your friend by starting early and staying the course!  Don’t worry about being a wunderkind! Consistency is king!


Buffet & I Agree on The Best Time to Invest!

Why am I patiently awaiting a temporary downturn? Because that’s a great time to buy high quality investments at a discount.  

wareren buffet being interviewed

In Business Insider’s article titled Warren Buffett’s 23 Most Brilliant Insights About Investing, Buffet quotes number seven and one, respectively, support my thinking:

“The best thing that happens to us is when a great company gets into temporary trouble….We want to buy them when they’re on the operating table.”

“It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”

At times individual companies, real estate markets, and other investments have temporary downturns.  That’s an excellent time to buy! Instead of buying when everything is booming and higher priced, I like to buy when quality is high and prices are reduced.

The two most critical numbers for any investment are the sale price and ROI (return on investment or the profitability of the investment).  When I buy an investment that I believe is high quality, I’m betting on a good ROI. When I buy a high quality investment during a temporary downturn, I’m maximizing both key numbers, sale price and, potentially, ROI.  

That’s why I’m patiently prepping myself for a temporary downturn, always looking for high quality investments at reduced prices.

Do you buy in downturns? Or are a fair weather buy? Are you preparing for a downturn?


Money is a Magnifier! What Does Your Spending Say about You?


“Money is a magnifier. It just makes you more of what you really are.”
– Bob Proctor


When I get a large chunk of cash, I spend more on my health and well-being, donate anonymously, save/invest, travel, and buy services that free up time.  My spending is focused on increasing my quality of life, giving, and growing my net worth so I can do more of the first two things!

What would you do with an extra $1 million dollars?  Buy Louis Vuitton purses? Buy a Porsche? Rent or buy a yacht? Donate to charity? Invest?  Give to your family? . . .

More practically, what will you do with money from your next raise or bonus?   How you spend the extra money reflects your values.  What does your spending say about you?



Need a SIMPLE Cash Flow System?

Need a SIMPLE Cash Flow System?

Amazing, Easy KISS Cash Flow System 

KISS, as in Keep It Simple, Stupid

Above is the simple cash flow system that I use! Everything’s automated, cutting down the level of effort and the number of the decisions.  Behavioral science teaches us that by having fewer decisions to make, we increase the likely hood of sticking to the something.

Notice that there’s event account for withdrawing cash.  That’s to prevent “accidentally” overspending in cash.

As long as you pay off your credit card each month and stick within your cash budget, the system works!!


Americans vs. Reality: Why Your Home is Not a Good Investment

Re-posted from: http://www.fool.com/investing/general/2014/05/02/the-uncomfortable-reason-your-home-is-not-a-great.aspx


Check out the graph below by Noel Prize winning economist Robert Shiller.  The lesson is that a home is great to meet your housing needs, but not great as a long-term investment.  Shiller — who won the Nobel Prize last year — is regarded as the world’s foremost housing expert. He has married historical data with deep insight into human psychology to offer some of the best housing analysis anyone’s ever produced.

“The housing boom in the early 2000s was driven by a sense that housing is a wonderful investment. It was not informed by good history,” Shiller said. Most people now agree on that much.

“If you look at the history of the housing market, it hasn’t been a good provider of capital gains. It is a provider of housing services,” he explained.  By that, he means a home gives you a place to live, a place to sleep, a place to store your stuff.  But that’s it. Americans believed — and still believe — that the value of their home will increase above the rate of inflation.

In the 2000s Shiller noticed that nobody had created a chart tracking national home prices historically, over the long term.  So he did it himself.  “The strange thing is, nobody else had ever made a plot like that. I can tell you, no one had ever seen that picture,” he told me, shaking his head in disbelief. “People plot all kinds of data. Why wouldn’t someone have done that? I still haven’t figured it out.”

The chart, measuring nationwide home prices adjusted for inflation, was this one:


From 1890 — just three decades after the Civil War — through 2012, home prices adjusted for inflation literally went nowhere. Not a single dime of real growth. For comparison, the S&P 500 increased more than 2,000-fold during that period, adjusted for inflation. And from 1890 to through 1980, real home prices actually declined by about 10%.

It’s important to reiterate what a home does do: It provides a place to live. A place to raise your kids. A place to spend the holidays with your family. A place to barbecue with your neighbors. Even a place to rent out. That has tremendous value, of course. Shiller owns a home. He’d buy another if he needed one. “Basically, if I were in the market right now because I wanted a house, I would buy a house,” he said.

The problem is that Americans expect more out of their homes than just a place to live. In 2010 — years after the housing bubble burst — Shiller’s surveys showed Americans still expected their home to appreciate by more than 6% a year over the following decade. If history is any guide, that’s probably about twice as fast as they’ll actually appreciate by. Despite the housing crash, people still expect stock-like returns out of their homes.

Since a home is most Americans’ largest asset, you can see how this becomes a problem. When you have inflated expectations about the largest asset you own, you walk down the path of financial disappointment.  Everyone should live in a home they can afford and provides the lifestyle they desire. But assuming it’s a superior long-term investment, one to rival stocks, is dangerous.

My addition: Of course, there are exceptions to the general rule some specific areas where homes will increase in value.  Areas undergoing gentrification is a great example of areas that generally appreciate in value.  But the key to remember is that those are exceptions to the general rule.  If you’re buying a home as a long-term investment (and not just to meet your housing needs), make sure you have data to explain why your home is an exception to the rule.



I was a jobless sophomore with $9,400 of debt to pay off and fast! I had a $3,400 90-day loan from the university, $6000 in credit card debt, and a bad habit of expecting my parents to manage my money. The 90-day window to repay $3,400 kicked me into high gear and I began searching for ways to find cash. Once I got energized about the loan, I also made a goal to pay off my credit card debt before fall semester started in 8 months.

Before setting the goal to pay off my debt, I rarely looked or thought about bills.  Setting an aggressive goal changed me a lot.

My lease ended soon after I set the goal, and I moved into a one-bedroom apartment with a friend who was an architecture major. In addition to being a blast to hang out with, she taught me money saving tricks that began to reform my bad habits. The living room was huge and the bedroom had just enough space for one bed and both of our clothes. She built a dividing wall in the living room to provide a private place for one of us to sleep. Then she taught me to go without cable, not to buy stuff to solve every new need or problem I had, and to make the air extremely cold during the night and let the apartment cool off during the day to decrease the air conditioning bill.  My monthly bills dropped from about $1,000 to $750.

I also took a part-time job which paid $3,000 over four months. Even with those changes, I needed more money and looked for ways to bring in large amounts of cash. I called my mom and seriously talked with her about if or how she could help. She was able to contribute $2,000.


Money-Saving Item Amount
Rent Savings $1,200
Lower Bills $   750
Part-Time Job $2,450
Mother’s Assistance $1,600
Total Saved $6,000
Total Initial Debt ($9,400)
Remaining Debt $3,400


Although my horizon was looking brighter, I still needed another large infusion of cash to finish paying off the credit card. The part-time job only lasted from May – August. After that, I’d only have $250 per month to pay down the debt and buy textbooks.  At that rate, it would have taken me 2 years and cost almost $812 in interest to pay off the card.

I weighed my options and decided to apply for an unsubsidized student loan. Instead of the whopping the 22% monthly compound interest rate on the credit card, the loan had a significantly lower 5.8% interest. I paid the loan during the first 6 months after graduation, which cost me only $58 in interest.The loan saved me $754 in interest payments!

In those 8-short months, I went from being completely clueless about my finances to implementing innovative techniques to save money and decrease interest payments.

Your turn:

Do you have a lot of debt to pay? How about setting an aggressive short-term goal to get you energized? If that doesn’t work, what will motivate you?

Think outside the box for ways to bring in or save $200 or more in a month or two.

A few ideas:

  • How about changing apartments or postponing a large purchase?
  • Or you could find something you spend a lot of money on–such as cable, concerts, vacation, eating out, or shopping–and cut out one item for long enough to reach your goal. During that time, you’ll grow in your ability to do without. You’ll get stronger like I did. Once you hit your goal, you can add the item back into your budget.

What other ideas do you have for quickly saving money?


ImageThe registrar’s email said I would be kicked out of school if I couldn’t pay $3,400 for tuition in 10 days. I re-read the email over and over again hoping the words would change.  “How could this happen?” I thought. “Both of my parents are doctors.”  I had spent about $6,000 on program costs, flights, shopping, etc. to study abroad the previous summer.  Had I planned for the tuition payment, this wouldn’t have happened. 

I realized I was financially irresponsible. I didn’t plan how to pay for tuition, rent, food . . . anything. I expected my parents to manage it.  They were recently divorced.  Within 4 months, my mom had became a single parent financially responsible for 3 kids, buried her father, and took on lawyer’s fees.  My tuition fell to the bottom of her long obligations list.

Fast forward 8 years, and I now have a well-funded 401K, an IRA that I started in college, and enough savings for two years of expenses.  I am also a blogger at Financially Fab and Smarteys, financial advisor to young professionals, and corporate strategist at a Fortune 500 company.  The registrar’s email was my wake up call.

I got a 90-day interest-free loan from the university so I could stay in school. Over the next 8 months, I read 20+ books on personal finance and learned that money was a tool to buy needs and wants. If I handed over my financial life to anyone – my parents, a bank, a credit card company, or anyone else else – then I’d lose control of basic life decisions. I needed to plan how and when to pay bills. 

Your turn: Do you need a simple plan to pay monthly bills?  Do you want to improve your current process? Check out the steps below! Respond with a comment sharing your financial questions and concerns. I’d love to hear from you.

Simple System for Paying Bills:

 1.     Reserve an hour of uninterrupted time and gather all your bills into one place.

    • Seriously, NO interruptions.

    2.     Check that you have enough cash to pay bills

      • My process:
        • I earn two paychecks a month and divide my bills into two groups: beginning of the month and end of the month payments.
        • I add up the total cost for beginning of the month bills and make sure it’s less than my beginning of the month paycheck.
        • I do the same check for end of the month bills.
      • Tips:
        • If you get paid more or less frequently, you can divide them into more or less groups.

      3.     Setup reminders

        • Using paper calendars:
          • Write the due dates for all your bills for the next 2 months in red.
          • Write the date you will send the bill payment in blue. 
          • Post the calendars somewhere you walk by often (i.e. in kitchen or by computer) or where you sit to pay bills.
          • Tips:
            • I keep my life simple only having two blue dates. I pay bills twice a month, and leave enough time for mailing and processing between the blue send date and red due date, as that can take 7+ days. 
            • Online ways to replace old-fashioned paper
              1. For online calendars, create email reminders for the blue dates.  The calendar remembers for you!
              2. If your online banking website has bill reminders, use that to replace the blue and red dates–as long as you check online banking often or your bank sends reminders.
              3. Use Mint.com to track bills and receive email or text message reminders.


              Will applying for rewards cards hurt your credit score?

              Ever see the reward cards that advertise thousands of travel miles for just opening an account?  I recently got the Capital One Venture Card and was wondering how my credit score would be affected if I applied for several of these cards.

              The post below is by RJ Weis at Gen Y Wealth.  He applied for several cards and tested the impact on his credit score.  What do you think happened?  The results were surprising! Read below:

              The Impact of Travel Hacking on Your Credit Score

              by RJ on May 15, 2011

              The last time I checked my credit score, it was at 717. That was on June 12, 2010.

              Since then, I have applied for 4 different credit cards. The purpose for applying to each of these cards was to earn free miles.

              The four cards I applied four earned me 200,000 miles. That’s good for 4 round trip tickets to many international destinations.

              So how did this impact my credit score?

              Let’s find out.

              Last time I checked my credit score, I did so using MyFico. Now it costs $20 to get a credit score at MyFico, so instead I’m using Equifax. You can view your FICO® score through Equifax for $15.95.

              I’m happy to report that my credit score as of 5/13/2011 is 752. An actual increase!

              Why did it go up? I can think of a few reasons.

              1. I only had one credit card before, so more credit cards improved my utilization rate.
              2. I paid all of my bills on time.
              3. I didn’t apply for many credit cards all at once. Although, I’m not entirely sure if this helps or not.

              One of the biggest assumptions about travel hacking is the negative impact on your credit score. Everyone’s credit situation is different and nobody knows exactly what goes into this calculation. However, my point is that you should always test assumptions. Many times, they’re incorrect.

              Stocks are still on sale, BUY, BUY, BUY!

              Yes, that’s right, I said it, stocks are still on sale. My ROTH IRA (Individual Retirement Account) earned a 15.95% increase from March 2010 to today.  Most of the increase was due to the overall stock market doing better. During the recession, stock prices crashed hardcore.   Two things determine stock prices:

              • Fundamental value of the company: company’s annual profit, upcoming products/services, and the cash you’d make by selling all the company’s assets
              • Perceived value by investors: people’s opinion of how well a company’s going to do in the future

              During a recession, the fundamental value of a company changes some and the perceived value changes A LOTPeople worry that the economy won’t recover and forgot that recessions happen periodically. They see their investment balances dropping fast, become terrified, and sell their stocks.

              Stock prices continue to drop until people feel comfortable investing again.  This is the best time to buy!  It’s a sale.  

              Stock prices in a recession resemble a post-Christmas sale—which are the lowest prices of the year. (When else can you buy a $300 Banana Republic jacket for $15?) Think of a recession as a surprise sale (a cyclical discount on stocks).

              If you have extra cash now, buy! If you don’t have cash, get ready for the next major sale. It will happen. We’ve had 4 recessions since 1982 (Dec 2007 – June 2009, March 200 1- Nov 2001, July 1990 – Mar 1991, and July 198 1– Nov 1982).

              During the next recession when everyone else is running out of the market, we’ll come in with buckets of cash, buy stocks on sale, and bolster the economy!  Ha, buying during a recession helps you and helps the national and world economy! Call that my community service message for the day.


              Have you been investing during or after the recession? If not, are you thinking about getting in? Share your experience!

              My $1,500 Accident!

              My recent car accident is a great example of why you need an emergency savings account.  I was riding my bike to work one Friday.  I took my regular route. Traffic was normal.  Nothing was out of the ordinary .  .  . then bam! I got hit by a car, flipped over the car with my bike, and landed on the concrete on top of the bike.

              When I woke up, the driver was holding my hand and trembling.  A small circle of people surrounded me.  He said, “Someone call an ambulance!”  Instantly, my first thoughts were, “Sh**, an ambulance is $400 – $500 for a 10-minute ride!  Maybe I can stand up and ride in someone’s car.”   (Yes, those were really my first thoughts.)  I tried to stand but couldn’t move.  I reluctantly sighed to myself, “An ambulance it is . . .”

              So far the medical costs have been $1,230! Do you have $1,200 lying around your checking account?  I don’t.

              The costs above included my health insurance covering 85% of costs after I met the $200 deductible. (To answer the most asked financial question: No, I can’t sue the driver.)

              Those were only the medical costs!  For the next 3 weeks, I was using pain killers, crutches, a neck brace, and a wrist brace.  I looked as bad as I felt and used a few luxuries to ease my suffering.  I took cabs more often and bought lunch and dinners, rather than carry food to work or standup to cook.   I also bought some clothes as a distraction.

              So far the accident has cost me $1,512!   Without an emergency savings account, I would have gone into credit card debt.  Medical costs are the #1 reason for bankruptcy in the US.

              Emergencies—car accidents, losing your job due to the recession, needing a new set of tires, a flood in your apartment—are surprises.    That’s why you NEED an emergency savings account.  You can start one this week by saving $5, $25, $50, or any amount your can consistently save each month.

              What would you do if you had a $1,500 accident?  If you don’t have an emergency savings account, how will you start one?