What comes to mind when you look at the chart above? What could the chart possibly be tracking? The EKG of a defective heart? Altitude measurements of the various Tour de France stages? The stress level of an air traffic controller during peak hours? None of the above. The above chart represents the Bitcoin price over the past three months.
In the modern connected, Internet age, following the herd may not only be ill-advised but also downright dangerous – in both social and financial matters. On the social side, connected devices and social media have spawned various fads and crazes of varying levels of stupidity and danger, with some fads even resulting in deaths. Some of the most unbelievably stupid recent stunts have included the duct tape challenge, the car surfing challenge, and the choking challenge just to name a few. So what explains this mass madness?
Privacy anywhere is hard to find these days, but on the Internet, it simply doesn’t exist unless you really put a lot of time, money and effort into it. In an age of interconnected devices, your every step and action is being tracked and monitored whether you think so or not. Your cellphone tags your location every second of every minute of every day. Your Google search log records your private thoughts, interests, and impulses.
In business, there are two ways to improve the bottom line, either by 1) putting your assets to more productive use to improve the inflow of income or 2) reducing the outflow of expenses. In investing, to improve cash flow, you can either 1) find investments with the better returns for the cash you already have or 2) reduce your expenses to free up more cash for your current investments.
Unless you were born with a silver spoon in your mouth, it wasn’t easy to get to where you’re at financially and professionally. You had to work at it. Like many in your position, you got to where you’re at because you invested in yourself. First, you invested in your education by doing well in school. Then, you found a good job out of school and invested in your career by putting in the time to rise through the ranks, but here is why you’re reading this article today.
During the real estate boom ten years ago, much was made of all the seemingly new millionaires being made every day. Then when it all came crashing down in 2008, these millionaires were wiped out overnight. What happened? Being a millionaire should ensure financial security right? Wrong. It depends on the type of millionaire you are. There’s the net-worth millionaire and the cash-flow millionaire.
The Great Recession officially lasted from December 2007 to June 2009 and had immediate and lasting negative financial impact on households and the broader markets. The economy bottomed out, crushing the real estate and stock markets, destroying $18.9 trillion of household wealth and wiping out more than eight million jobs. Investors heavily invested in the stock market through investment and retirement accounts saw their portfolios wiped out almost overnight.
To significantly grow wealth, it doesn’t hurt to learn from those who are good at it, more specifically looking at the investing habits of those with a good track record of growing their wealth. And university endowments have been some of the most successful investors at growing wealth. And ranked among the wealthiest and most successful of university endowments is the Yale University Endowment.
During the 2012 elections, one of the revelations that came out about Republican candidate Mitt Romney’s finances was that his self-directed IRA was worth up to $100m. With current annual contribution limits of $5,500 for those younger than 50 and $6,500 for 50 and older, how the heck does anybody build an IRA worth $100m?
With a self-directed IRA with checkbook control, the owner has complete signing authority over his/her retirement funds. No more going through an administrator to fund investments. This type of control offers greater investment freedom, allowing the owner to manage assets with ease.