You bought a new car and 4 other signs that tell everyone you’re bad at maths

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1) You’re bad at maths because you bought a new car

Quite a few of my friends read my blog. Some of them like Wendy* are even on board with the whole save enough to retire really young idea, but maths isn’t her forte as the following conversation should show:

Wendy: Can you believe Bill* just bought that big BMW*. So stupid, he makes less than I do. What do you think it cost?
Patrick: Well it was about 2 years old, so it’s probably worth around R300 000.Be like Bill, buy used cars.
Wendy: R300 000! I’d never spend that on a used car. I’d much rather get a new one for that price. What an idiot.
Patrick: Well the minute you drove out of the showroom in a new R300k car you’d lose R60 000. After one year of owning it your total loss would be around R90 000. After a year of owning his used car, Bill would only lose R30 000.

Conversations like that often have a lot of uncomfortable silence following them, especially when Ms want to be frugal bought a brand new (though much cheaper) Kia a few months back.

*Names and even cars have been changed. I’ve learnt my lesson on using even relatively similar examples before.

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How much to save each day to retire with R10 Million

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Teaching for moneyDear Investor Challenge,

I’d like to be rich one day. Properly rich, not just the “If you have a roof over your head and food in the fridge you’re richer than most of the world” rich, but actually very wealthy. A millionaire just won’t cut it, I’m aiming for a huge stash of cash. R10 million should do quite nicely.

I’m in Matric at the moment, and I have a part time job waiting tables on weekends. I make a fortune there, at least a couple of hundred a shift…

Next year I’m starting a teaching degree. I know it doesn’t pay well, but it really is what I want to do. The reasonable hours and long holidays are also going to be a bonus too.

So what are my chances of getting to R10 million with the totally shameful teachers salary I’m expecting to earn one day?

Teach to be

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Our government really doesn’t want us to invest locally

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Dear Investor Challenge,

We really need investment in South Africa. It’ll create jobs, stimulate the economy and drive innovation which could one day cure AIDS, Malaria and Cancer. It’ll even end the current scourge of crime we’re suffering so much under. But be warned, as fantastic as that sounds, if you do invest in South Africa I’m going to punish you.

Yes, I’m going to punish you, hard. And not in the 50 shades kind of way but really miserable pain. Exclusively to your rear pocket, where you carry your already heavily punished wallet. Of course I will still punish you for investing internationally, but it’ll be so much worse if you keep your money in SA.

But please, ignore the fact that keeping all your investments here is bad for your wealth, terrible diversification and completely ignores the efficient market hypothesis, just invest locally, it’s the right thing to do. Like paying your TV license so Hlaudi can get his next bonus or raise. Or both.

Thanks,

The South African Revenue Service.

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The fantastically simple rule of 300

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Dear Investor Challenge,Early retirement plan

This work thing can be a royal pain in the ass sometimes. People are supposed to listen to me, but I really get no respect. When I wanted to sign a new deal with the Russians, my accountant stopped me. He did the same thing when I asked him to fund my girlfriends travel company, now she’s all upset with me too. Then a couple of months back I was told that I’d have to pay for my swimming pool and farmyard, even after they were all promised to me as perks for a job well done, it’s totally ridiculous!

Now last week my three best friends decided to leave my business. I’m going to miss them so much, they were always so generous, and then just the other day, even the youngsters around here said they want me out. It just feels like everyone around here hates me. There’s really no reason for me to stay here anymore, which brings me to the point in this letter.

How much money do I need to have saved up and invested before I’m good to go? I really don’t want to come up short and have to try live on that measly excuse for a state pension we have.

Mr Anonymous

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You actually can buy happiness, but it’s not how you think

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"...I want to find out whether there's any truth in the belief that money can't buy happiness."

“…I want to find out whether there’s any truth in the belief that money can’t buy happiness.”

I often write about things I don’t like spending money on:

  • Balloon payments for a car. Remember those, the deposits you still have to pay AFTER you’ve paid for the car for the last 72 months. The Americans have a better term for these types of loans, they call it a bullet loan. Bullets are scary so this makes sense, balloons are happy which you won’t be when your payment is due. Don’t let someone aim a loaded bullet your way when you make a car purchase, it’s going to hurt, a lot.
  • Expensive label clothing. Are your genitals on display? No? Then consider yourself dressed. Feel free to spend money on quality clothing though, if it lasts a long time it is often more cost effective than buying cheap clothing more often.
  • Outrageous unit trust fees. I hate them, the people who dream them up, and all of the suckers who fall for them which means they’re still not extinct. Fortunately they are on the decline, and even Steen Jacobson, the CIO of Saxo Bank knows their days are numbered.
  • Taxes. It probably wouldn’t be so bad if most of the money didn’t go towards Nkandla, #1’s girlfriend at SAA who managed to lose R1.4 billion last year, our international relations minister with a hole in her head or the SABC boss who lied about finishing school, and now forces everyone else to lie about the news and to literally sing his praises. In a less corrupt country I’d have no problem with this. I’d even happily pay the Swedish 60% tax rate if the money would go back into social services rather than the pocket of politically connected hyenas.
  • Bond payments. You can argue with me until you’re blue in the face. Your house is not an investment, finish and klaar. I don’t care if you have one, but don’t kid yourself, it’s a lifestyle purchase, not an investment. The only positive I see is that it force the typical South African’s with money allergies to save.

Today I want to talk about something I love spending money on. It’s appropriate too, because I’ve recently spent a lot on it!

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What percentage of your investments should be offshore?

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Dear Investor Challenge,

The guy running my country seems a little daft. He once said that showers cure aids, and thinks that the African continent is so large all the others can fit inside it. I’ve seen him on TV trying to pronounce a not so big number, and while my 5 year old seems to be able to do this quite well in pre-school, this guy took four attempts, and I think one of them included an eleventy.

Now I really don’t have too much of an issue with stupid people, in fact Arnold Schwarzenegger remained one of my favourite movie stars, even after he said that he thinks gay marriage should be between a man and a woman.

The bigger issue for me when dealing with the #1 man of missing marbles, is that when he stuffs up, I lose a lot of money. This is something I don’t like very much. It’s better than losing a limb to carnivorous ants of course, but only just.

I’d like to take some of my assets offshore, somewhere safe from such stupidity. How much should I invest offshore? And any tips on where?

Thanks,

Ivan Tout

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The cheesecake powered cash printing machine

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Giant cheesecakeI have a machine that prints money. It’s legal too, and operates on nothing more than cheesecake. That’s right, nothing but pure cheesecake. I have two others that operate on a combination of cheesecake and a teeny tiny amount of electricity. My brother has two of these, and I’m buying one for my wife now too so we can use ours together. These machines are really quite common, I’ve been trying to get Orca to buy one that would run on beer, since he often has a surplus of that 🙂

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A newbie’s guide to investing on the JSE

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LemmingsMy favourite computer game as a child (yes we had computers back then, much to my son’s disbelief) was Lemmings. In this game you’d have to rescue these humanoid lemmings who were too stupid to do anything else except follow their leader to their doom. Sounds pretty much like our government at the moment doesn’t it?

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7 Financial products so bad they should be an April fools joke!

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The most useless sign everIt’s April fools day, but since I’m still upset that I fell for two of them (Heyneke Meyer returning as springbok coach and myBroadBand launching uncapped fibre for R99 a month) I thought I’d spare you any more stupid practical jokes.

Instead, I’m offering you an antidote to the madness. A kind of an unApril fools joke. I’m going to list out the top seven financial products so dumb, we should all be wishing they were practical jokes instead of reality. So let’s count them down:
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Should you be dollar cost averaging?

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You've just won second place in a beauty contest

Yes, well done you uber foxy person you, you now have an extra R1.2 million to invest. This is such a common problem, I thought we should address how to handle it. Firstly, I would like to advise against spending it all on hookers and cocaine like this overly honest guy would do. Sure it’s fun, but how much of that month will you actually remember? And after you’ve lost your job, wife and the bridge of your nose, life might just suck a little afterwards. Ideally you’ll invest your winnings, but should you do it all at once, or should you spread out putting it in investments over a year or more?

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