The subject of this weeks blog post, but what does that really mean, and what does the bread picture have to do with it?
(The bread picture, nothing really, just that bread has become symbolic with basic needs being met, and it was my first try at baking some bread)
Speaking of basic needs and money;
“When is enough money…..well….enough money?”
When do we in our individual, personal selves reach a place where we simply say;
“ok, I think I have enough money now, I don’t need to bother spending my time making more.”
Or do we simply never get to that point and keep trying to make more money?
And….I’m not pretending I know the answer to this question…..I don’t….I’ve got more questions than answers……
Personally I don’t yet think I’m at a place where I can say that yet, while I’m thankful for all that I have, and how far I’ve come toward my goals, I don’t believe I’m at that place yet…..
but, I think it’s a question worth exploring even if there is no direct answer, and only a bunch more questions…..
Is it that society appears to glorify financial success, over other forms of success?
If we all stop and think for a moment, (generally speaking) many of the worlds billionaires, multi millionaires and wealthy big-shots we all recognize as being “successful”, Are all still at it, whatever it is that they do, their still doing it…..making money
Are they still on a quest for more? …..if so, why?
What’s the point? Or maybe there is a point, but what about the other options….
Are there not other forms of success aside from financial success? Perhaps worth some thought and exploration.
We’ve all got financial goals or life goals that require serious finance……but what about the other stuff?
it’s worth questioning why we do what we do…..
When you reach your current financial dreams and goals, is that going to be enough for you?
If it’s not….then why isn’t it?
Or, was the goal to be of perpetual money making regardless of if you really need anymore or not?!
Is it an excuse to avoid exploring other responsibilities in your life?
I’m all for “produce more than you consume” and work hard lifestyle…..but it has its limits….
If you need more…..is something still missing that you don’t yet feel complete and need more money?
Can money and the modern worlds status of success even fill that kind of a void?
Wasn’t at least some of the reasoning behind the long hours, sacrificing time with family and friends………sacrificing free time and abstaining from non-essential purchases a means to an end…..
Wasn’t it supposed to be somewhat of a temporary measure to get you to whatever goal you had?…..
Did you ever say something like…..
“I’ll sacrifice time with my wife and kids so that I can make ‘x’ more money so that we will be better off later and then I can spend time with them”
But then when later came and the goal was reached, somehow it wasn’t enough after all….and more money needed to be made……still not good enough?!
If all our basic needs and more are met financially for the rest of our days, what makes some of us still want more?
Is that what greed is, or is it something else?
Or is it more a question of priorities, and having put to the side all the other important things in life like family time and just peace and quite….
That when you finally reach your financial goal and sit for a minute reflecting…..
You realize you still feel a bit empty and you choose to keep making more money instead of trying something else like not missing out on the important stuff.
After years of making…..”making money” or “building a business” a priority it becomes a habit, and what makes you feel comfortable…..maybe full time with the kids and family wasn’t such a good idea after all?
Perhaps it’s just a matter of confusing ideas of success and getting stuck on repeated financial success.
Nothing against capitalism per say, but it does seem to have its limits.
That’s all for this week, it’s all just a jumble of thoughts and words this time…..
Liban our seven year old asked when we could go stay at one of his favorite jungle lodges, the one with the nice swimming pool.
“Do you have $130 for one nights stay?”
And so it started….
Liban, “no”…..,”but Abo” (that’s dad in Somali) “you have money, you can pay”
Me; “if I’m paying then it’s going to wait until we have paper work to do in Belmopan (the capital city)”
Liban; “but that’s too long…..can’t we go sooner?”
Me; “no, we have to have good reason to
make the trip……if you want us to go, figure out how you can make $130, if you can do that, we will go as soon as you have it”
Liban; (thinking hard…..) “ok Abo……but I only get paid a dollar to help the neighbors with the goats…..that’s going to take….like forever……so I need to think about starting a business or something….”
Me; “ok….that’s a good idea, what are you going to be doing?”
Liban; “I could make and sell go carts, or cars”
Me; “well…..maybe you could, yes…..but isn’t that going to take some time….like years……and money like lots of it …,to get you started?…….”
Liban; “oh…yea….I don’t know how to do some of the parts”
Me; (trying to keep a strait face) “if you want to go stay at the place with the pool anytime soon, as in this year, you need to be thinking about what you can do now with what you have access too now, remember it doesn’t have to be complicated.”
Liban…..”Abo….me and my sister could make fruit juice to sell…..we have passion fruits falling off the fence…….”
Me; “ok….that sounds like a reasonable idea……but did you ask your little sister?”
Liban; …..”no….but she can help, she’ll do it”
Me; “ok then…..but we don’t have a drinks cooler….you know, the big one like at your football practice”
Liban; “we can buy one”
Me; “with what money?”
Liban; “oh……ok…..maybe we can borrow the one from football?”
Me; “I’ll ask a few people if anyone can lend us one to start with, you need to make a sign too….how much are you going to charge for juice?”
Liban; “I don’t know…..how much does juice cost?”
Me; “well……watered down fruit juice in the small bottles is often $2-“
Liban; “ok, so we can sell it $2- for a juice”
Me; “yes…but…why will people buy your juice? You need your product to be different than the next juice, and you also need to sell a lot of it quicker to make it worthwhile.”
Liban; “ok, juice for $1- then
Me; “that’s better, but you’ll need to minimize costs…..why don’t you try selling it by the cup, cups are cheaper than bottles….”
Liban; “ok…..me and my sister will sell orange and passion fruit juice by the cup for $1-“
Me; “ok, that’s better”
Liban; “Abo…..can you get the cups and ice?”
Me; “ok, I’ll lend you the money for that…..I’ll discuss with Hooyo (Somali for Mum) ….you’d better start collecting the ripe passion fruits.”
And so, our seven year old persuaded us and his sister into helping him make the juice business work….
So far, so good, he’s sold over 70 cups of juice, he and his three year old sister have learnt many worthwhile lessons and his trip to the place with the pool is getting closer.
That’s the title and subject for this weeks blog post!
So what is uncool stuff?
Well, let’s look at market cycles….they’ll help us figure out what’s uncool for now.
A market cycle as the phrase implies is a cyclical pattern in a market.
any market and industry more or less,
Most things we need and want go through slow ups and downs between being in favor and out of favor.
when something is considered in favor and everyone wants it, the price tends to go up, and likewise when something becomes out of favor, the price goes down and no one wants it.
This is also called “supply and demand”
The actual value is considered to be the middle price between high and low, when a market reaches this price it’s called “reversion to the mean”
It doesn’t take a genius to figure out that the cheapest and best deals are to be found when no one wants something and it’s out of favor!
Yet in the investment world, emotions tend to cloud judgment and for some reason, many of us want to buy stuff that is considered “cool” and in favor.
Partly that’s because we hear other folks talking about “how great” this cool thing or company is and naturally we want to invest in great companies and industries.
Instead, perhaps we should be looking at the uncool stuff for value and buying that instead,
For decades, a lot of real goods and services have become uncool and shunned as being menial dirty jobs, which in some ways they are, but in reality these are things that we mostly can’t do without, turns out we need a lot of uncool stuff in our lives too.
Farming is very uncool! It’s one of the worst industries to try to make money in.
So looking into the future….who’s going to produce our food, if it’s a crappy business?
Well….thankfully the cyclical nature of markets should naturally take care of this problem.
Over time businesses involved in this uncool industry have been quitting or going bankrupt, supply chains becoming more uncertain and other factors (including politics) are disrupting availability.
What does that mean?
Well….at some point we should have supply and demand issues.
If we all intend to keeping eating food in the future, (I certainly do, I love food)
Then we are guaranteeing that the price will go up in the near future and that those producing food will again be able to make a profit, I think it’s already happening.
There’s no other options, it’s either, we stop eating, or the price goes up and food gets a bump up in production and becomes cool again!
This is just one example
There are many uncool industries out there, I suggest we look at them, figure out which are indispensable and find ways to contribute and ultimately profit.
Often we want to forget about what that means and just keep our heads down and keep working…..it’ll all be fine!
Or….yea it sucks, but what am I supposed to do? I’ve got to put food on my table!
But nothing every really changes does it?
Sure you finally get that newer car (on payments) or even the bigger house or apartment. (More bills!)
your working more, and you got a raise! you can afford to pay more rent now right?! (or pay a bigger mortgage, I mean your family’s growing, you just needed the extra space!)
But again….your still running around the hamster wheel aren’t you?!……
Ok…ok…..let me keep my head down some more, I’ll figure it out!
I got this!
I need to work a little harder,
We have to get a babysitter too!
Then my wife and I can finally both work!
then I’m sure we will finally be able to get ahead!
Work…..work…..and more work….
The kids are growing up fast!
Wow…..(you get the picture!)
I mean….we’ve both been working our asses off for several years since we last sat down and looked at our situation and our budget, that was when we decided to get the babysitter so we could both work longer and harder to get ahead…….
I hardly even have the energy I used to have…..the kids are just getting bigger and bigger….something’s got to give….
This family life thing is hard!
Who know?! all this could be so expensive!
the babysitter, we had to get a second car……
I knew we shouldn’t have taken time off to go on that two week summer vacation!
We couldn’t really afford it, could we?
But…..we were so worn out I just thought it would be nice, and we deserve it!
How is it possible we still have no real savings?
I mean…..we’ve actually got less money now (and way more debt!) than we did when we met, before we got married?!
How can that even be possible?
We’re not really any further ahead than we were five years ago…..but we’re both working way harder than we did then!
This is depressing!
And on….and on…….and on….,
Yep, that’s the rat race I’m talking about, and It really sucks!
(Hope my fictional story above did at least paint the picture I’m trying to convey!)
So, what can we do?
How do we actually get ahead and eventually get out the rat race?
While there is no one answer to this all important question, some important points that are quite obvious from the story above, but that took me years to figure out and learn (decades actually!)
1-Spend less money!
Yes, that’s right, spend less money, don’t get the newer car or the bigger house, or even the babysitter if you can avoid it!
2- spend less money again!
Budget, your expenses must be less than your income, write down your monthly expenses and your budget, take a monthly average over the next 12 months.
3- earn more, and, do not increase your expenses! Keep your budget the same! No new shiny things! Making more money means you save more money, it does not mean spend more money!
The answer is NO!
4- work smarter, find a skill that you already have and do it as a side hustle!
(You don’t have to retrain, just think about what you already know, who would pay to learn what you know? And How do You get it to them?)
5- keep doing your side hustle!
being consistent with it over time will start to pay off!
Ok, let’s stop there for now.
I think you get the point,
If you actually do the things mentioned above, you will be well on your way to getting out the rat race!
In a relatively short period of time, you’ll have a healthy amount of savings and a reasonably developed side hustle that’s starting to pay you. That’s awesome!
Ever heard it said that the most important investment you can ever make is in yourself?
Well I think it’s true!
And it’s what I want to talk about today l in this blog post!
many of you have probably noticed we’ve not posted anything new in a while! A long while!
No excuses, we’ve just not been able to keep up with all our online commitments, the website and blog took a hit.
Everything in our lives has been going as amazingly as ever and probably better than we’d even expected!
So, lots to blog about going forward, just simply had thought we could keep this blog going better
But we let it fall flat on its face! Oh well, here we are.
Anyway, we’re back on the writing and blog now, newly committed and ready to share!
Consistency is the key they tell me, so here goes, we’re trying again.
I guess you could say, the time we spent absent from this blog, we’ve been investing in ourselves!
And we think it’s starting to pay off!
Briefly, let me explain……
In some ways It feels like it’s been a long journey for us as a family to get from where we were a few years ago, (working the daily grind, running the rat race) to where we are now.
Where are we now?
Well….we moved into our house in rural Belize a few months ago.
How we got here?
By investing in ourselves ultimately!
And lots and lots of hard work, but interestingly, working hard for yourself and your needs is more fun and rewarding than some might think!
All in all it’s taken us just about two years from start to finish, we built our house ourselves with no help….oh and we developed our farm too.
(you can tell we’re a little proud of ourselves can’t you? sorry!)
We live off grid, but enjoy loads of solar power, fresh water and high speed internet,
I’m currently working on digging a pool for those afternoons where you just want to cool off in the water and kick back in a hammock, it helps that the kids are cheering me on for this one, they really want a pool!
Ok so, did the above description of our lives sound remotely like your understanding of farming?
(It’s not what used to come to my mind, that’s for sure)
what’s your understanding of being off grid and being as self sufficient and sustainable as possible?
(I thought that meant living in woods, eating berries and singing “kumbaya” by the camp fire, it definitely didn’t involve internet and a pool, maybe not even a shower)
Ok…..so whats the point?
Well that is the whole point!
Mindset is everything!
What you can conceive you can create!
You don’t have to go hide in the woods and eat berries for the rest of your days!
So in the interest of the title of this blog post;
what are you going to conceive and create for yourself and your family?
That is the big question!
Investing in yourself is key to accomplishing most everything positive in your future,
And I don’t mean you have to go back to school of some sort and retrain, mindset is not something they teach there as far as I know.
it’s the baby steps that you take………… that over time create the new you that you strive to be!
If your not completely happy with where you are in your life now, then know that it is those baby steps you take to change your mindset that will make your future what you want it to be.
And that’s a really long winded way to say…..
1- Re-evaluate your mindset
2- Re-knowledge (re-educate) yourself
That’s all for this week, hope it was at least remotely interesting enough to suffer through it to the end!
and the pic at the top, that’s just some fruit from our farm, but i thought it was a good example of the “fruits of self investment”.
How to navigate inflation with your savings and investments:
Inflation is and always has been the silent killer of savings, and for that matter wealth in general.
Last month we spoke about the silent damage inflation does to ruin your savings accounts, and that it’s all about purchasing power. Central bank issued money will always loose its value over time. In the western world, the near term future looks and feels like we’re in for higher inflation and more importantly a greater annual loss in purchasing power going forward.
We all work hard to create our money, let’s keep as much of it as we can going forward.
Working hard to create wealth is important, but it doesn’t stop there, many of us underestimate the work it takes to hold on to your wealth and it’s purchasing power once you have even a little bit, don’t think this only affects “rich people” this affects the “poor” and the “middle class” probably more so than the rich!
so what can we do about this inflation or purchasing power thing?
In a nut shell;
The most important thing is for your savings to grow at a rate that is equal to or greater than the rate of inflation at any given time.
That means your money has to continuously make more money in order to retain its purchasing power into the future.
For those of us that live in the so called “developed world” savings accounts at the bank won’t do the job and are mostly pointless. Their rates of interest are simply far to low, you loose money by storing it in a savings account.
Stuffing your mattress doesn’t work either!
Using the dollar as an example, (CPI = consumer price inflation) its easy enough to see above why holding cash for the long term makes no sense at all!
Fortunately there are many ways we can store our money other than in cash,
Cash is the problem here, it looses its purchasing power over time,
but lots of other tangible things don’t, or at least not like cash does.
Generational wealth is not so much about being cash rich, it’s more about being asset rich.
Assets can generally be sold for cash at any given time, the difference between the two being that assets typically appreciate with inflation, whereas cash depreciates.
You may need to change the way in which you view your savings, and
you’ll need to consider dividing your savings cash into a minimum of two categories.
1- the I might need to have access to it at short notice pot.
2- the I won’t be touching this money until I retire pot.
For both pots of cash you’ll want to consider trading most of it out of cash and into something else that holds its value better than cash does, this will help you beat inflation and keep your purchasing power going forward.
But before we get to that, we need to briefly talk about how you figure out what to buy and when to buy it.
The basics of this is to understand that everything that can be bought or sold is a market and that all markets are cyclical.
Markets go up and down over time, meaning that most of the time any given asset is either overvalued or undervalued and only touches on actual value (the line in the middle of the graph) for a small portion of time, twice in each cycle, once on the way up and once on the way down. This is called “reversion to the mean” market cycles vary in length and breadth, but that doesn’t necessarily matter as much as your timing.
What does matter for the purposes of beating inflation and for the purposes of investments, or divesting out of cash is the
entrance and exit time of your cash in the market cycle.
This is important in achieving maximum results.
If the market for a particular sector is high, don’t buy it, find a market sector that’s low in its cycle.
Above all else be patient!
The time to buy anything is when it’s on sale at a steep discount and not when it’s in short supply and trading at a premium.
This is as true for real estate as it is for gold and silver, the latest fancy tech stock, or even the goods at the local grocery store, to get the most value for your money you want to buy when things are cheap and on sale as it were, and then be patient and wait it out for as long as it takes for the market to become expensive, at which point you sell and buy something else thats cheap.
We will continue with part two shortly
For the money that you want to have quick access to you need to buy into things that are highly liquid and easy to sell again.
gold, silver and other precious metals are a reasonable choice, they can be held physically at home or through a trusted third party. (our paid subscribers have access to the options we’ve chosen personally for this)
Gold, silver and most precious metals are highly liquid, and can be sold almost instantly for cash when you need it. This allows you to trade out of cash for as long as you need to and then back into cash as needed, the gold and precious metals market is currently in the early innings of its bullMarket meaning that it’s not a bad time to buy and hold.
other options for instantly accessible savings include traded equities (shares in public companies held through your brokerage account) and even better are dividend paying equities.
However your capital is also at risk of loosing value should your equities loose value, in our opinion less safe than gold and precious metals at the moment.
We also include gold/silver and other precious metals in our long term holdings along with,
income generating real estate,
hardwood tree plantations, commodities,
Other natural resources including water rights.
As a general rule, the tangible physical things that all people need will always have value even if it does go up and down a bit.
We’ve all heard the big thinkers in government and central banks talk about inflation targets as if they have some sort of goal in mind, they talk like they know what their doing, and they’d like us to believe they do, and it’s “normal” and even that it’s “good”
But what is inflation?
According to research:
In economics, inflation is a general rise in the price level of an economy over a period of time. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation reflects a reduction in the purchasing power per unit of money – a loss of real value in the medium of exchange and unit of account within the economy.
Does that sound like something that’s good to you?
If your someone who makes an effort to have a savings account of some sort it shouldn’t!
Essentially, inflation makes you poorer over time, it’s like an invisible tax that keeps eating away at your money every year.
Many of us will think, “well it’s always been that way, inflation is just something that occurs naturally, it’s just the way it is”,
“ 2.5%, 3% or even 5% is a small number, it doesn’t really affect my life at all”.
Firstly, we need to understand how any and all inflation affects us personally.
It might not seem like it matters that much if a cup of coffee or a dozen eggs goes up slightly every so often, but it does matter and it costs you big time!
Isn’t a loaf of bread or a dozen eggs about the same in quality and size regardless of its price increases over time? Did the price go up because the quality of the same brand loaf of bread is continually getting better?
Did a dozen eggs used to be fewer eggs than a dozen eggs today? Are the eggs today bigger? Or somehow better than they were before thereby justifying the continues price increase?
Is a house that cost $20,000 in 1970 somehow much more improved and arguably better if it cost $200,000 in 2021? Sure, the kitchens probably been updated, and it’s been repainted several times at least, but Isn’t it really just the same house?
So then what really happened?
Did the value really go up? Or did the purchasing power of your money go down? (And maybe the value of the product went up just a little bit)
Basically in an oversimplified way, things keep costing more because the money that you use to pay for them keeps losing its value, little by little and year by year, 2% 3% or 5% every single year, and it doesn’t take long before that’s a really big problem.
Look at it this way;
If you have $1,000 in a savings account for one year at .1% interest you’ll get $1 in interest for the year, but at the same time if inflation is running at 5% for the year, then your 1,000 is worth 5% less than a year ago, it’s now only worth $950 (plus the $1 you got in interest) so you now have $951 in purchasing power at the end of the year instead of your $1,000
Or as given in the example below
You can see where this is going can’t you, at 5% inflation it will take less than 10 years for you to loose half your money!
Or if your looking more long term and save for retirement, say 20-30-40 years down the road, any inflation at all will completely destroy your savings!
If inflation for the year is 5% you’ll need to make sure your savings is giving you a minimum 5% interest just to stay afloat with the same amount of money (in purchasing power)
Or If you expect to have any gains at all from your savings, you’ll need to have your gains be higher than the current rates of inflation.
Who knows of a savings account that pays anything close to the current rates of inflation?