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Millionaire gives poor people advice on how to save

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    'When that money is moved before you can touch it, that's how real wealth is built,' he explained

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  • Privatise the gains and socialise the losses is much better.  Latch on to the bailout bonus money.
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Sharing his financial wisdom, David recommended a 'pay-yourself-first plan', which involves saving an hour of your daily income every day of the month.

 

You can't buy such wisdom but saving £20 a day for every day of the week only gives you £7000 a year or about £350,000 for a lifetime of work.  You're still not a millionaire - and these days you would make next to nothing in interest.  Of course you might be good at investing in the casino economy (maybe at the start of a house price boom) but he doesn't seem to be suggesting taking that sort of risk.

Saving is good of course but in reality it's discouraged by those running the show and advocating inflation even when it's zirp days (and years and years and years ........).

He didn't make his own money that way.

https://en.wikipedia.org/wiki/David_Bach_(author)

Edited by billybong

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I kind of agree with where he is coming from ... But some people don't earn enough to save anything.

Most people though could get in the habit of saying no to unecessary expenditure thus saving 10% of income.

Most people though like the BMW 1 series for £249 a month (after £5k deposit!)... Even though that is 12% or more of their income!

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The principle is a good, if old, one. Clearly doesn't apply to the too poor to buy lattes & iPhones group. 

Personally, I'm of the view that selective consumption is better. If you really enjoy your daily coffee, then keep doing it - and try and find another area of life to cut back on.  When I was heavily into saving, I always had a decent computer, but was happy to forgo holidays. 

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25 minutes ago, spyguy said:

Poor people! - Write a book about how to become a millionaire.

Thats about it.

I did that but to be credible you first need to become a millionaire. 

What I've found interesting is that few seem actually interested in gaining real wealth. In my case a few hundred downloads and some new haters to go with it which I found interesting. I honestly don't understand why as it's incredibly liberating.

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7 minutes ago, wish I could afford one said:

I did that but to be credible you first need to become a millionaire. 

What I've found interesting is that few seem actually interested in gaining real wealth. In my case a few hundred downloads and some new haters to go with it which I found interesting. I honestly don't understand why as it's incredibly liberating.

Savings money harder then spending credit.

I dont want to sound a bellend, what with high cost of housing and all that, but if you avoid getting a new card on finance and and dont blow money on summer + winter holidays then a medium earner used to be able to invest/save a fair old some.

Now aeveryone putting all their savings and next 30 eyars income on red- housing. I doubt thatll pay off with the demographic changes.

 

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1 minute ago, spyguy said:

Savings money harder then spending credit.

I dont want to sound a bellend, what with high cost of housing and all that, but if you avoid getting a new card on finance and and dont blow money on summer + winter holidays then a medium earner used to be able to invest/save a fair old some.

Now aeveryone putting all their savings and next 30 eyars income on red- housing. I doubt thatll pay off with the demographic changes.

 

For once you're not the bellend ;)

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46 minutes ago, hotairmail said:

My technique is different.

I started out by creating a spreadhseet that listed all my assets and liabilities about 20 years ago and once a month I tot them up to measure progress and returns. The biggest thing that has helped me, is to reallocate monies from under performing areas to ones that can generate more or simply switching to a SIPP rather than leaving and forgetting your pension until its too late. You should include everything from pension assets to savings, endowments, house if you have one etc etc

On that basis, you can see how saving a small amount each day that you can then invest really does mount up down the years. Miracle of the passage of time, focus and compounding.

Big changes I made was transferring out of endowment pensions, AVC's and company pensions to a SIPP and also realising the worth of a house as I believed I could rent a higher quality house AND achieve a higher return than owning a low yielding asset.

One lesson I wish I had learned was that I should never have cleared down debts. That may be a lesson for today's students if they can earn a higher return than the interest on their loan. There is risk with ths approach though.

Yes, I while I've always put a little into my pension - I realised too late one year just how much of a tax break it is. I didn't make that mistake again.  I have a decent company pension with low charges so have stayed in that for now. 

It was probably also a mistake to concentrate on saving to buy a house outright rather than a mix of investments.  Probably wasted some time/money that way. 

While I'd argue nearly everyone can save something for a rainy day, earning more will make the most difference to your wealth - providing your lifestyle doesn't inflate alongside it.  

I'm at the stage where I could FIRE if I wanted to, but I'm waiting to see how things pan out at work later this year. My ideal would be go down to 3 days a week. 

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1. Get your house in order - spend less than you earn

2. Save what you have left.

3. Invest some left over in good investments.

4. Advanced players use the system to create corporations and use leverage with good debt (vs bad debt)

 

^This is from the channel that mocks Trump!

 

 

^advice that dates back to Babylonian times. Free, 5 hours long though

I have invested in a mp5 player so I can listen whilst driving. You can use keepvid to download. Investing is not just in money, but also in knowledge.

Edited by 200p

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5 minutes ago, spyguy said:

Savings money harder then spending credit.

I dont want to sound a bellend, what with high cost of housing and all that, but if you avoid getting a new card on finance and and dont blow money on summer + winter holidays then a medium earner used to be able to invest/save a fair old some.

Now aeveryone putting all their savings and next 30 eyars income on red- housing. I doubt thatll pay off with the demographic changes.

I agree saving is harder but to do it you only need to earn more and/or spend less. I believe with some thoughtfulness anybody who wants to do it can because the vast majority aren't. That means you have limited competition. 

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2 minutes ago, 200p said:

1. Get your house in order - spend less than you earn

2. Save what you have left.

3. Invest some left over in good investments.

4. Advanced players use the system to create corporations and use leverage with good debt (vs bad debt)

 

^This is from the channel that mocks Trump!

 

 

^advice that dates back to Babylonian times. Free, 5 hours long though

Maybe add to that earn more, minimise investment expenses and minimise taxes (earnings and investments). That'll make an additional huge difference. 

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Wealth is having money, most people fail to realize this & instead fall into the trap of thinking that wealth is having stuff - its that mentality that kills off many people's ability to save money.

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A lot/most people arent interested in building wealth.Most of my friends fall into this bracket.They have good jobs for the north east,yet have zero assets and mostly havent even paid mortgages off they have had 20 years.Instead they have moved house or MEWed the mortgage back up.Iv probably earned only a third of what they have over 20 years,yet i pretty much retired at 40 and have more assets than them all put together.They are all good people,hard working,but simply have no understanding of money or how you create an income outside of paid employment.One couple told me they are going to retire at 60 (they are 45),so i asked them how much they had saved in ISAs,pensions,cash etc.They said they hadnt started yet but where going to once their sons left uni (5 years time).They had no idea how much you need to create an income.

Another problem is none of them know how to live on less.Food bill £90 a week when it should be £35.Holidays £4k a year (5.5k earnings needed after tax/ni),lease cars,the list is endless.Frugal people can easily retire on £200 a week,£350 a couple,but these people simply cant.The loss of final salary pension and the push back in the state pension age is what will hit them all hard,as in the past they would of simply kept working and retired at pension age.

The truth is people are different,and saving and investing isnt what most people want.They want to spend and consume.This is also what the government wants.They need those people working forever paying tax to fund the welfare state.I find its best not to approach the subject,because they see it as we are crazing saving,having a 10 year old car etc.

The loss of pensions and the 68 retirement age is what will really bite though.

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29 minutes ago, durhamborn said:

<snip>

The loss of pensions and the 68 retirement age is what will really bite though.

No.

What will bite is losing their income before 68 and not being able to go on the nash/disabiliy to tide them over till 68.

The NE is insane now. So few people do productive work in the private sector. Its going to get reamed when benefits stop/tunred back.

 

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4 hours ago, Kiwi_Muncher said:

I kind of agree with where he is coming from ... But some people don't earn enough to save anything.

Most people though could get in the habit of saying no to unecessary expenditure thus saving 10% of income.

Most people though like the BMW 1 series for £249 a month (after £5k deposit!)... Even though that is 12% or more of their income!

Yes, agree, it's sort of sound, it's just that the economy makes it just undoable for so many people. And those of us who do save have our money eroded. It reminds me of my mum's story about washing her hair in washing-up liquid for a couple of years when they were saving for their first place. It's sweet but it's a bit out of touch.

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1 hour ago, StainlessSteelCat said:

Yes, I while I've always put a little into my pension - I realised too late one year just how much of a tax break it is. I didn't make that mistake again.  I have a decent company pension with low charges so have stayed in that for now. 

Good point with 40% Tax relief as I have said to a lot of friends it's a no brainer, stick in a safe big company and even with modest returns you are ahead of the game, of course part of a balanced portfolio, and that's before the BTL tax changes. Someone said to me that if you are really hell bent on investing in BTL do it through a fund out of your pension

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1 hour ago, durhamborn said:

A lot/most people arent interested in building wealth.Most of my friends fall into this bracket.They have good jobs for the north east,yet have zero assets and mostly havent even paid mortgages off they have had 20 years.Instead they have moved house or MEWed the mortgage back up.Iv probably earned only a third of what they have over 20 years,yet i pretty much retired at 40 and have more assets than them all put together.They are all good people,hard working,but simply have no understanding of money or how you create an income outside of paid employment.One couple told me they are going to retire at 60 (they are 45),so i asked them how much they had saved in ISAs,pensions,cash etc.They said they hadnt started yet but where going to once their sons left uni (5 years time).They had no idea how much you need to create an income.

Another problem is none of them know how to live on less.Food bill £90 a week when it should be £35.Holidays £4k a year (5.5k earnings needed after tax/ni),lease cars,the list is endless.Frugal people can easily retire on £200 a week,£350 a couple,but these people simply cant.The loss of final salary pension and the push back in the state pension age is what will hit them all hard,as in the past they would of simply kept working and retired at pension age.

The truth is people are different,and saving and investing isnt what most people want.They want to spend and consume.This is also what the government wants.They need those people working forever paying tax to fund the welfare state.I find its best not to approach the subject,because they see it as we are crazing saving,having a 10 year old car etc.

The loss of pensions and the 68 retirement age is what will really bite though.

+1 I am lucky had my own business for 25 odd years and boomer etc (and it is luck as well as a bit of sweat) Just getting ducks in a row to build the right size fund comprising pension pot, released house equity (we are downsizing) Isa's and starting a ordinary classic car fund http://www.ypdbooks.com/business/378-better-than-gold-YPD00347.html I like cars so hobby as well and my wife dabbles in gold.

Anyway I digress we can turn our  expenditure up and down according to our  means and whats going on (school fees were a burden) Currently in tighten up mode, stopped drinking, ride my motorbike instead of taking the train shop at Lidl etc. We find it fun changing gear (and a luxury I never forget that)

Not an Uriah Heep just come back from New York and off to Jamaica for a wedding in September because I believe in enjoying the journey.

I call it advanced life driving. As an advanced motorcyclist you make conscious  decisions to make progress and be safe and yet most people drive their life on auto pilot until its too late

I have a saying - I want to finish strong emotionally, financially and physically not begging the state for help

 

Edited by Greg Bowman

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1 hour ago, hotairmail said:

Wealth is freedom. Freedom to chose.

As long as you don't get yourself trapped by sacrificing living to a never-ending search for more wealth for more freedom. Some people will never have enough - their superyacht is too small and restricting, how much happier they'd be with a bigger one, with a helicopter deck! then if they get that it's the lack of another island that's constraining them, ad infinitum. Recognising the balance is important, and working out what you really want. Wealth is merely one tool to get that.

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34 minutes ago, North London Rent Girl said:

It reminds me of my mum's story about washing her hair in washing-up liquid for a couple of years when they were saving for their first place. It's sweet but it's a bit out of touch.

I doubt washing your hair in washing up liquid would save you money nowadays, supermarket own brand shampoo is about a quid a litre.

I do enjoy a good 'hopelessly outdated frugal tips from people who were young adults in the 1960s-70s' anecdote, maybe we should have a thread. I also like the 'we sat on garden furniture indoors for a year after we bought our first house' one. Would be totally pointless nowadays, with eBay and Gumtree flooded with 2nd hand furniture you can quite easily furnish a whole 2 bedroom house with pretty decent stuff for under a grand.

Edited by Dorkins

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1 hour ago, spyguy said:

No.

What will bite is losing their income before 68 and not being able to go on the nash/disabiliy to tide them over till 68.

The NE is insane now. So few people do productive work in the private sector. Its going to get reamed when benefits stop/tunred back.

 

Thats what i meant spy,the pension age pushed back means if they lose their job around 55 they are stuffed.

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1 hour ago, hotairmail said:

Wealth is freedom. Freedom to chose.

Completely agree & having money is a very helpful prerequisite for freedom. 

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