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     spider
Member
Username: spider
Post Number: 2437
Registered: 10-2002
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Votes: 0
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| | Thursday, May 25, 2006 - 02:43 pm: |  
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http://www.incrediblecharts.com/userscripts/forums/show.plx?tpc=35933&post=94119 #POST94119
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davkell
Member
Username: davkell
Post Number: 432
Registered: 07-2004
Rating: 
Votes: 1
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| | Friday, May 26, 2006 - 12:33 pm: |
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A good topic to have it's own thread Spider. I know so many simple strategies for wealth creation now, that I didn't know or even have an inkling of when I started working 14years ago!!! Had I known those simple strategies back then, I think I would be well on my way to retirement already... and I'm only 33!
A simple $140 per fortnight, earning an average of 10%pa, and I would currently be sitting on $115k or a nice $400+ per fortnight income at 10%pa!!! Not an amount one could retire on yet factoring in taxes etc, but not bad for a simple strategy. And to think that if I had done such a simple task, the money would not be missed today, especially factoring in wage increases etc etc.
But I don't like to be a "woulda, shoulda, coulda", but it does make you realise that sometimes the simple approach is the better one. If there is one thing I want my children to learn from me, and that is the power of compounding over time! My eldest has only just turned 5, but I am already teaching him this simple strategy. If he can grow up with a mentality of pay yourself first then perhaps he can retire at the same time as me!!!!
(Message edited by davkell on May 26, 2006)
"Trade Your Way To Financial Freedom" - Van K Tharp
"Manage the downside; the upside will take care of itself" - Donald Trump
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spider
Member
Username: spider
Post Number: 2438
Registered: 10-2002
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Votes: 0
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| | Friday, May 26, 2006 - 01:06 pm: |
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Many years ago, when I first discovered the simple strategy that you described davkell, I was so excited that I drove everyone I met crazy, describing it to them.
Most of my friends and acquaintances were in similar financial circumstances. You know the thing I mean, working hard, at least one and a half incomes, and a large mortgage, practically nothing in the bank, credit cards maxed out.
The reaction to my enthusiastic little 'discovery' , was almost always a blank look.
This used to drive me crazy!
It's so simple, why couldn't they see it?
After a few years I stopped telling the story outright, and started to tell it as a mystery story. The effect of proposing it as a 'secret' that only a few people knew, was amazing to watch.
These days, I hardly bother any more. I have come to the conclusion that, for whatever reason(
1.)people in general just don't get it, and even if they do, they dismiss it as being too slow.
THE THREE MONTH BUFFER
While we are on the subject of 'fake it till you make it', it is worth considering the idea of putting enough money aside to cover you and your family for a period of three months.
This money should be in addition to your "pay yourself first 10% bit".
My eldest son is right into all this, but my youngest generally goes his own way and pretty much lives on the edge of his income (2). But he does subscribe to the three month buffer idea, and recently it saved his butt when a few vital car repairs were needed so that he could get to work. He is now a VERY big fan of the idea.
Most people / families, would not last five minutes if the income stream was suddenly turned off. The TMB gives you time to breathe and look around for another job, without having to worry about paying the bills while dipping into hard earned savings, or maxing out the credit cards.
spider.
1. I would be very interested to hear why people ignore simple solutions to financial problems. If you can shed any light on this problem I would love to hear from you.
2. With the "National Bank of Dad" to back him up in case of emergency!
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zorba
Member
Username: zorba
Post Number: 125
Registered: 12-2003Rating: N/A
Votes: 0
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| | Friday, May 26, 2006 - 01:07 pm: |
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Dav
I often quote the old ".. if the dog hadn't 'ave stopped for a sh*t he'd have caught the hare".
'Fourteen years ago was a long time ago' - your interests, family situation, probably job, financial situation - and probably most other aspects of your life have changed since then.
I once bought a block of land for seven thousand dollars - that block is now not only 'un-buyable' but worth over a million dollars. But at the time I needed the money so sold it to be a couple of thousand dollars in front. I think we've all been in similar situations.
Getting wealthy is not a 'new' thing - 'been going on for hundreds of years. And the principles haven't changed. Compounding is as old as ... But is everyone that is aware of compounding rich/wealth?
Believe me, two thousand dollars when you're twenty means a whole lot more than when you're fifty (speaking in general terms and with common sense in mind).
jm2c
As the Irishman said, 'Anyone who's not confused here doesn't really understand what's going on'.
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dug
Member
Username: dug
Post Number: 1123
Registered: 07-2005
Rating: N/A
Votes: 0
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| | Friday, May 26, 2006 - 04:38 pm: |
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G'day,
Compound Interest is a concept Boring to most because it is always expressed/taught as applying to YEARS.Example davkell above 10% for 15 years.
Compounding FACT becomes more Dynamic when one thinks in terms of TIMES not Time[especially Years.]
Simply 6% by 12 times done compounding will Double your money.The twelve times can be days,weeks NOT only Years.One must roll over each 6% gain,not rush about spending it but that is the price you pay for wanting,Having to,Double your Dosh.
That's the Rule of 72,the formula of Compounding Interest.
I've rabbited on about it before but it is the ONLY formula that 'does' double your Money.It's probably in every Black Box system ever devised.It[Rule of 72]is the maths concept vital to any mechanical system of wealth creation.
All you have to do is find opportunities to Apply it the required number of Times!!
Happy Trading.
Avatar- PHACOPS{speculator}from the Devonian Period.
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captain_chaza
Member
Username: captain_chaza
Post Number: 1939
Registered: 02-2003Rating: N/A
Votes: 0
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| | Friday, May 26, 2006 - 05:27 pm: |
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Ahoy 1st Officer Spids
OR?
You can try to fast track it!!
You could save up 3 months of supplies and expenses
Keep 1 weeks cash onboard and then invest the other 11-12 weeks in shares with funds that are all on call in 7 days
You could then organise a Gold Card and another Card to pay the monthly fees of both cards for one year just to keep the pressure off the wife
and then GO SAILING!
Bon Voyage and Gods'Speed
"While we stop and think, we often miss our opportunity." Publilius Syrus, 1st century B.C.
"I believe the future is only the past again, entered through another gate."
Sir Arthur Wing Pinero 1893
"There are two times in a man's life when he should not speculate: When he can't afford it, and when he can." Mark Twain, 1897
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captain_chaza
Member
Username: captain_chaza
Post Number: 1940
Registered: 02-2003Rating: N/A
Votes: 0
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| | Friday, May 26, 2006 - 05:52 pm: |
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Ahoy Sea-Dog
Everyone knows the logarithmic power of Compounding
What they don't realize is that a Sail is a Sail except when it isn't the best Sail to HOIST
This problem is also Compounding
Bon Voyage and Gods'Speed
PS
You have just got to Compound correctly
OR
Compound more Correctly more times than not!
(Message edited by Captain_Chaza on May 26, 2006)
"While we stop and think, we often miss our opportunity." Publilius Syrus, 1st century B.C.
"I believe the future is only the past again, entered through another gate."
Sir Arthur Wing Pinero 1893
"There are two times in a man's life when he should not speculate: When he can't afford it, and when he can." Mark Twain, 1897
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dug
Member
Username: dug
Post Number: 1124
Registered: 07-2005
Rating: N/A
Votes: 0
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| | Friday, May 26, 2006 - 07:58 pm: |
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Don't agree that EVERYONE knows about compounding Bare Bones.
They ignore it as a Fact and the only basis of Method.
That is evidenced by the search for Tipsters,the search for secret,esoteric devices and/or indicators.
It takes one beyond Luck,a true appreciation of d'Rule of 72.
Like you don't need to have sipped absinthe[or single malt over just ice]to appreciate that 72 is a thing of beauty.
cheers.
Avatar- PHACOPS{speculator}from the Devonian Period.
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lafee
Member
Username: lafee
Post Number: 227
Registered: 04-2003
Rating: N/A
Votes: 0
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| | Friday, May 26, 2006 - 11:00 pm: |
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A percentage based risk tolerance ensures your largest loss will occur with your biggest position. I'd rather not deal with such an event. Position size should be increased/decreased, according to results over 'x' years/months/weeks etc.
Compounding is great in theory but terrible for cash flow. Short term traders who want to be profitable each month should forget about pure compounding, trend followers (who can put up with years of losses) may find relief in the magic of rule 72.
I desire a well financed plan B.
Laffee.
If nobody can be certain of anything, how can I be certain of that?
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