| young, stupid, and rich..need advice!! |
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twowheeled
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| young, stupid, and rich..need advice!! |
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Hello everyone. I am in need of financial and life advice, I really don't know where to turn to for this kind of help. It is sort of embarassing to approach financial advisors at my bank because they really don't understand my situation and usually ends in me angry and storming out.
A little background on myself first of all. I have to admit I have a pretty easy life. My parents are in the average income bracket, but really prioritized my education in the household. As such they set aside my college tuition in full and I had my way paid through school. Whatever scholarships I earned along the way were used personally.
During school I enrolled in a coop program which allowed me to work and go to school at the same time. I was fortunate enough to get a well paying job in school, and since I lived at home I had no living expenses. And as such, I enjoyed a very extravagent lifestyle. I was making around $50k a year while being sheltered from taxes as a student. I made a ton of frivolous purchases including 5 motorcycles and a sports car. On top of that I engaged in a hobby that only really wealthy individuals seem to undertake-motorcycle club racing.
I spent money without regret and I had no budget. Each time I saved money, it was merely to buy a bigger or more expensive toy. And why would I have saved, I had no living expenses to worry about, no debt, and complete security. It is a little embarassing to admit but in 4 years of school I spent more than $200k for leisure.
Now I am finished school and have a well paying job as a young professional. I have no debt to speak of and make a 6 figure salary. I still have the same bad habits, but part of me feels the need to fix this. I am fortunate to be in an OK spot financially, but honestly I would love to be stinking rich, who wouldn't right?
The problem is my situation is really unique. I am 23 years old, and I live at home. It makes no sense for me to move out. I work in the oil patch and my shift is a 10 days on, 4 days off. While I am working my accomadations are provided, same with food. If I bought a house or rented, it would sit vacant for 20 days a month.
I try to save money, but it doesn't seem to be going anywhere. Compounding this is a bitter resentment towards taxes and low interest rates. The only savings I have are RRSP's, which are maxed out. It seems like I am stuck, I can't make any money by saving it. I only try to mitigate the damage by buying RRSP's and trying to keep the govt from taking my money. When I went to check on a mutual fund last week at the bank, I saw that over a year my $10k earned $300. Now I know a lot of people think this is a good return. I'll be honest, to me it seems pathetic. The opportunity cost of tying up $10,000... not being able to spend that for an entire year, just for a measly $300!! I don't mean to sound like an ingrateful snob but I make more than that in a single day. I spend that on dinner and drinks sometimes! An entire years worth of interest!!
I would really like to save my money and invest it, but not if I am going to be getting measly rates of return. To me these figures don't even make me blink, and that's really the problem with my bad habits I've developed. I would not think twice about dropping $300 on a watch or other frivolous purchase. It has already been ingrained in my head that it's an inconsequential amount of money.
I really need some investing advice for my type of lifestyle. I am willing to accept risk, but I need high rates of return. I don't want 3%, I want 20%. The type of risk I am willing to accept? Well lets just put it this way, I have $10k to play with, and honestly I would not be against putting it down on a roulette table on red for the chance to double it.
I know a lot of this comes across as brash and immature, and I apologize but I can't help it. My parents tried to teach me financial responsibility from a young age, and it worked until I got out into the real world and started making my own paychecks. Once that happened something took hold of me and I let loose, buying all the things I ever wanted but wasn't allowed to have. I would just slam down entire paychecks on purchases and when the money ran out I would go right back to work and earn it back again. This type of lifestyle was addicting and I got hooked. 
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Sat Jan 15, 2011 2:00 am |
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oldguy
Senior Member
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quote:
On top of that I engaged in a hobby that only really wealthy individuals seem to undertake-motorcycle club racing.
I've watched the ice riders in the Great North, the ones with the spikes on the tires to dig into the ice - amazing. BTW, someone is on the other side of that equation, ie someone is making money off of bike racing.
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I spent money without regret and I had no budget. Each time I saved money, it was merely to buy a bigger or more expensive toy. And why would I have saved
Don't worry, you grow out of it, LOL. When I was a 23 yr old engineer, I bought a brand new convertible, giant V8, 4-speed, 3 dual carbs, yada. It was the fastest Detroit car built in 1964. After about 5 yrs of trying to keep that thing maintained, I have never again had a desire for a fast car.
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I can't make any money by saving it. I only try to mitigate the damage by buying RRSP's and trying to keep the govt from taking my money. When I went to check on a mutual fund last week at the bank, I saw that over a year my $10k earned $300.
Well, a 3% return for 2010 does suck, the general market returned 15.1% last year. But after you learn how to make money, don't be too concerned about the govt taking your money - you never lose money when you're paying taxes.
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I would just slam down entire paychecks on purchases and when the money ran out I would go right back to work and earn it back again.
The simple truth is - you won't make money by spending what you need and saving what is leftover (there is never much left over). Reverse it - have a specified amount auto-invested from each check, and then live on what is leftover.
Eg, arrange to have $1500/m invested in an 11%/yr investment at a no-load fund company. That compounds to $1,000,000 at age 41, $2,000,000 at age 47, $4,000,000 at age 53, $8,000,000 at age 60, and so on. If you want more (or less) it is linear - ie, $750/m = only $4M at age 60 - and $3000/m = $16M at age 60.
With this method you are free to spend every dime you earn as long as you never skip the $1500. To build wealth, a steady reliable income stream trumps a big sporatic income.
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Sat Jan 15, 2011 5:04 am |
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coaster
Senior Advisor
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Location: Wisconsin
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Stay away from the bank for financial advice. They are in the business of making money off of your money. Your best interests are not what they have in mind. You want to have a financial adviser who works for you, not someone who works for a bank or an insurance company. The type of adviser who will look out for your interests is a fee-for-service financial adviser/planner. They don't make their money off of commissions; they make it by working for you and working with you. The best way to find one is word-of-mouth from friends, relatives, associates. Otherwise look for someone with an established clientele, a modest office, and one of these sets of letters behind their name: CFP, ChFC, CFA, or PFS. There are others, but these are the most common and are known to indicate a certain level of qualifications, knowledge and expertise.
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Sat Jan 15, 2011 7:14 am |
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ETF Trading Strategies
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OldGuy is right on the money. You need to set aside 10 - 20% of your income automatically each month and forget it is happening. You are in a very fortunate position not having to pay for shelter. You might want to also consider paying "ghost rent" and increasing your savings plan by the real cost of shelter... because one day you'll have to move out and you'll be ready to handle it.
Your in a great situation, you should maximize the opportunity while it lasts and save more.
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Sat Jan 15, 2011 5:05 pm |
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twowheeled
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thanks for the advice guys. One thing I am really struggling to understand is financial planners and how they get paid. From my research I understand that they are either hourly fee or commission paid. Commission paid is nothing like what I imagined.
I want to find a financial advisor that makes commission off of my returns, not on selling me a certain product. Does this exist? As someone who doesn't understand a lot about investing, this method seems like common sense. If an advisor takes a percentage of the earnings of my investment..he has more motivation for it to do well. Or is there something I'm missing here?
For example, me taking $10k to an advisor and saying "buy penny stocks, you get half of the return" vs paying them $200 and saying "buy me what you think is going to make me rich"
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Sun Jan 16, 2011 11:48 pm |
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coaster
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Yes, but they usually have account minimums. $100K is the lowest I've ever seen.
And that's probably somebody new in the biz trying to build a clientele. $1 mil is more like the norm for the established asset managers.
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Mon Jan 17, 2011 5:55 am |
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samurai
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I apologize for the late response, but I just couldn't help myself...
Why do you think you're rich? Just cuz you're making a 6 figure salary? Rich depends on what you've set aside, and not what you're making. You can define yourself as 'rich' once you have at least $3M investable assets.
If I were you, my first investment is for disability insurance. At least if, God forbid, your motorcycle racing hobby leads to an accident, you're covered!
The best way to predict the future is to create it.
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Sat Sep 10, 2011 1:59 am |
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globaldoc2001
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You know? You have all the advantages in the world. One thing is, with your situation, you should set up a goal. Let us say, you target saving money until you have this much. Then a part of it, you go into business, treating it as if you have lost that money already, but your goal is to get that business blooming.
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Sat Sep 10, 2011 9:34 am |
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Gary Barzel
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You can set up a savings account where every time you deposit your paycheck to the bank automatically 15% (or whatever amount you decide on) of what your earn goes into your savings account. That way even though you're spending whatever you have at least you're saving something on the side.
Gary Barzel
FastUpFront | Business Loans Made Easy
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Sun Sep 11, 2011 9:42 am |
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eastmn
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Something which might inspire you; Read billionaire Mark Cuban's wiki page. He was a wild-child, but he had a head for business (gifted), went straight to the top.
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Mon Sep 12, 2011 9:23 pm |
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Kenny Soward
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My honest opinion is that you have to budget and plan your money no matter how much money you make.
It is exactly all of those things--your bad habits--that drive you. You seem to be in control of nothing. I'm sure it is a blast, but eventually you will need to make healthier decisions because as an older man you might not have the same luxuries you have now.
Besides all of that, it says a lot when a person learns self-control, learns to live inside themselves and focus on their financial goals. Like another poster said, you aren't really financially rich until you have some real assets, and until you get to a point where you show some responsibility.
Not beating you up at all. It is good of you to come here and even pose this question. Good luck to you!
Kenny Soward, author of The Budget of Your Life; Breaking the Chains of Debt
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Tue Sep 13, 2011 1:22 am |
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globaldoc2001
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This is the actual case. You, instead of spending so much for expensive gifts, end up with your money gone. I know it might not be wrong, but if this goes on, I think for your case, gambling might be a better option since you might still end up a winner. Because in your case, a sure thing is inevitable. You always lose your money. So, if I were you, I would spend more time looking into the market, and try to understand something. More of investment opportunities. I would set up a budget, save a big part of it in the bank, then set up a portion for investment purposes only. This portion will be used to fund your investment for a month or two. You lose that money, that will be your tuition fee and your ticket to better experience. Your money grows, then you will have more money in the bank. I think that would make you more responsible in handling your money. Turn your expensive gifts to yourself into investments.
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Tue Sep 13, 2011 6:13 am |
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coaster
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quote:
Originally posted by Kenny Soward
It is exactly all of those things--your bad habits--that drive you. You seem to be in control of nothing.
It was the OP's sincere desire to change all that when posted nine months ago; so hopefully the verbs used should be in the past tense by now. 
This is why I often ask for updates. If someone never comes back to fill us in, we have no idea of the outcome, and whether or not our comments helped that person.
~Tim~
Eye Candy : Why Whimsy
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Tue Sep 13, 2011 6:13 am |
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