Wisdom on Wealth

In today’s market, are there asset classes that are being overlooked?

Well, the answer is Yes. A very big yes. And that asset class is cash.

Cash is the currency in your wallet, the funds in your bank checking account and savings account and even money in money market accounts. It’s the medium of exchange with which we buy things.

So it’s nearly impossible to separate the idea of cash from cash flow – as the phrase suggests, that’s the flow of cash into and out of a financial system.

How do you get out of a rut at work?

Earl Nightingale was a 20th century writer and radio personality. Dubbed the “Dean of Personal Development,” he often repeated his motto, “Your rewards in life are always in exact proportion to your contribution.”

Now, that’s one of those statements that’s easy to believe but it’s harder to put into practice.

Most of us wish that our work was interesting and rewarding (both emotionally and financially, of course) and we wish that we made a real contribution. But those aren’t choices on a drop-down menu of a job search website.

When someone asks me how I think we’ll do the longer this pandemic wears on, most often I think, “You need to meet Frank and Jerry.”

His brother was broke and in debt, having moved back in with their mother. After going through a divorce and a rebound girlfriend, he was left with credit card debt, no car, no assets, and, of course, no job.

His good-hearted brother wanted very badly to help out but realized that throwing cash at his troubled brother would solve nothing.

Their father taught them to save and spend responsibly, but apparently one brother got it and the other brother didn’t.

If you want to build high, you should first go deep.

Almost immediately following the tragic events of September 11, 2001, there was popular agreement that another magnificent structure must take the place of the fallen Twin Towers. In April 2006, about five years later, construction began on the structure that would one day be called One World Trade Center.

  During the first three years of that construction, however, no small amount of grumbling went on concerning the “lack of progress,” so to speak, on the project.

Suppose you had two choices for a retirement scenario: the first is that you owned $50,000,000 worth of real estate. The second is that you own $500,000 worth of real estate.

You’d pick the first, right?

Well, what if the $50,000,000 of real estate is worth so much because it’s located adjacent to a national forest, but the government says you can’t build anything on the land that will pay you rental income. So, that means you’re asset rich, but income poor.

We find ourselves in the midst of a worldwide health crisis – the Coronavirus (COVID-19). Among the many ripple effects of the disease, and the world’s disparate attempts to contain it, have been significant impact on financial markets.

Now, markets do not like uncertainty. It’s a lot like what happens when the power goes off and you suddenly find yourself in a very dark room. The first thing you do is stop, and then you grope around a while, taking small steps, trying to avoid a collision with something that you can’t see.

This is for the person who can look in the mirror and say, “I have messed up my financial life!”

If that’s you, where do you start?

Let’s start with something that I heard consultant Wayne Cotton say one time, “If you don’t like your past, then fix your present and you’ll have a new past in your future. Just clean-slate it and build a new past by building your present properly.”

One dimensional thinking is rarely quality thinking.

The problem comes when you only consider one piece of a total financial picture.

Let’s say that there is a piece of land that you’ve had your eye on for some time. And it comes up for sale.

Well, you could borrow $100,000 to buy the land. If the bank agrees to finance the purchase for you at 4% over 20 years, you’re gonna owe the bank 240 payments of $600. If my $5 Wal-Mart calculator still works, that’s about $145,000. It means that you paid $45,000 in interest on top of the $100,000 that you paid for the land.