I often write on Quora.com, where I am the most viewed writer on financial matters, with over 290.3 million views in recent years.
In the answers below I focused on the following topics and issues:
- Is it really worth starting your own business given the risks, stress and hard work?
- Is buying a luxury car at 30 a good idea?
- Can you make 1% profits per month with minimum risk? I explain why this is often misleading.
- What are the worst decisions most 20 somethings make financially speaking?
- What are some underrated investing tips?
- Would raising interest rates really result in an economic collapse?
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I don’t know enough about your situation to answer this with any degree of certainty.
All I will say is we all pay a price. It is just either now or later.
Let me give you a health analogy. Imagine you never exercise and eat ten muffins a day.
You might not pay a price today. In fact, you might have more energy. Eventually, you might pay a price.
The same is true in starting your own business. People think it is risky. It is. Yet sometimes, staying as a salaried employee is risky too.
For example, if you are let go above a certain age, it is often difficult to get new positions.
What is more, if you succeed as a business owner, your risks tend to be lowered a lot, because you can have multiple sources of income.
The business owners who successfully sells four products in tens of countries faces fewer risks than somebody who relies on just one source of income.
That is why sensible employees invest some of their salary on the side, to lower risks.
I am not saying a business is for everybody. In face, it often isn’t suitable for the majority, but it perhaps isn’t always as risky as people assume.
Whether a business is worth it depends on what you want to achieve. If you want to make a difference in the world, make loads of money, and become financially secure, then you will probably feel that it is worth it if you achieve those things.
If, on the other hand, you start a business to impress others and because you want to work fewer hours and outsource everything, then it is easy to feel disappointed.
That is because, for most business owners, the business takes over your life. It has to be worth it in other ways.
I would go further than this. If possible, I wouldn’t buy any car under 30 if you can do it.
Or at least, if you really need a car, I wouldn’t buy an expensive one, and wouldn’t use it all the time.
Now, this isn’t possible everywhere. It isn’t possible in some countries where you often need a car to get to work.
Not every city, or country, has good reliable transport.
The points I am making are merely
- Most cars are depreciating assets. You usually lose money, directly and indirectly, on cars.
- I personally know countless multi-millionaires who have never bought cars, and know loads of high-income people who are broke. Why are they broke? Well, 30%-60% comes out in taxes. Then one day after they are paid, the house and car payments also come out. I explain more here:
3. Many people buy luxury cars, and indeed cars in general, for the wrong reasons. Often, to impress random people.
Don’t get me wrong, some people need a car at a young age to get to a well-paying job, and love driving, so aren’t buying a car to show off.
However, for me personally, delaying buying a car until after 30 was one of my best financial decisions.
My circumstances were different compared to most. I emigrated at a young age.
That meant buying a car and selling it every time I moved countries would have been annoying.
Beyond that, I lived in cities where the public transport was about 20x less than back home but buying a car was more expensive as I mentioned in the video above.
The point is, younger people often need flexibility, so getting a house and car can often be better after 30, not doing things early to act “adult”.
What’s more, you are in good company if you decide not to buy, and when you do, buy a fairly cheap car.
Studies have shown that the average deca-millionaire doesn’t spend much on cars.
I think one of the biggest reasons for that isn’t just that many wealthy people are more frugal than the press let’s on.
It is also because it is easier to become wealthy if you live unconventionally.
The following answers were put in the adamfayed.com Quora space.
Believe it or not, some non-investing investing tips, whilst that might sound like a contradiction, are useful.
What do I mean by non-investing investing tips? I mean anything financial which will indirectly help you investing returns.
Let me give you the best example. What contributes the most to how much you have in retirement.
Most people guess
- How much inheritance you receive
- The percentage investment returns
- Your profession and who your parents are, as it indirectly influences income.
- How tax-efficient the investment is.
- The degree of investing knowledge a person has. Most people assume somebody with a PHD in finance will be worth more in retirement.
In fact, numerous studies have shown that the biggest indications are how much you invest and for how long.
Sounds so simple. If you invest more, and for longer, you will have more at the end of the day due to compounding and some other factors.
Investing more for longer is even more important than total investment percentage returns.
Of course, in an ideal world, both should be good, but most people just focus on investment returns as a percentage.
The above information also means that anything which can increase your net income, and reduce your savings, can indirectly lead to huge investment gains in USD, Euro or Pound terms.
For example, if you save a lot of money on cost of living and taxes by changing your residency, that won’t add even 0.1% to your gross investment returns.
However, it could add a fortune to how much money you can invest in the first place, which will really compound over time.
Simple example. Let’s say in the early 1990s, somebody became an expat in the Middle East, paying 0% taxes, after being sent from the company HQ.
That person saved $100,000 in taxes and cost compared to back home, and invested that money in the Dow or S&P500.
That extra saving would now be worth $1.5m, if all dividends were reinvested and no panic selling occureed.
And that is one simple example of many I could have given. The point is, a holistic approach to finances (investing, gross and net income, taxes etc) can yield better overall returns.
Other underrated tips are focus on emotional control as much as technical knowledge, and be 100% allocated stock markets for longer, and focus on diversification of assets later on.
The traditional advice was to have your bonds linked to your age and reduce stock market exposure even in your 30s.
But in this day and age, with bonds paying so little, keeping bonds to a minimum until age 40 or 50 is fine if you can deal with the volatility of a 100% stock portfolio.
If there was a way to make 1% every single month, with minimal risk and no volatility, then almost everybody would do it.
It is far better not to be afraid of volatility. Some of the best investors in the world were down in 2008 and briefly in 2020, often by 50% or more, before the recovery.
So, instead of focusing on a monthly and steady return, I would focus instead on a sensible long-term portfolio.
What are the worst money decisions people often make in their 20s?
The biggest ones are:
- Buying a house and a car as quickly as possible, often due to societal pressure
- Not taking many calculated risks at a young age. Many people are cautious when they have little to lose. Taking risks early is better.
- Not investing soon enough to compound returns
- Failing to read much after university. We are now in a fast-paced, ever-changing, digital economy. Reading after you are experienced is even more important than at a younger age.
- Getting into excessive amounts of consumer debt
- Caring too much about what other people think, which indirectly results in things like overspending on things we don’t even like or need
- Meeting the wrong life partner, or spending too much time with toxic people.
- Not speaking to a life partner about finances, which is one of the biggest reasons for divorce and associated costs and heartache.
- Not setting long-term financial goals.
- Above all else, not learning from mistakes. All of the above aren’t huge deals if lessons are learned. Some learn the lessons, and some don’t.
Increasing interest rates wouldn’t cause an economic collapse. The last time they rose significantly in a developed country was in 2018, when they hit over 2% in the US.
The economy did fine until Covid. In fact, it did more than fine, with very low unemployment.
Likewise, interest rates rose in the 1970s and 1980s. At that time, the rates were much higher though, so it slowed down the economy.
It didn’t collapse it. Interest rates are usually increased to lower a super-hot economy.
Rising them sometimes does that, and can lead to a mild recession, but not in all instances.
Pained by financial indecision? Want to invest with Adam?
Adam is an internationally recognised author on financial matters, with over 289.3 million answers views on Quora.com and a widely sold book on Amazon
In the article below, taken directly from my online Quora answers, I spoke about the following issues and subjects:
- When does one become ready to invest in stocks? I explain why some people will never be ready
- Can you retire off $2,000 a month in the UK?
- What should you do when you are terrified of a stock market crash? I tell the story of one of the giant’s of investing – Sir John Templeton. What does it say about him that he invested during a period when Hitler was rising and the Great Depression was all around to see?
- Is investing in stocks or cryptocurrency more risky? In fact, I explain that the risk can’t even be compared.
- Can middle income, or middle-class, people really get rich (or wealthy) investing, or is investing a rich person’s game?
To read more click on the link below.