It will if you know the "offset" ... I have a few like that.
Same "offset" they've been using for decades.
Investing Strategies. What is your move?
- Thread starter PimTac
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Same "offset" they've been using for decades.
The opening chapter in many personal finance books is not spending a dollar is a superior return to anything you can get gain in the market.Can I just add: not buying extended warranties on anything?
About 100% return on that money saved…
Absolutely true and not true.
But excellent thought provoker.
Not spending recklessly is solid. No doubt about that. And odd as it sounds, it's a bit like buying gold. Not spending is NOT an investment, doesn't cause real gain. It holds, rather you hold that money. At the mercy of future value.
Not in my book. Inflation will make that money worthless. My motto is, "Make your money work for you at all times, regardless of the market."
I’ll tell Benjamin Graham you disagree with him but his rationale is solid. For you to get $100 you actually have to make $130 (or whatever your tax bracket). If you save $100 because you didn’t spend it that’s a 30% “return” the first year by not spending. But you’re missing out on compounding and market gains, right? Well, it also leaves you more money to put into the market.
Anyway, not my ideas but it makes sense. Many people experiencing financial hardship have a spending problem and not a making money problem.
That makes sense but it’s playing semantics and games.
The less money you spend on frivolous and unnecessary stuff means more to go to work for you.
Going through your budget to find needless expenses is an eye opener for most people. Then, cutting those expenses that are not necessary like spending hundreds each month on cable television.
Then there is cutting those things that will improve your life. Going to the tavern every evening? Smoking? Those are big winners that save a ton of money and improve your health.
Finally, redo your tax withholding to try to break even instead of getting huge refunds that are wasteful and foolish.
Take all that money saved and add it to your monthly investment contributions.
Going through your budget to find needless expenses is an eye opener for most people. Then, cutting those expenses that are not necessary like spending hundreds each month on cable television.
Then there is cutting those things that will improve your life. Going to the tavern every evening? Smoking? Those are big winners that save a ton of money and improve your health.
Finally, redo your tax withholding to try to break even instead of getting huge refunds that are wasteful and foolish.
Take all that money saved and add it to your monthly investment contributions.
I don't follow.
Taxes are not part of the equation because they have to be paid; any money I get is after tax dollars. Inflation will eat up the money that isn't working for you.
If you are lucky you will get to pay even more taxes! You never will sitting on cash. I hate cash.
If this is true, paying yourself first and not having debt are investments as well. Smart but like gold not investments.
Easy to say ....... not easy to do .
What’s $5+billion in interest minus X% inflation?
Outlier. Or maybe he should listen to me? $100B? That's 100,000 millions.
This is from May. It’s $130 Billion.
https://www.investopedia.com/berkshire-hathaway-annual-meeting-2023-7494837
He also sold all his Taiwan Semiconductor holdings. What does he know that we don’t?
Sure. But you have to try, right? Money scares me, so I am a fiscal conservative. Pay yourself first.
TSMC is the #1 buyer of SEMI. I am a (relatively) large SEMI stock investor, as that where my options came from.
They are expanding at a fast pace. Their plants in the US are on the fast track and they recently announced a second plant in Japan working with Denso and another company.
A new wafer fab can be $10B, or more. If you are not in tech, you are crazy.
From The Only Investment Guide You'll Ever Need by Andrew Tobias.
"A Penny Saved Is Two Pennies Earned - I walked home to save bus fare."
“Gee, you could have saved a lot more by not taking a taxi.”—OLD JOKE YOU ARE IN a higher tax bracket than you think. At least, most people are. And this number—your tax bracket—is critical to understanding your finances.If you earn $40,000 and pay $4,000 in tax, that does not mean you are in the10% tax bracket (any more than if you earn $240,000 and pay $24,000). Onaverage, you are paying 10% of your income in tax, but that’s not what’simportant. What’s important in making financial decisions is how much tax youpay on the margin—on the last few dollars that you earn. Because the income tax is graduated, you pay little tax on the first few dollars you earn but a lot on the last few. That may average out to 10%; but, in the caseabove, if you earned another $1,000 and you’re single, nearly a third of it wouldgo straight to the government ($250 in federal income tax, another $76.50 inSocial Security tax), and that’s your tax bracket: 33%. Unless you happen to beself-employed (add another 7.65%) and/or subject to local income taxes as well(add some more). In New York City, it’s not hard to find subway riders, never mind guys in limos, in close to the 50% tax bracket. To figure your own tax bracket, should you be of a mind to, just haul out lastyear’s federal and local tax returns and calculate how much more tax you’d havehad to pay if you had earned an extra $1,000.* If you’d have had to fork over$350 of this hypothetical $1,000 bonus in taxes, you’re in the 35% tax bracket.Or thereabouts. Add in sales tax and property taxes, of course, and the bite is even worse. But such taxes, which are not directly tied to what you earn, don’t count in figuring your tax bracket. (Neither does Social Security tax when making many decisions, since it is not levied on investment income and is not reduced by charitable or other “deductions.”) For the sake of simplicity, even though it’s an exaggeration for most people, let us assume you are in the 50% bracket, or not far from it. Do you know what that means? It means that if your boss gave you a $1,000 bonus or raise, you would get to keep $500. It means that “time-and-a-half for overtime,” since it’s all earned on the margin, is not such a posh deal after all. After taxes, it may be no more valuable to you than any other “time.” It means, above all, that a penny saved—not spent—is two pennies earned. Consider: If you were planning to go out for dinner tomorrow night, as you do every Thursday night, for around $50 with the tip . . . but you ate at home instead for $10 . . . you’d have saved $40. To earn an extra $40, you’d actually have had to earn $80: half for you, half for the tax men. My point is not that we pay too much in taxes. For whatever comfort it may provide (not much), we get off pretty easy relative to the citizens of most other nations. My point, rather, is that when Ben Franklin said, “A penny saved is apenny earned,” there was no income tax. There was no Social Security tax. The updated adage would read: “A penny saved is two pennies earned.” Or nearly so. So if you want to pile up a little nest egg, or a big one, the first thing you might consider—even though you’ve doubtless considered it before—is spending less rather than earning more. Which is what this chapter’s about. If you’re in the 50% tax bracket, it’s twice as effective—and often easier."
Anyway, I think it's interesting to think about the value of saving in the context of marginal tax rates as well as the value of your time and effort. This thought experiment sort of looks at things backwards - not how do I make more to satisfy my spending and savings/investment needs but how do I spend less so I need to make less so I can still meet those needs but spend less on taxes which is just money that is gone. The value of time and effort also needs to be considered. How much does the extra time and effort to make more that is just subtracted as taxes actually mean to me? All things being equal, the person with the smaller monthly nut has more to save than the person with more expenses but he/she also requires less money to live their lives. My point was that not spending money, which reduces your need for money, which means you can spend less time and effort making money, and less of your money is taxed at a higher marginal rate, many times is a better "return" on your time and effort than even the stock market.
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Maybe just semantics but...
There are different definitions of savings and investment. In economics buying equities, bonds, etc is considered SAVINGS and investment means buying new office building, machinery, factories, etc to be able to produce something or provide a service. Oh and new home sales is considered economic investment too. This is the difference between economic/financial investment and economic/financial savings - but are they really all that different? All of these, economic investment, economic savings, financial investment, and financial savings basically say using resources now can (or at least this is the goal) get you more resources in the future. Having more money to invest by paying yourself first or having more money to invest because you waste less of it on debt both accomplish this idea of using resources now to make more resources in the future. You can call it whatever you want.
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