Is Saving Money Depriving Yourself? 

“The best thing money can buy is financial freedom.” ~Rob Berger

One of the biggest problems most people have is that they believe that only spending money makes them happy. As a result, many people are reluctant to save because they reason that, taken to the extreme, if they save up money, they will be rich when they are older, but then they will be too old to enjoy that money.

The problem with this line if reasoning is that it assumes that spending gives happiness and therefore saving up money means you are not spending money and therefore while you are saving you are depriving yourself, making yourself unhappy.

The problem with this reasoning is that it ignores the happiness that comes from holding money rather than spending it.

When you hold money, you give yourself freedom and optimism about the future. You give yourself a sense of security. Holding money and investing that money also allows you draw income in the form of dividends, which gives you security because you don’t need to work for that money.

This is why I have no fear of dying with money saved up. I imagine I will adopt a child when I am very old and he or she will inherit everything or I will just will it to charity.

Many people consider this wasteful but it is not. Money held is not wasted. It serves a useful purpose, which is to give you passive income and security, which gives you happiness.

How to Invest Post-Brexit

The ASX200 went down about 5% after Brexit. A few days earlier, I purchased about $19k worth of gold mining ETFs (ASX: GDX). GDX went up 10% on Friday, so much that it made up for the losses from my other investments in my margin loan account. However, if you add up money in other areas, such as my super fund, my Vanguard funds, and so forth, I’m sure I made a net loss immediately after Brexit. I believe that there is a huge bubble right now in the economy caused by money printing. The economy is fragile because this bubble could pop any moment now, but it’s difficult to know when the bubble will pop. It may take decades before the bubble pops, so you need to have a strategy that allows you to profit when the bubble continues to inflate while also protecting you if the bubble pops.

What I am doing is focusing on dividend income but hedging this portfolio by buying gold mining stocks, gold ETFs, and maybe some government bond ETFs. I am less bullish on bonds because I think that they are artificially being pumped up with printed money. Gold is better as a safe haven asset compared to bonds as bonds are being artificially inflated by central bankers.

In my opinion, we are entering a period of stagnation similar to what we see in Japan where the stock market goes sideways and there is no more growth. We have reached the limits of growth, in fact. Investing in dividends allows you to capture income as the market goes sideways, and if the bubble bursts, gold will protect you. You are covered either way.

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What will burst the bubble?

The Main Benefit of Travelling Solo

I’m sitting at the airport now. There are two girls next to me who are clearly travelling together. As I sat there, these two girls got into a huge argument over how much money they should be spending at the airport.

Holiday fights are not unusual. When I was in the hotel, I overheard a family bickering because the mother kept barking orders at her children, and the children didn’t appreciate it.

Like like bacteria thrives in moist environments so too arguments and disagreements thrive during holidays or vacations. There is something about travelling with others. It forces you to work together.

This is not to say that all holidays will descend into argument and chaos. If you’re travelling with a great travel buddy, it’s a brilliant experience. I’ve travelled with good travel buddies before. However, if you’re travelling with a bad travel buddy, that is a big problem.

If you are travelling with someone and suddenly an argument breaks out, you are stuck with this person for the remainder of the holiday. You may even be sleeping with this person.

The better approach, in my opinion, is to travel solo and sleep alone. If you want to be with others, you can still agree to meet them at, say, a restaurant or cafe, and you can still agree to go on tours together. The benefit of travelling solo is that at the end of the day you retreat to your own space where you have privacy and freedom. From your own space, you can choose to be with others or to be by yourself. There are times you want to be with others and there are times you want to be by yourself. Travelling solo gives you the freedom to choose from both these options. However, when travelling with others, because accommodation and tours tend to be booked in advance, you are stuck with the people you’re travelling with.

If you have your own accommodation and you meet up with a friend, if you get into an argument with this friend, you have the option to simply never see him or her again.

There is nothing wrong with human intimacy and closeness. We humans are social creatures who need closeness with others. However, there are smart ways to get human intimacy without exposing yourself to the risk of being captive to human anger or hate.

Total independence is essential. You need to build a fortress for yourself where you are safe. You may venture out from this fortress to seek out human intimacy, but you do so cautiously, and you retreat back to your fortress when you are not comfortable. Every man need his own space.

The Girlfriend Allowance

I’m feeling excited, not because it is almost 2015 but because it is looking likely that I will very soon have a girlfriend! It’s not certain but it is looking likely.

Having been single for the last few months, it is refreshing having a girlfriend again, but I do remember much of the negatives of my previous girlfriend. I remember the arguments, the whining and complaining, and the constant put-downs. Maybe it’s my fault for being too much of a beta male and not manning up. Either way, it was a bad experience, and I need to learn my lesson.

Something I will be implementing with my new girlfriend is a “girlfriend allowance.” After we are in a relationship, or maybe once we date a few times, I will ask her for her bank account details and will direct a certain amount of income from my investments straight into her bank account. One option is to plow money into a high-yield ETF or managed fund that pays monthly distributions (e.g. APN AREIT Fund, Firstmac High Livez, Aurora Dividend Income Trust, or Betashares Australian Dividend Harvester Fund). Another option is to borrow money, buy a small apartment, and ask the property manager to rent the apartment out and send all rental income to my girlfriend’s bank account. Either way, money will be sent automatically into the girlfriend’s bank account every month. I will probably aim to provide about $500 to $1500 per month.

I have never done this before, so I have no idea what the results will be, but I think paying a girlfriend allowance will help the relationship significantly.

One of the problems with many girls is that they are influenced by mainstream culture, which gives people certain impressions about how girlfriends should behave and how boyfriends should behave. There are all sorts of rules, rituals, and customs. For example, when it is Valentine’s Day, you must buy a flower and chocolates. When there is an event, you must bring along the girlfriend. You must shower the girl with gifts. There are all sorts of duties that the girlfriend expects from you. If you are a man who wants to engage in these activities, a girlfriend allowance may not be necessary. If you don’t want to engage in these conformist social customs, you will not meet the girlfriend’s expectations and she will start to resent you. She will then start to complain, whine, and give you passive aggression.

This is where the girlfriend allowance comes in. If you are paying a girlfriend allowance, then you can afford the freedom of doing what you want. You are no longer shackled to the duties and obligations of “boyfriend services.” If, for example, you do not buy the girlfriend a gift on Valentine’s Day (because Valentine’s Day is an embarrassing marketing scam), she may resent you and may consider dumping you. However, if you are paying her a girlfriend allowance of $1000 per month, she will need to consider whether dumping you is worth sacrificing $1000 per month.

In my opinion, a girlfriend allowance will also allow you to enjoy higher quality “girlfriend services.” She will treat you better because she knows that if she does not treat you well, she will lose the allowance and it will be snapped up by another girl. In labour economics, this is the theory of the efficiency wage. A girlfriend allowance is effectively a girlfriend efficiency wage. A girlfriend allowance will ensure that you receive high quality and efficient services from your girlfriend.

Paying a girlfriend allowance will also reduce the likelihood that she will dump you. For some men (at least for me), it is expensive, time-consuming, and just plain difficult to get a girlfriend. A girlfriend allowance makes it more likely that you will spend more time with your current girlfriend rather than spend time hunting down girlfriends at nightclubs, bars, online, or via friends or family.

A girlfriend allowance will also provide the girl will more confidence and assurance in herself. If you are willing to pay a girl money, she feels she is worth it. Once a woman is at the receiving end of market demand, a price on her services will increase her morale, and she will want to treat you better.

A girlfriend allowance also recognises the fact that being a girlfriend is quite expensive. Girls are required to buy appropriate clothes, use make-up, perfume, shampoo, and have gym membership. Attractive girls also tend to have specific diets. Looking good comes at a cost.

Another good argument for a girlfriend allowance is that love is too difficult to maintain. Love is fickle and temporary. In a normal relationship, the bond is sustained by love, but love wanes over time. As the girlfriend gets tired of you, her attraction for you will also drop. The excitement and novelty of being with other men will tempt the girlfriend (or wife). Although love is difficult to maintain, the girlfriend allowance is not. The girlfriend allowance (as I will implement it) is a set value of income-producing assets whose rental or dividend income is directed into the lady’s bank account automatically every month by the fund manager or property manager. It is set-and-forget. You only need to reconfigure it once you break up with the girlfriend and need to distribute that income to someone else (or yourself if you are single). Maintaining a relationship on love requires constant effort and work. It is like having debt over your head or being bossed around by a bad boss. A girlfriend allowance, on the other hand, requires nothing.

To conclude, although the girlfriend allowance or girlfriend efficiency wage seems to make sense, theory does not always align with practice. I will update you all on how things go.

Is Your Primary Residence an Asset? Yes, But…

I was having lunch with a colleague a week ago and he said the following to me: “Your primary residence is not an asset but a liability because you have to continually pay for it. You don’t own your house. The bank owns it.”

This got me thinking because years of education has taught me that a house is an asset since assets are defined as anything that produces value. A house can be rented out to produce rental income. Indeed, it is an asset according to this definition.

But technicalities aside, I do understand what my friend was trying to say. After some googling, I found that this concept derives from the book Rich Dad, Poor Dad in which Robert Kiyosaki explains that a house generates negative cashflow and therefore is a liability for you.

He is wrong. It is not the house that creates the negative cashflow. It is the mortgage. The problem is, for most people, in order to afford a house, they need to accept the mortgage because they simply don’t have enough cash to buy a house outright.

It is this connection that the bank has concocted that fools people. When you buy a house, you get an asset, but it doesn’t end there. Two sets of assets are created. The first asset is the house, which you hold. The second asset is debt, which is held by the bank. Houses tend to go up in value, but not always. House prices tend to move up only slowly and are volatile. The asset the bank holds, on the other hand, is much more valuable. The bank holds debt. It produces income no matter what. Even if you default, the bank simply takes your house. Effectively, when the bank lends you money to buy a house, it is doing two things: (1) directing cashflow from you to itself and (2) transferring risk from itself to you. The cash the bank would have held would have sat in a vault doing nothing but by lending it to you, that cash now generates interest that flows to the bank. Rather than buying real estate itself and suffer from the risk of volatile prices, the bank simply puts that risk on you by lending to you. It gets a steady income while you wear the risk.

I am not against buying a home. What I advise against is the debt. Unfortunately, when most people buy homes, it is connected to debt. It is like coffee. Research shows the antioxidants in coffee prevents prostate cancer in men. But if you put four teaspoons of sugar in your coffee, the sugar will hurt your health. Likewise, even though a house is great for you, the debt that is attached is what will work against you. If you need to buy a home, I recommend you buy a small home to minimise the debt. Otherwise, pay off the debt as quickly as possible. Rent out spare rooms. I have nothing against buying a house as an investment, but it is best to stay out of debt.

The Physical and Economic Aspects of Alpha Maleness

Debt is slavery

What do I mean when I talk about an alpha male? In the animal kingdom, alpha males are those who rise to the top of the hierarchy. They have the power to do what they want. It is about power, but my desire for power is not linked to any desire to hurt others. I simply wish to defend myself. As a beta male, other males put me down and control me. Women disrespect me. I need to correct this. I need to become an alpha male. This will make men fear me and women respect me.

Being an alpha male is not just about swaggering around, swearing, or calling women bitches. There is also an economic aspect as well. An alpha male needs enough money saved up or invested to be free from wage slavery. An alpha male also needs to have his debt under control for the same reason. I’ve seen many beta males out there who have a wife at home, three children, and a massive mortgage, and these people come to work and slave away barely making ends meet. Freedom comes from running surpluses. Freedom comes from making sure what comes in to your bank account is much greater than what goes out. The opposite of this is slavery. Debt is slavery.