Why I don’t invest in Crypto

So another finance piece today. There is a massive story that broke recently pertaining to FTX exchange collapse. Let me get this out of the way now, I am not a crypto expert. You should take any advice/opinion you see online with a grain of salt and always do your own research. The FTX collapse is tied directly to Crypto currency values. Many people have lost a lot of money and for them I offer my deepest condolences. I know what it’s like to lose money on investments, it sucks.

So for me I never invested in crypto. Why? Because I am not educated in that market. It really is that simple folks and YOU should apply this simple philosophy to anything you chose to invest in. You have to be educated on the investment type. Now a caveat here, you can invest in things you are unfamiliar with if (big if) you are not risking a major portion of your portfolio (5% or less).

I simply don’t know crypto currencies. Further they, for the most part, are not regulated in any manner so the risk is much higher. So is the reward of course. Like most things in life the higher the risk the greater the reward. For me I use a long term conservative approach to investing. I invest in things I know, like Microsoft, Toyota, McDonalds. You see companies like that, whether you like them or not have long term established business models.

Money gives you the opportunity for a comfortable life.

I always felt more comfortable investing in companies who produced a tangible product that I actually used. See for me, the best advice I ever got for investing was “Take note of the products you buy and use and invest in those companies”. It made sense to me, if I am buying the product its likely other people are as well. That establishes a revenue stream that equates to value.

So those simple principals enable me to avoid the current decline in crypto currency. It also means I missed any and all gains by crypto as well. It’s a double edged sword. Meantime I keep the long term boring process of investing in companies that produce goods and services with a long term track record. Coca Cola, Intel, Google, Apple we can go on and on. The point here is I know these products, I use them and by slowly and steadily investing into stocks and mutual funds that hold these stocks I’ve created a nice portfolio.

Maybe you know crypto, maybe you know oil or real estate? There isn’t a perfect formula here, but investing in what you know is often the best you can do. Sure you might miss a trend and not get in on those huge returns, I get it that sucks. By long term steady investing into companies and products you are educated on is a great way to ensure liquidity and viability of your investment portfolio.

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Finance secret finance professionals won’t tell you (but I will)

It’s time for another finance piece on the blog. Before we get to far in remember that any advice you see here is my opinion based on 30 years of experience working in the finance industry. You should always obtain as much information as possible before making any financial decisions, and not take one bloggers advice as gospel.

The basis for wealth is income. Surviving in today’s world you need money and the more of it you have the more you can secure positive future outcomes. Simply put, income allows you to purchase things to make life better. TV’s, Food, Furniture, Housing on and on. The more income you have the more wealth you accumulate and that allows for the ability to make those purchases over longer periods of time.

“What’s the finance secret then Karac?”

It pertains to how you obtain income. Most of us exchange our time for money, you are getting an hourly wage. Even salaried people, you equate the hours worked to the money received. The problem with this method is there is a fixed number of hours you can potentially work. So your plateau for this income model can be reached quickly.

More governments will start regulating Bitcoin in the next 3 years.

Sure you can change jobs and get a raise or get a promotion but you pretty quickly cap at that level as well. A few years go by maybe you get raise but overall you are stagnant you are not growing your income profile and your wealth building slows. That isn’t to say you can’t have a great life and build wealth in this model, millions have. However, it always requires you to live with less now so you can have the same later on.

The secret is results based income. Essentially sales or production. Most people do not have an income based on results. Income based on results nullifies the weakness of time based income because results directly correlate to your skill. What may take me 3 hours may take you 1. Let’s say we are selling a graphic design for 5K. You worked 5 hours on it, I worked 10. Effectively you made double what I did, for the same result because it took you less time. Had we both been time for money based, I would have made more money for the same outcome.

Results based income is a fantastic way to maximize your earning potential and so little people do it. The finance industry wants you locked in to the time based job, making a fixed amount and saving a fixed amount. This enables them to project their earnings based on your investment strategy. A results based income earner is a finance professional’s nightmare. You could earn 50K in a week and then not have income for 2 months.

How can I forecast my fee’s off your investing with that kind of income model? This is why they don’t tell you about this income and wealth building model. Yes, it’s hard to pull off, but results based income is a great way to make a lot of money quickly. How do you do this? Look at all the people on EBay, they are essentially working on result based income models. They sell more they make more. So ya they have to hustle to get the product but that’s the return for them.

You? Go to work for 10 hours a day and make “X” every day, regardless of how hard you work. Even as a side hustle, selling the result = the greatest income potential for you. People will by anything, there is great demand. Teach someone a language, cut lawns, clean gutters, make walking sticks, resell used clothes on and on and on.

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How to create the change you want in society?

Are you political? Are you an environmentalist? Are you a woman’s rights advocate? A men’s rights advocate? It’s likely that there are some causes you are extremely passionate about. It’s also likely that at times you feel helpless to affect change that impacts the causes you believe in. What if I told you that you hold one of, if not the most potent tool to affect change in the modern world? You probably wouldn’t believe me, particularly when I say “you’re going to do it anyway” you would raise a brow and stare.

What is it? It’s your consumption.

What you spend your resources on is the greatest driver of outcomes in the modern western world. You are going to spend money on things you need and want, imagine if you focused that spending on companies who support the causes you care most about? It is true when people say “follow the money” or “money drives the economy”. Basically large corporations, political parties, celebrities all drive outcomes that usually involve economic benefit to them. The only larger entity in the world then some of these institutions is consumer spending.

How you spend your money drives change.

Imagine if a shoe company made shoes that were made completely out of recycled material. Imagine that that shoe company blew up and got as popular as NIKE. Do you think Jordan would be endorsing their shoes? You think their branding and social messaging would be all over sports? Of course it would, but what would it take to get to that point? Your consumption.

None of this happens if those with disposable income don’t purchase the product. You start, you tell your friends, they follow, bam you have created change. It takes a long time, but as an example, I remember when the first modern electric cars were introduced in the 90’s. Many people laughed at it, then consumers started buying them, there was demand. More companies made cars like this. Now? Electric cars are poised to supplant combustion based vehicles in the next 50 years. If you told someone in 1962 that in 2062 there would be all electric cars they would laugh their butts off.

You want to affect change? Where is your money going? Do the companies you send money too, say Amazon, support the causes you believe in? They don’t? Why are you giving them money then? What is your excuse exactly?

Want to create change in society, your consumption is the quickest most direct way to get the change you want. Do business with companies who support the causes you believe in. In doing this you create the economic conditions supported by supply and demand economics that may result in large cultural changes. Don’t believe me? That’s what they said about Electric cars in the 90’s.

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5 things I have learned in my 30+ years of working

We all have work experiences, right? I started working when I was 14, I am now 50. I have seen a lot and been through a lot at work. I have picked up a lot along the way, here are 5 things I have learned while working that I feel are super important:

  1. Advocating for yourself: If you are lucky, you have a great boss who will go to the wall for you. If you are like most of us, you don’t have that luxury. When its your review, when you have completed a project and when the company is going through transitions, you have to advocate for yourself. Ask for good raises, point out you did project “X”, affirm why you are an asset.
  2. Keeping the boss happy: This will be very unpopular but its an important lesson to learn. It requires a pretty large degree of humility but if you can keep your boss happy you will be happy at work. I mean this of course within reasonable context, but the bottom line is when my boss at work asks me to do something I try and do it as quickly and efficiently as I can. This simple thing, while challenging at times, has resulted in my getting good raises and bonus’s over the years.
  3. Keep showing up: Excessive absences create negative conditions as work still has to get done. If you are out a lot, someone else has to pick up your slack. If you show up everyday chances are, you’re picking up slack for others. This is extremely valuable, at the end of the day companies want work done they are less concerned with how you feel about it. If you show up everyday this enables the first item, advocating for yourself to be an easier sell.
  4. Deal with issues early: When you put a group of people together inevitably something happens, or people don’t get along. The last thing you want is someone bad mouthing you behind your back. If you have a problem with someone at work, even if its not your fault get it resolved. I’ve seen several examples of people being undermined at work but unhappy people. Deal with it quickly.
  5. Its about the money: You are 1 of 2 people in my opinion when it comes to work. You love what you do and are thrilled to do it, or you go to work to get money to do the things you love. Know your value, at all times. Every quarter you should be looking up online what someone with your degree and experience is being paid in your area. Don’t be lulled into benefits packages (they are nice, don’t get me wrong) or “corporate culture” memes from HR. Money is why you are working, the more you have the more things you can do with it.

I’ve got another 10-15 years left of work, how long do you have and what are your biggest take away’ s from working?

Anxiety and your money – Income

Anxiety takes on many different forms in the way it manifests itself within us. Often times we are unable to think clearly, so things are overlooked. A bill is due, the laundry hasn’t been done. We curl up in our safe spaces and wait it out. These times don’t often lead to productive outcomes, its essentially just holding on until the mood passes, sometimes it can take days. For some people it can take years. Regardless if we have anxiety or not, we all have to deal with money.

Money or your income is the basis in which you can survive in modern society. The degree to which you understand your income often leads to the quality of the survival. In simple terms, the more income you have the more resources you can muster to “weather the storm” we talked about in the first paragraph.

Let’s be clear on income first, Gross Income is the sum of all sources of income you have before deductions or expenses. Net income is the income you have left after all of your deductions or expenses. I know this is basic information but finance, for those of us with anxiety is often easiest when we establish the basics. The goal is to figure out how much gross income you need to pay all of your expenses, so you don’t end up with negative net income or a loss.

Many people get preoccupied with the amount of money they make or have. What’s critical is you make enough money to provide your necessities. More and more traditional income sources are falling by the wayside. There was a time where you worked for one company for decades and they were your primary income source. Today there are side hustles everywhere and you may be deriving income from multiple sources.

The important thing to remember is all sources of income have to be looked at carefully. What I mean here is if for instance you live in the U.S. and you are contracting, or you get ad revenue, or you sell items on eBay. In these examples the income is “true gross” meaning nothing has been deducted. You sell your marketing services for 1000, you get 1000. You then have “salary income” you work at a job, they take out taxes, you receive the net.

Its critical to understand your sources of income and where they come from. Most important here is to understand if you need to pay taxes on this income. The government will always get their money, its not a matter of if, it’s a matter of when. So, for those of us with Anxiety we need to be acutely aware of our income source. If for example you received 1000 and spent a 1000 but at the end of the year were required to pay 250 taxes on the 1000, you would have to get it somewhere else.

Income is the most important financial gauge you have to determining your future outcomes with money. Debt is often a choice, income is a reward for something you provided. If you have multiple sources of income and suffer from anxiety remember to keep it as organized as you can. Spend 15-30 a week focused on your finances, understand where your income is coming from and what kind of income it was. This can save you a lot of pain later on, as often we get money and we spend it. Understanding your income portfolio is extremely important don’t ignore it !

If you need help or have questions, feel free to email me directly and I will do my best to help you.