Okay, Part 3 is here! You definitely want to check our Part 1 and Part 2 as well. They ALL Build on each other. In the Previous Installments , I Introduced you to a different way to see money and the importance of why you should consider seeing it as such, and going beyond making and having just enough money to get by. Part 2 was about the 2 Basic Plans you can adopt to handling money and debt and the advantages and disadvantages of both. So now we delve a little into the savings and investment dynamics you need to consider in making the right money moves for you! Let’s get into it!
Save, for what?
That is definitely the Question, and the answer for the most part , if you think it through , is you to save for Emergencies and Opportunities. It’s the epitome of hustling backward for any thinking black man not to be preparing financially for the future , and saving beyond paying expenses is the foundation for that. Never count on the comfort of your current situation to always be what it currently is , even if its going great and you are at the top of your income game. Always be capitalizing! Let your hustle be as hard in the up time as the down time , never let your hunger settle to average. Again I’m no financial planner , or even millionaire, but I am an experienced thinking black man and now I will share with you , my experiences with different Savings means beyond cash. I will also make a strong distinction between Income producing investments and Speculative investments, and why you should consider using both to make more money beyond your profession or skill set. But first a little more on saving.
Make Saving Simple and Automatic
Make saving a reflex. The smartest thing you could do while saving is make it automated. Automating your saving ,mentally prepares you to work with a restricted amount of money. The way I do this is have one bank account receive my income , and another take an allotted amount out. The deposit account is my saving account. And the account that pulls money is my operations account. I automatically Pay myself first that way. You should do it too. This reduces the need to have so much discipline and willpower while saving , and trains you indirectly to focus mostly on your operations account. If you have your expenses well managed, you will passively save, and the more you make and the better you manage those expenses, the more you save, which leads me to my next point of taking that next step from saving to investing. Investing is the act of parting with something you value , in order to gain something more valuable in the future.
This sounds so common sense , but it’s not. If more people realized this , there would be so many financial advisers out of business because they would not be needed. I digress , but what I’m simply saying is, everything financial , starts with and is maintained with you. Read things like this article and listen to financial information , read financial books , and what makes sense to you will start to form financially. If you are a job guy like myself, Always remember you job is a paid internship, it’s good while it’s going , but it may not be meant to be long term for you , so prepare yourself to handle a shift for whatever reason (yet another basic reason to save). With your intelligence , you create a financial ecosystem that sustains your life and your circle. When there are challenges , you can diagnose and fix them. Be wise, be flexible , never fully count on any single investment vehicle, or currency form for that matter to carry you or fully protect you from changes, and be aware of how each of your investments work, more or less , their advantages , disadvantages , and how they compliment each other in your overall plan. But before that, a word of consideration about financial advisers…
Get Professionals involved in your Investments, but don’t let them take over for you.
Wait a second , didn’t I just say financial advisers weren’t needed in the other paragraph? Let me clarify. Financial advisers should not be fully depended on to guarantee your financial plan effectiveness. Remember, it’s your life , your money and your future. Financial Advisers are there to advise. Sometimes though they are just there to sell you product and ironically collect their money before you collect yours. Professionals are there just to contrast or confirm your thoughts or your plans for your money. They are there to communicate with. Be careful to know why you are investing into something they recommend. You need to be able to understand how returns are made with whatever money you give to them . Unfortunately , most working class level investments are more risky than higher class investments (Oh the Irony!) , and yes there are levels that I may have to cover another time. But yes , be mindful of all the advice you get. What I’m sharing is not gospel , but I hope I have you thinking. Next, find ways to diversify and collateralize your savings.
A Great beginning to Investing is to diversify your cash into other forms of Currency.
One of the challenges in saving in just cash is that it just sits there and often loses buying power because of the bigger Economic policy at play and time. There was a time Banks were in the Savings to lend Business, but now if you look up any savings based product such as a Bank CD or Money market Account , you will see paltry rates of interest for just parking money, things that are an Insult in the face of Time, economic Policy, and Inflation. That’s because banks are in the Borrow to Lend Business, and its a better profit model for THEM, not you.
Banks at this time are good mostly for lending and electronic bill payment means, and high , but short term, capital savings and that’s about it. Your mattress at home can probably produce a better return on your savings than you bank can IF you diversify your currency savings. So, that’s what I have done. I’ve diversified my savings to at least try to expose myself to potential value preservation or even gains. So next I will tell you some of the ways I have done such and what I have been willing to risk in order to gain. I still hold Cash as savings, but I do peel off some dollars to convert them into alternate forms of currency, with so far no regrets and more flexibility.
There was a time, where there was a fixed rate of Dollars to Gold and Silver Bullion in the United States and the world. But now, it is free flowing, because its easier to settle world debts with expanding currency , as opposed to fixed currency. That being said, the flexibility promotes that infamous inflation, which KILLS your savings over long term.
I hold Physical Bullion and Bullion correlated accounts, to expose myself to precious metals to hedge against inflation. I mostly Hold silver coins outside of the bank. They go up and down usually in inverse to the us and downs of the dollar, and they have proven to be a good source of cash and easily convertible at the local coin shop. All you need to know if you decide to purchase locally or online is the Spot price for the day which can be found at www.Kitco.com or www.Goldsilver.com , the premium, usually nothing over $2 pre coin, the purity on the coin needs to show .999, and the weight needs to be 1 troy ounce. You do not have to by only nationally minted coins, any generic coin will do for saving.
Gold can be Steep per ounce, so you can buy it by the Gram , a nd hold physically or setup an account at www.goldmoney.com , where you can buy per dollar amount and liquidate onto a prepaid card, or get shipped to you the actual physical bullion. The goldmoney company is actually a throwback to the banking system we use to have where your paper money was tied to Gold and Silver value, although not as fixed. I like gold and silver to compliment my dollar savings, but what I dont like is it my be suppressed by Government and banking for political reasons, and so here is another way I convert some of my savings to expose myself to returns.
Bitcoin: No, I’m not Fucking Kidding!
Bitcoin is the top of a class of an ever expanding form of currency called Crypto Currency, money based off programmed algorithms and digital signatures. It is the Ultimate form of Digital and Global currency and has proven itself to be fairly resilient in its nine years of existence.Whats unique about it is that it is decentralized. You do not need a bank to access it , just a cell phone and internet connection optimally, worst case, a cell signal , and I have heard even a radio frequency. Anyway Bitcoin is a massive digital legder, that accounts for every transaction ever made in its system. Because it is not centralized, it audits itself as an algorithm.
So why trust this shit that’s out in the “ether” to place your hard earned money in? Well you already do that in a way, it’s called the world currency and banking system, of which you trust your dollars with, and of which the majority of dollars you hold, and use daily , are digital digits. Bitcoin serves as a countercurrency such as Gold and Silver, except for Gold and Silver, its not so easily controlled by Centralized Governments and banks, it’s value is determined by the free market. What that means is if Dollars are struggling, and Gold and Silver are checked politically by Banks and government, Bitcoin looks more attractive to people with access to it (which as the day goes by more people have access and exposure) which makes it’s values go up significantly. Even if the exchanges that make it easy you you to access and convert your money into Bitcoin like www.coinbase.com where I hold some of my holdings get shut down, there’s peer to peer matching apps and websites such as www.localbitcoins.com and www.libertyx.com, where you can find , buy and sell at mutually safe public places and exchange dollars of bitcoin and vice versa. Hell, if you sell it you can charge a nice premium for your exchange too!
Here is a YTD performance for Bitcoin. The green number is the percent return. Full disclosure, bitcoin is quite volatile, so don’t be a dumbass and put your whole life savings into it. But also remember , no guts , no glory!!
Traditional Advisers cannot tell you about this because its very young as a currency , and it’s not regulated by the S.E.C. and they therefore cannot be licenced to sell or expose you to it, although VERY SOON, there may be an ETF (Electronically Traded fund) in the stock market you can buy into, but the question becomes why, if you can just scoop up some in the streets?
Well, I have said a Mouthful and I hope I did not Bore you or fry your brain, but I’m here to talk about thing most Thinking Black men have not even considered when it comes to money . you don’t need to embrace everything I speak of but you would do yourself a disservice not to at least research and understand the monetary world around you , your money you hold in your pocket and how that is changing.
It should not be any question as to the importance of savings and at least considering diversified savings a part of your money plan as a thinking Black man.
In the next Installment I will share my thoughts on making Speculative and Income based Investments a part of
your diversified Investment and Income strategy. The more our world and economy changes , the more you will need diversified sources of capital growth and income. Stay Tuned!!