George is an anxious baby boomer, concerned that the current generation might be overwhelmed by today's complex financial environment. How does one achieve a balance between being informed and experiencing information overload?
Heather is surprised by the idea that renting might be more financially advantageous than purchasing a home. In her area, the figures consistently favor ownership. What is she overlooking?
In this episode, former financial planner Joe Saul-Sehy and I address these inquiries.
Enjoy!
P.S. If you have a question, feel free to leave it here.
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George inquires (at 01:38 minutes): As leaders in financial media, what advice would you offer to young financial enthusiasts in their twenties, thirties, or forties who worry that missing a single podcast or TikTok video will leave them hopelessly behind?
Many individuals are interested in financial independence and the FIRE movement, whether it's Fat FIRE, Lean FIRE, Coast FIRE, Barista FIRE, or even Double-II FIRE. As a member of the Baby Boomer generation, I wanted to contribute.
I retired a year ago at age 60, along with my wife. Our approach was straightforward: earn a decent income, excel in our careers, invest 25 percent of our gross earnings, and lead a fulfilling life focused on family.
When I was growing up, we didn't have much access to personal finance advice or investing knowledge. Our resources were limited to Money magazine and a finance book from the local library. There weren't any experts to turn to.
Now, I'm concerned that people will chase after fleeting trends, diving headfirst into strategies like hacking, leveraging, and arbitraging, without recognizing that circumstances may change: such as welcoming children, experiencing a separation, losing a job, or facing a sudden illness.
What is the role of financial media in educating consumers without overwhelming them? Should they read all the classic texts such as Simple Path to Wealth, Millionaire Next Door, Mr. Money Mustache’s well-known blog post, or Stacked?
Should they focus on frugality, take on multiple side hustles, or buy into the real estate hype? Or should they adopt a "Die With Zero" mentality, pursuing their best life in a van and "retiring" to places like Portugal or Bali at 26 with a bucket of FU money?
Heather poses a question (at 31:40 minutes): Considering the variations in property laws and tax regulations around the world, do the standard formulas for assessing rental properties in the U.S. apply to international investments?
I reside in the U.K. and have been pondering something Paula mentioned recently: that renting isn't necessarily “throwing money away.” While I agree conceptually, I believe the dynamics are different here, and purchasing often makes more financial sense.
For instance, the opportunity cost of investing in real estate compared to the stock market isn't as pronounced here. Only 20 percent of Britons engage with the stock market. One-third of first-time buyers receive their deposit from their parents, and those who don't often see their money sitting idly in savings.
Homeownership costs tend to be lower than in the U.S. I recently insured a four-bedroom house for just £400 a year. We don’t have property taxes like in the U.S.; instead, renters pay our equivalent "council tax."
Maintenance costs have also been surprisingly low. I owned a home for 18 years, and when factoring in the mortgage, my average monthly housing costs were just £665. During that same time, my average maintenance expenses, including repairs, amounted to only £135 per month.
The value of that home increased from £250,000 to £580,000. I put down £16,500, lived there for five years, and then rented it out. Between rental income and appreciation, I achieved a significant return. The price-to-rent ratio remained at 21 both when I bought and sold.
From my viewpoint, this appears to be a clear-cut investment. However, after listening to your episodes on property, it's become evident how differently the numbers can appear in the U.S., especially with higher property taxes, insurance, and maintenance expenses.
I'd love to hear your insights — do you think that real estate investment principles are applicable across borders, or must they be adjusted for local contexts like those in the U.K.?
Resources Mentioned:
Die with Zero | Book
The Simple Path To Wealth | Book
The Millionaire Next Door | Book
Stacked: Your Super-Serious Guide to Modern Money Management | Book
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George is a concerned baby boomer, pondering whether the current generation is overwhelmed by the complexities of today’s financial environment. How can one strike a balance between having enough information and being overloaded?