Financial tips to become poor FAST!
In a number of essays about basic finance and invisting, our resident biz-find financial adviser gives us his financial tips on what we need to do to become poor:
This nation is in some ways excellent at getting poor. You will recognise what we’re good at when you read some of the items on the list below. In other ways, many of us are just too cynical of so-called professionals to let them tell us what to do with our money. Or are we?
Here are my tips for getting poor faster:
Learn to trust strangers
Give all your money to someone you have never met and know nothing about, and ask him to look after it for you for a while before he secretly passes it to someone else you’ve never met to look after. The investment fund industry generally doesn’t like people to enquire too closely into the long-term records of its managers. You often won’t even be aware who the manager is, as the provider will merely say our “expert, experienced team of managers” or something. The fact is that the vast majority — no joke — the vast majority of funds underperform their most suitable benchmark over the long-term, whether that’s the FTSE 100, the S&P 500, or whatever. There are few talented with proven records, but the rest still get paid a fat lot of cash, and that comes from your funds. If you want to invest in a fund, check out how the manager has performed over the past ten years at least, and whether he or she tends to stay in one place, because you don’t want to try to keep track of that person’s movements, and it frequently costs money to sell and then buy another fund.
Borrow your way to poverty
“What do you do when you’re short o’ cash, Sharpe?”
“Do without, Sir.”
“You borrow, Richard.” Sharpe’s Rifles, 1993
If you need more money, you just borrow, right? And when that runs out, you borrow some more. That’s why our country is doing so well. The truth is that borrowing leads to an irreversible loss of wealth and the more you borrow, the poorer you will be: not just now and not just while you are paying off your debts — but for the rest of your life. There are very few exceptions.
Don’t plan, just spend
When you need or want something, don’t think about it too much. Just go and buy it. It’ll all work out ok. right? Imagine a business doing that. The business doesn’t know how much money is coming in and it doesn’t know how much it’s spending. How likely is it going to survive, and for how long? How rich is this company likely to get? People are the same. There is no way around it: unless you are the sort who truly lives frugally even when earning lots of money, there is no replacement for budgeting.
Find an industry that is invented purely to take your money
No, this time I’m not talking about the finance industry, but one that’s even more efficient at taking your money: the gaming — or gambling — industry. It is your moral duty, as someone who wants to get poor quick, to go to the casino right now. Industry turnover approaching £100bn in the UK alone is produced by games mathematically designed to slowly (or, if you’re lucky, not so slowly) relieve you of your wealth. This is one of the few industries to boom during economic troubles. Like debt-management companies and loan sharks. Steer clear unless you want to get poor quick.
Buy into enthusiasm and heavy tactics
If a bank manager, cold caller or any other person who will financially benefit from you buying something through them is particularly insistent and enthusiastic about a product, naturally they are enthusiastic for you, right? That’s right. They have heard of your mission to get poor quick. That’s why they’re selflessly being heavy handed and want you to sign now before you think too much. Why is it that some the same companies spend tens of thousands of pounds plastering adverts over every second website time and again? Are they spending this money to tell you about their most cost-effective products? No. If you assume that they are pushing their most expensive confusing and ultimately wealth-grabbing products, you will frequently be correct. The more they advertise, the more likely it is that this product is not the cheapest of its kind. The more complicated, astounding or “innovative” it seems to be, the greater the chance that other products will be more suitable for you. “Innovative” is a particularly ugly word in finance. Innovations tend to make the financial institutions richer at the customers’ expense.
Buy into a get rich-quick idea
Here’s one that really works! Just try it for yourself. Search for the most unbelievable, fantastic and especially secret idea that makes you wonder why on earth the investment industry and venture capitalists aren’t doing it, or why the CEO of this firm hides behind dodgy websites or brochures with no contact details instead of getting on Working Lunch to talk about this amazing opportunity for investment. Get rich quick schemes will strip you of your wealth in no time. Don’t worry that you’ll accidentally succeed and set back your chances of living in poverty for a generation; I guarantee you’ll be poor before you can say “Brewster’s millions.”
It’s no effort to be poor
“Trying is the first step towards failure. Kids, you tried your best and you failed miserably. The lesson is: never try. If something’s hard to do then it’s not worth doing.” Homer Simpson
That’s right. Sit back. Relax. Do nothing. Don’t switch accounts. Put your feet up at work. Watch a bit more TV. Your income will steadily fall against inflation as your boss tries to get rid of you through attrition. But watch out. By far the most likely way to take a wrong turn onto that road to the hellishness of money security, wealth and even (shudder) riches is to work hard.
It’s just not worth it. Is it?
Tigon is a well established and well trusted Financial adviser contact Steve for some simple advice.