How To Accumulate Wealth Instead of Continually Losing It
I remember the first brand new car I purchased. It was a shiny black with lots of chrome trim Dodge Charger with a turbo charged engine and it cost me around 13,000 dollars. I thought I got the deal of a lifetime. I was starting to make really good income as a young guy and I guess I wanted something to show that off a bit and so I looked at Camaro’s, drooled at Corvette’s, but they were just too far out of my comfort range at that time. Then someone tipped me off on how these Chargers were cheap, but still had that performance and appearance I was looking for so I took one for a drive and that sealed the deal.
13,000 dollars, it was a lot of money in the mid 1980’s. It was not far from what the median national wage was at that time. I remember when a Mcdonald’s hamburger was a quarter. Why is it not still a quarter, what changed? Well, the hamburger got smaller, the quality is far worse, and now it costs you a dollar, 4 times for the privilege of getting a stomach ache!
What about the fate of my 13,000 dollars I put into my shiny new Dodge Charger? Well, eventually it needed tires, a new radiator, the AC compressor died so I continually had to sink even more money into it. It did probably help me get a really pretty girlfriend, so that was sort of a side bonus. Finally, horror of horrors, it started to rust in a few years and was not very cool anymore. I would imagine it has been scrapped and might be part of the can of Coke you are drinking out of now, so all of that wealth disappeared. Today, to buy a similar car will cost you around 30,000 dollars per this inflation calculator.
http://www.dollartimes.com/inflation/inflation.php?amount=5&year=1980
Lesson learned, cars are not an investment, they are a liability as are many things. All of that wealth is essentially gone. I could have put it all into the bank. With a generous (by today’s standards) interest rate of 1.25% I would now have over 19,000 dollars, but I would have had to pay taxes on the gains, so it is really less than that. Hey, that will not even buy me a comparable car, the burgers I get are far worse and even the girlfriend is long gone! Something is wrong here!
http://www.bankrate.com/calculators/savings/simple-savings-calculator.aspx
Cars are depreciating assets and as I just proved, so are dollars in a bank account. The girlfriend, heck, she cost a lot of money too, lol!! Now what if I would have done something radically different. Something no expert money manager worth his salt would ever tell you to do and put that money into silver. I could have received around 2600 ounces of silver at that time for the money. As I write, silver is at 17 dollars and that would be worth over 44,000 and I am positive silver will be a lot higher not to long from now. I could have with that money today gotten a better car, eaten steak and lobster instead of crappy hamburgers and maybe a pretty girl to boot!
Ok, I am kind of joking around here but this is serious business really. Saving in dollars is a losing proposition. They continually go down in value. I was lucky and figured that out a long time ago. That knowledge has served me quite well. I am continually looking for undervalued opportunities to invest in. Silver and gold have stood the test of time and are a must have if you intend to create wealth and not debt for yourself. There are always other new opportunities arising that can multiply and should be looked at, but most of those carry with them a bit more risk. Things like mining stocks and crypto currencies have a very high beta factor and can move very quickly and can make you a lot of money very quickly and I believe are currently worth the risk because they are widely unknown and un-owned. Just remember to anchor some wealth in real silver and gold, something that has stood the test for literally thousands of years.
Here are some ideas for mining stocks worth looking into I have evaluated for myself.
https://steemit.com/gold/@motowngold/quick-evaluation-of-several-gold-and-silver-mining-companies
MOTOWNGOLD!
Very good article but I have the feeling that it's not finished yet! You described the problem very good but the solution and conclusion are not that well described and detailed. What about other approaches like running a business or investing on learning? Which approach makes more money in the long run? Thank you and keep writing please.
I appreciate the input, I have updated the article to include the info below. I do intend to build on this article going forward.
Here are some ideas for some mining stocks worth looking into I have evaluated for myself.
https://steemit.com/gold/@motowngold/quick-evaluation-of-several-gold-and-silver-mining-companies
True vehicles are very much a liability. not to mention you had to pay money on insurance and gas, things you would not have had to pay for if you had not owned the car. But on the other side of things, I can not drive and since I can not I am not able to apply for several different jobs, first lack of a drivers license and second no car to get to the work place being they are usually future out of town. So, cars are beneficial, and we need them, but as you pointed out also a risk.
Vehicles, houses, food, clothing, etc., these are all things we need often need and must spend money on. Depending on where you live, it can be very hard to get around without a vehicle and I certainly appreciate having one and I hope you will be able to find a solution for you situation. I know, that must be very limiting for you. The thing is, I think too many people equate these things with investments, which I do not believe they are, they are liabilities, even if necessary.
I do agree, well I have unpaid tickets I owe on, being I did not have the money to pay, my license was suspended. Now that my wife is working, and I start a new job end of the month, I think things will be on track to paying them off.
But your right, my wife assumes a vehicle is an investment, still cant help her understand the difference yet.
Awesome, glad to hear things are going to bet better for you!!
Thank you it did take sometime, but things are definitely improving.
Good points here. Sure gold and silver are great investments, but you forgot real estate! Real estate can give you a source of residual income in addition to steadily raising in value.
I think real estate can be a good investment, but is complicated for many, plus I think we are headed for a correction with interest rates pegged at zero leaving only one way for that to go, up, which will be a big negative for real estate going forward.
Thanks for sharing :)
Thank you for finding it worth your time!