Archive for the ‘Saving money’ Category
Friday, June 27th, 2008 |
Warren Buffett has made a million dollar bet that the S&P 500 index fund will return more to investors over the next 10 years than a collection of hedge funds that are carefully selected by experts.
The bet was made between Buffett and a company called Protégé Partners LLC - a company that specializes in running funds of funds. Those in the dark - a fund of funds is just like a hedge fund but instead of owning stocks or bonds, it owns other funds.
This has some positive and negative aspects.
The Good
A fund of funds is extremely diversified. Since it consists of funds that each consist of hundreds of stocks it is relatively risk free. This is good during the bad times.
The Bad
When compared to owning stocks or index funds a fund of funds has extremely high fees. Such a fund has an annual management fee of 1% and each one of the funds that it consists of have fees of about 1,5% a year. In contrast - owning the Vanguards S&P 500 index fund has a yearly fee of only 0,07%.
Hedge funds also typically collect 20% of the gains they make - this leaves you 80% of which the fund of funds also takes its share - typically about 5%.
Why Buffett Decided to Take This Bet
The high management fees of funds of funds are what Buffett thinks will win him the bet.
In order for a fund or a fund of funds to equal the return of the S&P 500 index, it has to have a lot higher yield than the index. Buffett is essentially saying that even if the fund he is betting against can surpass the yield of S&P 500, the costs associated with the fund will be so high that net of all fees the yield of S&P 500 will be greater than the fund of funds Protégé Partners is running.
You can read Warren Buffett’s and the Protégé Partners views on the bet at Long Bets.
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Posted in Saving money | 2 Comments »
Wednesday, June 25th, 2008 |
I got pulled over for speeding this weekend.
I was doing 71 km/h in a 50 zone. For those thinking in miles this translates roughly to 44 miles in a 31 miles an hour zone.
To tell the truth it didn’t feel like I was speeding too much (and it still doesn’t) but anyone speeding more than 20 km/h for the first time can expect a decent fine here in Estonia.
The maximum fine for my offense is about 2000 dollars + suspension of driving license for 6 months. When pulled over, my initial thought was that the fine will probably be between 400 and 800 dollars - the average for that kind of speeding. Instead - I got a ticket for 30 dollars.
Here is how I did it.
- Tell the truth. I immediately accepted that I was speeding. In fact I told the police that I thought I was driving a bit faster than their radar registered.
There are a lot of people who get pulled over every day and most of them lie in order to get a smaller fine. Finding someone who is totally honest can be a breath of fresh air for a police officer.
- Make friends first, customers second. When I was a door-to-door salesman this rule never failed to deliver. Whenever I got into trouble with people or the authority I was taught to always make friends first and only afterward try to resolve the situation. Just as everyone else - the police is more likely to help when they like you. Make the officers your friends. This is how I did it:
- Show interest in what others do. While writing me the ticket a police officer verified some information and asked for my signature for at least 3 different papers - I told him that as an IT student it doesn’t make a lot of sense - all the information I gave them was already downloaded to their on-board computer via wireless internet. They had my picture, where I live and etc but they were still required to ask all this information from me. I told the police that it would be a lot faster when they could simply print the information out or if I could sign everything with my electronic signature (everyone has 1 here in Estonia) - that way there would be no need for paper and the process would be 3 or 4 times faster. Not surprisingly both police officers agreed and they also had some personal views and ideas that they eagerly shared! I just made 2 friends!
- Ask questions and tell something of interest. This is the best way to establish rapport and quickly befriend someone you didn’t know before. I told the police that this was my first speeding ticket in Estonia but that I had gotten 1 in the States. The officer writing the ticket was very interested in getting to know how it exactly works in the US and what are the biggest “speeding ticket differences” in the two countries. I told him everything I knew.
I also asked a few questions about how exactly the speed radar works since I was genuinely interested. It got to the point where 1 officer proposed that if I want I can drive by their car and they can measure my speed again - just to better explain how it works. I laughed and refused but I got the feeling that they were enjoying talking with me.
The Secret
As you can see there are no mysteries on how to get a smaller fine. Make the police your friend first and only after that deal with the ticket part. Put yourself in their shoes - who would you rather let go - the guy who is obviously lying or the guy who seems genuinely interested and asks a lot of questions about your job.
1 more (evil) tip
Being honest or coming up with a little lie can depend on the situation you are in and your ability to read other people. If you are going to lie and you are from Europe but driving in the US you can say that you accidentally mixed miles and kilometers since in Europe we only have the latter. This has worked at least 3 times for me! 
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Posted in Saving money | 1 Comment »
Tuesday, June 10th, 2008 |
This is what 1 million pennies looks like.
1 million pennies is a total of 10 000 dollars and weights about 2.3 tons.
An interesting fact about pennies is that because of the falling dollar 1 penny is actually worth more when sold as metal as opposed to its nominal value. The US government passed a special law that says it is illegal to sell pennies as metal.
If it would be legal we wouldn’t soon have any pennies left… (For most people that would be a good thing but for some reason the government thinks they are important)
PS! If you have noticed that the amount of posts has dropped a bit recently it is because I am actually on a inflatable boat trip with some of my friends and the articles appearing here in FinancialJesus.com have been written before the trip and are automatically scheduled for release by Wordpress!
Posted in Saving money | 5 Comments »
Monday, June 2nd, 2008 |
In 1987 American Airlines saved $40,000 by eliminating 1 olive from each salad served in first-class.
In 2001 the world’s largest airline caterer served 427 million meals to airline customers.
Make your own conclusion
This puts the real world into perspective. Things as tiny as 1 olive can save a large company more than some people make. An airliner who serves 427 million meals and gets an olive for 1 cent saves 4.27 million dollars by eliminating 1 olive from every meal.
Moral of the story?
Small things can make a difference. That’s probably also why elephants are afraid of mice 
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Posted in Saving money | 1 Comment »
Friday, May 30th, 2008 |
Have you noticed how everyone is talking about the high gas prices lately? Aren’t you fed up already? I am!
Talking about high gas prices seems to be the new national past time. A lot of people offline and even more online, are suddenly talking about how much they have to pay for gas.
There is also a growing number of people telling you that the current prices are nothing - you should see the gas prices in Europe! It’s true that the gas in Europe costs about $8 to $9 per gallon on average and even a bit more in some countries.
High prices make me feel bad.
If you know that it’s even worse somewhere else, it won’t make you happy. Just the opposite - It makes me feel even worse!
10 countries with cheapest gas
Today I am trying to make everyone a bit happier! Here is a list of 10 countries that have the cheapest gas prices in the world!
United Arab Emirates is a nice country to live in. In addition to having one of the cheapest gas prices in the world they are also the 4th rich country in the world.
Did you know that Ferrari Enzo takes a lot more gas than Toyota Prius? Thinking about it this way, makes it only logical to have super cheap gas for super rich people and there super expensive cars!
9. Egypt - $1.21/gallon or $0.32/litre
Starting from 1979 Egypt has gotten an average of $2.2 billion a year as foreign aid from the US. It’s only fair - the money to buy all that cheap gas has to come from somewhere!
8. Bahrain - $1.02/gallon or 0.27/liter
This small island country has a total area of only 266 mi² (665 km²). If you decide to drive around the island you should know that this trip will be about 100 miles (161 km). So why not give the people gas with dirt cheap prices? How much gas do they need anyway? It’s not like there are some far away destinations you could drive to.
7. Qatar - $0.83/gallon or $0.22/litre
If you would be the government of this second richest country in the world you wouldn’t want the people to pay too much for gas. After all - they can get mad at you if they don’t have enough money to buy their second airplane! So of course, it makes sense to keep gas prices really low in Qatar.
6. Kuwait - $0.79/gallon or 0.21$/liter
It’s pretty much the same deal in Kuwait as in Qatar! But Kuwait is only the 4th richest country in the world, so it makes sense that gas in Kuwait is a bit cheaper than in Qatar! People in Kuwait probably can’t afford the prices Qatar has!
5. Saudi Arabia - $0.45/gallon or $0.12/litre
When King Abdullah of Saudi Arabia visits foreign countries he usually goes with 6 planes - 1 for himself and his sons and another 5 for his closest friends. Everyone knows that planes consume a lot of fuel! Now if they would only lower the price a little bit they could afford to take with them that 7th personal Boeing 747.
4. Iran - $0.42/gallon or $0.11/liter
At current rate of production it is estimated that Iran will run out of oil in 74 years. They are trying to get rid of it faster by giving it away with really cheap prices.
3. Nigeria - $0.38/gallon or $0.10/litre
Nigeria has the 10th largest oil reserves in the world. They also have about 150 million people and a history of violence. Mix this with a government that is corrupt and want to keep the money they get from selling oil to other countries for more than $4/gallon (about $1.1/liter) it makes sense that they keep the local prices down. You don’t want to make the people mad, overthrow the government and kill everyone they don’t like! You can’t use the money after you die, can you?
2. Turkmenistan - $0.30/gallon or $0.08/liter
Turkmenistan is by far the coolest country on the list. Until December 2006 it was ruled by president for life Saparmurat_Niyazov. Some cool things he has done:
- Officially named the months of the year after his family members
- Won a “democratic election” with 99.9% of the votes!
- Closed down all rural libraries - “Ordinary Turkmenistan people don’t read books”
1. Venezuela - $0.19/gallon or 0.05$/litre
Venezuela is run by president Hugo Chavez - a quite well known guy for those who are following international politics. He is a lot into socialism. This includes having the state take control of privately held companies and doing pretty much whatever he thinks helps his people to have a better life. The nice thing is that when he does something major he always asks the opinion of the people! If you had to vote would you rather choose high or low gas prices?
Take a road trip
Next time you are going on a road trip consider these countries. Cheap prices and guaranteed experiences!
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If you live on any of the above countries there is probably no need to check out the following post
Posted in Saving money | 1 Comment »
Thursday, May 29th, 2008 |
This is an overview page to a series of insights about money and how to get rich, that I have posted on FinancialJesus.com
It is important to know these rules for everyone interested in getting rich. The list is in reverse order - that way when I add a new insight it will appear on the top. Expect this list to grow over 100+ posts.
Challenge yourself and the way you think and get rid of the money beliefs that are holding you back on achieving what you are truly capable of.
Everyone can become rich but most people are too lazy. Becoming rich requires hard work and discipline. You might win the lottery but you should always work as if becoming rich is up to you. Statistically speaking - getting hit by lightning is more likely than winning the lottery
Sharing your goals with people you trust can be one of the most powerful ways to ensure that you get what you are out to achieve. Depending on your personality it can be a good idea to share your goals with positive or negative people.
Setting and working relentlessly to achieve your goals is what separates the people who will become rich from the people who will stay poor. This post has some great tips on how to achieve what you want. For example people who write down their goals are in general 10 times wealthier than the people who don’t write down their goals.
Being rich means different things for different people. Some people consider them rich when they can take care of themselves and their families. Some, when they have 1 million dollars. Defining the meaning of “I am rich” should be one of the first things everybody interested in becoming wealthy should do. After all, how will you know you have reached the destination when you don’t know what the destination is.
My personal definition of being rich is
“I am rich when I can do whatever I want to do whenever I want it!”
It is possible for everyone to make money. Money doesn’t care about the color of your skin or whether you are smart or stupid. Money has no feelings.
“If you think you can make money - you can. If you think you can’t - you can’t”
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Posted in Saving money | 1 Comment »
Wednesday, May 28th, 2008 |
A huge marketing campaign started across Europe today with the goal to save fuel, money and the environment.
Over 40 oil companies, 45 000 gas stations and 29 countries are taking part.
Here are 10 things the marketing campaign is recommending people to do.
- Service your car and check the oil level regularly
- Check tire pressure once a month
- Take everything that you don’t need out of the trunk and from your back seat.
- Close your car windows when you are driving fast
- Only use the air conditioner when it’s absolutely necessary
- Start driving soon after starting the engine and stop the motor if the car is not driving for more than 1 minute.
- Drive with a reasonable speed and smoothly
- When accelerating shift to a faster car as soon as possible (Most cars in Europe use the “stick”)
- Try to sense what is going to happen in the traffic before it happens
- Share your car with others.
If you ask me, these recommendations are quite simple and can even seem somewhat stupid to a person who knows a little about saving gas.
I have a feeling that Europe needs this campaign badly - the average gas price is about 8 to 9 dollars per gallon.
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If you are fed up with tips about how to save fuel you should check out this post
Posted in Saving money | 9 Comments »
Thursday, May 15th, 2008 |
You are fed up with your work. Your boss is an asshole. Every day that you go to work is the worse day of your life.
You decide to give your employer the finger and quit without a notice. You simply get up and walk away from your cubicle and 5 minutes later you are free - no obligations, no nerve-wracking job, and
No weekly paycheck!
If you were to quit your job right now, how much money would you have left? Would it be enough to continue living your lifestyle for 1 month, 2 months, 3 months or more? Is it enough to comfortably find a new and a better job?
F*CK Y*U money is typically measured in months or years - how long can you live using your reserves without changing your lifestyle?
Leave your answer in the comments!
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And remember - leave your answer in the comments!
Posted in Saving money | 4 Comments »
