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Jul. 11th, 2006 10:45 pmAfter reading Investing: Why Value Matters More than Price by Robert Kiyosaki, the point I decided to take was that there are two kinds of investments: the kind where you make money by keeping them and the kind where you make money by selling them. (This was either not exactly a point he made or not at all a point he made, but his article was the trigger.)
So, things where you make money by selling them (buying low and selling high) include stocks, real estate, collector's items, jewelry, art, etc. These kinds of investments are like gambling; they only work if the items are worth more when you want to sell them than when you bought them (accounting for inflation).
Things where you make money by keeping them include savings accounts, savings bonds, money market accounts, CDs, etc. These feel less like gambling and more like stockpiling to me. Except of course that along with the lower risk generally comes a lower expected return. Still, maybe that's not so true with other, less commonly written-up make-money-by-keeping-them investments.
What kinds of things do you own that pay you dividends of some kind just because you own them? (The dividends have to be arguably high enough so that they can be considered an investment. For example, owning a car means I don't have to rent one when I want to go to Dallas, but it would still be cheaper just to rent cars occasionally, so that doesn't count.)
Here are ones I have that I can think of off the top of my head:
* savings account (minimal)
* online money market account (4.35% interest annually)
* I-bonds from the good old days (currently 8.79% but about to go to 4.02% for the next six months)
* stocks that pay dividends (minimal, usually)
* a paying housemate (half my mortgage payment and utilities)
* a paid-off car (so I don't need to pay for comprehensive insurance)
* a rewards credit card (5% back on some purchases, 1% back on others) (unless I'm late with a payment, which I never am anymore now that you can pay online as soon as you get the bill but set it so they don't get the money for two more weeks)
* a kitchen and pantry (can cook at home instead of eating out)
* a washing machine (saves gas money and many quarters at the laundromat)
(Owning my house doesn't count yet. The amount I spend looks like about the amount I would be paying in rent. Although it's true that the amount I'm losing every month in interest, insurance, taxes, and repairs is less than I would probably otherwise be paying in rent, that extra equity counts as the other kind of investment, I guess. Although it's also bringing me closer to having the mortgage paid of and thus having to pay for only taxes, insurance, and repairs.)
Ballot update: Remember I said how Strayhorn wanted to be called "Grandma" on the ballot and said it would be fair because "Kinky" isn't a real name either, and because people know her as "Grandma"? Well, I'm happy to report that the Texas Secretary of State ruled yesterday that "Kinky" can go on the ballot (though between quotation marks, because it's a nickname), and "Grandma" can't (because it's a slogan--"One tough grandma").
I'm afraid that if Grandma was on the ballot, some people would vote for that name either thinking that their own grandma was running, or that someone like her was running. Now that would be incredibly stupid, but I happen to know that incredibly stupid people do vote.
Here is my evidence: 1) If you just put up billboards and hand out fliers with your name on them, you get more votes than if you don't, even if there is nothing on these items but your name and office. People like to vote for a familiar name, even when they have no clue about anything.
2) I once lived in Georgia during an election where several votes for President of the United States had to be thrown out because people voted for two presidential candidates. See, the first page of the ballot listed the Democratic and Republican candidates, and the second page listed two other candidates, and some huge number of people, like 20%, selected someone on each page. Now if you don't even get that both the people you are voting for are running for president, and that you only get to pick one, then that's a little too close to just voting for people at random for my comfort. (Tra la la, oh here's another page! This guy sounds whiter; I'll pick him.)
So, things where you make money by selling them (buying low and selling high) include stocks, real estate, collector's items, jewelry, art, etc. These kinds of investments are like gambling; they only work if the items are worth more when you want to sell them than when you bought them (accounting for inflation).
Things where you make money by keeping them include savings accounts, savings bonds, money market accounts, CDs, etc. These feel less like gambling and more like stockpiling to me. Except of course that along with the lower risk generally comes a lower expected return. Still, maybe that's not so true with other, less commonly written-up make-money-by-keeping-them investments.
What kinds of things do you own that pay you dividends of some kind just because you own them? (The dividends have to be arguably high enough so that they can be considered an investment. For example, owning a car means I don't have to rent one when I want to go to Dallas, but it would still be cheaper just to rent cars occasionally, so that doesn't count.)
Here are ones I have that I can think of off the top of my head:
* savings account (minimal)
* online money market account (4.35% interest annually)
* I-bonds from the good old days (currently 8.79% but about to go to 4.02% for the next six months)
* stocks that pay dividends (minimal, usually)
* a paying housemate (half my mortgage payment and utilities)
* a paid-off car (so I don't need to pay for comprehensive insurance)
* a rewards credit card (5% back on some purchases, 1% back on others) (unless I'm late with a payment, which I never am anymore now that you can pay online as soon as you get the bill but set it so they don't get the money for two more weeks)
* a kitchen and pantry (can cook at home instead of eating out)
* a washing machine (saves gas money and many quarters at the laundromat)
(Owning my house doesn't count yet. The amount I spend looks like about the amount I would be paying in rent. Although it's true that the amount I'm losing every month in interest, insurance, taxes, and repairs is less than I would probably otherwise be paying in rent, that extra equity counts as the other kind of investment, I guess. Although it's also bringing me closer to having the mortgage paid of and thus having to pay for only taxes, insurance, and repairs.)
Ballot update: Remember I said how Strayhorn wanted to be called "Grandma" on the ballot and said it would be fair because "Kinky" isn't a real name either, and because people know her as "Grandma"? Well, I'm happy to report that the Texas Secretary of State ruled yesterday that "Kinky" can go on the ballot (though between quotation marks, because it's a nickname), and "Grandma" can't (because it's a slogan--"One tough grandma").
I'm afraid that if Grandma was on the ballot, some people would vote for that name either thinking that their own grandma was running, or that someone like her was running. Now that would be incredibly stupid, but I happen to know that incredibly stupid people do vote.
Here is my evidence: 1) If you just put up billboards and hand out fliers with your name on them, you get more votes than if you don't, even if there is nothing on these items but your name and office. People like to vote for a familiar name, even when they have no clue about anything.
2) I once lived in Georgia during an election where several votes for President of the United States had to be thrown out because people voted for two presidential candidates. See, the first page of the ballot listed the Democratic and Republican candidates, and the second page listed two other candidates, and some huge number of people, like 20%, selected someone on each page. Now if you don't even get that both the people you are voting for are running for president, and that you only get to pick one, then that's a little too close to just voting for people at random for my comfort. (Tra la la, oh here's another page! This guy sounds whiter; I'll pick him.)