Tag Archives: time horizon

Warren Buffet: How a Sixteen Year Old Turned $5,000 into almost $1B

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Almost everyone has at some point heard of the famous figure Warren Buffet. However did you know that Warren’s success didn’t just start as an investor. Mr. Buffet actually began making strides towards his massive fortune in his high school years.

In high school he was making more than a lot of his teachers by running a pinball machine business and delivering papers. At the age of sixteen he had amassed five grand. $5,000 at his age would be the equivalent of around $60,000 today! He was just sixteen.

While most of us can’t redo our high school years, childhood or even college experience, we can chose to adapt many of the principles that Warren did in his younger years and implement them long term.

There are three things that we can use from Warren’s life to make changes today:

  1. Win Friends and Influence People

Warren implemented (not just read) this book. Simply reading it and taking daily action to change behavior and habits can go a long way in making your life a more successful one.

2. Understand the time value of money

Warren, even in his teen years, didn’t squander his cash on toys, games or nice clothes. He understood that a dollar today could be worth $30, $100 or (in his case) $1000 in the future.

3. Be entrepreneurial

This doesn’t mean you need to start a company or quit your day job. Just like Warren, you can figure out creative ways to make side money. If Warren Buffet at the ages of 13, 14 and 15 could figure out how to make side money, then you, as an adult can figure out how to do the same.

Conclusion:

Warren Buffet is extraordinarily rich. I can’t tell you that you’ll be as rich as him. I can’t even guarantee that you’ll have $1M. But I can guarantee that you’ll grow as a person and become richer then you are now if you implement these three steps.

Try them, you may find that they actually work.

Renting Vs Buying – 4 Factors to Look At

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Most people will spend the largest percentage of their income on housing. Deciding what kind of housing, and how much can be the most crucial financial decision you’ll make. Choosing between renting or buying can literally be the difference between retiring in the next decade or not.

I am going to cover the largest factors that determine which option is better. In a later post I will outline what my math and research has shown, and which options work best for which situations.

Time-frame

For the vast majority of cases, the rent vs buy scenario comes down to timing. If, for example, you plan on moving in the next few years, renting is almost always better because of the closing costs associated with buying. However as we begin to look at longer time horizons, renting generally becomes more and more expensive, relatively speaking.

Location

In certain locations, like San Fransisco for example, it makes proportionally more sense to rent than it does to buy over shorter periods of time. This is due to the fact that there lies what I call a “Cali Premium” for people who buy real estate in any of the large metropolitan areas along the California coast. Because of this higher pricing, the cost to rent is comparatively lower than most areas of the country.

Discipline

The numbers only make sense if the person doing the renting is investing the difference (assuming there is a difference between renting and owning) consistently. If someone simply rents over buying, the numbers skew back in favor of the homebuyer, who has automatically enrolled in a “forced savings plan.”

The Numbers

The last major factor to look at is the actual numbers and data. These are questions like, what is the interest rate on the loan, what is my rate of return on my investments, how fast does my property increase in value, and how fast does the rent rise year-over-year? These four questions are some of the most impactful when it comes to analyzing the numbers, but there are a host of others to ask as well.

Hopefully these insights are beneficial when making these important decisions. I looking forward to seeing how the actual numbers pan out in real life in the years to come.