What formed your attitude toward money?

My attitude defiantly formed from my parents and how they managed money. They were very successful with a few business and they worked very very hard to have that success but they also knew how to spend money and waste money. I always remember the amounts of $ that would be wasted on over seas holidays, buying then selling real estate at the wrong time... the list goes on and on. Funnily enough they were excellent managers and business owners, but when it came to managing their money they had no idea. Luckily they made so much it really doesn't matter.... as they are still very well off.

I guess seeing all this money get wasted taught me from a very early age that investing for the future is so important. Putting that nest egg away, even a little bit at a time really starts to add up after awhile.

My second big lesson in my life was starting my own business (a franchise that will remain nameless....) and loosing approx $35,000 at the age of 22. It was not my fault, I basically got screwed over, lawyers got involved... and I lost all of my life savings that I had saved up from working since I was 14. If ONLY I just put a deposit on a house back then instead!

Fast forward 10 years down the track and things are going great, and my portfolio just keeps growing so I cant complain.

The hardest lesson I learnt was when I lost everything, it seriuosly ate away at me for a few years to get over that loss and have the will to start again.

Julia said:

Many thanks, Sir O. It's a great story and one of which you can be very proud.

So, in your case it sounds as though your attitude toward money came from two directly opposite examples, i.e. the waste exhibited by your biological father, and the skills and determination of your mother.

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Perhaps I should expand a bit - not that you are wrong here Julia, more that I think it could be useful to explain my mindset for how and why I invest. It's somewhat shameful to admit but one of my earliest memories is helping my biological father look for mistakenly dropped winning tickets at the race track. I would have been four or five years old at the time.

To this day I feel about gambling like a reformed smoker feels about someone lighting up a 12 inch havana. Gambling = bad juju. I personally love playing poker. It's a fun game, especially when you can card count like me, however I will never play poker for money. Ever. To do so would make me far too similar to a man that makes me cringe that we share genetic material.

It's why I took so long to find the sharemarket because in my uneducated state I equated investing in the sharemarket to gambling, mistakenly believing that for every winner there had to be a loser.

The way I invest therefore means that I have to have an incredibly solid foundation for putting money into something. If I don't I'm gambling. Gambling=bad juju. I prefer small, consistent returns that I can compound, rather than big massive punty winners (although I have had a few big punty winners over the years).

So the way I think about risk is a very emotive subject for me. Intellectually I realize that my negative experiences mean that in plenty of occasions I have been too cautious in balancing my risk reward and its been something I struggled with for a number of years until I found systematic trading.

I don't suppose it seemed so at the time, but in hindsight you probably had the best of both worlds in terms of 'learning'.

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Yeah I can see that, but I have to say I would have preffered the education I am giving my kids rather than the way I learned it

Absolutely agree. If I could hold on to just one basic maxim about money, this would be it.



So obviously you have acquired wisdom as well as financial success.

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Wheres that Blushing smilie ??

Thanks Julia

Cheers

Sir O

sinner said:

Hey Sir O!

I am trying to shift my career out of CompSci area into financials but it's proving difficult even with some great advice from one of the members here.

Basically I'm looking for some company to recognise I'm a compsci guy with finance passion and take me under their wing. I can code systems, indicators, data processing/validation, etc. I can run stats. I can trawl information off the net faster than anyone I know.

All stuff which serves me well once I come home from work and turn on the tickers, but seemingly useless when it comes to getting my foot in the door. Everyone wants quants to write HFT these days (I am looking at seek all the time). It's not even like they're doing much except collecting liquidity rebates, certainly no Markowitz style operations going down from what I can see.

Any advice from someone like yourself as to how to make the switch? Posting the question here rather than PMing you because I figure other members might have thoughts too.

Hope it isn't too off-topic.

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So you are saying you want to be an evil broker? <- Semi joking

Look I'd have to say that as much as it may hurt no one is going to hire a CompSci guy over someone that's done say a Commerce degree from the big end of town. You could try the Prop shops. Some of them have intakes where they will train you to become RG146 compliant as part of the employment but basically I think you will need to look at it as a career change and take the plunge.

Go back to Uni and do Econ, Stat, Bus units. Do some vocational stuff and get your RG independently and you will be seen as a go getter. I think you may need to reskill just to get your piece of paper on something that you are doing anyway. Personally I don't see the benefit or the attraction. The only formalized training you will likely receive (or the only stuff that was provided free to me whan I was a broker at least) will be in sales techniques. The rest of it (technical and fundamental analysis) you can learn outside of that environment without needing full immersion.

Cheers

Sir O

Sir Osisofliver said:

The only formalized training you will likely receive (or the only stuff that was provided free to me whan I was a broker at least) will be in sales techniques.
Sir O

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Ah, the naked truth about financial advisers!
Sorry for the diversion. I only dare put this up because I'm pretty sure you don't disagree in terms of the majority of your erstwhile colleagues, Sir O.

These days

Global Kleptocrats

GumbyLearner said:

... Global Kleptocrats

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Mesmerizing video!!

Does it have to do with how you were brought up? What attitudes you observed in your parents re saving/spending/investing?

My mum and Dad were always hard working. My mum has worked all over the place, at temp jobs, admin, etc. My Dad is in business banking and has been in Branch Banking all his life. If always felt open about talking about money with my Dad especially.

When I was little, I was very determined and very patient in getting what I wanted. My brother, sister and I all got pocket money each week for doing chores around the house. My brother and sister always spent their money each week, I continued to save mine for about 2 years without spending hardly any of it. I used to save up $300-400 at a time (saving $5 each week as pocket money). My first big purchase was a cricket bat. I absolutely loved the fact that I saved long and hard for that cricket bat and made me enjoy and cherish it so much more.

With knowing that, my next purchase was a surfboard a few years later for the same price. I had learnt my lesson that savings = better things to spend money on. Delayed gratification I was very good at.

Next was when I got a local paper run on Friday evenings after school when I was about 12. I worked 2-3 hours each Friday in rain, hail or shine and got paid about $3 for it. This was only 10 years ago so $1 per hour was miserable pay. I didn't mind. I was saving money! This further taught me the value of hard work and exchanging hard work for dollars.

My next experience was when I was waiting with my Mum at Auckland Airport and our flight was delayed. We we bored and my Mum decided to go to the bookstore in the Airport to read some magazines. I wanted to read cricket magazines but a purple book with the title "Rich Dad, Poor Dad" caught my eye. I took it to my mum and asked her if she would buy it for me. She said no, but she would get it out of the library for me when we got home from our trip down to Christchurch.

Once I read that book, my life changed.

I knew I wanted to be a rich man.

Several weeks after I read the book I searched the internet and read books about business ideas for kids. I came across and idea that fit me perfectly. I would buy hanging flower baskets, buy all the potting mix, buy the seedlings, put them all together and sell "Hanging Herb Baskets"

I made about $20 of them. They cost me about $11 or $12 to make each and then I sold them for $20 each. I used to take 4-5 of them at a time and sit outside the local school at the end of the day and try sell them to the school mums picking up their kids. This worked extremely well and I made a handy $160 odd profit from my original $240 investment. Not a bad return for about a month and in total only 5-10 hours work.

After that, I just kept devouring every book on finance, budgeting, investment, real estate, stocks etc. During "study period" at school, I used to read these books while others were goofing around sleeping.

Now move forward, I'm 22, still budgeting and disciplined with my spending and with a university degree under my belt and 1.5 years of working have managed to save up about $20,000.

Was there any influence via your school years?

Even though I'm a pretty B grade student at school, I managed to come first in the whole school for my age level in accounting. Mainly because I was so interested in business. But apart from that, I learnt nothing from school about money. Although I did learn about all the friends who I played cricket with and who's Dad's were quite wealthy, all owned their own businesses rather than work jobs.

What effect did 'wanting to do better than others have', if that was a factor?

I've never wanted to do better than individuals. I am generally not a hugely competitive person. I just want to be looked up to and respected for my hard work and growing intelligence about money. Not many people ask me for advice.

Or if you've struggled with being able to save and invest proficiently, what factors do you think have influenced this?

No income coming in during university isn't great for wanting to save and invest. It taught me a lot about budgeting and stretching a dollar. Having money coming in periodically from my full time job now makes it much easier to save and invest.

ENP said:

No income coming in during university isn't great for wanting to save and invest. It taught me a lot about budgeting and stretching a dollar. Having money coming in periodically from my full time job now makes it much easier to save and invest.

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Very true. The trap that one needs to avoid is that once you do start full time work that you don't increase your standard of living too dramatically. Obviously no one wants to live like a uni student without a job, but it doesn't mean that once you have a full time job you start living like a millionaire. I see lots of my fellow graduates making this mistake, wondering why they are older than me and have no house and are 40K in debt yet earn the same as me.

For me I increased my standard of living by about 20% compared to uni life. I was working during Uni so it wasn't so bad - my pay has more than doubled first year out, but I spend only 20% more than I used to. And let me tell you, the savings are growing at a phenomenal rate and I still enjoy my life thoroughly.

Also agree about the Rich Dad Poor Dad book. Not the best written book but it was my first book on finance too and got me seriously thinking about getting out of the 'rat race'. Never looked back since

Thanks for sharing ENP!

ENP said:

I made about $20 of them. They cost me about $11 or $12 to make each and then I sold them for $20 each. I used to take 4-5 of them at a time and sit outside the local school at the end of the day and try sell them to the school mums picking up their kids. This worked extremely well and I made a handy $160 odd profit from my original $240 investment. Not a bad return for about a month and in total only 5-10 hours work.

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Awesome post ENP but this was my favorite bit.

Great ROI!

ENP said:

Does it have to do with how you were brought up? What attitudes you observed in your parents re saving/spending/investing?

My mum and Dad were always hard working. My mum has worked all over the place, at temp jobs, admin, etc. My Dad is in business banking and has been in Branch Banking all his life. If always felt open about talking about money with my Dad especially........................

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Fantastic post, ENP. Might print it off and use with some of the school students in our mentoring program. Thank you.

Hi Julia, I am enjoying this thread too. The main theme that applies to most contributors is that they seem to know the value of money. They know how hard they and their parents worked for it and they know how to make it and more importantly invest it.

I was talking to an Aussie Ex Pat mate of mine in bar over a few beers once. I said to him how is it you and I can come over here and just sit back drink beer and watch the sunset over the water everyday while everyone else slaves away in OZ. He wasn't a wealthy man so I was interested in his reply, he said "because we worked bloody hard for it so I'm not going to waste it". "I could spend triple what I do now but then I would have to go back to OZ and get back into work" he said. And then he said "and that ain't going to happen." He is just a frugal simple man, can make his buck stretch, knows how to look after himself.

Then I know another mate, he is 56 years old. He works full time and lives from week to week. He rents a room in Sydney and pays board to the the lady that rents out 4 rooms. He has no property or shares. He has never been overseas and has never married. Recently his Father died and he received a 60K inheritance, he has blown 10k already. He plans to blow another 12k on a 5 star train ride and a cruise. See the differences? I just couldn't do that with my Mothers and Fathers money, I would just invest it. Everyone has choices, he has often used the throw away line to me "what's money anyway"....... Seems to be what has come up a couple of times through the thread, instant gratification versus investing and long term more permanent returns. The whole thread is interesting.

Julia said:

Fantastic post, ENP. Might print it off and use with some of the school students in our mentoring program. Thank you.

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No problem,

I enjoyed writing it. Is there any questions you would like to ask so your students can get a better understanding?

My attitude towards money is from my parents and genetics.

I say genetics because when I was very young, 4-6, I used to collect 1,2 & 5c coins. I think I just like the shine of it but my dad used to call me "little jew boy". Never knew what it meant until I was in high school and the association with jews and money :
My parents never taught me about money until high school so it must be something with genetics.

As for my parents - I followed my mum's advice for what do to with money and my dad for what NOT to do with money


Also followed my gut and didn't listen to anyone when I started my own business. Started out as a hobby, then something to supplement my income and now it's the main source of my income and stop working full time to only work casual.
So good going for runs at the TAN in the afternoon...