wealthy http://www.wisebread.com/taxonomy/term/9171/all en-US 6 Ways More Money Does Truly Lead to More Problems http://www.wisebread.com/6-ways-more-money-does-truly-lead-to-more-problems <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/6-ways-more-money-does-truly-lead-to-more-problems" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/man_with_cash_000073068135.jpg" alt="Man learning how money leads to more problems" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>If you're struggling to pay the bills each month, you probably don't have much sympathy for your wealthier neighbor or for the millionaire who complains about paying too much in taxes. But here's the truth: Even those blessed with a lot of dollars can have money problems.</p> <p>The rich just have different kinds of money problems. They might not worry about having enough money to make their car payment, but they do worry about sending too much to Uncle Sam every tax day.</p> <p>Planning to get rich yourself someday? Here's a list of some of the problems that you might face when you have more money to worry about.</p> <h2>1. Higher Taxes</h2> <p>Income tax rates jump steeply the more money you earn, which means that unless you and your accountant get creative, you'll be sending more of the money you earn each year to the federal government.</p> <p>Say you earned $514,000 in 2015. When you pay your taxes on April 18 of this year, you'll be taxed 10% for the first $9,225 of your earnings, and 15% on every dollar from $9,226 to $37,450. This rate goes up until you hit the maximum. You'll be taxed at this maximum rate of 39.6% for every dollar you earn from $413,201 and up.</p> <p>The upshot? The more money you make, the more taxes you pay. At least that's the theory. It is possible through deductions for the wealthy to dramatically lower the actual dollars that they send to the government each year. Trying to lower your tax bills is definitely one problem that grows the more money you earn.</p> <h2>2. Lifestyle Creep</h2> <p>When you get a big raise, do you boost the amount of money you save each year in your <a href="http://www.wisebread.com/5-important-things-to-know-about-your-401k-and-ira-in-2016">401K plan</a> or IRA? Or do you buy a nicer car?</p> <p>It's all too tempting to improve your lifestyle when your annual income rises. This is known as lifestyle creep. And it's a problem that the wealthy have to work hard to avoid.</p> <p>The rich might feel pressure, for instance, to invest in a larger home once their income swells. The better financial move might be for them to stay in their current home and instead invest their extra income. The allure of all those extra bedrooms and baths, though, can overwhelm the good sense of even the most fiscally conservative of consumers.</p> <h2>3. The Arrival of &quot;Long-Lost&quot; Relatives</h2> <p>There's a reason why lottery winners often joke about changing their phone numbers. They're worried that their relatives &mdash; especially long-lost ones with whom they've had little contact &mdash; will start hitting them up for money.</p> <p>The same thing can happen when you've built up your wealth over the decades. Your relatives who are struggling with their finances will expect your monetary help. If you don't cough up some bucks? You can bet those relatives will resent you. That can lead to strained familial relationships.</p> <h2>4. What Does Your Spouse Really Love?</h2> <p>Getting married after you've become fabulously wealthy can be tricky. How will you know if your future spouse loves you or your money?</p> <p>The stereotype of the gold-digging spouse might actually be a myth, at least according to this recent story in the <em>Guardian</em>, which argues that couples are more likely to get married when they <a href="http://www.theguardian.com/commentisfree/2014/jun/24/myth-trophy-wife-inaccurate-demeaning">have something in common</a> than because they're seeking partners with great wealth. But it's not surprising that some wealthy people wonder if that future spouse wants to marry them because of their overflowing bank account and not their wit or charm.</p> <h2>5. You Might Need an Army of Advisers</h2> <p>Once you've become wealthy, you'll undoubtedly need help to manage all those dollars. After all, you can't just stash those big bucks in a savings account. You want your riches to continue to grow. To master that feat, you'll need the help of financial advisers and accountants. And if you've invested in a larger home or a luxury boat? You'll need staffers to clean and maintain these investments. That isn't free, and finding the right help can prove challenging.</p> <h2>6. You're Even More of a Target</h2> <p>Think of how many scams fill your email box every morning &mdash; and you're not wealthy at all. Now imagine the target you'll become for fraudsters and scammers once you become rich.</p> <p>Wealthy people have to be especially careful to avoid scams, both online and traditional ones such as fake charities seeking donations. Nothing entices scammers like rich people who aren't especially careful with their wealth.</p> <p><em>Are you burdened with too much money? Share some in comments!</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/6-ways-more-money-does-truly-lead-to-more-problems">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-5-most-money-savvy-rap-stars">The 5 Most Money-Savvy Rap Stars</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/if-you-won-the-lottery-you-would">If You Won The Lottery, You Would...</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/are-you-a-yawn">Are You a Yawn?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/flashback-friday-70-brilliant-ways-to-beat-the-heat-this-summer">Flashback Friday: 70 Brilliant Ways to Beat the Heat This Summer</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-surprising-ways-summer-will-cost-you">7 Surprising Ways Summer Will Cost You</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Lifestyle gold diggers income taxes money problems rich people wealthy Thu, 17 Mar 2016 11:00:05 +0000 Dan Rafter 1668455 at http://www.wisebread.com The 5 Cities the Most Billionaires Call Home http://www.wisebread.com/the-5-cities-the-most-billionaires-call-home <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/the-5-cities-the-most-billionaires-call-home" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/rich_couple_boat_000063821551.jpg" alt="Finding cities that the most billionaires call home" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Lured by favorable tax laws and fantastic views, the richest of the rich choose their backyards with precision. Read on for our roundup of some of the most popular locales for the luxe &mdash; and why so many of the globe's elite choose to call them home.&nbsp;(See also: <a href="http://www.wisebread.com/8-jaw-dropping-tax-havens-of-the-filthy-rich" target="_blank">8 Jaw-Dropping Tax Havens of the Filthy Rich</a>)</p> <h2>1. Moscow</h2> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5171/moscow_000019576792.jpg" width="605" height="340" alt="" /></p> <p>More than 80% of Russia's 68 billionaires reside in the sprawling country's capital, making Moscow a mecca of wealth. The city center is dominated by gold-domed architecture, pricey eateries, and luxe hotels. Home of the Kremlin and some of the world's most exquisite ballet, Moscow offers impressive city parks, unique urban promenades, and a nightlife scene that rivals that of New York. Moscow is also full of culinary treats. Consider your visit incomplete until you've sampled the perogies and borscht.</p> <h2>2. Zurich</h2> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5171/zurich_000028993338.jpg" width="605" height="340" alt="" /></p> <p>The average price of a pair of blue jeans in this Swiss banking hub is a staggering $156. Need we say more? Millionaires account for an astounding 27% of the population, pushing the price of everyday items like jeans nearly out of reach for everyone else. The city itself is concentrated on a fairly small footprint surrounded by mountains, rolling hills, and other feats of nature. It's entirely possible to spend the morning exploring city streets and art galleries, and then enjoy an afternoon hike alongside a serene lake or river.</p> <h2>3. Monaco</h2> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5171/monaco_beach_000032484536.jpg" width="605" height="340" alt="" /></p> <p>This city-state on the sea is the most likely place you'll bump into a millionaire. And with its posh casinos, glamorous hotels, and yacht-lined harbors, it's really no surprise. Monaco is a major center of banking as well as tourism, but it is most widely associated with being the ultimate playground for the rich and famous. With nearly 38,000 residents stuffed into soaring high rises and regal estates along a small area of the French Riviera, it is the world's second smallest and most densely populated country &mdash; and one of its most legendary tax havens. Monaco does not charge its elite residents income taxes.</p> <h2>4. New York</h2> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5171/new_york_city_000045975658.jpg" width="605" height="340" alt="" /></p> <p>One in every 22 New Yorkers is a millionaire. And with 78 billionaires, the Big Apple has more uber-rich residents than any other city in the world. Home of the Statue of Liberty, Wall Street, and the best pizza on the planet, New York is chock full of iconic people and places just waiting to be explored. New York is also the global center of industries ranging from fashion to finance. Luckily, there are lots of frugal ways to enjoy the City That Never Sleeps.</p> <h2>5. Stamford</h2> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5171/stamford_connecticut_000060481318.jpg" width="605" height="340" alt="" /></p> <p>This waterfront enclave in yankee Connecticut is called &quot;the city that works.&quot; Clearly, you've got to work pretty hard to afford living here. Stamford has one of the highest concentrations of millionaire households in the nation, with housing costs at more than double the national average. But with its easy access to NYC, views of Long Island Sound, and a bustling downtown, Stamford is one of Connecticut's jewels. This city of 126,000 people boasts a lively bar scene, small theaters, and several live recording studios where episodes of legendary television shows are filmed. Brimming with hedge fund types, Stamford is also home of the largest trading floor in the world.</p> <p><em>Have you visited any of these hangouts of the mega-wealthy?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/brittany-lyte">Brittany Lyte</a> of <a href="http://www.wisebread.com/the-5-cities-the-most-billionaires-call-home">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/save-thousands-by-buying-a-timeshare-on-the-secondary-market">Save Thousands by Buying a Timeshare on the Secondary Market</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-5-best-mid-sized-cities-for-millennials">The 5 Best Mid-Sized Cities for Millennials</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-6-best-cities-for-single-millennials">The 6 Best Cities for Single Millennials</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-benefits-of-a-walkable-neighborhood">The Benefits of a Walkable Neighborhood</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/if-you-won-the-lottery-you-would">If You Won The Lottery, You Would...</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing Travel billionaires millionaires rich tax laws wealthy world cities Thu, 24 Dec 2015 12:00:03 +0000 Brittany Lyte 1625936 at http://www.wisebread.com 8 Jaw-Dropping Tax Havens of the Filthy Rich http://www.wisebread.com/8-jaw-dropping-tax-havens-of-the-filthy-rich <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/8-jaw-dropping-tax-havens-of-the-filthy-rich" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/000035064692.jpg" alt="" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>There are roughly 80 countries that are considered tax havens. These are secrecy jurisdictions with incredibly low to no taxes. (See also: <a href="http://www.wisebread.com/7-states-with-the-lowest-taxes-for-retirees?ref=seealso">7 States With the Lowest Taxes for Retirees</a>).</p> <p>Billionaires and millionaires flock to these places to take advantage of tax loopholes that allow them to establish offshore bank accounts and shell corporations, and pay virtually nothing. By doing so, they avoid the otherwise high tax rates they would pay in their home countries, without renouncing their citizenship.</p> <p>Recently, the IRS announced plans to go after U.S. citizens holding offshore accounts. Still, that hasn't been a deterrent for a lot of wealthy individuals seeking to escape steep tax implications. Done correctly, offshore banking is completely legal. And you don't have to have tons of cash in order to seek out the reprieve tax havens offer. Because, in addition to the lenient tax laws, many of these nations are exotic travel destinations that offer outside investors simplified pathways to citizenship. Take a closer look.</p> <h2>1. Belize</h2> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5171/belize_ocean_scene_000063940785.jpg" width="605" height="340" alt="" /></p> <p>Best known for the scuba diving and its astonishing Barrier Reef, Belize is a tropical paradise in the Caribbean Sea and just the place for anyone seeking discretion. English is the country's native language, though many habitants also speak Spanish. There are two pathways to citizenship: Permanent Residence and the Qualified Retired Person (QRP) program.</p> <p>Permanent Residence status is applicable if you intend to earn income as an employee. Otherwise, you would be considered a QRP and all you have to do is spend four weeks of the year in Belize, while meeting a minimum yearly retirement income threshold. As a QRP, foreign income is tax-exempt and there's no tax on capital gains or inheritances.</p> <p><strong>Language: </strong>English, Spanish, and Creole</p> <p><strong>Population: </strong>332,000</p> <h2>2. British Virgin Islands</h2> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5171/british_virgin_islands_000044344594.jpg" width="605" height="340" alt="" /></p> <p>Another Caribbean oasis, The British Virgin Islands (BVI) has long been known for its banking secrecy. BVI's income tax rate is 0% &mdash; there's no corporation, capital gains, gift, sales, profit, or inheritance tax. And property owners or real estate investors can become part-time residents, which permits you to stay in the country six months out of the year. There is a nominal property tax of 1.5% of the assessed value per annum.</p> <p><strong>Language: </strong>English</p> <p><strong>Population: </strong>32,680</p> <h2>3. Cayman Islands</h2> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5171/cayman_islands_beach_000035064692.jpg" width="605" height="340" alt="" /></p> <p>The Cayman Islands has been on the radar for multinational U.S.-based Fortune 500 companies with offshore subsidiaries for decades. Apple, IBM, and others are just a few on the list. The country has no corporate tax &mdash; and no taxes on income, capital gains, profits, or estates, either.</p> <p><strong>Language: </strong>English &nbsp;</p> <p><strong>Population: </strong>58,435</p> <h2>4. Costa Rica</h2> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5171/costa_rica_waterfall_000021667287.jpg" width="605" height="340" alt="" /></p> <p>The gorgeous country of Costa Rica attracted 2.52 million tourists last year. This Central American nation is known for its rainforests, pristine beaches, and waterfalls. Corporations pay no income tax on gains from outside the jurisdiction, and no interest, capital gains, or dividend tax. &nbsp;</p> <p><strong>Language: </strong>Spanish</p> <p><strong>Population: </strong>4.872 million</p> <h2>5. Monaco</h2> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5171/monoco_castle_000015588648.jpg" width="605" height="340" alt="" /></p> <p>Home of the famed Monte Carlo Casino and the Monaco Grand Prix, Monaco is a playground for wealthy jetsetters from around the world. Monaco has no income tax, capital gains, or inheritance taxes.</p> <p><strong>Language:</strong> French</p> <p><strong>Population: </strong>37,831</p> <h2>6. Seychelles</h2> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5171/seychelles_beach_000058004304.jpg" width="605" height="340" alt="" /></p> <p>The Seychelles is comprised of 115 paradise islands off the west coast of Africa. The area is plush with coral reefs, pristine white beaches, luxury resorts, and local culture. There is no income tax, capital gains tax, gift tax, or property tax. To become a permanent resident, the country only requires that you reside in the Seychelles at least five days per year, and that you make a transfer of at least $10,000 per year into your bank account there.</p> <p><strong>Langu</strong><strong>age:</strong> Seychellois Creole, English, and French</p> <p><strong>Population: </strong>89,173</p> <h2>7. Panama</h2> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5171/panama_city_000009775119.jpg" width="605" height="340" alt="" /></p> <p>Panama has one of the fastest growing economies in Central America. It doesn't share tax treaties with other countries, and is under no obligation to share financial information with any authority. Banking discretion in Panama is among the most secretive. The country has no income, dividend, or capital gains tax.</p> <p><strong>Language:</strong> Spanish</p> <p><strong>Population: </strong>3.864 million</p> <h2>8. Puerto Rico</h2> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5171/san_juan_000046617994.jpg" width="605" height="340" alt="" /></p> <p>Puerto Rico is a United States territory, but it is a Commonwealth government that has its own tax laws. In 2012, the country enacted a law that deems it a tax haven for U.S. citizens living on the island a total of 183 days per year; <a href="http://www.businessinsider.com/puerto-rico-tax-law-act-22-2013-3">Act 20 &amp; 22</a>, and <a href="https://www.law.cornell.edu/uscode/text/26/933">section 933</a> of the uniform tax code allows U.S. citizens to avoid paying taxes on interest, dividends, and capital gains without renouncing citizenship.</p> <p><strong>Native Language:</strong> Spanish and English</p> <p><strong>Population: </strong>3.548 million</p> <p><em>Have you ever visited any of these tax havens?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/qiana-chavaia">Qiana Chavaia</a> of <a href="http://www.wisebread.com/8-jaw-dropping-tax-havens-of-the-filthy-rich">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-surprising-ways-the-rich-get-richer">5 Surprising Ways the Rich Get Richer</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-indirect-ways-taxes-to-the-rich-may-hurt-you">6 Indirect Ways Taxes to the Rich May Hurt You</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/15-surprising-facts-about-income-tax">15 Surprising Facts About Income Tax</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-5-most-money-savvy-rap-stars">The 5 Most Money-Savvy Rap Stars</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-ways-to-file-your-taxes-for-free-in-2015">8 Ways to File Your Taxes for Free in 2015</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Taxes offshore banking tax havens tax loopholes the rich wealthy Fri, 18 Dec 2015 14:00:08 +0000 Qiana Chavaia 1622728 at http://www.wisebread.com 5 Surprising Ways the Rich Get Richer http://www.wisebread.com/5-surprising-ways-the-rich-get-richer <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-surprising-ways-the-rich-get-richer" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/man_throwing_cash_000022559207.jpg" alt="Rich man using surprising ways to get richer" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>You've noticed an interesting phenomenon: The richest people in the country have a knack for getting richer. Don't get jealous. Emulate them, instead.</p> <p>How do the rich get richer? They don't fall for get-rich-quick schemes, they don't fall in love with their stocks, and they certainly don't panic whenever the economy takes a dip. And if you do the same, you, too, can steadily grow your wealth.</p> <p>Here is look at some of the surprising &mdash; and not so surprising &mdash; ways that the rich keep getting richer:</p> <h2>1. They're Patient and Diversified</h2> <p>Laurie Samay, a certified financial planner and portfolio manager with Scarsdale, New York-based Palisades Hudson Financial Group, says that the wealthy never chase get-rich-quick schemes. Instead, they are more focused on preserving their wealth, usually by taking a &quot;slow-and-steady&quot; approach to investing.</p> <p>The investment portfolios of the wealthy are almost always filled with a <a href="http://www.wisebread.com/stabilize-your-portfolio-with-these-11-dividend-stocks">diverse array of stocks and bonds</a>. Diversity protects the wealthy against economic swings. If one asset class is struggling because of outside economic factors, another might be doing well. Say oil companies are struggling because of low oil prices. Car makers might be doing better because gas prices are lower, encouraging more consumers to buy their vehicles. By investing in both oil producers and car makers, the wealthy investor's portfolio doesn't take as big a hit.</p> <p>&quot;Academic studies have concluded that the mix of stocks and bonds in a portfolio has the greatest influence on performance, even more so than transaction costs and security selection,&quot; Samay said. &quot;Like the rich, your portfolio should be diversified.&quot;</p> <p>Samay says that all investors should invest in different types of bonds, large-cap equities, small-cap equities, and international equities. She also recommends that consumers invest in specialty asset classes like real estate and natural resources to create the most diversified portfolio possible.</p> <h2>2. They Recognize Panic as Opportunity</h2> <p>Remember when the housing market crashed in 2008 and 2009? David Hardin, president of Hardin Financial Group in Troy, Michigan, does. He also remembers that the rich &mdash; at least the savviest of them &mdash; took this time to invest in real estate at lower prices as others dumped their properties. Today, the value of these investments has soared.</p> <p>&quot;Buy when others are panicking,&quot; Hardin said. &quot;That is a strategy that the wealthy always use to grow their income.&quot;</p> <p>Those who stay wealthy avoid the herd mentality that often results in big sell-offs in asset classes or stocks, Hardin said. Instead, they buy stocks and other investments when their value is at their lowest.</p> <p>&quot;People who really understand the markets and study them see opportunities when people are panicking,&quot; Hardin said. &quot;That is when they often make lots and lots of money.&quot;</p> <h2>3. They Invest in Socially Responsible Companies</h2> <p>Andre Cherry, chief executive officer of Los Angeles-based investment firm Aspiration, says that the wealthy tend to invest in companies that are both sustainable and socially responsible. They don't do this just because they want to do good. They do it because these companies tend to be more successful.</p> <p>&quot;50 years ago, a company's value was largely in how many factories or how much heavy machinery it had,&quot; Cherry said. &quot;Today, the real value of a company comes in their reputation. You can see this in the kind of financial hit BP took after Deepwater Horizon. Its stock took a hit that it still hasn't really recovered from.&quot;</p> <p>Companies that are doing good &mdash; installing environmentally friendly practices, investing in employee wellness programs &mdash; tend to perform better, too, Cherry said. He pointed to Johnson &amp; Johnson's employee wellness initiative. For each dollar that the company spends on the program, it receives $2.71 back in the form of a more productive and healthier workforce.</p> <p>&quot;When a company cuts waste or becomes more environmentally friendly, it usually saves money,&quot; Cherry explained. &quot;When it installs workplace practices that encourage a more diverse workforce, they get an employee base that is more innovative and productive. Companies that have executives and boards of directors who are given financial incentives to think about the long-term instead of the short-term perform better, too.&quot;</p> <h2>4. They Never Fall in Love With Their Investments</h2> <p>Even the bluest of blue-chip stocks can steadily lose value as the country and consumer tastes change. The wealthy recognize this, and never fall in love with their stocks, Hardin pointed out.</p> <p>&quot;I've met some people who are absolutely in love with blue-chip stocks that they have inherited,&quot; Hardin said. &quot;They won't get rid of them, and some of those companies are no longer doing well. They haven't done well for decades. They're living on past glory.&quot;</p> <p>Hardin uses the classic example: &quot;If the company you invest in sells buggy whips and buggy whips aren't in demand any more, you might need to get rid of that stock.&quot;</p> <p>This leads to another important point about the wealthy: They spend a lot of time researching the companies in which they have invested. This helps them identify what might be cloudy futures for companies that have performed well in the past.</p> <p>&quot;You can't be efficient in the stock market or with your investments without research,&quot; Hardin said. &quot;Would you buy a business without knowing what that business does and without understanding the market in which it operated? Of course you wouldn't. And you shouldn't invest your money without doing the same kind of research.&quot;</p> <h2>5. They Pay as Little in Taxes as Possible</h2> <p>The wealthy face the highest tax brackets. Because of this, they work hard to reduce their tax bill &mdash; legally, of course.</p> <p>Samay said that wealthy investors distribute their investments across a mix of taxable, tax-deferred, and tax-free accounts, with the goal of placing their income-producing securities in tax-deferred or tax-free accounts. They reserve their taxable accounts for those growth investments that produce little to no dividend income.</p> <p>This kind of mix reduces the amount of taxes the wealthy pay each year, which leads to one final point from Cherry: The wealthy spend as much time making sure that they don't lose money as they do working to make more dollars.</p> <p>&quot;It's easier to lose money than make it,&quot; Cherry said. &quot;Protecting that wealth is one way to stay wealthy.&quot;</p> <p><em>What personal finance lessons have you learned by watching the wealthy?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/5-surprising-ways-the-rich-get-richer">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-6"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-financial-moves-you-will-always-regret">9 Financial Moves You Will Always Regret</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/optimize-your-ira-and-401k">Optimize Your IRA and 401(k)</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-tax-friendly-ways-to-save-beyond-your-retirement-fund">9 Tax-Friendly Ways to Save Beyond Your Retirement Fund</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-money-software-tools-worth-the-price">7 Money Software Tools Worth the Price</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-choose-a-financial-planner-yes-you">How To Choose A Financial Planner - Yes You!</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance diversification investing taxes the rich wealthy Mon, 23 Nov 2015 14:00:22 +0000 Dan Rafter 1615574 at http://www.wisebread.com The 5 Most Money-Savvy Rap Stars http://www.wisebread.com/the-5-most-money-savvy-rap-stars <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/the-5-most-money-savvy-rap-stars" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/jay_z_performance_000016852682.jpg" alt="Jay-Z is one of 5 money savvy rap stars" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Easy comes, easy goes.</p> <p>Nobody knows that better that rapper MC Hammer. At the top of his game back in 1991, Hammer had a net worth estimated at <a href="http://www.oprah.com/oprahshow/Whatever-Happened-to-MC-Hammer">more than $33 million</a>. However, only five years later he had debt that had ballooned to about $13 million.</p> <p>Many rappers take this cautionary tale very seriously and want to make sure that their wealth keeps growing, even after their records fall from the top of the charts. Take notes from the five most <a href="http://www.wisebread.com/10-things-financially-savvy-people-dont-do">money-savvy</a> rap stars.</p> <h2>1. Diddy</h2> <p>Sean Combs, known as Puff Daddy in the 90s and nowadays as Diddy, may be the closest one in the rap game to becoming the first billionaire. In 2015 Forbes estimates Diddy's fortune at $735 million, up $35 million from 2014.</p> <p>The main lesson that you can learn from Diddy is the importance of creating multiple sources of income. Besides his music career (latest release, MMM, was scheduled to drop on June 29, 2015), Diddy makes money through his:</p> <ul> <li><a href="http://www.amazon.com/s/ref=as_li_ss_tl?_encoding=UTF8&amp;camp=1789&amp;creative=390957&amp;fst=as%3Aoff&amp;keywords=Sean%20John&amp;linkCode=ur2&amp;qid=1433951346&amp;rh=i%3Aaps%2Ck%3ASean%20John%2Cp_89%3ASean%20John&amp;rnid=2528832011&amp;tag=wisbre03-20&amp;linkId=DD6YOXX5GAHEOHL6">Sean John</a> men's clothing and apparel line;<br /> &nbsp;</li> <li>Investment in alkaline water brand, <a href="http://www.amazon.com/gp/product/B001SB4JU2/ref=as_li_tl?ie=UTF8&amp;camp=1789&amp;creative=390957&amp;creativeASIN=B001SB4JU2&amp;linkCode=as2&amp;tag=wisbre03-20&amp;linkId=TZ4EJWWARUQUSGCT">Aquahydrate</a> (over <a href="https://www.crunchbase.com/organization/aquahydrate">$20 million in funding</a>), and tequila DeLeon (prices ranging from $60 to $850 per bottle);<br /> &nbsp;</li> <li>Major equity ownership in music TV network, Revolt; and<br /> &nbsp;</li> <li>Portfolio of business partnerships, such as the one with Diageo's Ciroc Vodka.</li> </ul> <h2>2. Dr. Dre</h2> <p>Born Andre Romelie Young, Dr. Dre has proven his talent as a producer again and again by overseeing the careers of many rappers, including Snoop Dogg, Eminem, The Game, and Kendrick Lamar.</p> <p>However, Dre's biggest stroke of genius came in the form of his brand of headphones, speakers, and software, <a href="http://www.amazon.com/s/ref=as_li_ss_tl?_encoding=UTF8&amp;camp=1789&amp;creative=390957&amp;field-keywords=beats%20by%20dre&amp;linkCode=ur2&amp;sprefix=beats%2Celectronics%2C160&amp;tag=wisbre03-20&amp;url=search-alias%3Delectronics&amp;linkId=QTAANSGFNGG27TPO">Beats by Dr. Dre</a>. First released in July 2008, Beats by Dr. Dre became such a retail hit that Dre secured business partnerships with several musicians, including Diddy, and manufacturers, such as HP. The success of Dre's enterprise was cemented with an acquisition from Apple for a <a href="https://www.apple.com/pr/library/2014/05/28Apple-to-Acquire-Beats-Music-Beats-Electronics.html">total of $3 billion</a>.</p> <p>Despite his gigantic payday, Dre isn't a billionaire... yet. According to numbers from Forbes, Dre's payout after calculating his actual stake and taking away taxes was $500 million. The main lesson here is that one day you're going to receive a major windfall, so you need to know in advance the right moves to maximize that lucky break. By making the right money moves, Dr. Dre could beat Diddy in the race to the $1 billion net worth. (See also: <a href="http://www.wisebread.com/6-smart-things-to-do-with-your-bonus?ref=seealso">6 Smart Things to Do With Your Bonus</a>)</p> <h2>3. Jay Z</h2> <p>&quot;I'm not a businessman, I'm a business, man!&quot; raps Jay Z in &quot;Diamonds From Sierra Leone.&quot;</p> <p>And for good reason. Shawn Carter (Jay Z's real name) founded a record label (1995), started a clothing line (1999), sold that clothing line for $204 million in cash (2007), tied in sneakers and cell phones to the release of Black Album (2003), invested in a basketball team (2005), and, more recently, launched a streaming service with some of the biggest names in the music industry, including Madonna, Jack White, and Rihanna (2015).</p> <p>To the untrained eye, it may seem that Jay Z's efforts aren't coordinated. Actually, it's quite the opposite. Take a lesson from Jay Z's playbook about pursuing business interests: &quot;My brands are an extension of me. They're close to me. It's not like running GM, where there's no emotional attachment.&quot;</p> <p>Money doesn't determine job satisfaction. &quot;Interest in work&quot; and &quot;people at work&quot; were chosen by <a href="http://www.forbes.com/sites/susanadams/2014/06/20/most-americans-are-unhappy-at-work/">59% and 60.6% of U.S. workers</a>, respectively, as the top criteria that make people happiest at at job.</p> <h2>4. Drake</h2> <p>It's very easy to dismiss Drake due to his nice guy nature, but Drake's numbers tell a completely different story about his business savvy.</p> <ul> <li>Drake's earnings for 2013 were <a href="http://www.forbes.com/pictures/eeel45emedh/4-drake-33-million/">$10.5 million</a>.<br /> &nbsp;</li> <li>Tying a record set by The Beatles, Drake has 14 hits in the Hot 100 Billboard chart.<br /> &nbsp;</li> <li>His fourth album, <em>If You're Reading This It's Too Late</em>, moved 535,000 copies in its first week. He achieved this without any traditional promotion and despite dropping the album as a surprise.<br /> &nbsp;</li> <li>Jay Z was counting on Drake to join his streaming service, but Apple secured Drake as one of the main spokespersons for the launch of <a href="http://www.billboard.com/articles/business/6590679/drake-previously-in-talks-with-tidal-endorses-apple-music-at-wwdc">Apple Connect</a>.</li> </ul> <p>The &quot;Started From the Bottom&quot; rapper owes his rise to stardom to building savvy business relationships. From having Lil Wayne as a mentor to counting on manager Oliver El-Khatib for expert advice, Drake understands that you need to surround yourself with people much more successful and smarter than you to make it to the top. That's also why he has collaborated with heavy hitters such as Rihanna, Eminem, Mary J. Blige, Jay Z, and Nicki Minaj. (See also: <a href="http://www.wisebread.com/mick-jagger-rarely-buys-new-and-4-other-smart-money-lessons-from-thrifty-musicians?ref=seealso">Mick Jagger Rarely Buys New and 4 Other Smart Money Lessons From Thrifty Musicians</a>)</p> <h2>5. 50 Cent</h2> <p>Last but not least, Curtis Jackson (a.k.a. 50 Cent) stands out from other rappers because of his net worth ($150 million as of 2015) and his skill at identifying trends.</p> <p>He has proven his business knowledge by building up the <a href="http://www.amazon.com/gp/product/B00KCJR0KW/ref=as_li_tl?ie=UTF8&amp;camp=1789&amp;creative=390957&amp;creativeASIN=B00KCJR0KW&amp;linkCode=as2&amp;tag=wisbre03-20&amp;linkId=6CG2ET6XHUDI4SK5">Vitaminwater</a> brand and then selling it to Coca Cola for a $100 million payday in 2007. He explains how he noticed the potential of the water business in the early 2000s in his own words: &quot;I walked into a grocery store and I saw a bottle of water for 59 [cents] and another right next to it priced at $2.59.&quot; Currently, 50 Cent hopes to repeat his fortunetelling act with Frigo Revolutionwear, a luxury underwear brand with prices ranging from $30 to $100 per boxer. Other current investments for 50 Cent are SMS headphones and Effen vodka.</p> <p>From the way 50 Cent decides his investments, you can see that he follows two key investment mantras from famous investor Peter Lynch: &quot;Know what you own, and know why you own it&quot; and &quot;Never invest in any idea you can't illustrate with a crayon.&quot; You should apply these same rules of thumb when evaluating potential investments. (See also: <a href="http://www.wisebread.com/5-investors-with-better-returns-than-warren-buffett?ref=seealso">5 Investors With Better Returns Than Warren Buffett</a>)</p> <p><em>Any money-savvy rap stars I've missed? Please share in comments!</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/damian-davila">Damian Davila</a> of <a href="http://www.wisebread.com/the-5-most-money-savvy-rap-stars">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/dont-get-taken-how-to-evaluate-an-exchange-rate">Don&#039;t Get Taken: How to Evaluate an Exchange Rate</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-3-best-pieces-of-financial-wisdom-from-oprah-winfrey">The 3 Best Pieces of Financial Wisdom From Oprah Winfrey</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/sensible-ways-to-raise-cash-for-a-wedding">Sensible Ways to Raise Cash for a Wedding</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/save-more-gas-by-safely-following-trucks">Save More Gas by Safely Following Trucks</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/chinese-money-habits-how-my-culture-influences-my-attitudes-toward-money">Chinese Money Habits - How My Culture Influences My Attitudes Toward Money</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance hip hop money rappers rich people wealthy Tue, 30 Jun 2015 13:00:13 +0000 Damian Davila 1468495 at http://www.wisebread.com Best Money Tips: Hurdles That Keep You From Being Wealthy http://www.wisebread.com/best-money-tips-hurdles-that-keep-you-from-being-wealthy <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/best-money-tips-hurdles-that-keep-you-from-being-wealthy" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/financial_struggle_000026300090.jpg" alt="Couple paying bills and worrying about not becoming wealthy" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Welcome to Wise Bread's <a href="http://www.wisebread.com/topic/best-money-tips">Best Money Tips</a> Roundup! Today we found some great articles on the hurdles that keep you from being wealthy, ways to ensure your side hustle is productive, and foods you can freeze for at least six months.</p> <h2>Top 5 Articles</h2> <p><a href="http://www.moneyspruce.com/6-hurdles-keeping-you-from-being-wealthy/">6 Hurdles Keeping you from Being Wealthy</a> &mdash; You're putting your financial health (and your family's financial health) at risk if you don't have adequate insurance. [Money Spruce]</p> <p><a href="http://www.onesmartdollar.com/5-ways-to-make-sure-your-side-hustle-is-productive/">5 Ways to Make Sure Your Side Hustle is Productive</a> &mdash; Designate a power hour where you shut down all distractions and work straight for an hour. Power through as much work as you can, then take a break. [One Smart Dollar]</p> <p><a href="http://bargainbabe.com/5-foods-you-can-freeze-6-months-or-longer/">5 Foods You Can Freeze For 6 Months &ndash; Or Longer</a> &mdash; You can store unopened blocks of hard cheese (like cheddar and Parmesan) for six months in the fridge. Freeze sliced and shredded cheeses for up to four months. [Bargain Babe]</p> <p><a href="http://www.cheapism.com/blog/3493/leftover-recipes">11 Ways to Spice Up Leftovers</a> &mdash; Reinvent your leftovers by using them in cheap and easy quesadillas. [Cheapism]</p> <p><a href="http://www.popsugar.com/smart-living/How-Make-Coach-Feel-Like-First-Class-36514384">How to Make Coach Feel More Like First Class</a> &mdash; Many airlines give their first-class passengers pajamas to change into &mdash; and you can bring your own into coach! [PopSugar Smart Living]</p> <h2>Other Essential Reading</h2> <p><a href="http://parentingsquad.com/15-things-that-always-make-me-happy">15 Things That Always Make Me Happy</a> &mdash; When times are hard, remember the small things that make you happy &mdash; like the smell of freshly baked bread or a beautiful sunset. [Parenting Squad]</p> <p><a href="http://www.everybodylovesyourmoney.com/2015/04/01/buying-a-house-without-a-real-estate-agent-mistakes-to-avoid.html">Buying a House Without a Real Estate Agent: Mistakes to Avoid</a> &mdash; Don't assume anything! Be very clear about the terms when you are negotiating. [Everybody Loves Your Money]</p> <p><a href="http://www.thousandaire.com/5-reasons-i-love-my-high-deductible-health-plan/">5 Reasons I Love my High Deductible Health Plan</a> &mdash; HDHPs cover 100% of preventative care, including check ups, well visits, and vaccines. [Thousandaire]</p> <p><a href="http://www.aspiringmillionaire.com/2015/04/having-positive-mindset-can-help-your.html">Having a Positive Mindset Can Help Your Finances</a> &mdash; We all face financial setbacks from time to time, but when we think positively, we become more open to potential positive outcomes. [Aspiring Millionaire]</p> <p><a href="http://www.moneyunder30.com/how-to-do-work-you-love-without-taking-an-oath-of-poverty">How To Do Work You Love Without Taking An Oath Of Poverty</a> &mdash; Before you leave your day job to pursue your passion, be sure to first lower your living expenses, build your cash reserve, and pay off as much debt as you can. [Money Under 30]</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/amy-lu">Amy Lu</a> of <a href="http://www.wisebread.com/best-money-tips-hurdles-that-keep-you-from-being-wealthy">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-self-improvement-apps-to-make-you-smarter-stronger-and-happier">10 Self-Improvement Apps to Make You Smarter, Stronger, and Happier</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-ways-to-improve-your-decision-making-skills">10 Ways to Improve Your Decision-Making Skills</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-look-rich-on-social-media">How to Look Rich on Social Media</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/get-it-done-how-to-measure-your-goals">Get It Done: How to Measure Your Goals</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-ways-to-always-have-something-interesting-to-say">6 Ways to Always Have Something Interesting to Say</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Development best money tips wealthy Thu, 09 Apr 2015 19:00:09 +0000 Amy Lu 1379352 at http://www.wisebread.com Peak Debt and Income http://www.wisebread.com/peak-debt-and-income <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/peak-debt-and-income" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock_000001512809Small_1.jpg" alt="Rich person giving money to poor" title="Rich person giving money to poor" class="imagecache imagecache-250w" width="250" height="169" /></a> </div> </div> </div> <p>The big argument in the debate on the stimulus packages was between two groups. The demand-side folks wanted to make sure that the money got into the hands of the poor, because they'd spend the money, boosting the economy. The supply-side folks wanted to keep money in the hands of the well-off, because they'd invest it, providing increased productive capacity to boost the economy. (See also: <a href="http://www.wisebread.com/5-creative-ways-to-invest-during-a-weak-market">5 Creative Ways to Invest During a Weak Market</a>)</p> <p>If you're interested in looking into the issue a bit more deeply than the economic pundits in the mainstream media usually do, check out <a href="http://www.philipbrewer.net/wpx/wp-content/uploads/2011/03/Peak-Debt-Income-v7.25.10p.pdf">Peak Debt and Income</a> (PDF), a new paper by&nbsp;Ronald M. Laszewski. (I linked to his previous paper in my <a href="http://www.wisebread.com/peak-debt">Peak Debt</a> article.)</p> <p>There are two threads to Laszewski's argument.</p> <h2>Maximizing Household Assets</h2> <p>Laszewski creates a simple model of the economy as a tool for investigating the question of how to get household balance sheets back in order after suffering the problems diagnosed in the earlier Peak Debt paper:</p> <blockquote><p><a id="fck_paste_padding"></a>At the time it appeared that a peak in consumer purchasing power had already been reached, and that it was likely that there would be a long period of economic decline to follow. Three ways in which the consequences of the large over-hang of debt might be ameliorated were examined: (1) a significant growth in real personal income, (2) a default on outstanding debt, and (3) a central bank induced hyper-inflation.</p> </blockquote> <p>The earlier paper had gone on to demonstrate that options two and three would probably have little effect in boosting future economic activity. Option one, on the other hand, could be effective.</p> <p>The result of Laszewski's further analysis is that growth in GDP is strongly dependent on how total income in the economy is divided up.</p> <h2>Consumption by Income Group</h2> <p>From the end of World War II until the early 1980s, the top 10% got about 34% of total income. In recent years the share taken by the top 10% has grown sharply; they now get almost 50%. If the income fraction received by the top 10% was returned to its historic value, the current incomes of the other 90% of households could be increased by 30%.</p> <p>As the demand-side analysts have been pointing out, the rich spend much less of their income. The poorest folks spend almost 100% of their income, average folks spend about 90%, and the top 10% spend only a little more than 50% of their income.</p> <p>Putting these facts together, Laszewski calculates the effect on the economy if the income distribution were returned to something like its <a href="http://www.wisebread.com/patriotism-and-personal-finance-a-brief-walk-through-american-history">post-war norms</a>. If the richest 10% only got 34% of the national income (instead of the 50% they're currently receiving), the increased spending on consumption would boost GDP by 4.2%. Other assumptions about how the money might be redistributed could add as much as 10.5%.</p> <p>The math in this paper isn't as complex as in the previous paper. So, if you're interested, take a look at Laszewski's <a href="http://www.philipbrewer.net/wpx/wp-content/uploads/2011/03/Peak-Debt-Income-v7.25.10p.pdf">Peak Debt and Income paper</a>&nbsp;(PDF).</p> <h2>Key Takeaways</h2> <p>The supply-side folks are wrong. At this time, additional business investment will produce very little additional growth in GDP.</p> <p>The demand-side folks are right. Getting extra money into the hands of the bottom 90% of the population would produce substantial growth in GDP.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/philip-brewer">Philip Brewer</a> of <a href="http://www.wisebread.com/peak-debt-and-income">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-reasons-why-the-us-economy-is-kicking-the-worlds-butt">9 Reasons Why the U.S. Economy Is Kicking the World&#039;s Butt</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/peak-debt">Peak Debt</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/is-gdp-still-important">Is GDP Still Important?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-i-miss-about-the-recession">What I Miss About the Recession</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/do-these-8-things-to-profit-from-the-improving-economy">Do These 8 Things to Profit From the Improving Economy</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Financial News Economy GDP peak debt poor wealthy Tue, 15 Mar 2011 12:00:09 +0000 Philip Brewer 504638 at http://www.wisebread.com Tactics of the rich http://www.wisebread.com/tactics-of-the-rich <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/tactics-of-the-rich" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/sunsinger.jpg" alt="Sunsinger statue in Allerton Park" title="Sunsinger" class="imagecache imagecache-250w" width="250" height="334" /></a> </div> </div> </div> <p>There are things the rich do that working class and middle class folks don't. Some of them--living off the return on capital rather than wages or salary--are only available to the rich. Others--seeking a first-rate education for your kids, working for yourself rather than others--are things that ordinary folks do to the extent that they can, but their ability is limited. Even so, it's worth learning the tactics of the rich and applying them where possible.</p> <p>Some of the tactics of the wealthy are unsavory. One key tactic is to share as little as possible of the profits of the enterprise. This is why working for yourself is such an important tactic--the owners and managers are in a position to grab the lion's share. Put your suppliers in the position of competing with one another for the lowest price, put your workers in the position of competing with the unemployed for the lowest wage, and pocket the savings (via dividends if you're an owner, via bonuses if you're a manager).</p> <p>Others, though--tactics like frugality, living within your means, avoiding debt (except to invest in a money-earning enterprise), and working hard--are positive virtues, or at least neutral. (And they're generally the ones that lead to wealth creation. The others are largely about wealth preservation.)</p> <p>These tactics are not kept secret, exactly, but various factors keep them largely out of view from ordinary folks. The biggest is simply that consumption is interesting while frugality is dull. So, buying a yacht makes the news, whereas driving a 10-year-old car one more year doesn't get noticed. The result is that popular culture shows the excesses of super-wealthy but not the ordinary lifestyles of the ordinary wealthy. But there are way more of the latter than there are of the former.</p> <h2>Not a level playing field</h2> <p>There are a lot of ways in which the deck is stacked in favor of the rich. The advantage I mentioned at the beginning--owners and managers being able to skim off an outsized share of the profits--is a huge one, but there are others:</p> <ul> <li>The legal system heavily favors the rich.</li> <li>The financial system offers high quality services to the wealthy (often for free), while the poor make do with expensive check-cashing services and payday lenders.</li> <li>The rich are in a much better position to wait for a good deal--which gets them lower interest rates on loans, lower rents, lower insurance rates, and better prices on just about everything.</li> <li>And then there are simple social realities--affluent neighborhoods are safer, stores that cater to the affluent have more and better choices (and often cheaper ones as well), schools in affluent neighborhoods are better and safer.</li> </ul> <h2>Knowledge can help level it</h2> <p>If you know enough, though, most of these advantages of the wealthy are available to the poor as well:</p> <ul> <li>Anybody can start a small business. The internet has vastly increased the range of options that require almost no capital (and has made a wide range of formerly expensive services available cheap or free). This mean that anybody can work for themselves rather than others.</li> <li>Anybody can be frugal and live within their means, as long as they don't assume that they're entitled to some particular standard of living.</li> <li>Anybody can avoid debt. More important, anybody can understand the difference between <a href="http://www.wisebread.com/good-debt-bad-debt">productive debt</a> (invested to earn the money to pay itself off) and unproductive debt (spent on consumption).</li> <li>Anybody can do the research to find the good public schools. The affluent have a lot more choices, but you only need to find one affordable place to live in a safe neighborhood with good schools.</li> <li>Anyone (even <a href="http://www.wisebread.com/making-direct-deposit-safe-for-the-garnished">people with garnishments</a>) can open a bank account and quit using the check-chasing places.</li> <li>Anyone can be patient and refuse to take a bad deal--which will, over time, get you the same good prices that the rich get.</li> </ul> <p>It takes time and effort to learn the tricks and pitfalls, and this is where the children of the affluent get their biggest leg up: They learn these things from their parents and their friends' parents, from their classmates and teachers and neighbors. They also generally reach adulthood with at least <a href="http://www.wisebread.com/join-the-rentier-class">a little capital</a> (instead of student loan debts). But you can learn these things too. It's one reason for reading Wise Bread.</p> <p> &nbsp;</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/philip-brewer">Philip Brewer</a> of <a href="http://www.wisebread.com/tactics-of-the-rich">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-5"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/12-personal-finance-skills-everyone-should-master">12 Personal Finance Skills Everyone Should Master</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/a-decent-standard-of-living">A decent standard of living</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/if-you-won-the-lottery-you-would">If You Won The Lottery, You Would...</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/if-youre-so-smart-why-arent-you-rich">If you&#039;re so smart, why aren&#039;t you rich?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-brilliant-tips-from-smart-mom-rich-mom">4 Brilliant Tips From &quot;Smart Mom, Rich Mom&quot;</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Frugal Living class investments rentier class rich tactics wealthy Sun, 12 Apr 2009 21:18:49 +0000 Philip Brewer 3037 at http://www.wisebread.com If You Won The Lottery, You Would... http://www.wisebread.com/if-you-won-the-lottery-you-would <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/if-you-won-the-lottery-you-would" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/lotto.jpg" alt="" title="" class="imagecache imagecache-250w" width="250" height="154" /></a> </div> </div> </div> <p>We've all had the dream where the bouncing white balls in the glass orb line up perfectly or the numbers we picked magically materialize in the exact order we predicted to set us up for life. Millions of dollars are coming our way, and we don't have to worry about anything anymore.</p> <p>We've won the lotto. Ahhh...the life that would await us...</p> <p>But the odds of winning the MegaMillions are 1 in 135,145,920, so don't hold your breath and get back to work.</p> <h3>Not Likely</h3> <p>While the lottery is a nice fantasy, it's much more likely you'll wind up in a position (CEO, anyone?) that pays you tons of money for working hard instead of getting lucky. And that's something I've been thinking about a lot lately. What would I do if I won or was making millions of dollars a year? I've talked to friends about this and usually the answer is the same:</p> <blockquote><p>I'd work for a few years and then retire to an island somewhere!</p> </blockquote> <p>I understand the sentiment&mdash;who wouldn't want to quit the rat race and go relax on a beach without a care in the world?&nbsp;But I always play devil's advocate and try to get them thinking about this at a deeper level. My argument is that they probably wouldn't just walk away like that.</p> <p>Here's why: whatever motivation drives you to work hard enough to make it to CEO&nbsp;(or any other top-paying position) isn't just going to disappear after you've &quot;made it.&quot; If anything, that drive would get even stronger. Sure, this sometimes happens with certain athletes after they get their big contract (which always draws the ire of fans&mdash;you're getting paid to play a game!), but most athletes follow the same pattern. They play because they're driven to compete and win.</p> <p>You can't just turn off the machine that got you to the top like that&mdash;it's not that simple.</p> <h3>So What Would You Do?</h3> <p>I love imagining these kinds of scenarios and trying to picture what I would do. Last year, I imagined what I&nbsp;would do if I&nbsp;had all the money in the world and how my life would change. Here's the weird thing about that little exercise, though: <a href="http://www.thewriterscoin.com/2007/11/12/all-the-money-in-the-world-part-1/">I&nbsp;figured out</a> that most of the things I would do or change were things that had nothing to do with money.&nbsp;</p> <p>They were things I&nbsp;could do in my life right now.</p> <p>I didn't want to buy a new car or move into a mansion. The things I wanted to do were more about personal fulfillment (although I did want to buy an apartment on the Seine and travel more). But most of it was about the job I had and some other things I&nbsp;could actually control.</p> <p>And I asked myself, &quot;Why don't you do them then?&quot;</p> <p>It was quite the moment for me&mdash;I&nbsp;was surprised that money had nothing to do with the things I&nbsp;would do if I&nbsp;had tons of money. Does that make sense?</p> <p>Granted, once you have a couple million bucks in the bank, things change...but I think it's still a worthwhile exercise to picture yourself in that position to see what you would do. Go ahead and list out the things you would do right away if money wasn't an object: would you quit your job or get a different one?&nbsp;If you quit, what would you do with all that spare time? Would you move to a different apartment or house?&nbsp;</p> <p>Think about it for a second and then look the list up and down. Can you do any of that stuff right now?</p> <p>Let me know what you find out!</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/carlos-portocarrero">Carlos Portocarrero</a> of <a href="http://www.wisebread.com/if-you-won-the-lottery-you-would">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-6"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/ten-tenets-for-arranging-your-rich-part-1-rich-is-relative">Ten Tenets for &quot;Arranging Your Rich&quot; - Part 1: Rich is Relative</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-same-actions-will-produce-the-same-results-ten-tenets-for-arranging-your-rich-part-2">The Same Actions Will Produce The Same Results (Ten Tenets for Arranging Your Rich: Part 2)</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/when-should-you-say-no-to-those-who-want-to-borrow-money-from-you">When Should You Say No to Those Who Want to Borrow Money from You?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/is-six-figures-really-that-much">Is Six Figures Really That Much?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-get-rich-by-being-evil">How to get rich by being evil</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Career and Income Lifestyle lottery millions rich wealthy Fri, 03 Apr 2009 12:21:35 +0000 Carlos Portocarrero 3003 at http://www.wisebread.com Are You a Yawn? http://www.wisebread.com/are-you-a-yawn <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/are-you-a-yawn" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/yawn.jpg" alt="" title="" class="imagecache imagecache-250w" width="250" height="167" /></a> </div> </div> </div> <p>I am familiar with the meaning of hippies and yuppies, but today I heard a funny new word for a demographic of people - yawns. YAWN stands for Young and Wealthy but Normal. It is a pretty silly acronym, but this is how the radio program I was listening to described this group of people. </p> <p>Yawns are people in their 20s to 40s who are usually wealthy through their own work. Many of them are self-made millionaires and have a lot of disposable income. However, they prefer to live simple lives away from excessive consumerism. They usually live very much beneath their means and like to purchase local produce. They are also more environmentally friendly and philanthropic because they want to save the world with their money and they really think they could do it. They live relatively muted lives they do not have as much entertainment value as other rich people, and thus the Sunday Telegraphy of London coined the acronym YAWN to indicate that these people live somewhat boring lives.</p> <p>The radio program also suggested that the amount of Yawns is increasing because recent history has seen several cycles of pro-materialism and anti-materialism. For example, the communists and hippies of the 50s and 60s spawned a materialistic backlash in the next generation and produced the selfish yuppies. Now the rampant consumerism is once again producing a generation of people who hate the mainstream materialism. I think that may be true because I am seeing a growth in the popularity of frugality and &quot;green&quot; products amongst my friends and colleagues.</p> <p>As much as I like to be a person fitting the description of a yawn, I would hate to say, &quot;I am a yawn!&quot; because that just sounds like that I am admitting I am a boring person. I am glad that there are so many rich people who are living beneath their means and conscious about helping others, but why do they have to be stuck with such a silly moniker? So what do you think? Are you a yawn? Would you like to be one? </p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/xin-lu">Xin Lu</a> of <a href="http://www.wisebread.com/are-you-a-yawn">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/will-forced-frugality-last">Will &quot;forced frugality&quot; last?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/biggest-money-saving-tip-move-far-away-from-the-joneses">Biggest Money Saving Tip: Move Far Away from the Joneses</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/these-diy-magazines-can-help-you-be-self-reliant">These DIY Magazines Can Help You Be Self-Reliant</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/is-six-figures-really-that-much">Is Six Figures Really That Much?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/is-living-on-one-income-a-status-symbol">Is living on one income a status symbol?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Frugal Living Lifestyle demographics lifestyle people wealthy Thu, 01 May 2008 05:09:26 +0000 Xin Lu 2056 at http://www.wisebread.com