wealthy

How to Profit From China's Growing Upper Class — Even If You Don't Speak Chinese

Carrie Kirby — Mon, 14 May 2018 08:31:13 +0000

When I lived in Beijing in the late 1990s, most Chinese people were poor compared to their American counterparts. I remember visiting bars that catered to foreigners with local friends in tow, and having them marvel that the price of one drink could feed them for a week. People were considered well off if they owned a car or had an apartment with hot water on demand.

Things have changed. While poverty is still common in China, the wealthy class has ballooned. China is now in second place, after the U.S., for the most ultra high net worth individuals. And the wealthy class there is expected to keep on growing, with the number of Chinese millionaires expected to surge 41 percent to 2.7 million by 2022, according to Credit Suisse.

This means that there are lots of Chinese people in the market for goods and services their parents couldn't afford. Here are some ways you could cash in.

Teach English online

Teaching English for a low salary or as a volunteer has long been a way for new college grads to see the world. But the combination of global broadband and growing Chinese wealth has created an opportunity for Americans to make decent money teaching English from the comfort of their homes. VIPKID connects English-speaking teachers with children in China for one-on-one video lessons that pay $14 to $22 per hour. (See also: How to Earn $1,000 a Month or More as an Online Tutor)

Be a butler

In 2016, the Netherlands-based International Butler Academy opened a training program in Shanghai to serve the growing demand for butlers among high net worth households in China. English or English-appearing butlers who are willing to travel to China can start at $60,000 — nearly 50 percent more than beginner butlers earn in the West. Staffing agencies report that the premium is driven by the status boost that comes with employing a bona fide Downton Abbey-style butler. (See also: 14 Jobs that Capitalize on the Growth in Rich Households)

Rent your vacation property to Chinese tourists

Airbnb has been pushing hard into the Chinese market, adding 24/7 Chinese-language customer support and locally used payment options. At the same time, the number of Chinese visitors to the United States has been exploding, with more Chinese visitors than any other country except Mexico.

If you own a vacation property in a popular Chinese destination, such as Los Angeles, or near a national park, you can make your listing more attractive to Chinese travelers by providing a high level of service, since Chinese travelers are more used to hotels than home sharing. Discounts for longer stays help, too. If you have Chinese visitors coming in, thoughtful touches such as having a hot water kettle and house slippers available can help them feel more at home. (See also: 5 Easy Ways to Make Good Money From Airbnb)

Teach skiing

Skiing didn't really take off in China until the recent wealth boom, with the number of domestic ski areas rocketing to 568 from just six between 1996 and 2016. The run up to the 2022 Beijing Winter Olympics is further ratcheting up interest.

The combination of booming popularity and a limited history means that ski instructors are in short supply in China. A Club Med recruiting page promises ski instructors who travel to China perks such as accommodations, meals, and free flights in addition to an "attractive wage." How attractive? While ski instructors in the United States earn $15 to $20 an hour, in China you can make $20 to $30. Although speaking Chinese would increase your chances of getting hired, resorts are increasingly accepting that most available ski instructors don't.

Host a high school student

The number of international students earning high school diplomas in the United States has skyrocketed over the past decade, and the trend is led by China, whose students make up 46 percent of all international high school students here. Some of these kids are in U.S. boarding schools, but others are in private day schools and even public schools. These students need host families, who can earn $500 to $600 monthly per student for providing room and board.

Sell your property to a Chinese investor

To the chagrin of many would-be homeowners in certain markets, U.S. real estate has become attractive to Chinese investors making all-cash purchases. In fact, Chinese are now the top foreign buyers of U.S. real estate.

If you are looking to get top dollar, cash, for a property, it may be worthwhile to enlist an agent who knows the Chinese investor market well. Just don't expect this tactic to win you any friends among neighbors who might not like to see neighborhood properties turn into investor-owned ones.

Be a private schoolteacher or administrator

As I mentioned in the first item on this list, teaching in China used to be a low-earning opportunity for young people who wanted an adventure. With the growth of wealth in China, however, comes many domestic private schools who want English-speaking teachers and administrators, and are willing to pay for them.

Experienced teachers can earn $3,000 or more per month, and while that might not sound like big bucks, if it comes with a furnished apartment, airfare, and halftime pay over holiday breaks, some estimate you could sock away at least half your salary.

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This article is from Carrie Kirby of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

15 Jobs That Capitalize on the Growth in Rich Households

Carrie Kirby — Wed, 25 Apr 2018 08:30:10 +0000

The rich keep getting richer. Even among high net worth families, the fastest growing group is the richest — those with $5 million or more in investable assets, according to the Phoenix Wealth & Affluent Monitor. That group grew 8 percent in the U.S. in 2017, and the high net worth market overall (meaning people with at least a cool million in liquid assets) grew by 6 percent.

What does that mean for you? Maybe you won't be entering the 1 percent anytime soon, but could you work for the 1 percent? Here are some jobs growing in demand along with the wealthy class.

1. Butler/personal assistant

Perhaps stimulated by the popularity of Downton Abbey on PBS, the profession of butler has been on the rise. Times have changed, of course. Women can now be butlers as well as men. And while today's butler may share a lot of the duties that Carson carried out on Downton Abbey, such as supervising the rest of the household staff and decanting fine wines, they must also be comfortable with more modern responsibilities, such as acting as a concierge to score concert tickets, and making sure handheld devices are charged up.

The starting salary is for a butler is around $30,000, but goes up steeply from there. Butlers work an average 60 hours a week and earn between $50,000 and $150,000, according to the International Butler Academy.

Another source of demand for butlers is high-end resorts and condo developments, which are increasingly offering butler service as a perk. Sandals, for example, offers butlers with their highest-end suites, who provide services such as unpacking suitcases and bringing you drinks poolside. They book tours for you, and even anticipate your desires, such as having a bubble bath and iced Champagne waiting when you return to your suite.

Today's butler may also serve as a personal assistant, or that may be a separate job. A PA handles the boss's calendar, keeps track of correspondence, and runs errands, among other tasks.

2. Chauffeur

When I was a business reporter, billionaire Larry Ellison once visited our newspaper. I waited with other staff in the lobby while his sports car pulled up to the front door. He got out of the driver's seat, and one of his bodyguards switched over from the passenger seat to go park the car. To me, this epitomizes what it's like to be super rich: You can drive when you want to, but you never have to drive when you don't want to.

Clearly, the main job of a private chauffeur is to drive people around. You'll also be expected to keep a household's cars clean inside and out and in working order. You may need to keep the car stocked with what your employer needs, whether it's the morning paper for the ride to work or clean glasses and Champagne for a night out. You might be called upon to sit in the car for hours waiting for the "principal," as servant's employers are typically called. Personal drivers earn about $40,000 a year.

Another option for those who would drive the rich is to work for a private car service. While on-demand ride hailing is a new thing for the middle class, it's been available to the rich pretty much forever.

3. Nanny

Lots of middle income people hire nannies, but the ultrarich have their own style when it comes to child care. It's common for wealthy families to list teaching credentials as requirements for the job. In fact, I have a kindergarten teacher friend who interviewed with a wealthy Silicon Valley family to be the nanny for just one of their children; the other child would have his own nanny, and each nanny would have a car to drive her single charge around in.

But that's nothing! Check out this UK posting for a nanny position that went viral: It asks for a baby sitter with a degree in child psychology, self-defense training, and a willingness to travel as often as three times a week among the family's homes on four continents.

But with great responsibility comes great compensation: The ad also offers a $140,000 salary and access to the family Maserati (unless you prefer to run family errands in the Porsche). This may be an extreme case, but it's pretty common for wealthy families to take their sitters on vacation; I know several nannies who have enjoyed these trips despite the work involved.

If you have high-end nanny cred but would rather not live with a single family, perhaps a career as a vacation nanny is for you.

4. Closet nanny

A friend told me she interviewed a nanny once who had previously worked as a "closet nanny." My friend was slightly disappointed to learn that this job entails not secret closet assignations for diaper fetishists, but merely cleaning up people's drawers and closets a couple of times a week. San Francisco company Clean Slate Interiors calls this service organizational maintenance, and charges $160 per hour for two organizers to keep up any kind of system that the company previously set up.

5. Pet nanny

Americans spent 70 percent more on pets in 2017 than they did a decade earlier, so it's not too surprising that there are more opportunities than ever providing high-end pet care. It may not be unusual to hire a pet sitter to stay in your home while you're on vacation or to walk your dog during a long workday, but the true elite hire live-in nannies to care for their pets 24/7.

You could also work at a high-end pet boarding, day care, or grooming facility. Americans spent $5.76 billion on grooming and boarding in 2016. For pet owners who are merely well off, that may mean sending your dog to a $200-a-night spa when you travel. But for the ultrarich, there are services such as The Dog Store in Manhattan and the Hamptons, where you can pay $350 to $1,500 to have your pooch prepped for a trip with beauty treatments and a relaxing massage. (See also: How to Make $400+ a Week as a Pet Sitter)

6. Cosmetic surgeon

Cosmetic procedures in the United States have increased by nearly 50 percent since 2007. This growth in demand has led to predictions of a shortage of cosmetic surgeons. Of course, this job requires years of expensive and rigorous training, but if you happen to be a medical student looking for a specialty, this is one that's growing with the size of the wealthy class.

7. Landscape architect

This is not a gardening job (although those are in demand with the growth of rich households as well). A landscape architect has a bachelor's or master's degree, has passed the Landscape Architect Registration Examination (L.A.R.E.), and knows how to use computer-aided design software. Median pay is $63,400 per year. These professionals spend most of their day at a computer, designing the models for the grounds of grand estates, as well as campuses and public spaces.

8. Estate manager

Different from a butler, this job involves managing any and all properties owned by the employer. Just as an operations manager for a corporation would be responsible for the campus, an estate manager may hire and oversee the grounds crew, make sure an emergency HVAC issue gets taken care of, and ensure security at all times. It's not uncommon for these managers to come from the ranks of corporate America or the hospitality industry, doing the same thing for private households that they once did for whole companies or grand hotels.

9. Housekeeper

There is overlap in listings for housekeepers, estate managers, and butlers, but in general a housekeeper's job is going to be more focused on housework. One housekeeper listing offered $30,000 to $55,000 a year, plus lodging, car, a phone, and access to a pool and gym. Required duties included laundry, closet organization, inventory management, and cooking.

10. Wealth planner

Any ordinary Joe can sit down with a financial planner and get advice about funding his 401(k), but elite wealth planners provide much more extensive service. They tend to devote their time to just a few clients, or may work exclusively for one family, planning not only for individual households' wealth but also making a long term plan for the children and grandchildren, as well as multigenerational charitable giving plans.

11. Personal/private chef

A private chef works for one family, making all their meals and sourcing ingredients. Personal chefs — who are accessible to the merely affluent — typically work for multiple families, making and packaging meals for the fridge or freezer. Then there are chefs who focus on catering home dinner parties. All these fancy cooks are in demand as the rich look for ways to save the most finite resource: time.

Typically trained in cooking academies, with restaurant experience, being a personal chef to multiple clients can be a nice small business with less overhead and risk than a restaurant.

12. Personal trainer

The median pay for a trainer in the United States is only $18 per hour, but if you land a job at an elite boutique gym, you could earn much more. These places charge as much as $50,000 per year and count supermodels among their clients. To work at this echelon, you'll need the best certifications and experience, and will be expected to be able to advise on diet and supplements as well as workouts. Some wealthy gym rats pay two trainers to work with them at once: One to run the workout and the other to observe and give pointers on form.

13. Private jet interior decorator

Sure, you could be a regular interior decorator like a schmuck, but why not shoot for the sky (literally)? Private jet decorators design the client's ideal cabin configuration, pick the perfect upholstery, and if they want every fixture plated in gold or a movie editing studio in the sky, they need only say the word.

In general, the private jet market has soared. New Flight Charters, a private jet charter company, has reported 12.5 percent year-over-year growth. Whether the jet is owned by just one rich family, time shared, or chartered, the growing popularity of private flight means there are more jobs for pilots, stewards, and maintenance crews as well.

14. Yacht crew

The yacht industry was expected to grow a whopping 20 percent last year, and yachts are getting bigger, with the average size now up to 51.6 meters.

These mega yachts need crews: captains, mates, deckhands, engineers, stewards, chefs. Salaries range from $2,000 to $25,000 a month, depending on the role. You can even be hired to just live on someone's boat, like a house sitter — but, you know, on a boat.

15. In-house tech support

When you're a billionaire, you don't call Microsoft tech support and wait on hold. You leave that aggravation to your family systems administrator. For example, RDV Corporation, established by the billionaire DeVos family to take care of all their household needs, is hiring a Senior Systems Administrator responsible for "ensuring that technology needs are met in family homes, offices, marine vessels, and other locations." Tasks include desktop support, supporting Apple TV, drones, and testing new products. Requirements include a bachelor's degree and five years working in tech support.

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This article is from Carrie Kirby of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

5 Characteristics of the World's Youngest Billionaires

Rachel Slifka — Wed, 18 Apr 2018 09:00:07 +0000

According to Forbes, there are 2,208 billionaires in the world today. And just 63 members of this elite group are under the age of 40.

Though the 63 youngest billionaires are a diverse group of individuals with different claims to fame, they do have quite a few things in common. Here are a few characteristics shared by some of the world's youngest billionaires.

1. More than half are entrepreneurs

Over half the billionaires on the under-40 list are self-made, with a majority being in the tech industry. Of course, people like Mark Zuckerberg of Facebook and Evan Spiegel of Snapchat made the list. So did the founders of Airbnb, Stripe, Uber, among others. But tech isn't the only profitable industry. Several of the billionaires on the list are from manufacturing, design, and medical industries.

2. Inheritance is prevalent

Not all of the world's most wealthy pulled themselves up by their bootstraps. While many of the world's youngest billionaires were self-made, there are also many who inherited their wealth.

Twenty-four-year-old Gustav Magnar Witzøe, heir of Norwegian fish farming company Salmar, amassed a net worth of $1.9 billion after inheriting nearly half the company from his father. Heiress Yang Huiyan is worth over $21.9 billion at only 36 years old after inheriting her father's real estate development company in China. And Norwegian sisters Alexandra and Katharina Andresen — just 21 and 22 years old, respectively — each inherited 42 percent of their family-owned investment company, Ferd, for a net worth of $1.4 billion a piece.

3. Many of them left school to pursue their businesses

School was not the end game for many of the world's youngest billionaires; their business was.

While enrolled in a product design class at Stanford, Evan Spiegel came up with the idea of Snapchat. In 2012, he officially dropped out of Stanford to focus on his growing app. Mark Zuckerberg dropped out of Harvard in 2005 to manage the ever-growing Facebook. Even some of the world's more established billionaires, such as Steve Jobs and Bill Gates, all dropped out of school before they graduated.

This isn't to say dropping out of school to pursue a business is the secret to their success: Many billionaires on the list hold at least a bachelor's degree. (See also: 5 Jobs That Pay Over $50K and Don't Require a Bachelor's Degree)

4. They have multiple successful businesses

The world's wealthiest often have more than one claim to fame. In fact, many of the youngest billionaires have worked on several notable and profitable projects on their rise to success.

Garrett Camp, mostly known as the billionaire founder of Uber, was well on the tech scene before he even started the rideshare company. He actually was the founder of StumbleUpon, which he sold to eBay in 2007 for $75 million.

Facebook's third employee, Dustin Moskovitz, worked with Zuckerberg to launch Facebook out of their dorm room at Harvard. After they both dropped out of college, Moskovitz moved to California with Zuckerberg to focus on further developing Facebook. In 2008, Moskovitz left Facebook to start Asana, a project management software — though most of his $12.4 billion net worth comes from his small remaining stake in Facebook. (See also: What Small Business Owners Can Learn From Top Forbes Entrepreneurs)

5. They prioritize hobbies

Norwegian heiresses Alexandra and Katharina Andresen spend most of their time riding horses competitively. Airbnb billionaire Brian Chesky was a former bodybuilder, and 27-year-old Stripe founder Jack Collison prefers to spend his spare time running — a hobby we can all afford.

While many of these billionaires spend a majority of their time overseeing extravagant business operations, they still value taking time for their own interests and hobbies. That's something we should all take to heart.

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This article is from Rachel Slifka of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

5 Everyday Routines of Wealthy People

Emily Guy Birken — Fri, 16 Feb 2018 09:00:06 +0000

Whether you end each day binge-watching TV until the wee hours, or you drink a kale smoothie before hitting the hay promptly at 10 p.m., your daily routine will certainly affect your ability to achieve your goals.

In fact, many famous and wealthy individuals claim that their daily routines are the driving force behind their success. That's why it's a great idea to learn how trailblazers and top-earners structure their days so you can figure out which of their routines will help set you up for success. (See also: 7 Money Lessons We Can Learn From Beyoncé)

1. Wake up early

While hitting the snooze button until 20 minutes before you absolutely have to leave for work may feel a little more comfortable than jumping out of bed at 5:30 a.m., this habitual procrastination may be costing you. Not only are you more likely to forget something important in your rush out the door, but you start your day already feeling like you're behind and out of control. It's difficult to start tackling work when you're still rubbing sleep out of your eyes, am I right?

This is why nearly 50 percent of wealthy individuals get up at least three hours before their workday starts, according to Tom Corley, author of Change Your Habits, Change Your Life. Having that extra time in the morning gives you the opportunity to plan your day, exercise, or work on a side project — all of which will help you get in the right frame of mind to get to work once you get to the office.

2. Exercise

We all know that we should be exercising, but just because we know that breaking a sweat is necessary for good health doesn't mean we do it. However, Corley found that 76 percent of wealthy people make sure they spend 30 minutes or more every day on aerobic exercise.

These successful individuals recognize that their physical health is the cornerstone of all of their success. You cannot work toward your goals if you're sick. In addition, according to Harvard Medical School, aerobic exercise such as walking, running, biking, or swimming improves both thinking and memory. This means that making sure daily exercise is part of your routine can help you to work smarter. (See also: 7 Ways to Sneak More Exercise Into Your Busy Schedule)

3. Eliminate choices

How many times have you stood in front of your bulging closet wondering what to wear to work that day? While it may seem like a luxury to have lots of choices, it can often lead to decision fatigue, which is when you use up your brain's limited bandwidth on several smaller daily decisions, making it that much harder for you to figure out the right choice on bigger decisions.

This is why many wealthy individuals have voluntarily chosen to eliminate decisions in their day. For instance, Facebook CEO Mark Zuckerberg admits to owning 20 identical gray T-shirts so that he doesn't have to think about what to wear each morning. Similarly, Apple's Steve Jobs was famous for his uniform of black turtleneck and jeans. Adhering to these personal uniforms allowed these extremely influential men to focus their attention where it belongs — on the growth of their products.

Similarly, many successful people choose to eat the same foods each day so they aren't tempted to stray from a healthy or inexpensive diet. This lack of choice means there is no chance of agonizing over whether or not to have pizza for lunch, since the decision has already been made. (See also: Here's How Too Many Decisions Costs You Money)

4. Meditate

Zoning out while playing Candy Crush may feel like a sort of Zen state while you're in the midst of a game, but it's hardly going to offer you the kind of stress-reducing relaxation that meditation can.

For one thing, you'll never fall prey to an in-app purchase in a moment of weakness while meditating. For another, meditation offers everything from improved cognitive functioning, creative thinking, and productivity, to better physical health — none of which you'll get from a rousing round of smartphone gaming.

This is why hugely successful individuals like Oprah Winfrey and Bridgewater Associates founder Ray Dalio make sure to include meditation in their daily routines. The daily mindfulness practice helps these wealthy individuals to keep their minds clear and focused. (See also: 6 Ways Meditation Can Make You a Money Master)

5. Read

Reading has a number of excellent brain benefits, and incorporating a routine of reading a book at bedtime is far better for your sleep health than scrolling through Facebook or Instagram on your phone.

But before you pick up the latest crime thriller or romance novel, consider what kind of reading is going to do the most to help improve your life. According to Corley, 85 percent of wealthy individuals read at least 30 minutes each day for self-improvement. That means they pick up books that will help them to achieve more or help them overcome bad habits, rather than reading solely for entertainment. (See also: 10 Books to Read for a Better Money Mindset)

Create a wealthy life

Having a beneficial daily routine is not a shortcut to riches. Instead, it helps foster the proper circumstances you need in your life to reach your goals and live the life you want.

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This article is from Emily Guy Birken of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

8 Wise Tips Famous CEOs Would Give Their Younger Selves

Brittany Lyte — Thu, 25 May 2017 09:00:11 +0000

Every successful CEO has hit plenty of bumps on the road to the top. Despite the struggles, these top leaders have still managed to conquer challenges, shed their shortcomings, and grow both their skills and their net worth. They have made mistakes and learned from them.

We wondered what some of the wealthiest CEOs would tell their younger selves, and found eight gems worth passing on. (See also: 11 Finance Tips You Wish You Could Tell Your Younger Self)

1. Stay true to yourself

Kevin Johnson, CEO of Starbucks, is working hard to grow the chain from 26,000 locations today to 37,000 by 2021, all while maintaining the brand's unique appeal. He has some big shoes to fill, after taking over from Starbucks' iconic leader Howard Schultz in April 2017. His guiding principle, as he told Business Insider: Be authentic. By acknowledging all aspects of your authentic self — shortcomings and counterproductive tendencies included — you allow yourself and the people around you to do their best work.

"It's important to be comfortable being authentic," Johnson said, adding, "Being authentic means you have to be vulnerable."

2. Find a job you love

Berkshire Hathaway Chairman and CEO Warren Buffett — one of the world's most successful investors with a net worth of $73 billion — puts it in layman's terms: Take on a career that makes you excited to wake up in the morning.

"You follow your passions. You find something you love," said Buffett at Fortune's Most Powerful Women Summit in 2014. "The truth is, so few people really jump on their jobs, you really will stand out more than you think. You will get noticed if you really go for it." (See also: The 5 Best Pieces of Financial Wisdom From Warren Buffett)

3. Exceed expectations

DreamWorks co-founder Jeffrey Katzenberg's path to success was made by following this tip: Always give your best performance. And, if you can, outperform other people's expectations of your work.

"I don't think it matters how small or how big the task is," the Hollywood influencer, whose net worth is estimated at $750 million, famously said. "If you can do it just a little bit better than what is expected, you will be noticed and rewarded."

4. Embrace tough assignments

Don't settle for easy work — that's the advice of PepsiCo CEO Indra Nooyi, who earned $29.8 million in 2016.

"Nobody notices when you do an easy job well," she told Business Insider in 2014. "It's far better to challenge yourself by raising your hand for the toughest assignments and work to solve problems that no one else has been able to solve. That's how you truly become a trusted leader inside an organization."

5. Pursue extracurricular interests

"My advice is to focus on becoming a complete person," said Goldman Sachs CEO Lloyd Blankfein, who grew up in a Brooklyn housing project and now has a net worth estimated at $1.1 billion. "Everyone should focus on the content of his or her job, of course. But work is not the end; it's a means to an end. You owe it to yourself to open up to broader interests."

So, pursue a hobby, travel, learn a new skill, read voraciously. Become that interesting person that makes great dinner conversation.

6. Focus on developing your own unique talents

Former Birchbox co-CEO Hayley Barna knows a thing or two about developing personal strengths and talents. She helped launch the subscription beauty box company in 2010 before stepping down five years later to become First Round Capital's first female partner.

Her best advice is to identify and strengthen your distinct set of skills, rather than trying to be good at things you struggle with. For example, if you're a horrible writer but you're mathematically gifted, focus on your talent with numbers rather than trying to develop a literary voice.

"Never compare your weaknesses to someone else's strengths," Barna has said. "While comparisons are tempting, especially for competitive, ambitious people, it's always important to focus on your own special talents. That's how you can make a real impact. And it's the coordination of everyone's unique skills that can make magic happen."

7. Own up to your mistakes

Dave Finocchio, CEO of Bleacher Report, would tell his younger self to admit his faults, act swiftly to correct them, and learn from them.

"I make mistakes all the time, and talk about them openly with people up and down our hierarchy," the digital sports franchise leader told Forbes in 2016. "It fosters a culture where people should feel comfortable critiquing themselves honestly."

8. Push yourself

Marissa Mayer, former CEO of Yahoo, says she would counsel her younger self to get comfortable being uncomfortable. You'll never get ahead without pushing yourself to do things you've never done, and that means embracing tasks that you think you might not be fully prepared for.

"I always did something I was a little not ready to do," Mayer, whose net worth is $189 million, said in a 2015 speech. "I think that's how you grow. When there's that moment of, 'Wow, I'm not really sure I can do this,' and you push through those moments, that's when you have a breakthrough."

This article is from Brittany Lyte of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

5 Reasons Being a Millionaire Is Overrated

Brittany Lyte — Fri, 12 May 2017 09:00:10 +0000

All told, 10.4 million households in the U.S. have $1 million or more in investable assets, according to a 2017 study by investor research firm Spectrem Group. Sounds pretty nice, doesn't it?

You may want to reconsider those feelings of envy. Does the money really make life any more enjoyable? As Bill Gates once said, "A hamburger is still a hamburger, millions in your pocket or not." Read on for our roundup of reasons why you should feel perfectly content to live on Main Street.

1. Happiness can be bought — but most rich people aren't doing it right

Do you have enough money to eat, pay for health care, and make the rent? If so, you're off to a good start. Research shows that as long as your basic needs are met, you've got as much of a shot at living a joyful life as anybody else.

In fact, the relationship between money and happiness is surprisingly weak. A positive experience, such as working hard to attain a goal or falling in love, will make you happier than a new Porsche. Over time, the Porsche will rust, dent, and age. The car simply won't be as thrilling to drive as it was when you first bought it. But the memory of a first love or receiving a reward for your hard work won't as quickly deteriorate.

Indeed, money can be used to have more of the positive experiences that make us happy. But research shows that people who are well-to-do don't often spend their money this way.

2. Small delights bring more joy than big, expensive ones

A series of small, frequent treats — a pedicure, a day at the beach, a box of chocolate-covered strawberries — is more fulfilling than a big, blowout, annual gift to yourself. In this way, even millionaires are limited by their funds. If a millionaire wants their fortune to last, they can't spend it all at once. And if the goal is happiness, money should be spent in a way that brings constant delight, even if those delights come in smaller packages.

Remember: Eating an entire, 12-slice cake in one sitting is not 12 times more pleasurable than eating one slice at a time. Similarly, most people who play the lottery would prefer to win a $50 ticket and then another $75 ticket at a later date, rather than win a one-time lump sum of $125. So, even if you can afford to treat yourself to one big present, you'd be wiser — and happier — to gift yourself a series of small ones instead.

3. Anticipation promotes happiness

If you're rich enough to buy yourself every new gadget the moment it hits the market, you're robbing yourself of anticipation — that feeling of yearning and desire which delivers a more intense feeling of happiness when we finally attain the thing from which we've been deprived.

The pleasure that arises from immediate consumption simply doesn't match the staying power of the happiness we feel when we get something we've been yearning for. Here's an example from researchers who study happiness: People often derive the most joy from talking about and looking forward to a vacation than the actual experience of the vacation itself.

4. A fancy vacation might sound like bliss, but it can often bring problems

The Notorious B.I.G. said it best: Mo' money, mo' problems. Here's another way to think about it: People buy big ticket items expecting one thing, but often they get something else. Let's take a yacht, for example. Warm sun, deep ocean swims, navigating through foreign seas — what could be bad about owning a 200-foot yacht?

Well, what about the huge, hidden price tags — such as the cost of storage and maintenance? What about mosquito bites, and stormy seas, and engine glitches, and that fear of sharks you never knew you had until you bought the darn thing?

Consider how it might feel to have a yacht on which to sail around the world, but you can't find a willing companion to join you for the tour. Because, you know, some people have to work. But not you! You're rich and you've got a yacht — and now you have a whole new set of troubles to worry about. Happiness is in the details, but it's easy to get caught up in the illusion.

5. Rich people tend to spend more time working

Our happiness is largely determined by how we spend our time. As a person's income rises, they typically begin to devote more time to working, running errands, and shopping. These activities are known to drive stress and anxiety — not happiness.

More than anything else, it's leisure time that breeds happiness. But, of course, it's a balance. If we're not working enough, we often find ourselves right back in the throes of stress and anxiety. "Am I spending my time in a way that's worthwhile? What's the meaning of all this stuff?" Striking a balance between work and play is important whether you're a millionaire or not.

This article is from Brittany Lyte of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

10 Beloved Books of Successful Millionaires

Paul Michael — Fri, 21 Apr 2017 09:00:11 +0000

If you are what you read, then the books that the super-rich have on their bookshelves should be of interest to all of us. From entrepreneurs and media tycoons, to international superstars and the President himself, here are 10 books that should be required reading for anyone looking to improve their lives.

1. Mark Cuban — The Fountainhead by Ayn Rand

A billionaire entrepreneur and a star of the hit series Shark Tank, Mark Cuban loves this book so much, he named his yacht after it. The author, Ayn Rand, is a polarizing figure in politics, and her books and life views are often adopted by both right-wing and libertarian politicians. Her basic philosophy revolves around the power of the individual, with the pursuit of happiness being the moral purpose of life.

The Fountainhead, first published in 1943, offered the world Rand's philosophy of Objectivism. The story, which centers on a young architect who battles against conventional standards, has become a classic of modern literature. Speaking of the book to C-Span, Cuban said, "You know it's funny because I'll pick it up when I need motivation, but then if I read too far, I get too much motivation and I get too jittery so I have to put it down."

If a book can continue to give a multibillionaire goose bumps, it has to be worth a read.

2. Jeff Bezos — The Remains of the Day by Kazuo Ishiguro

Amazon founder and CEO Jeff Bezos has a net worth of over $73 billion. So, it's perhaps a little surprising that his favorite book, Kazuo Ishiguro's The Remains of the Day, revolves around the life of a servant. In this case, that servant is an English butler called Stevens, who narrates the novel.

Set in postwar England, the elderly butler must come to terms with some pivotal issues from his past, whilst maintaining his stoic and "correct" behavior. In 1993, the book was turned into a beautiful film featuring Sir Anthony Hopkins and Emma Thompson.

Speaking about the book, Bezos said, "You can't help but come away and think, I just spent 10 hours living an alternate life and I learned something about life and about regret." Awarded the Man Booker Prize for Fiction in 1989, The Remains of the Day was included in The Guardian's "Books You Can't Live Without" list.

3. Mark Zuckerberg — The Aeneid by Virgil

Written between 28 and 19 BC, The Aeneid recounts the legendary story of Aeneas, a Trojan who traveled to Italy and became an ancestor of the Romans. From his journey from Troy, to the Trojan War, the funeral games, and a vision of the underworld, The Aeneid is widely regarded as a classic of Italian literature. What's more, the entire book is actually a poem, consisting of 9,896 lines in dactylic hexameter.

So how did Mark Zuckerberg, a young tech-savvy entrepreneur who created the social media climate we now live in, come to read the book? He was introduced to it while studying Latin in high school, and says the book "knows no boundaries in time and greatness." He is also known to quote lines from The Aeneid in Facebook meetings.

4. Oprah Winfrey — To Kill a Mockingbird by Harper Lee

If you ever needed an excuse to read this masterpiece of American literature, knowing it's Oprah Winfrey's favorite book is a doozy. Set in Alabama during the Depression, "To Kill a Mockingbird" covers three years in the life of Scout Finch, an eight-year-old girl, her brother Jem, and their father Atticus, a defense lawyer. Atticus is called upon to defend Tom Robinson, a young black man accused of raping a white woman.

Told through Scout's eyes, it's a compassionate and moving story of kindness, cruelty, and the roots of human behavior. "I remember reading this book and then going to class and not being able to shut up about it," Oprah told The Baltimore Sun. "I read it in eighth or ninth grade, and I was trying to push the book off on other kids. So it makes sense to me that now I have a book club, because I have been doing that since probably this book."

5. Elon Musk — The Foundation Trilogy by Isaac Asimov

The founder and CEO of Space Exploration Technologies Corp is bringing the ideas of the future into the present day, with award-winning electric cars and whole-home solar power. To discover that his favorite book series comes from noted science fiction author Isaac Asimov hardly raises an eyebrow.

The The Foundation Trilogy series revolves around mathematician Hari Seldon, who has spent his whole life developing a branch of mathematics known as psychohistory. Using the laws of mass action, the science is able to predict the future on a grand scale. Unfortunately, it predicts the fall of the Galactic Empire, and a dark age lasting 30,000 years before the second great empire arises.

Musk says, "The lessons of history would suggest that civilizations move in cycles … there could be some series of events that cause technology levels to decline." The book series has had a profound effect on the way Musk thinks about the world.

6. Bill Gates — The Catcher in the Rye by J.D. Salinger

Set in the 1950s, The Catcher in the Rye is narrated by a 16-year-old boy named Holden Caulfield, who is undergoing treatment in a mental institution. He recounts the tale of two days in his life when all this "madman stuff" happened to him. But there is a deeper meaning here, as we see him battle with issues around growing up, and avoiding the pressures of adulthood.

"It's my favorite book," said Gates. "It acknowledges that young people are a little confused, but can be smart, and see things that adults don't."

7. Michael Bloomberg — The Honourable Schoolboy by John Le Carré

John Le Carré is a highly-regarded author of espionage novels, and has written such classics as The Spy Who Came in From the Cold, Tinker Tailor Soldier Spy, and The Constant Gardener. However, it his one of his lesser known works that captured the imagination of Bloomberg.

The Honourable Schoolboy tells the story of George Smiley, who must reconstruct an intelligence service and run a successful offensive espionage operation. It is the second novel in an omnibus featuring Smiley, and in 1983 it was adapted for a BBC Radio production featuring Martin Jarvis.

"It's 600 pages, it's mostly description, there is almost nothing that happens. But it's fascinating," said Bloomberg. Reading 600 pages of fascinating nothingness? Sounds like fun.

8. Richard Branson — Stalingrad: The Fateful Siege 1942–1943 by Antony Beevor

Founder of the highly successful Virgin brand, Richard Branson includes Peter Pan, Wild Swans, and Swallows and Amazons in his list of favorite books. As such, a book about World War II's most harrowing battle seems a little out of place in that company.

The year is August 1942, and Hitler's huge Sixth Army reached the city that bore Stalin's name. Over the five months that followed, the battle for the ruins of the city cost more than a million lives. More than just a pure account of the battle, Stalingrad: The Fateful Siege 1942–1943 recounts the personal experiences of soldiers on both sides, and includes tales of interrogation, desertion, and execution.

9. Beyoncé — What Will It Take to Make a Woman President? by Marianne Schnall

There aren't many people in America, or the world, who don't know of Beyoncé. The multi-Grammy winning singer and actress has amassed millions from her albums, concerts, perfume lines, clothing, and films.

Schnall penned What Will It Take to Make a Woman President? after a question was brought up by her 8-year-old daughter: "Why haven't we ever had a woman president?" It was a question she did not know how to answer, and so she set about asking the likes of Sheryl Sandberg, Maya Angelou, Gloria Steinem, Nancy Pelosi, Nicholas Kristof, and Melissa Etheridge.

"It's a collection of interviews and essays by great women," says Beyoncé. "They will inspire you to become a better leader."

10. President Trump — The Power of Positive Thinking by Norman Vincent Peale

Love him or hate him, he's the 45th President of the Unites States, and a very wealthy man. Some say that he's not much of a reader these days, but he has stated that this book had a profound effect on him and his business empire.

The international best seller by Norman Vincent Peale speaks of faith, spirituality, and the power of the mind to drive you forward. Via simple, prayerful exercises that you do daily, you can eliminate all the negative thoughts that prevent you from achieving the happiness and success you deserve.

President Trump read The Power of Positive Thinking when he was billions of dollars in debt, and it turned his life around. "My father was friends with Dr. Norman Vincent Peale, and I had read his famous book, The Power of Positive Thinking," said Trump. "I refused to be sucked into negative thinking on any level, even when the indications weren't great. That was a good lesson because I emerged on a very victorious level." Victorious indeed, considering he is now the most powerful man in the world.

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This article is from Paul Michael of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

5 Surprising Budget Habits of Wealthy Financial Gurus

Damian Davila — Fri, 24 Mar 2017 10:00:10 +0000

"He who will not economize will have to agonize," warned Chinese philosopher Confucius as early as the 5th Century B.C. His advice has survived the test of time and has become the mantra of many individuals in their quest for financial success.

However, you would think that once somebody "makes it," it's time to sit back and "treat yourself." Not so fast! Let's review five wealthy financial gurus who continue to save money in the most surprising ways.

1. Warren Buffett eats McDonald's every day for breakfast

With an estimated net worth of over $78 billion, Warren Buffett can definitely afford to sip mimosas for breakfast without sweating the bill. Still, the Oracle of Omaha revealed in a recent 2017 documentary that he sticks to a daily breakfast budget of no more than $3.17 at Mickey D's.

Buffett usually picks up his breakfast from the drive-thru of a nearby McDonald's on his way to the office. "When I'm not feeling quite so prosperous, I might go with the $2.61, which is two sausage patties, and then I put them together and pour myself a Coke," Buffett deadpans. Coke for breakfast, you ask? Buffett's investment company holds over 9 percent of shares from the drink company.

2. T. Boone Pickens owns a pair of shoes from 1957

Through his success in the oil and gas sector, T. Boone Pickens amassed a fortune over the years and ventured into the financing and investment sectors. In 2012, Pickens ranked #913 on Forbes' list of billionaires. Nowadays, he doesn't rank in that list at all because he has given more than $1 billion away through his philanthropic efforts.

Despite his financial success, the author of The First Billion Is the Hardest uses what he buys until it falls apart, which can be several decades later. "If I want something, I look at it, decide what it is, but it will usually be the best product. I've got a pair of loafers that I still wear that I got in 1957," he disclosed during an interview in 2011.

And it's not just shoes, Pickens limits the size of the pieces on his closet in general. "People are always surprised that I don't have a closet full of suits," Pickens told Kiplinger. "I buy three suits every five or so years and only own 10 total. That's all I need."

3. Mitt Romney hunts for cheap flights

While you may know Mitt Romney mostly for being a former presidential candidate, he is also the co-founder of the private equity firm Bain Capital. Through his work as a management consultant and private equity investor, he has a high net worth — estimated at $230 million by Forbes when he ran for office back in 2012.

Not a stranger to the finer things in life, you would expect Romney to stick only with premium buys. While he has purchased six-figure Warmblood horses, he also loves finding bargains. According to The New York Times, he is obsessed with scoring cheap flights on JetBlue. A longtime adviser to Romney supported that claim by stating that, when asked to change a flight, Romney hesitated and responded, "Well, it's a cheap flight. It's a middle seat, but I got a great JetBlue rate."

4. Jack Bogle eats PB&J sandwiches for lunch

One of the few investors with better returns than Warren Buffett is John "Jack" Bogle, founder and retired CEO of the Vanguard Group. If the Vanguard name sounds familiar, it's most likely because you own one of its low-cost index funds in your retirement or investment account. And you wouldn't be alone: Just the Vanguard 500 Index Investor Shares fund [Nasdaq: VFINX] has $292.36 billion in assets as of February 2017!

As the pioneer of low-cost passively managed index funds, Bogle believes that the key to making it big in investments is to aggressively minimize fees. And he sticks by this belief in life as well. Many publications have recounted that his go-to lunch food is peanut butter and jelly sandwiches. He began bringing a PB&J sandwich and an apple when he first started Vanguard because he refused to pay the prices charged in his own cafeteria. And when he does have to order there, he sticks with a simple grilled cheese sandwich.

5. David Cheriton cuts his own hair

A common daydream of individual investors is to uncover the next Microsoft, Facebook, or Apple, become the first one to invest in that moneymaker, and be set for life. Stanford professor David Cheriton happens to be one of those investors that hit the jackpot when in 1998, he wrote a check for $100,000 to Google founders Larry Page and Sergey Brin. Today, that investment makes up the bulk of his estimated $4.2 billion net worth.

As of 2012, the "Billionaire Professor" had invested over $50 million across 17 startups and companies, and continues to invest. To this day, he continues to plunk down checks in several other companies, such as AISense and ThreatSTOP.

With such an investing pedigree, you would think that he wouldn't mind splurging a bit on a nice haircut once a month. For over three decades, Cheriton prefers to cut his hair himself. "It's not that I can't fathom a haircut," said Cheriton. "It's just easy to do myself, and it takes less time," he confessed to Forbes. Since the professor is adept at making good calls, probably nobody would argue with him on this one.

This article is from Damian Davila of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

How "Carried Interest" May Affect Our Taxes

Dan Rafter — Mon, 13 Mar 2017 10:30:10 +0000

A lot has happened since now-president Donald Trump and candidate Hillary Clinton debated on October 9 at Washington University in St. Louis. If you're like most taxpayers, you probably don't remember the candidates bantering about something called "carried interest."

During the debate, Trump was asked what steps he'd take to make sure that the wealthiest of U.S. taxpayers pay a fair share of taxes. Trump responded by saying that he'd eliminate carried interest. What Trump actually meant, though, was that he would change the way carried interest is taxed. Clinton, too, supported making this change. And so did former president Barack Obama.

You can be forgiven if you have no idea what carried interest is. That's because it's something that only benefits the general partners who manage private equity and hedge funds. And most of us can't invest in these private funds because it is so expensive to do so. Investors must usually pony up at least $250,000 to make an investment in one of these funds.

Carried interest is one way that the managers of these expensive hedge funds and private equity funds make a profit. But just because carried interest only benefits a select few, doesn't mean that it's not important to the U.S. economy. According to the Tax Foundation, if Congress taxed carried interest as ordinary income, it could cost the country 2,200 jobs. On the positive side, the Tax Foundation said that changing how carried interest is taxed would also generate about $15 billion during the next 10 years in the form of more taxes sent to the federal government.

What Is Carried Interest?

The best way to understand carried interest is to look at your own investing habits. Say you invest some money in a stock. You hold onto that stock for five years, and its value rises. You then sell the stock and earn a solid profit.

That profit is known as a capital gain, and you have to pay taxes on it. But the tax rate for a capital gain is lower than the tax rate for standard wages and income. In general, wages and salary income is taxed at a top rate of 39.6%. Capital gains, though, are taxed at a top rate of 23.8%.

You can then see that income made from capital gains is even more valuable than the income you make from your salary.

The same basic concept holds true for the managers of hedge and private equity funds. These managers are paid from fees generated by the fund. But they are also paid in carried interest, which is a share of the profits made by the fund. If the fund increases in value, the managers of the fund receive a financial boost in the form of carried interest.

Today, carried interest is taxed as capital gain income, not as salary or wage income. Obviously, this is a nice perk to fund managers, who have to pay less in taxes on carried interest.

How Should It Be Taxed?

During the campaign, Trump said that carried interest should be taxed the same way the country taxes ordinary income. Why? Because carried interest is really part of the salary of a fund manager. So why shouldn't it be taxed that way?

Others, though, make a different argument. The Tax Policy Center cites the common argument that fund managers should not be viewed as typical workers, but rather as entrepreneurs. Entrepreneurs are allowed to treat part of their financial returns as capital, and fund managers should be given the same tax break, according to this argument.

Will Congress ever change the way carried interest is taxed? That's probably not a priority right now. And you can bet that most U.S. taxpayers will remain unaware of what carried interest even is.

But the topic of carried interest might come up again whenever politicians, financial experts, and policymakers debate how the country can make its tax code fair to everyone.

This article is from Dan Rafter of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

5 Mental Habits That Make the Rich Richer

Ashley Eneriz — Thu, 29 Dec 2016 10:30:37 +0000

The mind is a powerful thing that should not be underestimated.

Many successful people believe that if you can change your thought patterns, you can also change your bank account size. Here are five mental tricks that rich people use to make even more money. Try adopting these thought patterns to see if they work at boosting your income.

1. They Think of Money as a Game

Rich people tend to think of money as a game, calculating where to spend and where to invest. Successful people love to win, which is why they are continually trying to do better, do more, learn more, and grow. The average earner gets in trouble when they become stagnant in their career and finances. If you drag yourself to work each day for just a paycheck to survive, then don't expect much more than that. (See also: How to Retire Rich)

2. They Set Big Goals

Rich people are not afraid of setting big, somewhat unrealistic goals because they know they can conquer them. Why are we afraid of setting big goals for ourselves? Is it because we don't believe they can happen? Is it because we know we will hit our financial expectation if we set it low enough?

Set big, scary goals for all areas of your life and look at them as a challenge. What if you don't meet those goals? There is always going to be a possibility of setting a huge goal that you never meet, but what if you try and get halfway there? When you set the bar high, you force yourself to grow as a person.

For example, you can set two different financial goals this next year. One goal is to save $1,000, and the other to save $20,000. There's a big difference in the two goals, and for some, the latter seems impossible. However, if you set the $20,000 savings goal and then tried your best to achieve it, you are going to surprise yourself. You might not hit the $20,000 mark, but you might hit the $10,000 or even $15,000 mark, which are all so much greater than the low-expectations goal of saving $1,000. Don't be afraid to set big goals for yourself. Shoot for the stars, not the dirt.

3. Fear Is Not an Option

One of the biggest emotions that keeps people from achieving great things is fear. Rich people block out fear and take smart risks. Do they fail? Yes! Every rich and successful person has a list of failures to their name, along with even more accomplishments and achievements. When you are trying to battle your fear, ask yourself, "What is the worst that can happen?" Many times, the worst isn't that bad at all.

4. They Deserve to Be Rich

The rich think that they deserve to be rich. They view themselves as worthy of having money. On the flip side, those stuck in middle class don't feel worthy to be rich. They don't view themselves as anyone important or of value.(See also: 5 "When You're Rich" Dream Buys That Aren't That Great)

This isn't just some lofty thought to have. Think of your current job position. Can you be replaced easily in your company? If you answered yes, then figure out how you can become a valuable asset to your boss. If your company doesn't want to lose you, they will pay more to keep you. This can apply to almost any position, so don't think you need to go back to school to get a better degree to make this true for you.

5. Money Is Their Friend

Wealthy individuals realize the power that money has, knowing that it can solve problems and make their lives better. Those who earn less view money as the enemy. They work so that they can pay bills, they pay bills so that they can live, and so on. The cycle never ends, and they are miserable.

Obviously, money is not the answer to happiness, but those who are smart with their money can leverage their paychecks to make their lives better.

These mental tricks aren't magic. Instead, they help rewire your brain to value yourself and your work — which in turn means you will earn more and spend your money better.

This article is from Ashley Eneriz of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

5 "When You're Rich" Dream Buys That Aren't That Great

Paul Michael — Wed, 19 Oct 2016 10:00:09 +0000

We all do it. We dream of the days when our money worries are over, and there's more cash in our bank account than gold in Fort Knox. And most of us know just what we're buying when those glory days happen.

But while some of those purchases seem incredible in the movies and glossy magazines, there's a lot more to them than meets the eye. Scratch the surface, and you'll see that there are better ways to spend your dough than these luxurious buys.

1. The Latest High-End Sports Car

Many of us dream of pulling up to our high school reunion in a car that would make a Rolls-Royce look like a hunk of junk. For instance, the most expensive sports car in the world is the Koenigsegg CCXR Trevita. It has an exterior that is finished with diamond dust, a 4.8-liter dual-supercharged V8 engine, and over 1,000 horsepower. It has a top speed of 245 mph, and goes from 0-60 in under three seconds. But, it's $4.8 million! And how often are you ever going to get this beast even close to top speed? (Chances are, you'll never get it out of first gear.)

Then let's factor in insurance, gas mileage, and the fact that you would be terrified to park it anywhere for fear of denting the exterior, or getting it stolen by professional car thieves who target these high-end cars. When people hit the jackpot and get a car like this, it usually ends up parked in a garage collecting dust, and driven around the block a few times a year. Save your money. (See also: Some Rich People Spend $350K to Park Their Cars)

2. A Yacht

A yacht is perhaps the ultimate status symbol of the rich. "I have a yacht… come take a ride with me." Well if you love the sea, and like entertaining while you're on top of the ocean waves, there are a few things to consider.

Owning a yacht is expensive. Like, really expensive. Most experts agree that you should expect to pay 10% of the yacht's purchase price every year to keep it running. So, if it's $10 million, expect to spend $1 million a year to keep it afloat. Your yacht needs fuel, insurance, dockage fees, maintenance and repairs, and of course, a crew. If you want to go and park your yacht at a prime event, like the Monaco Grand Prix, you can pay $100,000 for mooring costs during your five-day stay.

Most people who hit it rich and buy a yacht soon find the crippling operating costs too much to take, and end up selling the yacht at a loss a year or two later. If you want to do the whole, "I'm on a boat" thing, charter one when you're in the mood. It's way less expensive, and just as much fun.

3. Handfuls of Bling

Nothing says, "I'm rich" quite like showering yourself with all kinds of gold and jewelry. Necklaces, earrings, rings, and watches, all encrusted with more gems and precious metals than Jack Sparrow's treasure chest. Right now, the richest of the rich spend millions on watches and jewelry every year, with a Patek Philippe Ref 5016P coming in at $762,000! But as Ariel Adams writes on Forbes.com, these high-end watches come with lashings of irony. The biggest being they're not as accurate as your average cheap electronic quartz watch you can buy in any department store.

As for diamond jewelry, and in particular, diamond rings, it depreciates in value if you purchase it new (and when you're rich… you do). It's not a good investment. Some of this bling is so expensive, it's wiser to keep it in a safe at home than to ever take it out in public. It will also need to be insured. Solid gold can always be melted down and sold at market value, but all in all, you're better off buying bling with simulated diamonds, and keeping the watch purchase to under $1,000.

4. Your Own Private Jet

Flying for most of us is a real hassle. The long security lines, being crunched into a tiny seat, the delays and cancellations, lost luggage, and all those other annoyances add up to a real pain. Even when everything goes smoothly, it's still not a pleasant experience. So, a private jet would solve all that right? No security. No lost luggage. It's great!

Well, apart from the massive expense. Unless you are putting in some serious hours in the sky, it's a money sink. And even then, flying first class is cheaper. The cost of jet fuel alone makes a trip from LA to New York around $20,000, and that's not taking into account insurance, maintenance, hangar costs, and of course, the pilot's salary. Plus, you can be grounded often (it's known as AOG, or Aircraft On Ground) and will then have to take a charter or commercial flight while still paying the costs of private jet ownership.

You will have to abide by your pilot's schedule as well. A machine may be ready to go at any hour of the day or night, but people need time off. There's also the issue of maintenance. The less you use the jet, the bigger the chance that something will fail. And let's not forget the millions of dollars you pay up front to actually buy the jet. All in all, it's a quick way to throw a lot of your money down the toilet. Get yourself a TSA PreCheck, fly first class, and you'll save a ton of cash.

5. A Mansion

Imagine it. You pull up to the iron gates of your 15-bedroom home, are greeted by servants, and after walking around the beautiful grounds, you sit down to a meal prepared by your personal chef. It's great, but it's expensive.

Aside from shelling out the millions of dollars needed to buy the property, you will need a staff of trained professionals to take care of it. Back in 2006, Forbes interviewed a professional in the business, and she estimated that salaries alone would be $800,000 a year. That's easily over $1 million now. Then you have the other expenses, including huge utility bills, six-figure property taxes, and supplies for gardening, cleaning, and maintenance. And for what? A home so big you'll barely see most of the rooms in it anyway. These mega-mansions have bankrupted many rich people in the past, and unless you are setup to make a lot of money, they will quickly eat away at your pot of gold.

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This article is from Paul Michael of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

8 Clever Ways to Sample the Good Life

Mikey Rox — Thu, 22 Sep 2016 10:30:09 +0000

Want to live like a prince on a pauper's budget? Enjoy some of the finer things in life without spending a fortune with these hoity-toity hacks.

1. Make Friends With People in High Places

Oftentimes, getting ahead in life is all in whom you know. You've heard it before. Perhaps you've even experienced it — and if you have, good on you, because the outcome of such a situation is, by definition, a positive one.

As such, getting to "know" people is a solid practice to pick up. For instance, whenever I've moved to a new area I make it a point to introduce myself to the bartenders in my neighborhood when I visit a bar or restaurant. I go so far, in fact, to write down their names plus a few defining characteristics so I can remember them next time. After a while (and this never fails) we're on a first-name, "How's your day?" basis, which almost always turns into free drinks or other discounts regularly. I've saved hundreds, if not thousands, of dollars over the years by doing this, and I always repay that courtesy in my tips, as should you.

2. Crash Convention Receptions for Free Drinks

I hated attending conventions and making useless small talk with strangers when I worked in corporate America, but I rather enjoyed the open bar. Turns out I was doing it all wrong anyway — I didn't need that stinkin' job — according to Dr. Murray Grossan, a doctor who attends his fair share of conventions. He suggests crashing the party by grabbing a name tag at the entrance to look official so you can throw a few free ones back before anybody's the wiser.

3. Attend More Gallery Openings for Culture — And Booze

I enjoy art, and I'm an avid supporter of local artists as I've bought numerous pieces over the years to decorate my homes. Enjoying art also comes with perks, like attending gallery openings in your area while enjoying free snacks and wine. Get on the list by visiting a few of your home favorites and provide your email address in their guest book or another place where they cultivate visitors' information. You'll be in like Flynn for the next exhibition.

4. Rent a Luxury Vehicle

I would probably never rent a luxury vehicle myself — I'd be way too afraid that I'd inadvertently destroy it, and I don't feel the need to impress anybody with a flashy car. But if you're a luxury automobile super fan who balks at the idea of a luxury automobile payment every month, renting isn't a bad idea.

"Cars — brand-new — cost an average of $25,000 to $30,000, not including maintenance, fuel, and insurance, and then sit in your driveway 22 to 23 hours a day, typically," says Bradford Hines, personal finance expert and author of AutoProfitz, a book on how to make money buying and selling cars. "This amount of money easily is tripled for a high-end auto like an Audi, Mercedes, Porsche, etc. I use rental car service Turo, a peer-to-peer rental car company, to indulge in the occasional driving of a nice car to get it out of my system, cost effectively letting me not care about driving a 15-year-old Jetta the rest of the time. I recently rented a two-year-old Mercedes E-class for $125."

5. Order Apps for Dinner at the Fancy Restaurant

I enjoy dining out, and for me fancier is better for special occasions and the like. Sometimes though, I can't or won't let myself afford the high menu prices at some establishments. To settle on a compromise between my belly and back pocket, I often pop into higher-end eateries, grab a seat al fresco or at the bar, and dine on lesser-priced apps and salads to curb my hunger. By doing this, I'm able to enjoy the ambience and delicious cuisine without having to forage for my food the rest of the month. You also may even find a night at a multi-star joint that offers discounted specials, which is happening more and more as the restaurant wars continue to heat up.

6. Travel During a Location's Offseason

Frequent leisure travelers know that jet-setting during the offseason is where it's at. That's how I've gotten some of my most memorable vacations to places like Iceland and Costa Rica, and pet-insurance CEO Nick Braun is wise to that tactic, too.

"My wife and I like to take little two- and three-day trips together to have some fun and set the reset button," he admits. "Our favorite thing to do is book rooms at a fancy hotel, like Ritz Carlton or Four Seasons in the off season during the week. Rates are super low and you can pick any table at any restaurant while you're visiting because nobody else is there."

In addition, I highly recommend checking daily-deal sites like Groupon and LivingSocial for excellent vacation packages — that Costa Rica trip was a steal — as well as visiting the websites of the airlines you like to travel or the one based at your destination. They may have discounts that aren't publicized anywhere else.

7. Daily Deal Your Way to Finer Dining

If you want a heartier meal than appetizers at finer-dining establishments, daily deals also are good for shaving a significant amount off the bill.

"I like to cook food, and I avoid fast food and midlevel restaurants as well for health reasons and their typically uninspiring food," Hines says. "Pricier restaurants with incredible cuisine are something I like to do at least a few times a year to get to 'live.' What I do then is go to Groupon and LivingSocial monthly, look for steep discounts (my most recent was half off) at expensive restaurants, and I let the discount dictate which high-end restaurant I go to, which is fine with me since they all are a fun treat."

Restaurant.com is another great restaurant-savings resource, but by my own estimation it's slim pickins to find buzzed-about eateries on there that people are clamoring to get into. Still worth a look though.

8. Shop for Designer Clothes in Thrift Stores in Wealthier Areas

You may think all thrift shops are created equal, but they're not. Visit a secondhand store in an affluent area and you'll notice the difference. I've been to thrift stores that routinely stock designer brands like Ralph Lauren and Kate Spade, among others — you just have to know where to look.

Frugal-living expert Nedalee Thomas says, "I love expensive designer clothing and shoes but I don't like the price tags that go with it. For that reason I have made a habit of shopping in thrift stores located in wealthier areas. I've made many amazing finds, and the only thing better than knowing how good I look is knowing how little I paid."

Try it out for yourself and see what designers you can bring home at bargain-bin prices.

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This article is from Mikey Rox of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

7 Reasons You Shouldn't Invest Like Warren Buffett

Tim Lemke — Thu, 22 Sep 2016 09:00:05 +0000

Warren Buffett is, by most accounts, one of the most successful investors in history. The CEO of Berkshire Hathaway has amassed billions of dollars (more than $65 billion, at last count) through his savvy understanding of corporations' performance and the stock market.

But investing like Warren Buffett isn't easy, and an examination of Berkshire's holdings indicates that average investors might not necessarily benefit by following his every move.

Here's a look at some reasons to avoid investing like Warren Buffett.

1. Because You Can't

We can all try to invest like Warren Buffett, but at a certain point it will be clear that he can do things that us mere mortals can't. Buffett has access to information that most people wish they had. He's super wealthy, so he can buy shares in much larger quantities and take risks that we simply can't. He has mountains of cash, and the reputation to cut deals that we can't make. He has access to different types of investments (preferred stock, venture capital) that are often unavailable to non-wealthy people. It's possible to follow his general approach to investing, but at a certain point it's nearly impossible to do what he does.

2. His Goals Aren't the Same as Yours

The average person should be investing with long-term growth in mind, focused primarily on building a large retirement fund. An older investor might invest for income through dividend stocks and bonds. Berkshire Hathaway's investment motives, however, are far more complex. While it is focused on building wealth over the long-term, it also makes decisions to please its shareholders in the short-term. It makes acquisitions that don't make sense immediately, but have a broader strategic value.

3. He's Not Very Diversified

Berkshire Hathaway is a large and sprawling company with investments in a wide range of industries. But most of the company's holdings are still comprised of a handful of companies. More than half of the company's value is tied up in its stakes of Kraft, Coca-Cola, Wells Fargo, and IBM. Nearly 40% of Berkshire's portfolio stems from the consumer staples sector, while another 30% is tied up in financials. Meanwhile, the company has relatively small investments in major sectors including health care, energy, or telecommunications.

4. He Sometimes Invests With His Heart, Not His Head

Yes, even Warren Buffett is known to invest with his heart rather than his head. Not all of his investments are unemotional and purely driven by cold facts. Consider his affection for Coca-Cola. (He's known to drink several Cokes a day.) While it's true that Coca-Cola is one of the stock market's great success stories, it's actually underperformed the broader stock market over the last five years. Despite this, Buffett's Berkshire Hathaway has about 400 million shares of Coca-Cola, or 9% of the company.

5. He's Missed Out on Technology

When tech took off in the 1990s, Warren Buffett was not on board. No big investments in Microsoft, Apple, or Cisco. And he's also declined to invest in recent tech success stories including Alphabet (neé Google), Amazon, Netflix, or Facebook. He is a big investor in IBM, but bought shares late in the game and the company has had several years in a row of declining revenues.

Buffett has said he hasn't invested in tech because he doesn't understand it. While it's wise to avoid investing in something you don't understand, it also means he's missed out on some big gains over the years.

6. You're Better Off With Mutual Funds and ETFs

Warren Buffett is a great stock picker. His Berkshire Hathaway is a sprawling firm with investments in a wide range of companies in various industries. But for most people, it's foolish to try to invest in individual companies and expect to beat the broader stock market. It takes a lot of work to assemble a well-balanced portfolio if you're buying individual stocks. Mutual funds and exchange-traded funds offer the ability to invest in the broader stock market without worrying about share prices of individual companies.

7. He's Too U.S.-Centric

There's nothing wrong with betting on America and its companies. But a well-diversified portfolio should also have a good amount of international exposure, and Warren Buffett has tended to invest heavily in U.S.-based companies while ignoring the potential growth from overseas firms.

The suggested amount of exposure to international and emerging market stocks varies depending on the investor's age and goals. But Morningstar's Lifetime Allocation Indexes are one possible guide. These indexes, which offer a mix of investments appropriately balanced for a person's retirement age, have between 10% and 40% invested in non-U. S. stocks. Morningstar suggests holding more international stocks the further you are from retirement.

Warren Buffett hasn't eschewed international investing entirely, as Berkshire Hathaway does have holdings in European insurance companies and recently bought a German motorcycle accessory manufacturer. And some Berkshire holdings, including Coca-Cola and IBM, do have a significant overseas presence. But many of Berkshire's top holdings, including U.S. Bancorp, Wells Fargo, and Charter Communications, offer very little international exposure.

This article is from Tim Lemke of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

3 Smart Ways Young Millionaires Manage Their Money

Shannah Game — Fri, 09 Sep 2016 10:30:15 +0000

If you're lucky enough to wake up tomorrow as a young millionaire, it's time to learn a few tips to keep your wealth working for you. Here are three ways that financially-savvy millionaires under 40 manage their money wisely:

They Use Buckets

Good financial planners will tell you that it's not so much about the amount of money you have, but about how you spread that money out. It's a concept called diversification, and it doesn't just apply to your 401K mutual funds.

Millionaires under 40 understand can't rely on just one approach to save and grow their money. Instead, many young millionaires build an investment portfolio with the traditional securities, such as stocks and bonds, but also add in less-traditional investments like real estate, and other alternative investments.

Real estate is an excellent example of how young millionaires use buckets. They might hold a REIT (Real Estate Investment Trust) in their investment portfolio, and also have rental income streams that aren't tied to their job. Rental income provides an extra source of income that can be used for many smart purchases to grow even more wealth, like investing in a business or starting a small business to diversify further.

The best part of utilizing buckets is you're spreading your risk to avoid an all-out Bernie Madoff situation with your money. What young millionaires know is that if one bucket isn't performing, they can either reduce the exposure in that bucket or look to another bucket for growth or cash flow.

They Have a Cause

Millennials love a good cause. They're passionate and want to know that their money and time are going toward helping the greater good. Whether it's building an orphanage in Africa, rebuilding a community after a natural disaster, or marching in Washington to champion a cause, young millionaires believe in benefiting society.

There are many different options for socially responsible investing that young millionaires are incorporating into their financial plan. Most investment platforms now offer a selection of funds that either exclude certain companies, like oil and gas, or are inclusive of companies that focus on environmental or socially responsible products. Whatever your cause of choice is, there is a socially responsible investment to meet your needs.

They Are Curious

Most millionaires under 40 understand the importance of a financial adviser. When you get to the millionaire status, you probably also have a good lawyer and CPA on your "team." However, millionaires under 40 stay curious. They don't just rely on the advice of one person. They search for answers to money questions and read articles to find any other gems that might help them grow their net worth. They talk to friends and family about wealth as well.

It's a constant cycle that proves to be very successful with millionaires under 40. They understand that you need to spread your money around in different buckets to limit risk and maximize your growth potential. They become passionate about causes and want their money to make a difference in the world. At the end of the day, they stay restless and curious about finding more answers, asking more questions, and being ready to jump at opportunities.

Do you adhere to any of these — or other — precepts for managing your money?

This article is from Shannah Game of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

6 Ways More Money Does Truly Lead to More Problems

Dan Rafter — Thu, 17 Mar 2016 11:00:05 +0000

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.

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.

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.

1. Higher Taxes

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.

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.

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.

2. Lifestyle Creep

When you get a big raise, do you boost the amount of money you save each year in your 401K plan or IRA? Or do you buy a nicer car?

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.

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.

3. The Arrival of "Long-Lost" Relatives

There's a reason why lottery winners often joke about changing their phone numbers. They're worried that their relatives — especially long-lost ones with whom they've had little contact — will start hitting them up for money.

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.

4. What Does Your Spouse Really Love?

Getting married after you've become fabulously wealthy can be tricky. How will you know if your future spouse loves you or your money?

The stereotype of the gold-digging spouse might actually be a myth, at least according to this recent story in the Guardian, which argues that couples are more likely to get married when they have something in common 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.

5. You Might Need an Army of Advisers

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.

6. You're Even More of a Target

Think of how many scams fill your email box every morning — and you're not wealthy at all. Now imagine the target you'll become for fraudsters and scammers once you become rich.

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.

Are you burdened with too much money? Share some in comments!

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This article is from Dan Rafter of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread: