What financial advice would you give to a young person?

[NameName]

My big concerns are real estate, saving and vehicles.

 

For saving, what type would you reccomend? Bitcoin? Investment? Gold or silver? Any other advice?

 

For real estate, do you reccomend a mortgage, how many years, and what to avoid? Any other advice?

 

For vehicles, is it unwise to buy brand new since it losing so much value? Should you avoid loans for vehicles?

 

Basically, what do you wish you knew financially at 18 that you know now?

[MRW]

I really like this topic idea. I'm only 18, so I don't have much to contribute. Regardless, this is something that I've thought about a lot. Adults, please share your insight. 

[shirgall]

Never borrow money to do anything that does not pay a return (the return can be non-monetary but should be long-term), even to "build credit".

[MRW]

Never borrow money to do anything that does not pay a return (the return can be non-monetary but should be long-term), even to "build credit".

 

I recently got a credit card. What if there is no interest on the repayment?

[NameName]

Never borrow money to do anything that does not pay a return (the return can be non-monetary but should be long-term), even to "build credit".

 

How do you purchase property without credit?

[st434u]

For saving, what type would you reccomend? Bitcoin? Investment? Gold or silver? Any other advice?

https://board.freedomainradio.com/topic/39445-401k-dillema/  

For real estate, do you reccomend a mortgage, how many years, and what to avoid? Any other advice?

 Unless you can get a fixed rate, 30-year mortgage at a very low rate, just rent. You'll be saving yourself money for when the real estate bubble pops. This also has the added benefit of keeping you mobile should better opportunities or necessity arise to move somewhere else. 

For vehicles, is it unwise to buy brand new since it losing so much value? Should you avoid loans for vehicles?

Just buy the cheapest thing that will fit your needs. This will vary upon what your needs are. If you also need to make an impression with your vehicle (to girls, potential business partners, etc), then that's also up to you to consider. Whether to borrow for it or not depends on the rate you're getting, but if the only way you can get an expensive vehicle is by borrowing for it, I would make pretty darn sure that the benefits outweigh the costs. Consider how much money you'd be saving by buying a used car versus brand new, but also consider the potential risks if the car suddenly needs a lot of maintenance or totally breaks down. If you don't know anything about cars, and don't have anyone you can trust to help you out here, I would consider buying brand new to prevent headaches. But it also depends on what the price difference is. Where I live, there is little difference, so it makes no sense to buy a used car unless you're buying it from a friend or something. 

Basically, what do you wish you knew financially at 18 that you know now?

Make money now, invest it wisely, and it will pay off big time when you're older. Forget about formal education, it's a waste of time and money. Learn your skills while working. Whether that is working for a wage, as an unpaid intern, or in your own business. You can always research and study things in your free time. Professors can be useful, but you don't need someone to tell you all the subjects you need to learn, in what order, in what time, and in what way.

[NameName]

https://board.freedomainradio.com/topic/39445-401k-dillema/  

 Unless you can get a fixed rate, 30-year mortgage at a very low rate, just rent. You'll be saving yourself money for when the real estate bubble pops. This also has the added benefit of keeping you mobile should better opportunities or necessity arise to move somewhere else. 

Just buy the cheapest thing that will fit your needs. This will vary upon what your needs are. If you also need to make an impression with your vehicle (to girls, potential business partners, etc), then that's also up to you to consider. Whether to borrow for it or not depends on the rate you're getting, but if the only way you can get an expensive vehicle is by borrowing for it, I would make pretty darn sure that the benefits outweigh the costs. Consider how much money you'd be saving by buying a used car versus brand new, but also consider the potential risks if the car suddenly needs a lot of maintenance or totally breaks down. If you don't know anything about cars, and don't have anyone you can trust to help you out here, I would consider buying brand new to prevent headaches. But it also depends on what the price difference is. Where I live, there is little difference, so it makes no sense to buy a used car unless you're buying it from a friend or something. 

Make money now, invest it wisely, and it will pay off big time when you're older. Forget about formal education, it's a waste of time and money. Learn your skills while working. Whether that is working for a wage, as an unpaid intern, or in your own business. You can always research and study things in your free time. Professors can be useful, but you don't need someone to tell you all the subjects you need to learn, in what order, in what time, and in what way.

 

Excellent advice, much appreciated.

 

With renting, isn't that bad since I will never be building up an investment on property?

 

Also, I have no idea how to invest. Like do you go on a computer and send money to a company?

 

I am currently enrolled in a two year program and it seems like it's more about getting my actual certificate than actually learning. I am not learning as much and as fast as I want and everyone here is just drinking and stuff. I'm about a month in and not sure whether I should drop out, because I am learning even if it's slow and not as much as I wish. Or just finish the course and graduate. I can also do another two years after this and get my degree, one year would be paid co-op and my parents keep pushing me to do this. So I am not really sure what option I want to do.

 

Awesome advice, thanks!

[shirgall]

Buying property is fine as long as it has a return that's reasonable... that is, a good place that's close to good work and meets your comfort needs... but don't buy a place just because. Paying off your credit card every month is fine, but watch out for the cards that have annual fees for no reason and so on.

 

The thing about renting is yes, you don't build equity, but you can also walk away a great deal more easily and you are not responsible for repairs and other upkeep that can totally blow you out of the water as an owner.

 

I own a house in the middle of nowhere make in the late 1970s with well water and a drain field septic system. Hidden expenses come out of nowhere all the time. This is not a situation for someone just getting started with finances.

 

Here's another piece of advice: build up savings on the order of six months worth of pay as soon as you can. Fairly liquid savings at that. This way you have leg room to make changes in your life. NEVER live check to check if you can help it.

[RyanT]

Aaron Clarey on buying car for younger guys, so true

 

 

He also does some really great videos (and has written a few books), advocating young guys get into the minimalist lifestyle, well worth checking out.  

[st434u]

Excellent advice, much appreciated.

You're welcome. 

With renting, isn't that bad since I will never be building up an investment on property?

Not necessarily. If the value of the real estate will be going down, that means you open yourself up to the possibility of owing more money for your property than it's worth, even after putting a down payment and paying your mortgage for years. If you can get a mortgage that's lower than what your rent would be, this may make some sense (though not necessarily because rent can go down based on market conditions, and your mortgage can only go down due to inflation). This idea that renting is a waste of money really only applies if not only mortgages rates are low (and rents are high), but also the value of real estate is appropriate and will either stay the same in the future or go up (and the price of rents will also either stay the same or go up). If you expect it to go down significantly, and/or mortgage rates are high (or unpredictable, such as with adjustable-rate), then it's buying on credit that's a waste of money, and renting is the money saving proposition. Because mostly all State entities worldwide have given all sorts of incentives for people to take mortgages and buy plenty of real estate, the price of real estate worldwide is highly inflated. I don't know where in particular you live, or where you want to buy real estate in, but this phenomenon applies almost universally, to different extents. 

Also, I have no idea how to invest. Like do you go on a computer and send money to a company?

There are many ways to invest. Unfortunately in this day and age, with global record-high inflation rates, and global interest rates at record lows, you can't simply rely on savings like you could do through most of human history. You have to invest, otherwise your savings leak value by the day. So you either have to learn how to invest, or find someone you can trust who can invest for you. If you want, send me a PM and I can give you some ideas. 

I am currently enrolled in a two year program and it seems like it's more about getting my actual certificate than actually learning. I am not learning as much and as fast as I want and everyone here is just drinking and stuff. I'm about a month in and not sure whether I should drop out, because I am learning even if it's slow and not as much as I wish. Or just finish the course and graduate. I can also do another two years after this and get my degree, one year would be paid co-op and my parents keep pushing me to do this. So I am not really sure what option I want to do.

Well it's up to you, but in my view, a certificate or degree is just a piece of paper with your name on it. It has very little if any real value in the market. Very large companies with inefficient hiring programs, or smaller companies with clueless owners who have no idea how to hire, will rely on these papers to make a decision to hire you or not. But this is generally not the type of work you want. A good hiring program makes for a good work environment, good pay and an overall good job. And under those circumstances, nobody is going to care about what papers you have (unless for legal reasons). They will care about your skills, knowledge, work ethics, experience, etc.

 

And of course, if you want to start your own business, then you don't need any degrees. (except in some specific areas where the State requires it)

[B1-66ER]

Regarding real estate as investment in the US...Go for it if you have the capital! Do not go into debt to obtain land unless you're 100% certain you can pay it back and are allowed to pay it back early. Many banks won't allow you to pay off your death-pledge early without paying penalties, and in some cases they can be pretty significant. Also be aware, in the US, the state owns your land, you only rent it. If you do not pay your property taxes etc, the state can and will repossess your land and sell it back to the bank for dirt cheap. Unless you can obtain allodial title, which is quite rare. Allodial title is absolute ownership of property without a debt or lien attached. Though the state would likely just use force anyway to steal your land, it might be a moot point, unfortunately.

 

Considering the burgeoning market of legalized marijuana in Colorado and Washington, you may want to look into recent start-ups with a sound business model. The potential for entrepreneurs and investors is nearly limitless considering most mainstream banks won't go near the marijuana business.

 

Other than that the future of centrally planned economics looks pretty fucking grim. I don't recommend anyone invest time, energy and money in the global pyramid scheme. It's a paper tiger, a straw house, and the fucking wolf is on his way. Investing in physical wealth is never a bad option IMO, though others (usually invested in the system) will tell you its foolish and short-sighted. Invest in gold, silver and especially lead.

[tasmlab]

I'd recommend renting and not consider buying before wife and kids come along.  Even then I'm not sure.  Nothing to do with investment or equity, but young people should value mobility, whether they need to move in town or out of town for a job, find the love of their life elsewhere, or simply get a girlfriend they want to move in with.

 

As an investment, houses go down in value too.  I lost $140,000 last year on the house we owned, not counting having to buy a roof, a hot water heater and having it painted, about $25,000 in expenses just with those three items.  We also decided to move and it took us over 2 years to sell the home, massively stalling our plans.  After 14 years of home ownership, we're happy renters now.

 

Working and saving are smart things to do, but don't forget to have some fun.  You are only young once.

[Ace]

Renting vs. buying a home really depends on the market you're in.  I'm in Canada and I wouldn't even think about buying any kind of property right now the market is so unbelievably overvalued.  I get fliers in the mail all the time for 1000 sq. foot condos for $325k.  But at the same time a 1 bedroom apartment is $1200/month.  But renting keeps you flexible.  If some opportunity comes up you can pack up and go without needing to worry about selling a place.  There are a lot of costs that go along with home ownership.  If someone is married and has children, then home ownership is a lifestyle thing.  But the investment aspect of home ownership doesn't even exist right now, at least where I am.  I think there are quite a few areas in the US which fell a lot and are still good value.  If you lived in such a market and could get a long-term fixed rate mortgage, it might be worth exploring.  But there's a long list of pros and cons to renting vs. buying, you need to go through it and decide for yourself.

 

Honestly, I'd just focus on working hard and developing good economic opportunities for yourself.  Don't get into the habit of spending frivolously on stuff you don't need, but all these guides to getting rich by being a miser when you're young and saving it all, like the other poster said you gotta have fun too.  Unless you have a business plan, there isn't even anything to invest in these days.  The stock market is a bubble and any kind of safe investment pays nothing.

 

When it comes to vehicles, it depends again.  From a financial standpoint, buying a new vehicle is not smart.  I bought a new car in 2011 for $28 000 - then a year and a half later I got a company car from my job.  It had 12 000km on it and I got $18500 when I sold it.  So basically $10k disappeared.  Should have bought used.  Financing a vehicle isn't a bad idea unless you're using that credit to stretch what you'd be willing to pay if you had to come up with the cash or use a bank loan with a higher rate.  But it's insane these days you can get 7 year financing at 0% with nothing down from a lot of companies.  Thanks to the government and quantitative easing.  But that becomes dangerous - when normally you'd say "hey my budget for a car is $20 000" or something like that, when you look at the cost of a vehicle as bi-weekly payments over 84 months, suddenly a $35 000 car looks a lot more affordable. 

[helot]

The issue surrounding retirement is how to satisfy your needs.  So a young person needs to be educated about what needs are.  Food, shelter, clothing,  and sanitation are about all there is.  Now, as an American that has been indoctrinated, you might think that wifi and starbucks are needs, but when it comes down to base survival, you can probably get away with only the basics.

 

Now, the first thing a young person needs to understand is that proper nutrition and exercise are the most effective ways to maintain health.  What does this have to do with anything?  Well healthcare is something you will need to consider when retiring, and you don't want to be stuck with the state offered plans or even the market version of prescription medications and surgery.  You want to care for your body all through your life and know that it is the best defense against illness.

 

No, you cannot rub herbs on a broken leg, so you will want to consider some kind of contingency for emergency services and dental visits, but I assure you, the most cost effective healthcare plan is to never go to the doctor, and this is accomplished through eating well and exercising properly.  Don't forget to brush your teeth.

 

Now, the other issue is shelter.  This can be difficult because young people are not always ready or able to settle into one spot.  Idelly you would purchase property and sit on it until it is paid off.  Retirement means not having a mortgage.

 

You will also want to consider some form of alternative energy on that property.  Energy will only become increasingly more expensive, so having a way to generate your own will lessen the burden of hard cash you will need to have under your mattress for the day you get out of the workforce.

 

This translates into food as well.  Grow a garden.  Have some chickens.  Learn that stuff or you will be paying more for food when you retire than food costs now.

 

As for vehicles, buy an old GMC vehicle or VW bug.  Why?  Because there are tons of parts, they are easy to work on, and they get the job done.  You can have flash and expense, or you can have practical transportation for the long run.  It really is your choice.

 

There are dozens more ways to prepare for retirement, but the basic question you have to ask yourself is this.  Do you want to just amass fiat or precious metals in the hope that your stash will outlive you, or are you going to take the necessary steps to build a future where you do not need massive amounts of cash to survive and live comfortably.

 

Think about what you are willing to sacrifice, and know that the money can disappear in an instant, but gardens and VW beetles will be around for a very very long time.

[Josh Takacs]

The best thing to do is save up for at least 20% down for your first home you can afford. This will keep your monthly payments low. Make sure it is at least a 3 bed 2 bath home. You can rent out the other to rooms and for cash or bitcion if you pay your cards right your monthly living expense can turn into a monthly profit. Take half of the money and use it for your normal life (food & gas) and save the other half (gold, silver, bitcion). If you do this you will be off to a great head start.