Lazy Man and Money

Odds and Ends

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Sometimes I have a clear idea of what I’m going to write and sometimes I just have to put up words and see where it goes. This is one of those later times.

It’s been raining for the last 24-36 here. It feels like we didn’t have a day on Monday. I’m still stuck on the Tom Brady return to New England. Every article in the news seems to be about the upcoming debt ceiling disaster. I updated our net worth last night and for the first time in forever, it went down. It feels like there are a billion reasons to be depressed right now…

… or not. Most of these things are temporary. The weather will change soon. Mac Jones outplayed Tom Brady. The debt ceiling will be figured out one way or the other within a couple of weeks.

Lastly, our net worth will likely rebound. It’s still 50% more than what I expected it would be several years ago. It’s hard to get stressed it going back one percent. Initially, I was a little stressed. The markets have been consistently going up for years now, so they have me trained to expect that to continue.

In other personal finance journey news, I finished doing our 2020 taxes. I’m terrible at getting taxes done. I hate it and wait until the last minute. This year I wanted to get them done earlier because it would help with stimulus money. However, it didn’t happen with all the dog-sitting business we’ve. It turns out that we have a big refund, the biggest we’ve ever had. Some people may say that we shouldn’t have given a big loan to the government for a long time, but our taxes tend to have a lot of moving pieces with my income varying throughout all my side hustles.

My wife continues to sell things through Ebay and Facebook Marketplace. We have had a lot of odds and ends over the years. Kids’ old clothes are a big seller too. It’s working to clean up the basement. We had a contractor by to price what it would cost to finish the basement. They are still writing up the estimate, but I suspect that the tax refund will just funnel to them. That would be a big win for us.

I looked at our cryptocurrency for the first time in a while. I’m up about 40% thanks to dollar-cost averaging. I haven’t put any new money into it for a little while as it feels like buying in at highs. If you don’t have any crypto it may not be a bad idea to put a small amount in, if you can afford it. My crypto holdings are about 0.00000001% of our net worth (I’m exaggerating a bit), so it’s no big deal if it crashes or even doubles overnight.

That’s the quick update for the day. I’ll have more on Thursday with an update for September.

The Sublime Investing Approach

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[I’ve been extremely busy with dog sitting and extended tax deadlines this week, so Sublime Investing is filling in with some additional content for me. This is a bit of a sales pitch… but with a free option that you might find useful. I haven’t evaluated their service, so don’t view this as an endorsement. For transparency sake, I don’t make any money if you decide to sign up or not.]

Simplicity Is The Ultimate Sophistication

We created Sublime Trading, a community mentoring professionals and business owners to build investment portfolios around their busy lifestyles without compromising on time and profit, as a byproduct of our own success in the financial markets.

Our long-term strategies have returned over 410% since January 2017 and in excess of 30% per annum over the last 10 years. These are the strategies we share with our Phoenix members, the name we have given to our premium community.

My co-founders, Kola Gbadamasi and Jonathan Morgan, and I came together in 2018 with our combined 35+ years of investing and tech experience to form Sublime Trading. We have since had 100s of professionals come through our doors, playing an integral role in helping them work towards reaching their desired wealth target before retirement by learning and implementing our long-term philosophy.

What we learned is that the fog and mysticism this industry is shrouded in dissipates and the route to success becomes clearer when we have a simple system to follow. We have done all the hard work and so our members can get to their end goal, confidently investing to make consistent returns to reach their desired wealth target before retirement as seamlessly as possible. We are helping our members reignite lost dreams which instead become realistic goals in achievable deadlines.

The Investor Journey

Here is what is interesting. The investor journey is highly predictable, and when the problems are predictable, the solutions are predictable as well.

Let’s start with the unsophisticated investor. Typically no education or process. Gambler. Regularly faced with blown accounts. Regularly buys into get-rich-quick schemes. Left with nothing more than broken dreams. Lacks accountability and often blames others.

Next up is the traditional investor. Smart, plays the long game, limited in their knowledge. Use methods that work but are slow, time-consuming, and not up-to-date. Never in complete control of their money. Forced to sit through stressful bear markets such as in 2000 and 2008, meaning years of no growth waiting for a recovery. A basic understanding and use of compound growth.

Finally, the Phoenix investor, the term we have created for our members who use proven old-school techniques, combined with cutting-edge tech and modern-day investment vehicles. Creates a portfolio that compounds significantly. Moves effortlessly between the natural cycles of the market. Complete control over their money. Takes compound growth to a whole new level.

Investors Fall Into 2 Groups

The only barometer of success is profit. Our experience tells us that people generally fall into 2 groups:

  1. The unsophisticated inventor that struggles for consistency and focus.
  2. The sophisticated investor that consistently compounds their profit. This group can be broken down further into the traditional investor and the Phoenix investor explained above.

Group A is characterized by the following 3 problems they commonly face:

  • Problem 1 – A Lack of financial literacy

They lack clarity in the specific long-term processes needed whilst correctly leveraging modern-day investment opportunities available for us as busy everyday people to build wealth between now and retirement.

  • Problem 2 – A challenge to build trust

This is primarily based on buying from unqualified and questionable educators with no REAL results and giving into get-rich-quick schemes. People must slow down, learn to be accountable for their choices and adopt proven long-term wealth creation strategies.

  • Problem 3 – A financial shortfall at retirement

A simple exercise people often fail to do is calculate what ROI their investments need to grow by annually to reach their desired lump sum by retirement. Thus, current savings and investments are not growing at a rate that will see them hit their desired wealth target by or before retirement due to problem 1, a lack of financial literacy.

The Consequence

It is a serious one. A high percentage of the population will not have enough to live on at retirement with no means to getting on track! Many will fall short of their individual wealth retirement goals. We believe many have the right intentions but do not know where to start or get easily derailed and end up down the rabbit hole of get-rich-quick schemes.

For example, official broker figures confirm that up to 95% of their client go on to blow their accounts, losing significant sums in the process. A sad reality that has a far-reaching impact not just on the individual but on society as a whole. It does not have to be like this. The good news is that with the right choices going forward, you can easily and quickly see a change in results.

The Sublime Trading Solution

We have discovered that the smoothest way to the financial control of one’s investments is the perfect blend of learning proven old-school investment techniques which utilise cutting-edge tech and broker solutions. We call this The Phoenix Methodology. The confusion and clutter is replaced with 3 extremely desirable payoffs!

  1. Rise up – Step above the crowd and elevate to the next level.

No more poor choices. Accountability starts here. In a murky education space, you will do right by yourself and your loved ones by turning your back on quack educators peddling get rich-quick-schemes. Instead, you will adopt the proven long-term principles of sound investing, allowing you to live a fulfilling life whilst simultaneously growing your hard-earned money.

  1. Invest savvy – Take the driver’s seat and be the boss of your own portfolio.

Complete control over your money resulting in the life-changing benefits of the power of compound growth. With control comes a clear plan of action. With a clear plan of action comes peace of mind on reaching, even exceeding, your desired wealth target by retirement.

  1. Break the financial illiteracy loop – Be the catalyst that leaves a legacy for generations to come.

‘Generational wealth’ and ‘financial literacy’ become more than buzzwords. You will adopt and execute proven investment principles that are right for us as everyday people. This knowledge is now part of your heritage that will be passed on from generation to generation, breaking the endless loop of financial illiteracy. This is your legacy!

The Phoenix Methodology

We understand that the savvy are led by a hunger for expert knowledge. For investors who rise up, invest smart, and break the loop, we have developed a structured mentoring programme that simultaneously streamlines learning and implementation, shortening the route to creating a portfolio that performs consistently well.

The methodology is based on the 5 Cs:

  • Clarity – Understand the exact processes. Everything else is noise.
  • Control – Have the discipline to see through a proven strategy.
  • Consistency – Have a POA. Keep it simple. Never deviate.
  • Composure – With knowledge comes confidence, resilience and peace of mind.
  • Compound – Recycle profits, add more money and repeat for significant long-term exponential growth.

We know from our own experiences that the journey from looking for credible mentors to starting to invest is tough and which the primary reason we created Sublime Trading. Investing becomes straightforward when you receive the right guidance.

We have structured Sublime Trading and the Phoenix methodology to meet your needs.

  • We train you on our proven process – Investment strategies that fit seamlessly around your lifestyle.

We have developed a tried and tested formula that gets members taking immediate advantage of the best investment opportunities the financial markets have to offer.

  • We guide you daily – Online training, weekly webinars and in-person training days.

A combination of online and offline support to speed up the learning and to get you implementing our proven strategies seamlessly and with confidence.

  • Our digital tools simplify the process – Bespoke charting analysis and execution tools.

Complete training and transparency on specialised, simple-to-learn ‘tools of the trade’ to quickly and clearly establish the very best assets for the portfolio.

  • We make sure you stay on track – Focus and accountability.

Camaraderie, collaboration and support from fellow professionals and business owners through our private like-minded community, spearheaded by The Sublime Trading team.

  • We find the assets for you – Scanned watchlist preparation

We record bi-weekly short videos showcasing the very best assets from the stock, commodity and currency markets for you to watch and keep an eye on, saving you £1000s in scanner subscription costs and hours looking for these opportunities yourself.

  • Just follow our investing signals – Daily portfolio guidance

We share the final assets that make it into our portfolio and their management from entry to exit, removing the guesswork and helping you create a portfolio that performs and compounds from the get-go.

Accelerate The Journey

Investing success has little to do with your background. I have a background in photography and TEFL, Kola in media and property and Jonathan is a software engineer. We have never worked in the city or for an institution. We do not have degrees related to finance or economics. None of that matters.

What counts is being in the right position financially to start (NEWS FLASH: yes you need a decent size starting pot to invest!), learning the specific investment techniques that are right for us as busy everyday people (financial literacy!) and resilience in abundance to see this through to the very end.

Good investing is simple but not easy. The best techniques are simple to learn but growing wealth requires patience which is why so many fall short. The internet promised riches yesterday and people repeatedly fall for the gimmicks. Instead, do this properly, believe in yourself that you can do this, embrace compound growth and you will be handsomely rewarded with a generational changing portfolio.

So regardless of your background, we have combined the elements above to create a supportive yet challenging, high-performance environment for investors that accelerates their journey to rising up, investing savvy and ultimately breaking the financial illiteracy loop.

Our Mission

I came together with Kola and Jonathan to form Sublime Trading with a single mission in mind: To lead the revolution in simplifying good financial literacy, developing smart investors that use a repeatable system to reach their desired wealth target before retirement.

Our Vision

We have grand plans. We must think big else what is the point. And as a collective, we are powerful, people tend to forget that, as we live in a world where our media channels actively promote division and separation.

Our vision for Sublime Trading is to help our members create long-term financial wealth, which they can leave as their legacies made through a transfer of knowledge, wealth and power away from the institutions into the hands of the savvy everyday person.

How The Training Works

We believe that it is the role of every budding investor to lead the way in breaking the mould of generational financial illiteracy replacing it with a new cycle of expert knowledge and generational wealth. The training is structured for you to achieve that.

Start Your Journey With Us – Complete The Scorecard

If you are reading this, planning your financial future is no doubt a priority. To help you along your journey to wealth success, we have created this scorecard. We have designed it to score you in the key areas of savings, investing, lifestyle and mindset.

This scorecard is made up of 30 mostly yes/no questions and will take you less than 5 minutes to complete. The scorecard will then produce a detailed report telling you exactly where you are on your journey and the change you will need to consider adopting to hit your wealth retirement goals.

On completion, we also have an excellent FREE gift, the Launchpad Investor Starter Kit, priced at $409. The kit includes a ton of goodies including a video syllabus that breaks down financial literacy for us as everyday people, a wealth calculator that will work out the ROI you need to be achieving annually to hit your wealth goals, bespoke charting tools, a PDF that breaks down our methodology in detail and so much more.

This is the perfect kit to start taking your investing to the next level and to understand the opportunities the modern-day investment space has to offer. Awareness is key.

The question then remains, how will you break the financial illiteracy loop and make a positive impact in the world?

Zaheer Anwari – Co-founder of Sublime Trading

Kids and the Value of a Dollar

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kids-value-dollar

For some people, money stuff comes naturally. Others may have to work on being good with money. I’m lucky in that I learned the value of a dollar as a kid. I don’t know if I’ve consciously tried to teach my kids the value of the dollar. I suspect that, like most kids, they get much of their money sense from observing me.

When the kids were around 4, there were times that I had to take them on shopping errands. Grocery shopping for a kid that age isn’t too bad (the cart rides are fun), but not always great. Fortunately, right near my Aldi there was a Dollar Tree. Aldi never has diet cola, so I need to stop into the Dollar Tree almost every time I go.

Dollar Tree is tremendous for young kids. I would tell my kids they can get any item in the store. It’s great to set them loose exploring. When we first started they may not have made the full connection that everything was the same price of one dollar. However, as they got older they learned how it worked. They also realized that if they chose Pokemon cards, they’d only get 3. The puzzles were cheap 24 pieces, a sharp contrast from the Melissa and Doug quality ones they had at home. Now, at ages 7 and 9 they are starting to have problems finding something that they want for a dollar.

The Value of a Thrift Store Dollar

Recently, I was reminded that often the cost of a toy doesn’t reflect the true value to a kid. My son had his 9th birthday recently. One of the items on his list was a Nintendo Switch Lite with a Pokemon Sword game. That may seem normal, but we have a Nintendo Switch with Pokemon Shield (essentially the same game). His reason for wanting the new game system and the new game was so he could trade a few Pokemon that you can only get in one version of the game. At a cost of $250, that’s an expensive few digital characters.

Needless to say, this item on his wishlist went unfulfilled. We did pick up Pokemon Snap instead and he has a new game that’s teaching some photography skills. (At least that’s what I’m telling myself.)

By random luck, I happened to come across the opposite of the Nintendo Switch Lite request. I was at the local Navy Base and I popped into the thrift store to see if there was anything good. I ended up getting a couple of shirts for a dollar. I also saw an Apples to Apples game. My kids have played this in school and loved it. I picked it up and it looked brand new. With the price tag of one dollar, it was an easy decision.

Of all the gifts he got, the Apples to Apples game was his favorite. We’ve played it for at least a half-hour each night before bed.

As an adult, it seems easy for a dollar to be worth, well, a dollar. You don’t expect to get a Ferrari for a dollar. Pricing competition usually means that you get a value similar to a dollar in one way or another. However, as a kid, the value of a dollar can be an afternoon of fun or many nights of laughs.

Finding Purpose in Retirement

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Retirement means different things to different people. There’s a traditional view of sipping Mai Tais on the beach. I know a few retired people and I don’t know anyone who does that. I think it gets more boring. They are more likely to take their surfboard into the water at the beach.

I’ve been thinking of retirement a lot lately. I’m not sure if I believe in that traditional retirement of not working completely. When I tried to define “retirement” in 2007, I came up with five things that I would want in my retirement job:

  • Ability to work on projects that I enjoy
  • Flexibility to working as much (or as little) as I want to
  • Flexibility to when I want to
  • Flexibility to work from wherever I want to
  • Freedom from having to take orders (which I might disagree with) from others

The article that I wrote s a little rough around the edges, but the comments are exceptional for 2007. There are some bloggers who are still popular today (Early Retirement Extreme) as well as Brip Blap giving a great definition of “Work Optional”, something that’s seen some popularity in more recent “retirement” discussions. This is one reason why I love when people leave comments on blog posts. It’s a time capsule treasure.

I still agree with all those aspects of the ideal retirement job, or what is often called a “second act” today. For me blogging fits the mold. Unfortunately, blogging got a lot more difficult and the income has gotten a lot worse. It’s trending in the hobby category for me, which is fine as our financial situation is very good now.

While all those things are still great, they don’t do much to help with one thing:

Finding Purpose in Retirement

Even though I have these retirement qualities to my work now, it would be a stretch to say that I’m retired. On a basic level, I do customer service work for someone else, so that defeats almost all the bullet points above. Fortunately, there’s not a tremendous need for customer service much of the time. I still do blogging obviously. I also do dog sitting, which matches some of the above retirement qualities.

Unfortunately, I don’t find a lot of purpose in any of these things. Customer service is famously known as a thankless job. That said, I get so many polite people who say “thank you”, far more than the rude people. Dog sitting has some of the retirement job qualities, but not all of them. Overall, most people just want their dog back healthy with some good pictures that he/she had fun. Personal finance blogging has become a crowded field and producing more financial content for the world to consume seems, well, entirely unnecessary.

The first two (customer service and dog sitting) are transactional fulfilling someone’s needs. I don’t remember most dogs or customers from three years ago.

Blogging seems to have more purpose. For example, by digging up that old article from 2007, I feel like I uncovered a tiny piece of history. Like dogs or customer service requests, I do sometimes forget blog posts from a few years ago, but they are still there.

I’ve been thinking about how to do things that have more staying power than a transaction. I am working on starting another blog. I would like to self-publish a couple of eBooks. I don’t know if the eBooks will make any money as that’s a crowded area as well. However, I would be able to say, “This is something I created. Someone will be able to read the thoughts I had while on this Earth (and not with all the typos and poor grammar like my blog posts).” It doesn’t matter much to me that most people may not want to read those thoughts. It would be nice if they did, but it’s enough for me to know that they could.

I’m at a point in my life where I’m trying to put all these pieces of the puzzle together. There are those three jobs. There’s landlording our three rental properties that are becoming more and more difficult. In reality, our patience for dealing with them is running low. When I’m not doing those, I’m doing the basic errands of laundry, dishes, grocery shopping, cooking, etc. (some cleaning and yard work are outsourced). There’s also the kids and their activities.

I don’t know when I’ll reach a point of true retirement. Maybe we’ll get property managers or sell the properties. The kids will go off to college or live on their own someday. Maybe we’ll take fewer dogs as our mortgages get paid off. Even though, I can’t see a clear path to true retirement, it is helpful for me to think about what I’m going to do that’s going to have a purpose or leave some legacy. (Some may say raising decent human beings counts, but the human beings have to be decent and the jury isn’t close to deciding that one yet – LOL.)

So what do you think? How do you think you’ll find purpose in retirement? Or have you already found it?

Fixing My Biggest Money Mistake

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Last week, I wrote about My Biggest Money Mistake. It was not a money mistake that most people can identify with. I over-optimized and put too much into retirement accounts. It’s great if we are looking to maximize our net worth. It’s very poor if the plan is to use the money to pay expenses now – 15 years before traditional retirement age. As I mentioned in my previous article, this is a “good problem” to have. We’ve been extremely lucky that most of our personal finance plans have worked out well.

Overall, around 90% of our money is in real estate equity or a retirement account. Half of the real estate equity is our primary residence. The other half is in rental properties. We’re a few years away from owning our primary residence which will largely eliminate our biggest expense. The mortgages on the rental properties will be paid off in a few years as well, giving us a supplemental income. The rental property equity simply looks like a big number on paper a screen.

Getting the money out of the rental properties is straightforward. We could sell one to pay off the other two and get a smaller income stream now. We could sell off all three and invest the money in an index fund. If we did that, we may get around $10,000 a year in dividends. However, if we stay the course, I estimate we’ll get $30,000 a year in rents after all expenses once the mortgages are paid off. I don’t like the idea of selling the properties at this time.

Getting the money out of the retirement accounts early is a little more complicated. Actually, it can be easy if you are okay with paying penalties. However, the whole reason why I put the money in a retirement account was to maximize the growth and the amount available after taxes.

When we look at retirement accounts there are two basic types – those that are invested with pre-tax money and those that are invested with after-tax money. Pre-tax retirement accounts include 401ks, traditional IRAs, and government TSP plans. After-tax retirement accounts include things like Roth IRAs, Roth 401ks, and Roth TSP plans. With the after-tax Roth accounts, you’ve already paid tax, so you don’t need to pay tax again. For this reason, the only thing we need to think about with Roth IRAs is being old enough (age 59.5) that we don’t get penalized.

However, with the pre-tax retirement accounts, we have to pay regular income taxes on all the money we take out. Right now, that actually isn’t too bad. If we earn up to $80,250, we’ll pay only about 12% of taxes. If we earn less than $171,050 we’ll be in the 22% tax bracket. If we earn less than $326,600 we’ll be in the 24% bracket. That’s a ton of income, so I it’s not worth look at the 32% tax on incomes over $326,601. This almost guarantees that our effective tax rate would be less than 20%. (If you didn’t know, you pay all the taxes as you move up in the bracket, landing in a high tax bracket doesn’t mean all your income is suddenly taxed at that number.)

It’s hard to imagine we’d make over $326,000 in retirement, but it isn’t impossible. My wife may get a $60,000 pension that’s indexed for inflation. We might have income of $45,000 from rental properties (which will naturally adjust for inflation). We have a few other income sources (blogging, my dog sitting, etc.) that could add up to around another $50,000. My wife may continue to work that brings home an income. That would be around $150,000 before we account for withdrawing money from the IRAs. There’s not much room left in the 22% bracket, but still plenty of room in the 24% bracket.

So we wouldn’t pay too much more than the expected 20% in taxes except for two possible scenarios:

1. The brackets get lowered over time. I think there’s a strong possibility that this happens. We can imagine that at some point we want to fix the national debt and one way to do that is to raise taxes by lowering the bracket thresholds. If the $326,000 bracket gets dropped to $200,000, we might risk running into the 32% bracket easier. Alternatively, the tax rate may go up, which would conceivably be the same thing.

2. At age 70-something, we might have to pay Required Minimum Distributions (RMDs). I write “70-something” because the RMD age has changed recently and there’s legislation for it to potentially change again. In any likely scenario we’d be forced to take a percentage of our nest egg as regular income at age 70 or later. Since my wife and I are 45 years old, we may have 25 years of compound interest. With that much time, our pre-tax retirement accounts could be a big number, leading to taking a big distribution in our 70s. Social Security will still exist (in some form) and some simulations say that will be another $60,000 of income.

Some combination of #1 and #2 will likely happen. It’s always difficult to plan for “what ifs” in the future, but it never hurts to be prepared.

I’ve been writing a ton about taxes, but having access to money earlier rather than waiting until age 59.5 would be ideal. Fortunately, it’s possible to get access to the money early, while also potentially limiting high tax brackets in the future.

There are two ways we can access our IRAs early:

1. We can take Substantially Equal Periodic Payment (SEPP). That means that we commit to taking an amount of money out of our IRAs as determined by an IRS formula. We’d have to continue it until age 59.5 or face big penalties… with interest. It’s not a bad plan, but I don’t like to have to withdraw money based on what an IRS formula says we should. I also don’t like to be locked into 10-15 year decisions.

2. We can use a Roth IRA conversion ladder to move money from our pre-tax IRA to a Roth IRA. We’ll have to pay the taxes on the income immediately, but that sets up two very good scenarios. First, we can withdraw the money, tax-free, after 5 years. Second, we can let the money grow while not having to worry about taxes. The first scenario would give us access to money, penalty-free. The second scenario gives us the flexibility to decide not to take the money if we don’t need it.

I’m 90% sure that the Roth IRA conversion is the way to go. Getting access to money tax-free in 5 years is about as good as we could hope for.

There’s one small problem with a Roth IRA conversion. Paying taxes up-front can be tough. If we were to convert $50,000, we’d have to pay $10,000 in taxes (and we can’t use that $50,000). When you are trying to get through 5 years because you don’t have access to that retirement money, it’s not easy to come up with $10,000. That’s when I had an idea. Since you can take out Roth IRA contributions at any time, we could use our previous Roth IRA contributions to pay off the taxes on our IRAs. Under normal circumstances, you won’t want to pull those Roth IRA contributions out. However, pulling $10,000 out means putting $50,000 in, so I’m sure the personal finance experts won’t mind.

At the end of the day, all this essentially guarantees us paying around a low 20-ish% marginal tax rate, while giving us access to money in five years. Locking in that tax rate now is valuable, because I feel that taxes will rise in the future. Of course, I’ve felt this way for a long time and it doesn’t happen. Politicians don’t like the idea of raising taxes as it’s unpopular with almost all voters. At some point, I think we’ll simply need to do it.