Lazy Man and Money

I Bought (a lot of) a Company!

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Have you ever bought a company?

I know a few people who have a bought a money-making blog. That’s rare. It’s also possible to buy some real estate and create an investment property company. That’s mostly starting a company though.

Other than those cases, I don’t see people buying companies often. However, most everyone I know has bought parts of many companies by investing in stocks or mutual funds. Often they end up owning a millionth (or even less) of a single company.

Bought a CompanyLast month, I did something that was in the middle of both buying company experiences. I bought a double-digit stake in a company. It’s a small enough stake that I’m not expected to actively manage anything in the company. It’s a large enough stake that my suggestions will be heard and given a fair shake.

It’s not a public company. I’d be shocked if you have heard of it. The business is so extremely boring that I won’t describe it here for fear that you’d simply click away and never come back.

To make things easier, I’ll call the company WidgetTech.

WidgetTech has a lot going for it. Its customers need the service it provides. WidgetTech makes a profit. Just as importantly (to me), it has a profit sharing program.

I’m not going to share specific numbers such as how much I invested and what the return is. The WidgetTech owners know and read this blog. I presume they are a private company for a reason, and I respect that.

Instead, I will say that it is somewhat similar to one of our investment properties that we bought in 2013. We got it at a bargain price and it’s appreciated 60% since then. While we have currently a mortgage on it, in a few years, the rent minus the expenses (maintenance, property taxes, insurance, association fee, etc.) will earn us decent monthly check.

I like the WidgetTech investment more than the investment property for a few reasons:

  • Better Returns

    The amount of income that I’m making for the amount invested is better. In other words, the yield is better. This is usually the most important thing for investors. Making more money while investing less is a win, but it is elusive.

  • No Work

    Being a landlord can be a lot of work at times. Usually it’s somewhat passive, but it isn’t 100% passive unless you have a property manager. Paying a property manager cuts into profits. With a passive stake in WidgetTech, I’m not going to get calls at 3AM about a pipe bursting.

  • Recession Resistant

    WidgetTech has customers from all over the world paying for the product. While the United States may experience a downturn, WidgetTech’s global audience could allow it to weather a slowdown better than some investments. It’s a different kind of diversity from our other investments.

  • The People

    I’ve had some tremendous tenants. However, it would never occur to me to go grab a beer with them, much less go on vacation with them. That relationship is very strictly business – especially because it can get messy if you have evict them down the line. In contrast, I know the WidgetTech owners well and have a great relationship with them. There is very little direct client communication as long as things are operating well, so there’s no animosity there either.

While I wrote “no work” above, I want to put more work into WidgetTech. If you’ve watched Shark Tank, you’ve seen how the sharks work to promote their companies. That work improves the profits and value for all owners. I’d like to do something similar and I think there’s room to do it.

As you can tell, WidgetTech seems like a superior investment. That’s why I’m excited about it. However, you rarely get something for nothing when it comes to investing.

There are downsides to this type of investment:

  • It’s Not Liquid

    If you put your money in a savings or a checking account, you can get it back out easily. You might not earn a good interest rate, but you have great access to your money. If you bought stocks or a mutual fund, you could sell and get your money out easily as well. You might have to pay more taxes, but you’d still be able to get your money.

    With WidgetTech, my underlying investment money is hard to get back. It would require a very significant emergency to try to get it back. I’d be looking to exhaust all my other options first. This is another reason I consider it similar to the investment property. While I could take a loan out on the property, for the most part, the money is spent. I could sell the property, but it’s not easy and I find the costs to sell often prohibitive.

    Sometimes having an investment that is not liquid is a good thing. It prevents me from making rash/emotional decisions.

  • Risk of Company Failure

    Few companies last forever, right? If the company falls on difficult times or business landscape changes, the investment could be in trouble. I feel strongly about WidgetTech’s chances to last a long, long time.

In both investment cases, I know that I’m making a financial decision that isn’t for Lazy Man today, but for Lazy Man tomorrow. In today’s world of YOLO culture, this may not make sense to some people.

However, it’s easy for me to focus on the financial picture tomorrow. I’ve personally seen how the financial decisions over the last 20 years have put us in a great financial place today.

Alternative Income and Net Worth Reports

For the last few years, I’ve been publishing my alternative income which is passive and “passive-ish” income. This investment converts a large sum of money that was earning minimal interest in a money market account into something that generates significantly more through the profit sharing plan.

That’s going to give my alternative income a good boost. It will show up in the dividends category which is essentially what this is (even if the tax treatment is different). It’s certainly close enough based on it being the income return from investment in a business.

One the net worth side, I’m going to keep the underlying money that I invested as an asset. As I wrote above, it is possible to sell even if it’s difficult. This will give our net worth a boost going forward because the income earned is much better than what the bank’s money market was paying. In a number of years, this income will be worth the same as the underlying investment (if all goes according to plan), which would effectively double the value of it in our net worth.

This is no different than buying an investment property and keeping the value of the property on the books while collecting monthly checks.

Final Thoughts

When I started this blog back in 2006, I did it with the idea of coming up with a way to create passive or alternative income that would allow me to at least equal what my wife’s military pension will be. Life has a number of roller coaster ups and downs and twists and turns over a 13 year span.

With this investment, I can confidently say that the blog’s goal has been accomplished. (Just wait until you see what happens over the next 13 years of this blog.)

How to Work Less and Make Money from Selling Online Courses and eBooks

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The following is a sponsored post by Brenda Peterson of Ning.com. I usually don’t include sponsored posts on the website, but my curiosity was piqued because I remember Ning’s tools from 10 years ago. I also see there are a lot of bloggers making serious money selling courses and eBooks, so it’s definitely worth looking into.

Many people are starting to realize that working for a company is not the only way to ensure a steady income. Technology has made it possible for anyone to create online courses and eBooks which can be effectively sold online. The truth is, all you really need is Ning’s Professional Website Builder with proper monetization tools to make it all happen.

Even though selling courses on the internet and writing eBooks might look like a difficult job to people who are not technically skilled, it is in fact not as daunting as one may think. Here are a few ideas that can help you get started.

Passive income is your goal

The great thing about eBooks and courses is that you can keep making money from them for many years after creating them. For instance, an eBook that took you forty hours to write can actually sell for the next forty years. All you need to do is just make small amendments so it stays relevant over time.

If you are really good at what you do, and your online course or eBook is in demand, you will be able to make money literally while you sleep!

Use the skills of others

What if you don’t have the skills to write an eBook or create your own courses and websites? Things have changed and you no longer need to be a jack of all trades to earn money online. Start with finding a cheap website builder for business. There is no need for intricate technical skills to create an impressive website anymore.

Then, search the internet for places where you can hire professional content creators. You will be amazed to know how easy it is to get someone with the right knowledge to create a great course or eBook in any subject. The main advantage of using other people’s skills is that you can create eBooks and courses in various niches even if you are not an expert in them.

However, while you may choose to take this path, the reality is that you’re running a business and should be able to manage its different facets. You’ll need skills to manage people working for you in various locations, ensure that your customers are happy, and distribute the finances.

Give people what they need

Another skill you’re going to need is the ability to identify challenges, pain points, and problems that people are facing in different areas of their lives. You will need this knowledge to create the right content for your courses and eBooks. The fact is, people don’t mind paying for the valuable information which can make their lives better and easier.

Just remember that while eBooks and online courses can provide you with a steady income, it is vitally important to catch up with the trends and ensure that your content is relevant. However, no matter how much work this can involve, it will never be as demanding and exhausting as a regular nine-to-five job.

“Dollars Are My Favorite Employees”

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I’m going to make this pretty short and sweet today. Why make things more complicated than they need to be.

I have been using the phrase, “Making my money work so that I don’t have to” since 2006. And now Mr. 1500 comes around and says it better in 5 words: Dollars ARE my favorite employees.

Whether they are invested in stocks or real estate, dollars just seem to multiply. Of course I have to thank Mr. Market for doing it’s thing. I think Mr. Market may take a bit of a break soon, but I’m sure he’ll be back working not long after. And if you are wondering why I use Mr. Market instead of Mrs. Market, it goes back to a book from 1949.

I any case, I’m just going to point you to the article on Mr. 1500’s upcoming $51 million cash stash and not take any more of your time.

Save Money with Amazon Prime Phones

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A few months ago, I bought a new cell phone, the Moto X Pure. It’s been a great Android phone, I have no real complaints. I don’t even miss the wireless charging much as I can get 12 hours of charge in what seems to be 20 minutes. I’m not typically too far from the charger so it works for me.

However, the Moto X Pure was around $300. What if you wanted to save a little cash or get a phone for a kid? It turns out that Amazon has about 3.8 billion options in the $200 and under range. I’m exaggerating the number, but there really are a lot… probably enough options to suit almost everyone’s typical cell phone needs.

These phones are for Prime members, but that’s seems to be a group that is very large and growing.

Since there are so many phones, I thought I’d give you a breakdown of the core features as I understand them. I’m going to start with the cheapest phone and then let you know the upgrades and downgrades as we go up in price. The problem with this method is that it becomes easy to say, “Oh, I’ll just spend another $20 for this upgrade.” It’s even easier to do that a few times and find yourself spending $100 more dollars (which might not necessarily be a bad thing). Also, I should mention that Amazon may give me a small commission if you make a purchase through these links.

Amazon has it’s own comparison chart. I don’t think it’s useful to cut and paste the same information here. Instead, I’ll break down some of the major numbers. With respect to the cameras, megapixels don’t tell the story, but I don’t have a better objective number to share. You might want to consider reading a few reviews online if that’s a key feature for you.

Also, all of these can take SD cards, which can save you money on buying extra ROM. You’ll also get some Amazon lock ads on these phones for the price I’m quoted, but I’m presuming that’s cool, since we are trying to save money.

BLU R1 HD

Price: $50-$60

Specs

Processor: MediaTek 6735 (1.3 GHz – quad-core)
RAM: 1/2 GB
ROM: 8/16 GB
Screen Resolution: 1280 x 720
Camera (R/F): 8/5 Megapixels

You can spend $50 for the 1GB (RAM), 8GB (ROM) version, but I think it’s definitely worth spending the extra Hamilton to double those numbers.

Interesting note: BLU isn’t exactly a household name, but I had heard of them as a budget phone maker for quite awhile. I had considered getting one to test with Freedom Pop as a possible, very low use phone. Unfortunately, the phones may have sent information to China, but I think that issue is long resolved.

Alcatel A30

Price: $60

Specs:

Processor: Qualcomm Snapdragon 210 (1.1 GHz)

Since the specs are largely the same as the high-end BLU the only for me to update is the processor. It is different, but I don’t know if it’s any better. Qualcomm typically makes faster chips, but this is one of their lowest-end chips and the clock speed is a little slower than the Blu HD above. It’s probably a wash or close to it.

When PhoneDog compared the Blu HD and Alcatel A30, the author noted: “So these phones are incredibly alike. And while there’s no clear winner, I find myself gravitating more towards the BLU R1 HD.”

So let’s call it Coke vs. Pepsi… different flavors of the same thing.

Alcatel A30 PLUS

Price: $80

Specs:

Processor: MediaTek 6738 (1.5 GHz – quad-core)
Camera (R/F): 13/5

It seems like a Jackson buys you a slightly faster processor and a better rare camera. I don’t see a lot of value in this phone. It seems like you are spending 25% more for a tiny upgrade.

Alcatel A50

Price: $100

Specs:

I’m leaving the specs empty, because it doesn’t seem like the A50 is an upgrade to the A30 Plus in any of the core areas. I’m not sure why anyone would pay $20 more for this phone.

Moto E (4th Generation)

Price: $100

Specs:

Processor: Qualcomm Snapdragon 425 (1.4 GHz)
Camera (R/F): 8/5

This is a solid midrange processor, but the camera loses a few megapixels. This is the only Amazon Prime phone that works with Sprint and Verizon two of the best cell phone plans providers in US. If you aren’t on those networks, I don’t think this provides a lot of value.

Moto G (4th Generation)

Price: $130

Specs:

Processor: Qualcomm Snapdragon 617 (1.4 GHz)
Screen Resolution: 1080 x 1920
Camera (R/F): 13/5

We are finally getting into the phones that I would consider buying myself. I wouldn’t buy a phone with less than 1080 x 1920 resolution. The camera gets a boost from the E4 above and the processor is a 600-series by Qualcomm, which is very good for this price. I had to get this information from another website. I couldn’t easily find the numbers on Amazon’s website.

Moto G Plus (5th Generation)

Price: $185

Specs:

Processor: Qualcomm Snapdragon 625 (2.0 GHz)
ROM: 32GB
Camera (R/F): 12/5

The Moto G5 has a big price jump at nearly $50 over the G4 above. You get a faster chip and more ROM. I’d pass on this phone. I’ve seen this phone at $180, so I’m not sure why it is an extra $5 as I’m writing this.

Nokia 6

Price: $180

Specs:

Processor: Qualcomm Snapdragon 430 (1.4 Ghz)
RAM: 3GB
Camera (R/F): 16/8

The processor is a little slower than some of the previous phones, but you’ll be able to keep more apps open. This phone also has the most megapixels of all the Prime phones. I’d definitely buy this over the G5 above.

Alcatel Idol 5S

Price: $200

Specs:

Processor: Qualcomm Snapdragon 625 (2.0 GHz)
Camera (R/F): 12/8

This phone combines the best of Nokia (3GB of Ram) and the best of the G5 (fast processor). Unlike the other Prime phones that are $50 off the suggested price, this is $80 off. I’m not sure if it would really sell at the $280 price given the value of the cheaper phones.

So what’s the best value of all these phones? My pick is the Moto G4. However, because these phones are so cheap, I don’t think you can lose with any of them. I find it hard to justify paying $600 for some of the high-end phones on the market today, when a phone at 20% of the price will do most of the same stuff.

Let’s Fix Healthcare! (Again)

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Back in January, I put together some ideas on how to fix healthcare.

I put together six problems and proposed fixes for all of them. I thought it was interesting that most of the comments were about my mention of the Affordable Care Act. The exception was a regular reader who said it was, “Best. Article. Ever.” (*blushing*). I found it notable that no one seemed to argue for the $629 bandage from an emergency room stay or the high cost of medicine because the United States subsidize the rest of the world.

In the last month, the healthcare talk has ratcheted up. That’s probably a direct cause of the House pushing through a bill before the Congressional Budget Office could do analysis on it. It’s expected to get changed in the Senate and then I think it goes back to the House. It seems like a silly process to me because when it gets back to the House, they’ll probably say, “We’ve got it this far, we have to send it through.” So the Senate could do a bunch of things that the House originally didn’t want and the end result would be they have to accept them anyway.

There are worse political systems out there and this one has worked well for a long time, so maybe I’m just off-base here.

If the House can add amendments to their original bill, I can add amendments to my previous healthcare article. And that’s what I’ll do. Some of these are free-form thoughts, not problem solving like before. Let’s dig and see how we can improve health benefits.

Why We Need to Fix Healthcare

Short answer: Warren Buffett says so.

Longer answer: Since the 1950-1960s, corporate taxes went from 4% of the GDP to 2%. Healthcare went from 5% of the GDP to 17%. So while politicians are beating the drum about taxes, it’s silly. Here’s the key quote to the article:

“Our bloated health care system, Mr. Buffett asserted, is the true barrier to America’s world competitiveness as well as ‘the single biggest variable where we keep getting more and more out of whack with the rest of the world.'”

In short, we can’t “Make America Great Again” without fixing healthcare. And fixing healthcare doesn’t necessarily mean a “repeal and replace.” It means addressing those sky-high medicine prices we have subsidizing other countries. I haven’t heard either political party address that. It means a bunch of other things too, many of which I addressed in the previous article.

The only point I want to make here is that we should work on getting that 17% GDP number down to 5% again.

The Price of Doctors’ Education

I was chatting with a high-ranking pharmacist friend of mine about healthcare and I mentioned the cost of medicine. He was quick to point out that it really is the high cost of staffing that makes healthcare so expensive. I think he said that drug costs are only 20% of the problem. He knows a lot more than I do in this area, but it makes sense.

Medical professionals have to go to school for a long time. Colleges and universities have been raising rates for a long time. It seems to me that the medical professionals get out of school with more debt. I know a couple of doctors who have had $250,000 or more of student debt at one point or another. It’s reasonable that they’d want a return on their investment… and it’s reasonable they’d want to get out of the debt fairly quickly.

So it got me thinking, “Is healthcare a bubble within a bubble?” Could it be that at least part of the reason our healthcare is so expensive is simply because we let the costs of education spiral out of control? I view the costs of college today similarly to when people would get interest-only, 50-year fixed mortgages so that they could a home. The main idea seems to be, “With enough loans you can afford anything, which gives us license to greatly raise the price.”

It didn’t work out well for those mortgages and I think we can see it isn’t working well for recent graduates. If my friend is right (and it seems logical enough), it isn’t working well for our quest to create an affordable healthcare system.

What About Teeth?

Ironically, I’m writing this paragraph about 5 minutes away of getting in the car to go to the dentist.

Fortunately, recently published a great article about teeth and dental insurance. There’s a big divide of the “haves” and “have nots” when it comes to dental care.

Oh and the article points out that the average dentist starts out with $260,000 in student loans. I read after I wrote the above section.

I don’t have any magic fix for dental insurance, but I think it should be included with regular healthcare. When 1/3 of Americans are going without insurance and it can lead to greater health problems this needs to be part of the fix as well.

I’m back from the dentist and I guess the military changed dental insurance providers on May 1st. They didn’t have the courtesy to let me know. So my cleaning that had out-of-pocket costs of $0 is now around $30. It’s not a big deal, but it seems like all our dental costs are going to go up. Maybe a different dentist will be in-network and we can get our costs covered 100%. It still seems weird that for years they’d cover 100% and now it’s closer to 66%.

Let’s talk Cigarettes

Quartz Media put out some interesting statistics about cigarettes. The big takeaway for me was this:

People are smoking less – Yay! Cigarette companies are making more money – Boo! How is that happening? Those addicted to cigarettes are willing to pay for the huge increase in costs. Americans spent more on cigarettes than beer and soda combined. Think about that for a minute.

I know there are substantial taxes on cigarettes, but maybe we need to raise them even more to subsidize healthcare. Why are cigarette companies profiting so much on something that grows the high risk pool?

What If… We Just Ate Better?

I don’t want to be all doom and gloom when it comes to healthcare. There’s still a lot of things we can do.

For example, there was a great article covering Michelle Obama’s attempt to get kids healthier foods in school. This is a common sense start to a long term plan for a healthier America. A healthier America means less money spent on healthcare… and cheaper plans and deductibles.

I can find no reason why anyone wouldn’t support that. The only thing that makes any sense to me is that special interests (food companies) are paying off politicians.

Eating healthy doesn’t have to be a long-term solution either.

NPR has a great story about how it’s cost-effective to GIVE away $1000 worth of food a year to people with Type 2 diabetes. They find that spending that $1000 can save them as much as $24,000 in healthcare costs.

I don’t think the patients are complaining about getting free food either. Is it a “hand-out” that some politicians would fight against? Sure! However, lowering the healthcare costs for some, lowers the insurance premiums for all. I wrote a bit about this in my previous article, but this is one clear-cut example of a working system.

What Do Think?

Sound off in the comments below. The great thing is that you don’t have to be political about it. No one is keeping tabs on you. (Also, I don’t think any lobbyists are likely to pay you to write an opinion here.)

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