This lesson made Warren Buffett a billionaire:
— Matt Allen (@investmattallen) January 31, 2024
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Category Archives: Building Wealth
Citi AAdvantage Executive World Credit Card
Frequent American Airlines flyers have one big reason to consider the Citi AAdvantage Executive World credit card with its $595-a-year fee: It comes with access to the carrier’s exclusive airport lounges, wrote Gregory Karp and Craig Joseph.
The advantages of the card include:
Pros
- Admirals Club® membership for you and access for up to two guests or immediate family members traveling with you.
- No Foreign Transaction Fees on purchases.
- Earn 1 Loyalty Point for every 1 eligible AAdvantage® mile earned from purchases.
- First checked bag is free on domestic American Airlines itineraries for you and up to 8 companions traveling with you on the same reservation.
- $100 credit on Global Entry or TSA PreCheck every four years.
- 25% discount on in-flight food and beverages on AA flights.
- Priority boarding, check-in and screening on AA flights.
- Luxury perks
One of the easiest ways to get an Admirals Club membership is to get the Citi AAdvantage Executive World Elite MasterCard. The credit card includes access to nearly 100 Admirals Club® and partner lounges worldwide. Immediate family (spouse, domestic partner and/or children under 18) or up to 2 guests may join you. Up to $850 value.
This card has some great perks that would interest anybody looking to frequently fly with American Airlines, such as: 2X on purchases on American Airlines, free baggage, and priority boarding privileges.
Priority check-in offers you a special counter area for you to check in at many airports. These check-in areas (seen below) can have much smaller crowds than the standard check-in areas so you can save a lot of time.
Priority boarding privileges
The priority boarding benefit will display on your American Airlines boarding pass as “Group 4.”
This is the final group in the priority boarding group, so you’ll be boarding before all the economy passengers but you’ll still have some first class and elites in boarding in front of you.
Additionally, American Airlines implemented a fully dynamic award chart, where the number of miles required for a free flight changes based on demand.
For low-demand periods, you can reportedly find flights within the lower 48 states for as low as 7,500 miles each way.
The bottom line is if access to Admirals Club airport lounges is a high priority for you, then this is your card.
References:
Baby Boomers’ Wealth Transfer
“Experts say baby boomers will transfer over $50 trillion in wealth to their heirs. But for many, health care costs will claim the bulk of that wealth.” ~ NBC News
Baby boomers have experienced decades of wealth-building through real estate and the stock market, but skyrocketing healthcare costs will drain those resources faster for those who aren’t extraordinarily wealthy, according to NBC News.
Healthcare costs for elderly Americans and baby boomers are incredibly expensive and frequently wipe out people’s life savings. Thus, many people hoping that the “wealth transfer” will leave them with a substantial inheritance will end up disappointed because health care for older people in America is very expensive and destroying the transfer of wealth from baby boomers to subsequent generations.
According to the Bureau of Labor Statistics, people under the age of 65 reported spending an average of $5,209 per year on their health care in 2022, while those over 65 reported $7,540 annually.
By 2050, there are expected to be 84 million people over 65, according to the Bureau of Labor Statistics. That’s almost 50% more seniors than there are today.
Thus, the widely held belief that baby boomers are going to transfer tens of trillions of dollars to their heirs over the next few decades may not be entirely true.
The “generational wealth transfer” from Baby Boomers to Generation X and Millennials may not be as large as previously forecasted due to the rising costs of healthcare. The overwhelming cost of health care for older people means most people in those later generations won’t inherit much, even if their elders seem well-off today.
Cerulli estimated that 68% of the wealth transferred between 2020 and 2045 — which includes boomers as well as older generations — will come from U.S. households with at least $1 million in investable assets. And only 6.9% of households have that kind of wealth to begin with, Cerulli added.
References:
Google’s “Owner’s Manual for Shareholders.”
“Our goal is to develop services that significantly improve the lives of as many people as possible. In pursuing this goal, we may do things that we believe have a positive impact on the world, even if the near term financial returns are not obvious.” ~ Google founders Sergey Brin and Larry Page
The founders, Sergey Brin, 31, and Larry Page, 32, launched Google in September 1998 in a friend’s garage in Menlo Park, Calif., naming the company after the mathematical term “googol,” which stands for a 1 followed by 100 zeros. They met in 1995 when they were doctoral students in computer science at Stanford. Both were enthralled with information retrieval and artificial intelligence. The two collaborated in 1996 on a search engine called BackRub, Google’s precursor, which gained notoriety on campus for its ability to analyze the “back links” pointing to a given Web site.
In 2004, Google generated 95 percent of its revenue from advertising. Advertisers buy keywords that launch tiny text ads alongside search results each time someone types those words into Google’s search box and clicks “Google Search.” Advertisers pay the amount they bid for the terms, but only if someone clicks their ads.
In 2004, Google founders Sergey Brin and Larry Page issued a letter to investors called an “Owner’s Manual for Shareholders.” The seven-page letter was an organizational manifesto crafted by the co-founders to map out Google’s credo as a public company.The letter outlines the company’s goals, warning investors that as a public company, Google will not follow the usual path.
The letter outlines everything from the triumvirate leadership between the co-founders and CEO Eric Schmidt to its promise not to be “evil” by sacrificing its ideals for short-term financial gains. It promises more spending on employee perks such as free meals, a separate voting structure for executives, and avoidance of making financial predictions for Wall Street. Instead, the company will focus on long-term priorities that do not have an immediate effect on earnings.
“If opportunities arise that might cause us to sacrifice short-term results but are in the best long-term interest of our shareholders, we will take those opportunities,” the letter read. “We will have the fortitude to do this. We would request that our shareholders take the long-term view.”
The pair have created a corporate environment that fosters individual creative pursuits while pampering employees with free meals and regular beer bashes.
Here are several Google’s promises and processes as outlined in the owner’s manual:
Managing Wall Street: “Many companies are under pressure to keep their earnings in line with analysts’ forecasts. Therefore, they often accept smaller, but predictable, earnings rather than larger and more unpredictable returns. Sergey and I feel this is harmful, and we intend to steer in the opposite direction.”
Risk vs. reward: “As the ratio of reward to risk increases, we will accept projects further outside our normal areas, especially when the initial investment is small. We encourage our employees, in addition to their regular projects, to spend 20 percent of their time working on what they think will most benefit Google. Most risky projects fizzle, often teaching us something. Others succeed and become attractive businesses.”
Executive decision-making: “To facilitate timely decisions, Eric, Sergey and I meet daily to update each other on the business and to focus our collaborative thinking on the most important and immediate issues. Decisions are often made by one of us, with the others being briefed later. This works because we have tremendous trust and respect for each other and we generally think alike.”
Dual class voting: “While this structure is unusual for technology companies, it is common in the media business and has had a profound importance there. The New York Times Company, the Washington Post Company and Dow Jones, the publisher of The Wall Street Journal, all have similar dual class ownership structures. Media observers frequently point out that dual class ownership has allowed these companies to concentrate on their core, long-term interest in serious news coverage, despite fluctuations in quarterly results.
Googlers: “We provide many unusual benefits for our employees, including meals free of charge, doctors and washing machines. We are careful to consider the long-term advantages to the company of these benefits. Expect us to add benefits rather than pare them down over time.”
Kumbaya: “We aspire to make Google an institution that makes the world a better place. And now, we are in the process of establishing the Google Foundation. We intend to contribute significant resources to the foundation, including employee time and approximately 1 percent of Google’s equity and profits in some form.”
“As a private company, we have concentrated on the long term, and this has served us well. As a public company, we will do the same,” the letter states.
“In our opinion, outside pressures too often tempt companies to sacrifice long-term opportunities to meet quarterly market expectations. Sometimes, this pressure has caused companies to manipulate financial results in order to ‘make their quarter.’ In Warren Buffett’s words, ‘We won’t smooth quarterly or annual results: If earnings figures are lumpy when they reach headquarters, they will be lumpy when they reach you.'”
References:
Rules to Build Wealth
Wealth Building mindset and habits rules:
• Everything in life compounds…use it wisely
• Invest in assets
• Always use a margin of safety
• Create great money habits
• Spend what is left after saving
• Set clear financial goals and create a financial plan
• Control your time; learn to say “no” to things that do not align with you vision, values and goals
• Real wealth is created by solving problems
• Have multiple income streams
• Diversify your investments
• Surround yourself with smart people
• Invest in yourself, continue to learn and grow
• Buy income-generating assets
• Financial education is key
• Work for money. Then let money work for you
• Simplify your life and practice gratitude
• Focus on achieving financial freedom
• Track your monthly expenses
• Pay yourself first and focus on your health
• Live below your means; spend less than you earn
• Secure your future income…let your assets produce income while you sleep
Source: Compounding Quality https://x.com/qcompounding/status/1746198458040557966?s=46&t=mF_tsrQnjgviyl62GYfJjw
You’re never too young to invest. Starting early to invest in stocks is a major advantage.
In your 20s, and even your 30s, your biggest investment asset is time. Even when you’re just investing in retirement savings, nothing can make up for the effect of compound interest. Also, if you lose money in the market, you’ll have more time to make it back before you need it.
Your savings account isn’t invested in anything …
You do earn interest on money in savings, but it’s usually less than 1%, and that money sits in the bank. If you’re looking for a better place to keep your cash, high-yield savings accounts pay more like 4% to 5%, but note that rates fluctuate over time.
… but your retirement savings are.
Retirement savings, on the other hand, are invested if you put them in a retirement plan like an IRA or 401(k). This isn’t the case if you simply name your savings account “retirement.”
Investments are one of the only ways to keep up with inflation.
Inflation lopped an average of 3.1% off your money’s value in 2023, so you need your money to grow fast enough to outpace inflation. For most people, investing is the only way to get that kind of growth.
Investing is always a risk.
Investing could earn you money or lose it. Investments typically aren’t FDIC-insured like a bank account, meaning there’s the potential to lose money for good.
A security is a financial instrument.
You’ll probably hear people refer to “securities,” which is a catch-all term for things like stocks, bonds, or CDs. Securities are divided into debt securities (money owed to us, like from a government bond), and equity securities (actual value we own, like stocks).
Stocks are equity in a company.
When you buy a stock, you’re buying a tiny little piece of an actual company. Not a lot, but ownership nonetheless. Stocks are more volatile than bonds, and may therefore yield greater rewards or losses.
The stock market lets you track stock performance.
Stocks are traded on “exchanges,” which make up the overall market. The major stock exchanges in the US include the New York Stock Exchange (NYSE) and the Nasdaq. Stock prices are also tracked on indices such as the S&P 500 and the Dow Jones Industrial Average. While you’ll want to check in with your individual investments, monitoring stock market activity can give you an idea of how your portfolio might be performing.
Bonds are loans you make.
When you purchase a bond, you’re essentially loaning a little money to an entity — like the US government, for instance — and that entity has to pay you back after a fixed period of time, with interest. There aren’t bond exchanges that show up in a ticker, because bonds are traded differently than stocks. However, there are sites where you can get an idea of bond pricing, like Markets Insider.
Diversification means spreading your money out among different kinds of investments.
There are a lot of opinions out there about how diversified an investment portfolio needs to be, but most everyone agrees that putting all of your financial eggs in one basket is a recipe for disaster.
The ROI is how much money you make on your investments.
To get an idea of how well your investments are performing, you can calculate the ROI by dividing an investment’s gains by its costs.
You’ll be charged fees.
Investing isn’t free. If you’re working with an investment professional, you’ll pay them either a percentage of your portfolio or a flat fee (you’ll want to know if your advisor is “fee-based” or “fee-only” before you sign on), online investment platforms or “robo-advisors” each have their own fee structures, and some mutual funds and ETFs also charge fees. These fees vary, and if you do your research, you can minimize them.
No one can or has ever reliably predict or forecast the stock market.
Pundits and friends just can’t. While professionals can make educated guesses, predicting the market is predicting the future, and no one can do it.
And past market behavior isn’t a reliable way to predict the future.
On that same note, looking at what the markets have done isn’t a reliable way to predict what they will do. Again, this is a case of predicting the future, which could go in an unexpected direction due to unforeseen events known as “black swans.”
References:
Ray Charles – America the Beautiful
Ray Charles’s recordings are major landmarks in American culture.
By combining Gospel with R&B, he pioneered soul music, and his groundbreaking move into Country music during the heart of the Civil Rights Movement broke racial barriers, while elevating Country music to world-wide popularity for the very first time.
Ray Charles uniquely succeeded in recording and blending virtually every genre of music including soul, R&B, jazz, blue country, rock and pop in unique and unprecedented ways. This visionary singer, songwriter, pianist and composer brought his expansive musical vision to a worldwide audience and forever changed the face of American Music.
Positive Thoughts and Stress
Researchers believe that people who maintain a more positive mindset may be better protected against the long-term inflammatory damage of stress.
Also, researchers believe that positive thinking can help people make better health and life decisions and focus more on long-term goals.
Studies also find that negative emotions can weaken immune response.
The bottomline is that there is definitely a strong link between “positive thinking” and health.
There are steps you can take to improve your outlook and improve your health and well-being, according to John Hopkins.
Simply smile more.
A University of Kansas study found that smiling—even fake smiling—reduces heart rate and blood pressure during stressful situations.
Practice reframing.
Instead of stressing about a traffic jam, for instance, appreciate the fact that you can afford a car and get to spend a few extra minutes listening to music or the news, accepting that there is absolutely nothing you can do about the traffic.
Build resiliency.
Resiliency is the ability to adapt to stressful and/or negative situations and losses. Experts recommend these key ways to build yours:
- Maintain good relationships with family and friends.
- Accept that change is a part of life.
- Accept responsibility and take action on problems rather than just hoping they disappear or waiting for them to resolve themselves.
References:
Happy New Year
