If you have or haven’t noticed, I’ve been writing more about personal finance recently on Take Your Success.
This is because I believe that it’s never too early for you to gain financial wisdom and to start investing. The sooner you have a solid foundation in personal finance, the quicker you can become rich and be financially secure.
But, as you’ll see in my interview with Neal Schmidt, many young adults decide to spend their money without a purpose and put off investing for later. And in doing so, they lose one of the most important investing advantages: time. Then these same people start investing in their 30s, but can’t make up the tens to hundreds of thousands of dollars lost from stunting the power of compound interest.
To help you out, I decided to interview Neal because he has experience investing in the stock market at the early age of 12, is clearly passionate about the subject, and promises to give you significant value.
Remember to check out my key takeaways after the interview. Now let’s hear from Neal Schmidt.
Brian: How old were you when you started investing? And what attracted you to this at a young age?
Neal: I began investing when I was about 12 years old. My father showed me an article that aimed to highlight the power of compounding interest. The article was about two people who were investing in a Roth IRA. The first person, who I will call Paul, began investing at 22 by putting $1,200 per year into his Roth IRA. The next person, Mike, began at age 30 or so and put the maximum contribution every year until retirement (was $5,000 at that time).
Despite the difference in principal both had been adding to their retirement accounts, by the time both reached the retirement age of 59 1/2, Paul’s account (who started investing earlier) still contained a few hundred thousand dollars more than Mike’s. While I know these numbers are not exact, the point remains. It just goes to show that there is no substitution for time when investing.
Brian: Who did you learn and get inspired about personal finance/investing from?
Neal: My parents were undoubtedly the driving force in getting me interested in personal finance. It was frequently the topic of discussion around the dinner table, and my Dad would always reference things he heard on The Dave Ramsey Show or read in the book “The Millionaire Next Door.” He would always talk about how it is a huge misconception that “the only wealthy people in the world inherited their money.”
In “The Millionaire Next Door” Thomas Stanley and William Danko state that 88% of America’s millionaires are first generation wealth, meaning they inherited NOTHING. That fact really stuck with me and made me realize that attaining a little wealth is not impossible.
Now, my goal isn’t to become a mega millionaire, but I certainly would like to live comfortably, be able to send my children to their dream college and have something left over to give back to society. As Dave Ramsey always says, everyone has the ability to change their family tree, and I would love to do that.
Brian: How does investing at an early age, for you an extremely early age, make such a big difference?
Neal: As I said earlier, there is no substitute for time when investing. The best time to start investing was 10 years ago; the next best time to start is today. Compounding
interest is an incredible thing. When started early, retirement accounts such as a Roth IRA, Roth 401k or standard 401k can reach the high “hundreds of thousands” and in some cases even grow into the millions.
The biggest pieces of advice I can give to someone who is beginning to think about investing are start saving for retirement as soon as you are out of debt, and when you make that IRA or 401k contribution, forget that money even exists.
The worst thing you can do for your retirement is pull money from those accounts early. Not only will you incur stiff penalties, but you will be losing out on the compounding interest that money would have gained if it was left alone.
Brian: What’s your investing strategy?
Neal: Being only 22 years old, I’m an aggressive investor, since retirement is so far off. I am currently invested in 100% stock based mutual funds. Earlier I had made a statement about making contributions to retirement accounts and “forgetting” about them. That is because if I woke up tomorrow and there was a huge downturn in the market causing the value of my mutual funds to plummet, I really wouldn’t be that worried, since there is so much time for the market to recover before I even think about retirement.
Despite the Great Depression and Great Recession of 2008, the stock market has always trended upwards, and depending on which resource you ask, its historical rate of return is somewhere around 7 percent.
As I move closer to retirement age and my retirement accounts have grown to a more substantial size, I will move to more a moderate/conservative investment strategy. Until then, I am willing to be a more aggressive investor in order to gain the highest rate of return I can. The higher the risk, the higher the return.
Brian: Do you strictly invest in the stock market, or are you pursuing other investment areas like real estate?
Neal: Currently, I am focused on maxing out my Roth IRA contribution, contributing to my 401k and building a safety net that I am comfortable with. Many people, including Dave Ramsey, consider 3-6 months of expenses to be a sufficient safety net, but in my opinion, that amount should be whatever makes you feel the most comfortable.
Once I have that safety net built to a level that I am comfortable with, I will absolutely look into real estate investments. Having a rental property is a great way to add a supplementary income, but personally, I would not buy a second property to rent unless I had enough to pay for it in cash. I don’t see the sense in taking out a mortgage on a property in order to rent it to someone else.
Brian: How would you assess most twenty-somethings with their money? And why do you think people our age act this way?
Neal: Most people our age aren’t too concerned with their retirement. When I ask about retirement savings, often times I hear, “I have tons of time to save for retirement later.” Or “I want to have fun with my money when I am young.”
A lot of this kind of mentality stems from people feeling entitled to new things because they worked hard during college. I know so many people who went out and immediately bought a new car when they got their first professional job; hell, I almost did it myself. I almost bought a 2015 Mazda 3, on which I would have had to take out a $15,000 loan.
Sure, I absolutely could have made the monthly payments on it, but then I would have been putting a huge burden on my monthly take home pay. I wouldn’t have been able to contribute to my retirement, which would have cost me tens of thousands of dollars in retirement income. Just because you can afford something does not mean you should buy it.
Another part of that mentality is that I feel like many people our age do not understand the impact of compounding interest. Let’s take a look at a Roth IRA, for example. If someone were to start maxing out their yearly contribution ($5,500) at the age of 22 until they are 60, they will have paid $209,000 in principal over 38 years.
That sounds like a lot until you take into consideration that you can expect the value of that account to be upwards of one million or more, depending on the rate of return. Compounding interest is an amazing thing, especially if taken advantage of early on.
Brian: What advice would you give to young adults who don’t know where to start with their money and investing but want to become millionaires?
Neal: Read the book “The Total Money Makeover” by Dave Ramsey. I have been name dropping him a lot during this interview, and that is because I truly believe in the debt free lifestyle he promotes. I find his advice to be practical, easy to understand and downright effective.
This book has completely changed the way I look at my financial decisions, and the way Mr. Ramsey explains things makes personal finance seem much less daunting. Now, sometimes he can come across as a bit over the top, but overall, his message has been incredibly helpful.
Contrary to popular belief, becoming a millionaire is a choice, and if you don’t believe me, read this book or listen to his radio show. Becoming a millionaire is not about how much money you make but rather how much you save. By making wise financial decisions, living below your means and investing young, anyone can build a great financial foundation that will bring about what Mr. Ramsey refers to as “financial peace.”
Brian: Lastly, and more out of my curiosity, what are your financial goals?
Neal: Personally, I don’t have a dollar value that I am aiming for; all I am looking for is financial security. I could not imagine how I would feel if my son/daughter was accepted into their dream college, and I had to tell them “sorry, we can’t afford it.” That would crush me.
Or if I had to forgo anything but the best medical care if, god forbid, a family member ran into serious medical issues. Sure, money doesn’t make people happy, but it sure as hell makes the low points in life a heck of a lot more manageable. I don’t ever want to be sitting at the kitchen table with my wife at 4am trying to crunch numbers to figure out how we will keep the lights on, a roof over our heads or food on the table. I don’t want that stress on me, my family or my marriage.
People may call me crazy, paranoid or weird; that’s fine. Those are the things that cause me to be so passionate about my personal finances, and I know that if I start preparing now, I will never have those worries.
Neal and I have similar beliefs when it comes to money and personal finance. So it became no surprise to me when I shook my head in agreement multiple times throughout this interview.
One of my favorite amen moments is when Neal said, “Just because you can afford something does not mean you should buy it.” I think he hit the nail on the head here!
Because the way I look at it is you can spend your money on material items (new clothes, new gadgets, or a new car) that will make you happy only for the short-term, if that. And if you spend all your paycheck each month, you’re essentially going to have to work the rest of your life. Or you can save your money and invest it, so it grows and allows you experiences that make you happy. For example, traveling the world or retiring at 40 to work on your passions.
A second great nugget, where I actually hit my fist on the table and said “Yes,” is when Neal made the comment, “Becoming a millionaire is a choice.” If the year was 1900 then you might need a famous name and wealthy parents to be rich. But in 2016, the opportunity to become a millionaire is yours if you’re willing to save your money and start investing it.
Even beyond money, I believe that success in your work, fitness, health, friendships, and love life all comes down to a choice. So how bad do you want it? Choose what you desire, follow through, and live the life you want.
Readers, do you want to start investing after this interview? What holds you back from getting in control of your money and future? Is money a topic that deserves more attention and blog posts on this site?
The Definitive Guide To The 5 Hottest Cryptocurrencies Heading Into 2018
Despite naysayers saying that cryptocurrencies will bubble within the year, they continue to defy expectations by enjoying price boosts. Bitcoin, which was priced at $997.69 on January 2017, skyrocketed to $19,343 in December.
The recent publicity towards Bitcoin’s price surge has led to an increase in interest in the other cryptocurrencies as well.
Experts believe this is due to some form of trickle-down effect. Investors who become interested in Bitcoin realize that there are more digital currency investment options.
As a result, the other cryptocurrencies have also experienced price hikes in the past months, although not to the same extent as Bitcoin. Litecoin experienced a 225% price jump just this month, which led financial analysts Mitch Steves and Amit Daryanani to speculate that 2017 is just the beginning of the cryptocurrency boom.
While some experts dismiss the suggestion that cryptocurrencies may eventually replace traditional money, they also acknowledged that their prices will continue to soar in 2018.
A previous Take Your Success article even talked about how crypto coins are making their way into the Christmas stockings of investors. It’s only one of the many proofs of the increasing popularity of cryptocurrency.
Below are the top five cryptocurrencies that have positive 2018 projections from analysts across the world.
Bitcoin remains as the head of the pack when it comes to cryptocurrencies, and analysts say that its rally will not stop in 2018.
Managing director of cryptocurrency trading firm Octagon Strategy Dave Chapman estimates that Bitcoin will go beyond $100,000 before 2018 ends. The expert, who earlier predicted that the digital currency will breach $10,000 in 2017, has an overall positive outlook towards the cryptocurrency. He took the position that Bitcoin is on its way to disrupting traditional financial systems with its ability to allow the immediate transfer of value without any need for middlemen.
Nonetheless, Coinwire reported that Canadian businessman Kevin O’Leary warned investors to take care when investing in Bitcoin. While he acknowledged that Bitcoins are assets, he also said that buying them is a gamble, with investors potentially losing all the money they put into it. He advised those interested in investing in Bitcoin to understand it better first before putting their money in it.
Its high cost – currently on its way to breaching the $20,000 mark – has dissuaded all but the richest investors in purchasing or mining this digital currency. Instead, they have turned to other cryptocurrencies.
Recently, Blockchain CEO Peter Smith announced that central banks are likely to hold Bitcoin and Ether by 2018. If this pushes through, this will be the first time that digital currencies will be bought by such financial institutions. This potential development can spell good news for Ethereum, which is already enjoying a price rally in the past months. Since its inception in 2015, it has enjoyed growth by over 1,200%.
Interestingly enough, Ethereum is not actually marketed as a digital currency, but rather as a smart contract network. According to experts, it is this aspect of Ethereum that explains why Ethereum actually has a more efficient system and covers a broader scope than Bitcoin. In fact, some experts are currently exploring whether the system can be used as a supply-chain efficiency solution.
Many Fortune 500 companies support Ethereum, which gives an indication of the cryptocurrency’s status as a sound investment choice.
Bitcoin might have the highest price compared tp other cryptocurrencies in 2017, but it’s actually Litecoin – which is being marketed as the silver to Bitcoin’s gold – that experienced a more dramatic surge. Fortune reported that Litecoin rose by 7,291%, as opposed to Bitcoin’s 1,731%.
Ironically, Litecoin’s creator Charles Lee maintains that he developed the digital currency to complement and not compete with Bitcoin. Still, more investors are now shifting to Litecoin because it is easier to mine and offers faster transactions.
Unlike Bitcoin which is focused on hefty transactions, Litecoin is packaged as a platform that can manage a large volume of small transactions quickly and efficiently. A Litecoin transaction can be completed roughly within 2.5 minutes, as opposed to Bitcoin, which processes transactions at around 10 minutes. Litecoin’s lower price, compared to Bitcoin, also makes this more accessible to budding cryptocurrency investors.
IOTA recently made headlines when its price surged by over 90%. The spike happened after an announcement of its partnership with major tech firms such as Microsoft and Samsung on a marketplace that allows them to sell data.
The developers of IOTA claim that it is the first platform anchored on the Internet of Things. It stands out from other cryptocurrencies because it does not rely on the traditional blockchain network. Instead, it uses an alternative system, a ‘blockless’ digital ledger called Tangle. In theory, it has no limit for scaling, as opposed to cryptocurrencies operating on a blockchain network.
Furthermore, it does not require users to pay additional fees when making transactions. IOTA effectively created an incentive system for data sharing, all while ensuring data integrity.
Investors can enter trading with IOTA via Bitfinex.
Ripple is considered by many experts to be the spiritual successor of Bitcoin, and it has already gathered its own share of supporters. It’s even accepted today as a payment platform for digital transactions. In the first half of 2017, its price surged by almost 4,000%. At the time of writing, Ripple is currently trading at $2.40 per unit. This is far past the benchmark of $0.75 which was considered as the threshold for the cryptocurrency to gain traction.
If the positive trend becomes more consistent, Ripple might get the support of more big firms as well. Oracle Times declared that it is likely to become the cryptocurrency of choice for Amazon, as well as other Internet-based retailers. This is because of Ripple’s faster transaction times and lower costs compared to Bitcoin.
Global financial retailers are more interested in stability than investment for the sake of its customers. This is precisely the reason why they tend to lean towards cryptocurrencies with lower volatility levels.
Disclosure: The author has invested in these cryptocurrencies. Also, this article is meant for information purposes only and is not investment advice. Seek a licensed professional if you’re looking for investment advice.
Bitcoin And Cryptocurrency Investor’s Shopping List
Are you shopping for the perfect gift for the cryptocurrency investor on your Christmas list? Look no farther. This is the ultimate guide for you.
From decked out Christmas party gear to adding to a lucky someone’s investment portfolio, the person who you’re buying for will be thrilled with each and every one of these present ideas.
I know as an investor in Bitcoin and other cryptocurrencies myself, I would be pumped if I opened any one of these gifts.
Also there are presents on this list that range all across the price spectrum from thousands of dollars to a few dollars—and a free bonus gift at the end.
I made sure that individuals with any budget could find something for who they’re buying for or themselves.
Let’s get into my top 10 shopping list for cryptocurrency enthusiasts.
Cryptocurrency Investor’s Shopping List
1. A cryptocurrency itself
Almost every cryptocurrency is exploding in value right now. What better gift than to add to their portfolio by buying a specific coin (or part of a coin) for them?
You can buy it, wait until December 25th, and then send the money to them. They’ll wake up with a nice surprise and a higher net worth thanks to your generosity.
And who knows, if the price of Bitcoin and Ethereum continue to rise then you may have gifted them something that becomes worth 20 times more than what you bought it for down the road. Name another gift that can do that.
If you’re looking to buy your first cryptocurrency, head over to Coinbase and sign up there.
As much as I love the crypto world and believe in it—considering I could see one Bitcoin reaching $100,000—the major downside is the threat of losing all of your money.
The way the ledger technology works is once the cryptocurrency leaves your account, there’s no way of getting it back. Sometimes that’s fine because you’re sending money to someone or transferring to another account of yours.
But the scary part is if you get hacked, there’s essentially no way to recover the funds. You’re out of luck and in total misery.
However, the odds of your personal account being hacked go down significantly if you store your money offline in a wallet. Here’s where the Ledger Nano S helps out.
It’s a hardware wallet that allows you to store your Bitcoin, Ethereum, and other alternative coins. To use it, just hook up the device through a USB outlet to your computer and then you can send and receive cryptocurrencies.
Most people in the industry consider this one of the safest methods for securing your funds.
Assuming you already have or are going to purchase the Nano Ledger S, that doesn’t protect you from losing this device in a home break-in or a fire. So what’s the solution? A fire-proof safety deposit box.
The safe box I linked to is 10 pounds of steel, fire proof, and gun proof. Talk about a beast! Plus it’s small enough to carry and not a gigantic box where you need to recruit a small army to move it.
Put your Nano Ledger S in that box and sleep safer at night.
P.S. This gift is only needed if you’re protecting more than a few thousands of dollars worth of cryptocurrency. For example, if the safe costs more than or close to the amount of money you have invested, you’re getting ahead of yourself and you should hold off on buying the safe.
While a real Bitcoin will currently cost you nearly $20,000—a year of college or a new car—I personally think it’d be cool to receive a physical Bitcoin with no money attached to it, just to have.
Seeing this physical coin on my desk would inspire me to make more money, save more money, and invest more into Bitcoin because I’m very bullish on it going forward. I’m a big believer in the power of symbols.
Obviously there’s not any money attached to it, like there can be with legitimate physical Bitcoins, but it’s still fun as long as you don’t try to sell it for $20,000 only to get arrested for fraud.
And this physical coin on your desk would serve as a nice reminder to hold onto that investment and don’t sell. Hodl!
5. The Internet of Money book
The author, Andreas M. Antonopoulos, is one of the world’s thought leaders on Bitcoin and the cryptocurrency space. But he’s not in it to confuse the average investor with fancy jargon only a miner would understand.
He breaks down the complex ideas behind the blockchain into digestible bites of information for the reader to consume and pass along to others.
If I remember correctly, I believe in one of his speeches that Antonopoulos said he put his entire net worth into Bitcoin (but I may be wrong).
Anyway, the author is a genius and you’ll inch closer to becoming an expert in this space by getting your knowledge on through reading this book.
6. Digital Gold book
Buying for someone who wants to know where Bitcoin originated and how it’s trying to be the financial currency for the Internet age? Author Nathaniel Popper tells the story of Bitcoin and the people who are trying to reinvent the way the world thinks of and uses currency.
It’s a fascinating read that’s full of useful information for anyone who is remotely interested in this subject. Plus the insight from Bitcoin millionaires is fantastic.
You can’t go wrong with Digital Gold!
And if the person you’re buying for isn’t a reader, then buy them the audiobook. It’s just as good.
7. Bitcoin socks
Bitcoin socks are what the person you’re shopping for needs to spice up their outfit. Their shirt, pants, and shoe combination can be boring, but your socks are where you show you have a personality.
Seriously, these black Bitcoin socks would go together with a black pants and black shoe combination while spicing up your vibe in a good way.
And I’m betting the person who wears these socks will get compliments left and right. So, maybe your gift is the reason a stranger strikes up a conversation and becomes their best friend or significant other. You never know.
8. Cryptocurrency t-shirt swag
People who want others to know they’re fashionable wear Supreme. But my kind of people who want others to know they’ve invested in Bitcoin and are holding until it hits the moon wear cryptocurrency swag.
There are beautiful shirts reading “I accept Bitcoin”, “HODL”, and “You had me at blockchain”.
You can find a t-shirt for just about any cryptocurrency that’s your favorite like Bitcoin, Ethereum, Litecoin, Ripple, Iota, etc, and then there’s individual shirts that apply more to investors or miners.
The point being is Amazon has the cryptocurrency swag for the person you’re shopping for, no doubt about it.
Ugly Christmas sweaters are now a necessity to any wardrobe with these types of parties becoming a mainstream theme for almost any work, neighborhood, or extracurricular event around this time of year.
This sweater is also the perfect conversation starter that will get people talking about the blockchain, investing, and the future. If you’re buying for yourself or a friend and want some conversational assistance at a party, this is for you.
Get yours today because we all know that Bitcoin is way hotter right now than Santa ever was.
Thank God for giving us humans coffee. It’s my everything in the morning.
But why have a boring coffee mug if you can have a Bitcoin-themed one? This mug says “KEEP CALM AND HODL” which is perfect for Bitcoin investors.
Again, I believe visual symbols are important. So if you can start your work day or weekend with a warm cup of coffee that reminds you to hold onto your investment and don’t sell it, odds are you’re going to be far richer in the future.
There are also other cryptocurrency-themed mugs, so take a look and treat your friend or yourself to one.
*11. Bonus gift
For everyone who has invested in Bitcoin and has once considering selling, give them or yourself the gift of visiting this website: shouldisellmybitcoins.com.
This amazing page always has a new GIF tells the answer we all need to hear. Brilliant!
Disclosure: The author does own Bitcoin and other cryptocurrencies in his portfolio. The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.
Should I Wait To Buy Bitcoin And Ethereum?
When cryptocurrency prices spike, you may question if you should wait to buy Bitcoin or Ethereum at a lower price later. Buying low is only wise after all.
Of course I don’t disagree with the reasoning behind the “buy low, sell high” thinking.
However, the methodology can be difficult if not impossible to accomplish with some investments in real life. And following that philosophy will cost you big opportunities to make money investing in Bitcoin, Ethereum, or other assets.
Let me explain the problem behind this philosophy—because once you understand you’ll become a better investor with more money to show for your efforts than you do now.
The Problem With Waiting To Buy Bitcoin And Ethereum
For people who believe in the cryptocurrency technology and are convinced they’re going to make money investing in the long term, what’s the logic in waiting to buy Bitcoin, Ethereum, or any other asset?
It’s simple: the thought process is by waiting to buy at a later time they can get Bitcoin at a cheaper price and make more money years from the date you purchased.
In a vacuum that strategy is unbeatable. However the market doesn’t work that way! In reality this strategy is very often botched.
Because every day you wait to buy Bitcoin, you run the risk of not buying lower—which you intend—but buying higher—the complete opposite of your plan.
Many times the price is never lower in the future than what it is currently. So buying high, could still mean buying lower than any price point you’re ever going to get going forward. Got it?
It doesn’t make sense to miss out on gains because you’re waiting for the perfect storm when the price of Bitcoin drops 50% in a day—that’s extremely unlikely and by no means guaranteed to happen.
With potentially revolutionary assets like this, my opinion is it’s better to get in the game as soon as possible, even if the price is at an all-time high and you feel like johnny-come-lately.
Think about this: The price of Bitcoin was once at an all-time high of $10, so if you never invested then because you were waiting until it went down to $8 then you cost yourself millions of dollars as one Bitcoin is trading for over $8,000 today.
I didn’t forget about the visual learners out there. Take a look at this price chart to look at every investor that got hammered assuming they waited for Bitcoin to go down when instead it shot up to the moon almost every month since 2013.
There are only a few months, from 2013 on, in that chart where you’d have been better off to not buy Bitcoin and instead buy it the next month. The super majority of months show that it’s crazy talk to wait to buy this hot cryptocurrency.
And this logic is exactly why it makes the most sense to invest with a strategy called dollar-cost averaging.
Use Dollar-Cost Averaging To Build Your Position
Dollar-cost averaging is an investment strategy that recommends you buy a fixed dollar amount of an asset at the same time every month.
For example, someone using dollar-cost averaging to invest in this coin would set aside $300 to purchase Bitcoin on the 15th of every month for (at least) 12 months—no matter the current cost of one Bitcoin.
By doing this, the individual purchases more Bitcoin (or shares) when the prices are low and fewer Bitcoin (or shares) when the price is high. But their dollar amount invested stays the same following this philosophy—and they’re guaranteed to own some of the asset instead of wait on the sidelines.
The difference is simply you’re just gradually investing over months and years instead of investing a huge sum of money one day. And based on the past, performance increases when you invest with dollar-cast averaging.
The reason this technique works well is it’s impossible to time the market.
No one knows when Bitcoin, Ethereum, or stock prices are going to go up or down at any given moment. There’s too many moving parts and random things that can affect the price to accurately predict price movements.
And dollar-cost averaging ensures you don’t buy high and takes your emotions out of investing since all you have to do is stick to a set plan. Even better, set up an automatic investment the day after you get your paycheck to relieve you of the manual labor.
This is a winning investing strategy you should absolutely adapt to maximize your profits.
While most people are either waiting too long to invest in these cryptocurrencies or buying them at their peaks, you’ll be using dollar cost-averaging to rake in more profits.
Keep at this and you’ll go from a percentage of a coin to owning a full coin, and then maybe owning 3, 5, or 10 coins plus over time.
If cryptocurrencies like Bitcoin and Ethereum are not your thing, I’d encourage you to execute on this dollar-cost averaging strategy to buy index funds in the stock market. The strategy works just as well here.
And it’s not only a smart strategy in this space, but when wanting to increase your position in any asset—painting, real estate, coin collections, car collections, etc.
Best of luck in your investments and journey to financial freedom!
The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.