Tips on saving money

[McLovin]

I jumped the gun a bit there. It obviously comes back to everyones personal goals and aims. Personally I think every cent you have in the bank as a form of 'investment' then it is a complete waste of time. With inflation well above the quoted 2-3% you would barely be staying ahead of the game.

One of the best investments I ever made was going almost all to cash in late 2006 (I held onto some CSL that I'd had since about 1996). I had plenty of people telling me I was an idiot for getting out. I was working in finance at the time too and much smarter heads were telling me this. Didn't lose a cent through the GFC. And then in early 2009 I was cashed up and made a killing, enough that I can now concentrate on my investments full time. Doing it full time, I have found that my knowledge and understanding has expanded exponentially.

Sometimes cash is the best investment.

 

[young-gun]

O.K young gun, how about if you were 67 years old and had $1m, put it in the bank at 5.7% or buy silver?
$57,000 to live on or 1000kg of silver that you can't eat, can't take to the shop to buy food and hope it doesn't tank.

Would you be as cavalier, even if you were 35 years old and had $1m but had just been made redundant.
Would you jump in and buy silver or would you put the $1m in the bank at 5.7% and look for another job.

Life's great when you don't have to rely on your decissions to live on.

I don't know why you even bothered posting this. Obviously everyone's opinion and approach is going to differ from person to person depending on situation. It goes without saying. My situation allows me to do whatever I want. If someone is 67 and happy living off 57k a year then great, but I don't plan on being in that situation. In that case it's not really an investment anyway, it's a necessity to put food on the table. Obviously taking a risk to the point where you can't put food on the table or petrol or a roof over your head is idiotic.

 

[sptrawler]

I don't know why you even bothered posting this. Obviously everyone's opinion and approach is going to differ from person to person depending on situation. It goes without saying. My situation allows me to do whatever I want. If someone is 67 and happy living off 57k a year then great, but I don't plan on being in that situation. In that case it's not really an investment anyway, it's a necessity to put food on the table. Obviously taking a risk to the point where you can't put food on the table or petrol or a roof over your head is idiotic.

I was just responding to your statement, the same as McLovin above. It apeared to infer, that to have cash in the bank was akin to having a screw lose in your head.
As an aside, if inflation rises, so does interest rates. There was a time in the not too distant past that you could get 21% interest. If that was the case now, would you have your $1m in the bank earning $210k p.a or in speclative shares, gold and silver? It would still be boring but you would double your money garuanteed in 3.5 years.
As McLovin points out it is easy to halve your money with another G.F.C and as far as gold goes' I have seen it at $1800oz and $245oz in the last 10 or so years.

 

[young-gun]

I was just responding to your statement, the same as McLovin above. It apeared to infer, that to have cash in the bank was akin to having a screw lose in your head.
As an aside, if inflation rises, so does interest rates. There was a time in the not too distant past that you could get 21% interest. If that was the case now, would you have your $1m in the bank earning $210k p.a or in speclative shares, gold and silver? It would still be boring but you would double your money garuanteed in 3.5 years.
As McLovin points out it is easy to halve your money with another G.F.C and as far as gold goes' I have seen it at $1800oz and $245oz in the last 10 or so years.

Ok seems I am on a different page here. What I am trying to say is that in no way do I see putting 'small' amount of money into a term deposit as a form of 'investment'. If someone is putting money into the bank thinking it's a fantastic investment then I don't believe this to be the case. A bank account has its place for saving money, but once you have saved x amount if you want to make money then that money needs to be invested. The other time to use the bank is to protect yourself as you poitned out that Mclovin said. Mclovin I'm sure didn't invest in the bank thinking he was going to make huge returns, it was simply a safe haven until the storm blew over. My original post lacked clarity.

I'm not saying don't ever keep money in the bank, I am simply saying that if you are putting it there to make money (again unless you have millions of dollars of cash) then it isn't the smartest choice, and is quite lazy really. If you ahve no desire to turn a million dollars into 2 million or whatever your goal may be, then the bank is probably exactly what you need. They obviously have their place.

In relation to your example, if interest were at 21% then inflation must have been out of control, which would mean your purchasing power would be evaporating quickly, likely diminishing the majority of the 21% return. In your exampe I would take gold/silver any time, as its a great inflation hedge. Gold was at 240 at one point, and is now just under 1800. there is every chance they will crash absolutely, in fact I hope they do as it will present a great buying opportunity. However with central banks witht heir finger on the button, a major crash will be unlikely, or very short lived as they print their way to prosperity in the short term, sending gold and silver ever higher. JMO not advice

 

[sptrawler]

Ok seems I am on a different page here. What I am trying to say is that in no way do I see putting 'small' amount of money into a term deposit as a form of 'investment'. If someone is putting money into the bank thinking it's a fantastic investment then I don't believe this to be the case. A bank account has its place for saving money, but once you have saved x amount if you want to make money then that money needs to be invested. The other time to use the bank is to protect yourself as you poitned out that Mclovin said. Mclovin I'm sure didn't invest in the bank thinking he was going to make huge returns, it was simply a safe haven until the storm blew over. My original post lacked clarity.

I'm not saying don't ever keep money in the bank, I am simply saying that if you are putting it there to make money (again unless you have millions of dollars of cash) then it isn't the smartest choice, and is quite lazy really. If you ahve no desire to turn a million dollars into 2 million or whatever your goal may be, then the bank is probably exactly what you need. They obviously have their place.

In relation to your example, if interest were at 21% then inflation must have been out of control, which would mean your purchasing power would be evaporating quickly, likely diminishing the majority of the 21% return. In your exampe I would take gold/silver any time, as its a great inflation hedge. Gold was at 240 at one point, and is now just under 1800. there is every chance they will crash absolutely, in fact I hope they do as it will present a great buying opportunity. However with central banks witht heir finger on the button, a major crash will be unlikely, or very short lived as they print their way to prosperity in the short term, sending gold and silver ever higher. JMO not advice

Great post young gun, accurate to the point and good thoughts.
I reckon you will do well.

 

[Julia]

Ok seems I am on a different page here. What I am trying to say is that in no way do I see putting 'small' amount of money into a term deposit as a form of 'investment'. If someone is putting money into the bank thinking it's a fantastic investment then I don't believe this to be the case. A bank account has its place for saving money, but once you have saved x amount if you want to make money then that money needs to be invested. The other time to use the bank is to protect yourself as you poitned out that Mclovin said. Mclovin I'm sure didn't invest in the bank thinking he was going to make huge returns, it was simply a safe haven until the storm blew over. My original post lacked clarity.

Good to have you clarify what you meant.
One important factor you seem to have overlooked is risk/reward. Most investments with the potential for high reward also carry a similar risk for loss.
An example is the late Storm Financial where the double gearing was hugely risky but hugely profitable as long as the market trended upward. But it left the participants with nothing or almost nothing when the market turned, essentially because there was no proper risk management.

 

[sptrawler]

Good to have you clarify what you meant.
One important factor you seem to have overlooked is risk/reward. Most investments with the potential for high reward also carry a similar risk for loss.
An example is the late Storm Financial where the double gearing was hugely risky but hugely profitable as long as the market trended upward. But it left the participants with nothing or almost nothing when the market turned, essentially because there was no proper risk management.

Julia if someone said to you, "take a loan against the equity in your house to buy shares".
Then when that process is complete. Julia "Now use those shares to take a margin loan, to buy more shares"

At this point someone would have to be saying "look in my eyes, look in my eyes".
One would have to think that if these people were prepared to take on that risk, it was only a matter of time before scammers caught up with them.

 

[young-gun]

Good to have you clarify what you meant.
One important factor you seem to have overlooked is risk/reward. Most investments with the potential for high reward also carry a similar risk for loss.
An example is the late Storm Financial where the double gearing was hugely risky but hugely profitable as long as the market trended upward. But it left the participants with nothing or almost nothing when the market turned, essentially because there was no proper risk management.

Naturally risk is always the first thing to be thought of. for example I am well aware that my species could halve in a day, therefore I don't place 20k on a trade. As you say with great risk comes great reward. After researching certain companies and what they are doing and where thye are headed you can reduce the amount of risk exposure(although still high).

Although the stock market can generate huge fortunes for some, for me personally it is my least favourite form of investing(not that I am an accomplished investor in all fields, just an opinion.) It has far too many variables attached to it, and can vary from catastrophic to great. you don't have that sort of volatility in business and property. You have days to act in some instances in a stock market. you have weeks or months to adapt in business and property. the potentially extreme volatility just isn't there.

At the end of the day, no one gets rich off investing in term deposits.

Julia if someone said to you, "take a loan against the equity in your house to buy shares".
Then when that process is complete. Julia "Now use those shares to take a margin loan, to buy more shares"

At this point someone would have to be saying "look in my eyes, look in my eyes".
One would have to think that if these people were prepared to take on that risk, it was only a matter of time before scammers caught up with them.

+1. I am not too familiar with the whole storm financial gig, but as far as I am aware everyone was double leveraged and maxed out. This si great when you get exposure to a huge bull market, but very risky, and in my opinion very stupid. Not to cast judgement on those involved, whether they were misled or tricked into doing something that didn't want to. however they are still largely at fault by not knowing exactly what they were getting into if this were the case.

Huge returns usually means huge risks, and if you aren't familiar with them then you're in trouble, and shouldn't be ivnesting in anything.

 

[Happy]

Prepare as much food and drinks as you can yourself.

Earn more than you spend, or spend less than you have and you'll be OK.

I know trivial comment but true.

 

[sptrawler]

Prepare as much food and drinks as you can yourself.

Earn more than you spend, or spend less than you have and you'll be OK.

I know trivial comment but true.

It might be trivial, but as you say, very true.

How many times have you gone out to dinner, spent heaps and walked out thinking, that wasn't worth it?

I've done it twice in the last week and I'm over it.
$100 night out, that doesn't taste anywhere near as good as a home cooked meal. Maybe it is because I live in Perth? But I'm sure there is a lot of short order cooks passing themselves off as a chef.
The other thing I would like to know is, what sort of apprenticeship does a Thai, Vietnamese or Chinnese cook undertake? There seems to be no consitency in the quality of the offerings.IMO

 

[The Barbarian Investor]

Exactly Julia, people who have limited ability to replace capital are risk averse.
Re reading the post, it wasn't very clear.
Buying shares in the bank for dividend, tends to give a better outcome than a term deposit, in the same bank. sorry

On a side-note, Is a certificate of deposit better than a term deposit for those people?

 

[sptrawler]

On a side-note, Is a certificate of deposit better than a term deposit for those people?

Never heard of that, what is it?

 

[TMC93]

Never heard of that, what is it?

Sounds like the old IBD's the oldies used to go in and finger at the banks

 

[johenmo]

Learn to cook properly & do your own filet mignon - lots cheaper than out.
Expand that to dinner part with 3 groups - each prepare a course and eat at one house with BYO wine. Dinner for 6 for a lot less.
Become a Freegan.
Wait at least 24 hours before buying (no impulse buying).
Get at least 3 prices before purchasing.
Have a one-car household.

 

[awg]

Urinate near your roses...you will save money on water, both in watering the plant, and the absence of flush.

Reduced fertiliser too, and they bloom great. You will also be able to observe bugs or other pestilence upon the plant

If you dont have any roses, then lawn, fruit trees, compost heap, most plants in fact benefit from urea.

I draw the line at leafy veg :

 

[awg]

Talking fertiliser, forgot to mention that I recently spread approx 600kg of horse manure on my garden.

There are stables that I drive right past, and it has free manure...in 50kg bags

not easy to lift them into the 4wd, and a bit stinky too

but still at the Nursery that would be hundreds of $

this will be great for the soil over time

its amazing how much you can add..I could easily add several tonnes per year...I try and prefer organic fertilisers, as inorganic chemicals can damage the soil biology

got to get your manure early in the week...that free **** goes quick :

 

[prawn_86]

Like others i am a lot more focused on earning rather than saving, although obviously i stick to a budget. I know they probably all been mentioned before but my top 3 tips are:

1. Take lunches to work. Most peope in my office would easily spend $50 - $100 a week just on lunches. I bring mine from home saving both time and money
2. Use public transport. Admittedly owning a car has fairly high fixed costs, but by using public transport as much as possible you save $ on fuel and maintenance. We average maybe 100kms per week in our car and that includes weekends away/drives to the country once a month
3. Stop smoking and/or drink less or drink at home with friends.

I think implementing the above (if it was possible to do all 3) the 'average' Aussie battler could save at least $100pw

 

[Smurf1976]

Simply stop buying stuff you don't need.

There are exceptions of course (installing solar panels or buying groceries in bulk are obvious examples), but in general terms spending money is not the way to save it. Sure, you got 2 for the price of 1 on whatever it was but that's still a waste if you didn't need either of them. It's amazing how many seem to not grasp this concept...

 

[Miss Hale]

Simply stop buying stuff you don't need.

There are exceptions of course (installing solar panels or buying groceries in bulk are obvious examples), but in general terms spending money is not the way to save it. Sure, you got 2 for the price of 1 on whatever it was but that's still a waste if you didn't need either of them. It's amazing how many seem to not grasp this concept...

Agree with this. My Nanna had a a saying, "It's not a bargain if you don't need it".

 

[Doris]

Simply stop buying stuff you don't need.

There are exceptions of course (installing solar panels or buying groceries in bulk are obvious examples), but in general terms spending money is not the way to save it. Sure, you got 2 for the price of 1 on whatever it was but that's still a waste if you didn't need either of them. It's amazing how many seem to not grasp this concept...

This time last year Coles had a super-special on 18 pack Sorbent toilet paper... 32 cents a roll. I bought up ten packs then Woolies had the same deal. I bought up another 10 packs. A relative, last Xmas, was amazed coming down from the loft above my garages, amazed that I'd bought the company out.
I haven't seen them less than 50c a roll since. Time for another super-special! Too many visitors

However... there is no use-by date on them.
Oh how I've discarded things I've bought that were half priced specials and didn't get to use them in time.
I have a full pantry so I can cook whatever I want. Better to plan meals a week ahead and buy weekly.