Friends who've lost lots...

I think young people, during their pre-adult years, should learn 4 things:

1. Do not spend money on things you don't need. Find out why you need something before buying, if not sure, write it down to convince yourself. Of course you can still write excuses, but then at least you have to write a few and look at it again tomorrow.

2. Don't get into drugs and gambling. Drugs create irrevocable damages and you have to live with them for life. Gambling not only takes your future away, it also takes your love ones, parents, spouses, kids, siblings...

3. Work hard to earn your money in a legal (at least according to the lawyers if not the Laws) way. Invest in things which will build you a future, education (academic, trades, investments, etc.) and also sustainable assets. Don't dream of making quick monies, it's a law of physics, fast come, fast go. Persistence, perspiration, and patience are keys to success, well at least part of it.

4. Plan for your financial and health well beings. Losing any one of them or both won't put you in very good stead.

 

Don't do drugs? Drugs should be ****ing mandatory! lol

 

No 3 will get them there

 

I have an extremely smart friend who took the advice of his step dad (a multi millionaire developer in WA) and purchased land to build in Melbourne.
GFC hit and he couldn't build the house he wanted so sold at 100k loss.

Holding costs were killing him and he couldn't build an investment as LVR got to well over 130% on the land.

The lesson there is it doesn't matter how smart YOU are or how smart the person you are getting advice of is. ALWAYS do your own research or if you r too lazy then atleast get a second opinion.

 

I think there could be multiple reasons due to this fiasco, based on your description, I think the external contributing factor is the GFC, but NO ONE could have predicted the GFC. There are only a handful who did and made an absolute killing out of it. So this is pure bad luck.


The internal factor I think that he ran out of cash, but ultimately it is due to lack of self-awareness. Unfortunately this is a very common trait for super-smart people whom is too used to early success and never expected to fail at anything so if disaster like this strike, it tend to have worse effect on them than us normal folks who has experienced ups and downs in life.


I have a uncle who runs a successful trading business back in the eighties. For whatever reason after he made some money he listens to his “friends” and started to invest in antiques and futures which he has absolutely no idea about. Lost his millions within a few years and never recovered ever since.


Absolutely agree with your comment about “do your own research”!

 

Plenty of people predicted the GFC. They probably did not benefit but there were people in high level finance, who were voices in the wilderness, who predicted it and were ignored because "you have to be positive" and "house prices only go up" and "too big to fail". You understand markets and consumer behaviour and you can predict the seemingly unpredictable. I predicted the GFC by looking at patterns.

As for the "smart" bloke who lost money, well, laziness is not smart. No amount of reading makes up for hard graft.

 

There is a lot of talk of financial literacy and young people.
Taking out the drugs and gambling factors (as they are diseases/addictions)

If one spends all their money on stupid things I have no sympathy for them. Even my 8yr old niece and nephew would understand that if you spend all your savings then you have none left

It's not rocket science people

 

Yes agree

There is book smart and street smart

Also. Just because you are a super smart guy at one thing. Doesn't mean you will know squat about a different topic

Think about it

 

On a similar topic I went to a pretty nice private school, but despite being well off was the 'poorer' kid in a school full of rich kids. Couple of good friends received some big lump sums while in university or upon finishing school. Most of them had wild times during uni, but took until at least 30 to grow up completely. Most now have no property and are behind in their careers.

Although I felt very unfortunate at the time, in hindsight I was very lucky.

Moral of the story is I have not seen too many people who received so much at young ages turn out well. Give your children skills and independence.

 

we all know a few gamblers,
the worst guy i know is around 60-70s calculated his net loss over the years just last week.. he said $3m... yes $3,000,000 australian dollars.

worked as a postie all his life.. waste all his inheritance on gambling. this year sold his home for $2.2m. the last asset he got left.

 

Had another one today... Good friend of ours. We've suspected something's up for a while now, but today I saw their house listed for sale.

You would only sell now in Darwin if you had to.

It's very, very sad. They will lose a lot of money.

 

Why don't schools teach stuff like this?

 

Because schools are there to produce workers.

 

Exactly.

The system is built on the fact that there will be people who need to do the menial task jobs.
Imagine if all the cleaners and street sweepers had $100k passive income from their bitcoin and property portfolios and chucked in the towel and went holidaying in Thailand all year round...
We'd end up with a service industry and productivity crisis. Too many cashed up bludgers who don't need to work.

 

Give your children enough to do something with their lives, but not enough to do nothing.

 

I dont think its a conspiracy. The kids who do medicine and law and engineering dont get any more financial training. Ask a parent: what do you want your children to be able to do when they finish school? Most common answer is to get a good job. Thats what people ask for, thats what they get.

 

thats because back in the day for these parents, a good job, a good salary, a roof above their head and food on a table is all they ask for. especially immigrants. its about survival

now most people have the basic stuff easy, they/we want more. jobs alone is not enough,

kids in engineering and medical come out do achieve great things. yes they are a handful of them who come out and just earn a good living. engineers keep this world moving forward and medicine save lifes. they are not financial people, they learn the basics from their parents. let the finance people do financial stuff. are they paid well ?? yes they are and they deserve it

if i were to ask a questions.. why does one need to go to school to have a business degree?? what is a business degree?? do you need a degree to start a lemonade store ?

 

I don't know any friends/family who have lost the good fight (except in love) - however I do see quite a number of clients who have (through the 9-5) working for one of the banks... it's a sad sight to see but usually involves either blatant denial of current circumstances or refusal to accept any external help - most times it's the combination of the two.

 

Because one can’t sit for an examination in one hour and determine you have learned it well. Into the too hard basket for most Ministers of education or the school principal.

 

The most important thing to invest in is your own self development. Without that you will continuously repeat the same mistakes and lose money.