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I Will Teach You To Be Rich

by Ramit Sethi

Last tended to July 30, 2020

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Draft in Progress

The quality of writing on below this point is haphazard, disjointed, and possibly non-sensical. It's probably a good idea to come back later.

1. RICH LIFE

What does “rich” mean to you? A lot less than you think! Nice suit? Nice watch? Instagram bling? It’s all a lie... 50% of millionaires surveyed said never bought a suit more than $400 or a watch above $200!

2. START TODAY

Power of getting rich is in compounding. You’re already LOSING money by not taking action

3. CREDIT DEBT

GET OUT NOW (30% of credit score is based on amount of debt you carry). Ironically, (borrowing other people’s money aka "credit") credit is CRUCIAL for getting rich. BIG wins - credit purchases are huge (house, car, etc) and the interest rate you get depends on credit score/report. Could literally save or cost you tens of thousands of dollars over the course of 20/30 years!

4. Index funds

Warren Buffett favorite - leave his kids all money in these. These stocks use computers to find funds and average the market - SP 500 or NASDAQ or NSE (Kenya). Something like Old Mutual (Kenya) (don’t own YET, explain next point). Mostly they have very Low fee index funds are key — (0.2%-0.75% annual)

5. Lifecycle funds

Get rich if you’re lazy? Rebalancing portfolio takes work, time, knowledge, research, etc. Lifecycle or "Target Date Funds" Specific type of mutual fund helps diversify portfolio for you based on your age.

6. 401k MAX OUT

EX: Assume I made a bet with you - for every $1 you put into investing, I’d give you $1 for free. Up to $5,000. No risk to you. Would you do it? THAT’s WHAT 401k IS! 25 and under age less than 1/3 participate in 401k program (less than 4% max out). if employer offers 401k match - do it! In Kenya this equals to NSSF.

7. Rethink owning a house

It is said to be the "best investment". Rethinking the investment...

  • Extremely risky (not diversified portfolio if $777k in one area)
  • Hidden fees we don’t think about (purchase price + Interest (can double cost) + Taxes + Insurance + Maintenance + Major repairs or improvements = TOTAL (3-4x purchase price).
  • Investment? Who sells the house then keeps the money in smaller house? No one! We get a BIGGER house - never invest profits we "made" from the investment.

8. Roth ira MAX OUT

Everyone should have (especially in your 20s) At 59 and 1/2 can withdraw everything tax free. I think of this like Individual pension plan from KCB

9. Don’t be normal

Being average is NOT good. 86% of Kenya's living on paycheck to paycheck. Be better than that.

10. Emergency Fund

Have an emergency bank account that is at-least 2 times your monthly income.

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