# Investment logic gone askew …

Whilst I was traveling, I hope that you had a little time to reflect on some of the advice that I’ve been dishing out over the last few years?

It’s important that you don’t just follow my (or anybody’s) advice blindly, else you may end up making some fatal logic errors like this poor bloke:

Suppose I have 100K in an index fund that has a ten year return of 7.4%, a five year return of 8.2%, a 3 year return of 17.5%, and a 1 year return of 24.76%.  That is a pretty dependable return over the last few years, but it will probably not keep up with the 24.76% return, but will probably maintain at least a 7% return over the next year.  So I assume that 7% return.

I want to buy a car for 100K.  I can take money out of the index fund to buy the car, and give up \$7000 over the next year.  I can borrow money at 2% and pay \$2000 in interest over the next year.  If I choose to pay cash, I lose \$7K, but if I borrow and leave my own \$100K in the mutual fund, I pay \$2K and earn \$7K, for a net gain of \$5K.

So my logic says that paying cash for anything when the investment return is higher than the interest rate is a mistake.  Suze Orman won’t give me advice on this, so if my logic is off, I hope someone will show me better logic.

Have you spotted the flaws?

Well …

The principle of taking a 2% loan on the car so that he can invest at 7% elsewhere is sound, BUT his assumptions are wrong:

1. A low-interest car loan is generally subsidized by price.

Check the true rate, if it’s more than 2% then he is probably better off negotiating the cash price lower THEN doing his cash v finance analysis.

`[Source: http://www.bankrate.com/]`

2. Unless he’s planning on a 7+ year auto loan, the correct comparison is the finance rate on the loan against a CD for the same term.

This is because the stock market is way too volatile and he needs an investing horizon of at least 7 – 10 years before returns even approach ‘normal’.

In fact, even though this chart doesn’t show that time period, he needs at least 30 years (based on nearly 100 years of data) to ‘guarantee’ at least an 8% return (the worst thirty-year period delivered an average annual rate of 8.5% between 1929 and 1958).

3. Your past returns are NO predictor of future performance:

His ~25% of last year could just as easily be a LOSS of 48% next year. Look what happened in 2008:

But, he redeems himself, somewhat:

The same logic applies to my mortgage: I pay 2.62% on my house.  I could pay it off, but taking the money out of an international fund with a one year return of 22.85% would result in a net loss of \$100k over the next year (moving \$500K from an investment at 22.85% to pay off a \$500K balance at 2.62%).

4. On the other hand, his mortgage comparison is ideal:

If you can lock in a 3o year mortgage, fixed at today’s ridiculously low rates, and lock that money into a low-cost index fund for the same period then, yes, you are almost assured of a 3%+ net return, compounded for 30 years (which means that he should almost return 1.5 x his initial investment PLUS whatever profit he makes on your property).

That’s why real-estate is such a great long-term investment, and why the stock market is a terrible short-term gamble.

# Sudden Money. Sudden Death.

Winning the lottery may not kill you, but 70% of the time, it spells financial suicide:

It is estimated that up to 70% of all people who suddenly receive large amounts of money will lose that money within a few years.

It doesn’t take a genius to realize that the twin culprits are:

1. Gaining a large sum of money too quickly; this can be from an inheritance, winning the lottery, selling a business, and so on.

2. Impulse spending; the more you have, it seems, the bigger the amounts that you are prepared to spend on impulse.

The problem is, if you gain your money too quickly, you don’t give yourself time on the way up, to learn the lessons of money management that need to be learned in order not to fall back down.

And, when it comes to money, the bigger they are (as in, the bigger the windfall gain), the harder they fall:

So, here’s my golden advice on dealing with ‘sudden money’ that will help you avoid going broke again …

… as soon as you get that windfall, start using this table to effectively control that spending impulse:

If you hit the jackpot and made more than a couple of million, then you just start adding zero’s to the dollar amounts in this table, to suit!

But, the ‘default table’, as presented above, is a pretty good place to start …

… and, there’s no reason why you need to wait for the windfall before you start using it 😉

# What’s an eco-friendly standard of living?

Fellow blogger, Jonathan Ping, was kind enough to include a chart from one of my earlier posts in one of his recent posts, so I thought that I should repay the favor by including one of his charts, here:

I recommend that you read his original post, but the chart itself is pretty self-explanatory; it shows the problem in personal finance … and that’s:

It’s called ‘lifestyle creep’ and is one of the key reasons why the actual wealth of high-income earners (as indicated by the grey shading between the green income line and the red expense line) is not necessarily that much higher than that of some medium- (or even low-) income earners.

The obvious solution, according to Joe and many other pf bloggers, is to reduce your spending:

This way, you decrease the red expense line relative to the green income line …

… in the process, enlarging the grey-shaded area between the two lines i.e. allowing, at least in theory, even low-income earners to increase their wealth!

The problem with this strategy is that saving – especially, saving more (probably a lot more) than you do now – is really, really, really hard.

Austerity hurts. Austerity is against nature (well, my nature).

It gets worse: saving now so that you can spend later simply doesn’t work!

To make this type of cookie cutter personal finance plan actually work, you need to be debt-free and be able to live on just half your current annual income for your whole life.

In other words, you need to drop the red savings line to no more than half the green income line … not later, but now … and keep it there for the rest of your life.

Never fear, I have a better plan …

… it’s one that is far more natural, because it allows you to maintain your current standard of living, even increase it over time:

Let’s say that you start off as an average-income earner; here are your steps to success:

1. You can start to save a little, perhaps more than you have done in the past. Don’t worry, this austerity is temporary … after all, you already know how I feel about too much belt-tightening.

2. Once you have a little money beginning to pile up, you should find a way to put it to use to help you grow your income. Perhaps you could: start a part-time business; buy an ‘absentee-owner’ franchise; or open a car wash. You could work a little smarter and score that big (or little) promotion. Maybe you could collect a windfall: a tax refund; find a rich aunt who dies and decides not to leave all her money to her cat after all; or, you get really lucky and hit a small jackpot at Binions.

3. As your income grows, you should increase your spending by no more than 50% of your after-tax ‘pay rise’. The rest must go back into your little pile of money. Then you should concentrate on finding even more ways to put it to use to help you grow your income. Are you beginning to see a pattern here?

4. As your income grows at a (much) faster rate than your spending, you will slowly begin to see that you are actually already tending towards saving 50% of your income without even trying!

Keep it up for 15 to 20 years, and you’ll be able to sustain that savings rate all the way through – and beyond – retirement, as you build a big enough bucket of wealth (your net worth) as shown by the green-shaded area between your income and expense lines.

What’s more, this fully sustainable standard of living is always more than your current standard of living, so you never, ever need to tighten your best. The secret with this plan is that you simply don’t loosen your belt as fast as other high-income earners tend to do.

Obvious, really …

Now, that’s what I call eco-friendly finance 😉

[You can also read this post in the Carnival of Personal Finance:  http://wealthpilgrim.com/carnival-of-personal-finance-happy-days-are-here-again-edition ]

# The Golden Rule of personal finance …

If you find yourself asking a personal finance question like this one, this post will give you all the tools that you need to answer it for yourself:

I am in my early 20s, earning between \$110-180k/yr depending on my bonus. Would it be inappropriate for me to drive a \$50k Mercedes Benz?

Most people would deal with this by saying things like:

– Can you pay cash for the car?

– If you buy a Merc now, what will you buy next year?

– Save for your own home

– And, so on …

Which are all valid concerns …

… but there is one important question that nobody thinks to ask:

What is your current net financial position (i.e. net worth)?

Yet, this is the most important question to ask!

Why?

Because it’s your Net Worth that sustains you in retirement:

– Before your retire, you earn income

– You save and invest as much of your income as possible to build up your ‘nest egg’ (this is your net Worth on the day that you retire)

– After you retire, you live off the income (e.g. interest, dividends, investment income, etc.) generated by your Net Worth and/or deplete it over time

And, this takes you directly to The Golden Rule of personal finance …

… because, it’s the one financial rule to live by; the one above all others; the one that – if you follow it – will answer all of your financial questions and guarantee your financial future:

Always have 75% of your net worth in investments.

This means: at least until you retire at a time and place of YOUR choosing, that you should always have no more than the remaining 25% of your current net worth (tested yearly) as equity in your own home, car, possessions, etc..

These rules of thumb then follow:

– Have no more than 20% of your current net worth as equity in your own home

– Have no more than the remaining 5% of your current net worth in your other possessions. It is typical to split this 50/50 between your car and your other ‘stuff’.

– This means that you should have no more than 2.5% of your current net worth in your car. I suspect that the reader’s proposed Mercedes would break this rule.

There are a few important things to note, if you’re going to obey The Golden Rule:

1. You can – in fact, should -break the 20% Equity rule for your first house (otherwise, you will never be able to afford to buy one), but don’t upgrade for as long as you will be breaking this rule.

2. You will probably need to borrow money to buy your house (first and/or future home), but don’t spend more than 30% of your take home pay on the mortgage repayments, except – again – for your first house (but, only if you absolutely have to).

3. Never borrow money to buy a depreciating asset (e.g. car) UNLESS it’s required to earn income AND you have no other way of buying one. Even then, obviously buy the cheapest that will do the job, borrow the least, and pay it off early.

4. For a pleasant surprise, test these numbers annually: because your Net Worth will go up each year, yet your car and other ‘stuff’ will depreciate (check eBay). This means, you can actually afford to buy more ‘stuff’ every year or so, if you like, or just save up your ‘spare net worth’ for a couple of years to upgrade your car, etc. when ready.

So, are you following The Golden Rule?

If not, what do you have to change in your life so that you do?

# Tin Stacker or Kite Flyer? Which one are you?

I fly kites and I stack tins. But, I mainly fly kites. And, it’s all because I understand the true value of money.

Do you? Let’s find out …

The money that you save has a value today and a value in the future.

Aside from money that you save as a short-term buffer against emergencies, or to pay for a trip or other expense coming up soon, the real value of money that you save today is the value that it can provide tomorrow.

But, the ‘tomorrow’ that I am talking about is the one that comes on the day that you decide to begin Life After Work. Some call this retirement; others call it semi-retirement; I call it early retirement … but, that’s really up to you.

So, a dollar today is exactly that: One Today Dollar.

But, in the future, two things happen to that dollar:

1. Inflation erodes it – robbing it of roughly half its value every 20 years, and

2. Investment returns grows it – increasing it according to the annual compound growth rate of that asset class.

With inflation pulling one way (down), you need to find an investment that moves the value of your savings the other way (up); how fast you need to move depends on (a) how much money you need (your Number) and (b) when you need it (your Date).

So, how fast do different types of investments grow?

Well, according to Michael Masterson in his book Seven Years To Seven Figures:

[AJC: The greater the returns – that is, the lower down the table – the more ‘actively’ this table assumes you will manage the asset e.g. you may only be able to achieve 15% returns on stocks if you follow a system such as And, without active management – e.g. rehab’ing, flipping; leveraging; etc. – real-estate may only keep pace with inflation]

That’s why the Future Value of \$1 could be \$100, in just 10 years, if you invest it in a business.

But, that same \$1 could be worth only \$1.45 in 10 years, if left in CD’s. Now, that’s before inflation …

If inflation runs at its historical average of 4% \$1 is only worth \$1 in 10 years, 20 years, or 40 years!

So, when Brooke says:

create the proper mindset. then its time to move on to more advanced lessons.

I whole-heartedly agree.

EXCEPT that the “proper mindset” that she – and most others – talk about is saving, paying off debt, saving, living frugally, and … saving.

Which is great, if you value every Today Dollar exactly the same as a Future Dollar.

But, I don’t.

And, neither should you … and, here’s why:

The very first thing that you should do when you are thinking about saving is think about:

How many Future Dollars do you need, when you stop work / retire?

I’m guessing that Number’s at least 20 to 40 times your current expenses, doubled for every 20 years that you are prepared to wait.

[AJC: Ironically, the less you are willing to risk to grow each Future Dollar now, the higher the multiple that you will need e.g. if you are content to keep your savings in mutual funds, then you will need closer to 40 times your current expenses, doubled for every 20 years that you are prepared to wait. If you are prepared to actively invest in some mixture of stocks, real-estate, and/or businesses, then you may only need 20 times]

How much is that for you?

I’m guessing it’s much more that you previously thought.

Now, what has any of this got to do with either flying kites or stacking tins?!

Well, when you save, is it going to be so that you can line each Today Dollar that you collect by saving into a nice Today Dollar Tin with all of the others that you get, until you have enough to oil, salt and close … putting it away, with all the other tins that you collect in your working life until – in 20 or 40 years time – you pull all of those tins out of the Tin Storage Bank, dust them off, and find …

… exactly as many Future Dollars as you had Today Dollars, no more no less, and not enough?

Or, will you take each Today Dollar, and when you have enough, make a Future Dollar Kite (it can be a Business Kite, Real-Estate Kite, or possibly a Stock Kite) and let it soar?

And, if it crashes – when it crashes, because of storms and, well, kite-flying whilst you are learning is risky – will you then take a few more of your Today Dollars and make another, and another …

… until one flies, with each Today Dollar used in making it becoming 100 Future Dollars?

[AJC: Most likely, you will also be putting aside a few Today Dollar Tins of your own, for a rainy day – since it need not take many to make a few Kites, and you may as well save something whilst you are at it]

Tin Stacker or Kite Flyer? Which one you choose is up to you …

But, I must warn you – even though most of you are tin-stackers by nature, therefore, should not be surprised when your Future Dollar stock is well short of what I would consider a ‘nice retirement’ – I write solely for the kite-flyers out there!

# A dollar saved is a \$100 earned …

If you read this blog often enough, you may be forgiven if you leave with the impression that saving is not important.

Of course, you would be wrong!

It’s just that enough is written elsewhere about saving – too much – that little is left for me to say here.

So much, in fact, is written about saving, that you would also be forgiven for thinking that it’s the Holy Grail of Personal Finance.

It isn’t …

But, if your aim is to begin Life After Work (a.k.a. early full/part-retirement) as soon as possible, then every dollar that you save now has a far greater meaning than you may, at first think.

Firstly, though, you have to eradicate from your mind the idea that each dollar that you save is to be closeted in the warm confines of your bank, perhaps sitting shoulder to shoulder with your other dollars in a 5 year CD, locked up like sardines in a tin can waiting for the day that the lid will slowly curl back, only to be quickly consumed.

Equally, you have to eradicate from your mind that the “invisible dollars” scraped from the top of your paycheck and secreted in the mysterious 401k will somehow pop up just when needed to save your retirement, like an airbag in a crash …

No.

It’s clear – at least to me and my long-time readers – that if you need a Large Number / Soon Date (that means, retiring early with a large enough bankroll to happily sustain you until your family finally decides to park you in some nursing home for the remainder of your drool-filled days), then you need to actively manage your money.

Perhaps you need to start a business? Or, you should start rehabbing some houses to build your rental portfolio? Maybe, it’s time to plunge head-first back into that Blue Chip Lottery called the stock market?

Whatever your ‘investing poison’, it should be clear (perhaps with the aid of a few minutes and a simple online compound growth rate calculator) that you need to actively work to gain Very Large Compound Growth on your Net Worth.

So, the value of each dollar saved now is not the paltry 5% to 8% return that others expect, passively watching their CD’s and Index Funds match-racing with Inflation …

… rather, it’s the value of using those dollars to build a small war-chest (OK, a modest level of seed-capital, may be more apt for most of us) that allows you to get started on your business / real-estate / stock-based plan.

And, it is every dollar that you add, or reinvest instead of spending, that helps to fuel the flames of growth.

Once you start to see the value of saving though the spectacle of building a modest pool of funds-for-investing, you begin to realize that every dollar that you save today is really the same as \$100 in a mere 10 years timeif invested in a business.

If you don’t believe me, here it is in black (well, blue) and white:

So, slash those Coke Zero’s from your diet and start drinking tap water and, before you know it, you (too) will be a semi-retired multimillionaire, sitting on a beach in Maui …

Now, how do you feel about saving?
.

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# The myth of asset allocation …

There’s a Rule of Thumb that says that you should keep 100% – Your Current Age in stocks (and, the rest in bonds).

For example, if you are currently 27 years old, you should keep 27% of your current investments in bonds and the remainder (73%) in stocks e.g. an Index Fund that mirrors the S&P500.

There’s also a new school of thought that says the numbers should be ‘upped’ to 110% or even 120%, to ensure that you keep a larger percentage of your net worth in stocks at a young age, whilst you can still stand the volatility of the stock market (c’mon, you haven’t forgotten 2008 already?) and allow for a larger upside to help find your longer lifespan.

But, there’s a problem:

Let’s say that you want to retire at age 65, and you are currently 60; the original ‘rule’ says that you should still have 40% of your (hopefully, now considerable) net worth in stocks; the question is:

If you plan to retire in 5 years, what % of your net worth should you put in stocks?

5 years is too short an investment horizon to invest in stocks!

In fact, we’ve already established that the best place to keep your savings is in CD’s:

Over 5 years, based on past performance, there’s simply too much chance that you will lose money on the stock portion of your portfolio.

But, that’s not the major problem that I have with this – or any – theory of asset allocation …

… my issue is that asset allocation theory only works in long timeframes (again, because we can’t afford risk of loss), say > 10 years, and probably greater than 20.

And 10 to 20 years didn’t work for me, because my plan was to make \$7 million in 7 years.

To have any hope of emulating my outcome, you need to focus on three things:

1. Building up the largest ‘starting bank’ that you can,

2. Not spending more than you absolutely have to help build that starting capital in the shortest space of time possible, and

3. (this is the most critical of the three), investing to obtain the highest possible compound growth rate.

Sitting on a basket of stocks and bonds – no matter what the mix – probably won’t cut it.

Short time frames put a LOT of pressure on modern asset allocation and portfolio theories …

… way too much pressure, if you ask me.

# How much do you really need?

My soon-to-be-nephew is having his wedding at our house; he’s an event organizer (amongst other things) so this is his opportunity to create his (and my niece’s) ideal wedding …

… we were, of course, delighted to be able to lend our house.

As he was supervising the erection of the marquee over our tennis court and false flooring over the pool, we were chatting about wealth.

During the course of discussion, the subject came up of how much do you really … and, ideally … need?

What is the Perfect Number?

If you’ve been following my blog for a while, you will know that I’ve said that you need as much passive income as you need to live your Life’s Purpose.

Even without knowing your Life’s Purpose, though, I can still tell you roughly what your Perfect Number should be:

You should aim to live no better than your closest group of friends.

Let me explain with a personal example …

We have a long-standing group of friends.

We eat often eat together. We party together. We travel together.

Not always. Not only. But, often enough.

Now, how would you feel if you travel coach, most of your other friends travel coach, but one of your friends is always at the front of the plane?

How would you feel if you like to eat out at a mid-priced restaurant once every couple of weeks with your friends, but one of your friends is always trying to arrange 5-star dining? And, 5-star hotel’ing?

I think your friend would eventually price herself out of your group of friends.

Well, I am in danger of becoming that friend.

Our friends are all quite well-off, because they are all professionals (both husbands and wives) drawing great incomes for many years. All of our children privately school together, and vacations are now flying coach (with kids) or business class (without kids), staying at international 4-star resorts at least once, and probably twice, most years.

But, our house is clearly the best in the group. Our cars are the best (and, could be better, but I’m starting to realize that I should hold back a little). And, we could be flying business class (sometimes even international first class), and easily stay in 5-star hotels.

In short, we have to be careful not to make the difference obvious.

That’s why I told my nephew (to be) – as I am telling you now: aim to live no better (but, no worse) than your closest group of friends, assuming that you wish them to remain your friends.

I can add a little more:

– Aim to be towards the top of your circle in terms of sustainable annual income.

– Aim to have a buffer, so that you can maintain that standard even if something goes wrong.

[AJC: This is not the same as an emergency fund: this means, for example living on the same \$50k p.a. as your friends, but actually earning \$70k p.a.]

– Aim to be able to maintain that standard of living (with buffer) when you begin to live Life After Work.

– Make sure that your Life After Work (i.e. very early retirement) makes you still ‘look’ busy

[AJC: Sitting on a beach all day while your friends still 9-to-5 it 50 weeks a year will just as quickly put you in the ‘former friend’ category as flashing your cash]

So, how much money do you really need?

Step 1: Take what your friends are earning and add 20% buffer

Step 2: Multiply that by 20

Step 3: Add the amount remaining on your mortgage (or, what your mortgage would be if you bought one of the better houses owned by your friends)

Step 4: Add any additional ‘crazy money’ that you need for some of your ‘keep busy’ Life’s Purpose activities.

Step 5: Double your final total for every 20 years until you expect to be able to accumulate that amount of money (or, add 50% for every 10 years), to account for inflation.

That should give you a very practical Number … you might even say your Perfect Number 😉

Now, you just need to go out and get it.

# When should you take a loan instead of saving?

In which cases should you take credit or a loan instead of saving up?

When the price of whatever you are looking to buy is rising faster than the interest on the loan.

But, the answer that I want to focus on is that by popular financial blogger, Pinyo who says:

Buying a house at today’s interest rates is a good example of where taking a loan could be more beneficial than saving up.  You’re amortizing over 30 years and inflation would counter the interest expenses you paid over the life of the loan. In the mean time, you get to enjoy the house much sooner.

Whilst what Pinyo suggests is correct: real-estate is a great hedge against inflation; and, borrowing to purchase your home is probably the only way that most people will ever get to buy one …

… his comment actually fails to mention that it’s also a pretty good investment. Even your own home.

Let’s take a look at a simplified case of somebody purchasing their own first home (house or condo) for \$100k, including closing costs. They put in a 20% deposit and take out a 30 year fixed loan, locking in at 3% interest.

Let’s also take Pinyo’s line that the interest rate just happens to offset 30 years of inflation (i.e. inflation also averages 3%), which is almost spot-on, based on the past 30 years’ average inflation rate.

Whereas Pinyo suggests that you are (a) offsetting inflation, and (b) enjoying your house …

… I think you are also making a great investment.

Here’s why:

– Over the 30 years, at just 3% inflation, your \$100,000 home would have grown in value to \$237,000

– Of course, in that same 30 year period, you would have also paid your bank \$52,000 interest on that \$80k loan

– Don’t forget that you put in a \$20k deposit, which could have been earning interest elsewhere; let’s say that you would have averaged a 5% return on this investment, so your \$20k could have grown to \$86k.

The bottom line is that you will make an additional \$17k profit, if you buy the house instead of just ‘saving’ the \$20,000.

To me, this is a clear and tangible case where borrowing (to buy your first home) is better than merely saving …

What about the repairs and maintenance cost, you ask? And, the insurance, and the land tax?

My feeling is that these would be a lot less than the rent that you no longer need to pay …

… after all, you did just buy your own first home didn’t you? 😉

# The best place to keep your savings …

Where do you keep your money if you want to buy a house in, say, 7 years?

If you keep it in the bank, you’ll find rates up around 5% if you can commit to a 5 year term.

Given that inflation is currently running around 1.7%, you’re heading for a very small gain.

That’s why many choose to put their money into mutual funds

Despite the crash, returns from investing in a low-cost Index Fund (say, one that mirrors the S&P500) have been up to 28.6% for any 5 year period that you care to nominate in the past 85+ years.

Now, that’s certainly a lot better than CD’s (long-term bank deposits).

But, there’s a catch … and, it’s a big one!

Whilst’s CD’s virtually guarantee their admittedly paltry return, there’s no guarantees in the stock market …

… and, there has been at least one 5 year period where the S&P500 has lost 12.5%.

But, let’s look at the downside v the upside: that’s a potential 12.5% loss each year for the 5 years … compounded (meaning your savings will halve in a little less than 7 years) … but, you may gain up to 28.6% annual return (meaning you may double your savings every 2 years).

Compare that to the measly 5% return (before inflation) from CD’s and it seems like no contest, which is why many Americans are opting to use mutual funds as a mid-term savings vehicle, but …

It’s a huge mistake.

You see, it might be fine if you already had the deposit for the house saved up, and you were just setting it aside for 7 years. If so, and if this were me, I might very well elect to buy units in a low cost Index Fund rather than scraping by with a CD.

But, if I had the deposit already, I would more likely just go ahead and buy the house now, and rent it out if I wasn’t yet ready to live in it.

But, the reality is that most people need that 7 years to save for their deposit. And, that’s a whole different ballgame, because now you are putting aside a little every month and, over that 7 year period, slowly building up your deposit.

This means, your money is really only going to sit in your investment or savings account on average just for 3 years.

Now, your risk of loss is up to 27%, almost as much as your potential gain of up to 31%, and that means you are gambling, not saving.

This is one of very few cases that I have found where common financial wisdom is correct …

… the minimum period for committing your funds to the stock market should be 5 to 10 years, assuming you are not prepared to gamble with your starting capital.

And, if you are prepared to play the market, well, that’s a subject for a whole other post

So – and, unfortunately – the best place (indeed, the only sensible place) to keep your money safely parked for up to 7 years is in CD’s 🙁