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10 Money Observations You Might Not Have Realized


Spoiler: You have to spend money to make money.

Lifestyle, Columns, Personal Finance, Investing, Money, Advice

1. You usually make money when you buy, not when you sell. Every mercantile businessman learns this and it is just as applicable in the stock market. When you buy low, you simply have more options later. It has worked for Warren Buffet, for good example.

2. Money is already largely digitized; only 5% of the money in the world is in cash.

3. Overall market results determine 70% of any one stock’s performance, studies show. But because the market is unpredictable, so far, that is why you need to a) stay invested to take advantage of the upswings and b) stay diversified to improve your chances on the upswing while softening the fall on the downswings.

4. It is an expensive fact for those who worry about malpractice and want to keep health costs down at the same time, that docs are punished for under-diagnosis, not over-diagnosis. And fee-for-service only encourages that “cover your behind” mentality. A survey in The Archives of Internal Medicine showed that liability concerns prompt 75.9% of respondents to “do more,” for instance.

5. Times have changed. We used to have dinner at home and then go out for entertainment. Now you have entertainment at home and go out for dinner.

6. Be careful, boring markets can prod the nervous into doing something exciting when they should actually do nothing. “Stay the course.” Why do people object to getting rich slowly?

7. “The best things in life are free. The second best things are very, very expensive.” — Coco Chanel

8. For years, financial types have recommended minimizing one’s withholding because that practice amounted to a free loan to the government. In this era of very low interest rates, it is worth considering to let the government over-withdraw so that you get a fat check on purpose in May, having lost very little potential interest income. If you have the discipline to avoid spending that windfall, it can be a means to extra savings and money to rebalance your accounts.

9. There are three times more millionaires living in lower priced homes than in the million plus class. That is money smart because, historically, stocks have beaten real estate gains over time and taxes, insurance and maintenance can add up on the negative side. Note: There are always local exceptions in real estate (San Francisco on the crazy-high end and Detroit on the bargain-low end, etc.). Also, research has shown, oddly enough, that homeowners generally are no happier than renters.

10. The optimal number of hiring interviews turns out to be four, with an 86% confidence rate. Any interviews after that only add 1% each. FYI: Google used to do 25 interviews (!) per candidate before they figured this out.

11. Bonus! — You never make big money until you start hiring other people. And you never make huge (‘uge’) money until you start using other people’s money.

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Victor J. Dzau, MD, gives expert advice
Victor J. Dzau, MD, gives expert advice