DOGE discovers 2

(cont'd from yesterday's post) 

Embedded and hidden corruption discovered by the DOGE team continues from yesterday's video of their staff meeting.

At the "U.S. Institute of Peace" they found a contract (for unknown services) with an ex-Taliban for $130k, and found loaded firearms as well. 

 

Their chief accountant had deleted over a terabyte of accounting records, financial data which the team was able to recover. Since hiding or destroying records is illegal, this coverup was referred to the DOJ and FBI.

The agency had received $55 million/year from congress. Any unspent funds were swept into a private bank account having no congressional oversight, which funded events and private jets.

Asked whether DOGE would be ongoing, Elon answered: "If we drop the ball, fraud and waste will come roaring back." But by ending contracts and fraudulent practices now, it will be harder to get it going again in the future.

DOGE discovers

DOGE leader Elon Musk gets some staff together once a week at 10 p.m. They each answer the question, "what did you get done this week?" A media guy got to sit in on one of these meetings and discovered more absurdities that our taxes have been paying for:

• Investigation found that a $4 billion covid fund was used to rent stadiums for parties, with no explanation. Correction: now any drawdown must be identified as to purpose and receipts must be uploaded.
• Alpaca farming in Peru
• Marketing of peas in Guatamala
• GAO also found that only 10-15% of the money for these causes was actually getting to the stated destination. 
• So it's possible that "no one got a sex change in Guatemala" (a worthless expense discovered months ago)
• Grants may go to a cause that sounds good theoretically, like "save the baby pandas," but no evidence is forthcoming that any panda was actually saved. 

Billionaires

Here is the list of the ten biggest billionaires in the world by the people at Forbes, who keep track of these things. This animated chart shows the top ten by year, 2001 til 2022.

Big names make up some of the list of billionaires in the world. But many are not big names. Many are Americans, but many are not. 

The Albrecht brothers (Germany) made their fortune in selling cheaper groceries (Aldi and Trader Joe). Jeff Bezos made the top ten list in 2018, 24 years after founding Amazon. The name Walton is the family who founded another retailer with a reputation for cheaper goods, Walmart. Elon Musk made the top ten list just last year, and now leads it.

How did Aldi and Walmart make their founders rich by selling cheaper goods? Millions of people in the world took that offer of cheaper goods (and became their customers) because it helped them get more of the food and products they wanted for a lower price, to improve their lives.

from "World's Top Ten Billionaires" (where there's a better looking chart)

New credit 2

 (cont'd from yesterday's post)

Millennials generally hate credit cards, or so it is said. But Affirm's founders had an insight into the specific things they don't like about credit cards. 

It wasn't debt and high interest rates that they reject. Affirm's interest rate can range from 0% to as high as 30%, based on the buyer's credit rating. So their interest rate can be as high as any other.

But there are no hidden fees. If you choose Affirm at check-out, you will be told exactly what you will wind up paying for your purchase over the time period you choose. If you pay with an ordinary credit card on which you carry a balance, you wind up paying interest on everything you buy until you're caught up. People get confused.

Two more things about Affirm apparently appeal to millennials: no big bank, and never any late fees.

Max Levchin claims that his system is more honest. Here's an interview he did:

from Forbes

(cont'd next Friday)

W. Buffett 2

 (cont'd from yesterday's post)

The hedge fund manager, Ted Seides,  who competed against the S&P 500 in Warren Buffett's famous bet, conceded the game in September of 2017. His company's expertly-managed investments were only able to gain 2.2% per year (years 2-10) compared to the S&P 500's average of 7%. That's huge.

"That means Seides’ $1 million hedge fund investments . . only earned $220,000 in the same period that Buffett’s low-fee investment gained $854,000."

Much of that enormous difference results from the fees that hedge fund managers charge. But the cost of an average index fund is way smaller. Buffett's comment to his shareholders: "Performance comes, performance goes. Fees never falter."

What if you had invested $100,000 over the past ten years, 2011-2020? Here's a summary of what actually happened so you can make a recent comparison:

from Carpe Diem

from NY Post

W. Buffett 1

Warren Buffett is an investment legend and, according to Wikipedia, the 4th richest person in the world at about $85 billion. He and Bill Gates formed the "Giving Pledge" in 2009 where billionaires pledge to give away at least half of their fortunes. His own pledge is to give away 99% of it.

Sometimes called the "Sage of Omaha," he lives frugally - not grandly - in Nebraska. As just a teenager he started his investing career, and now at 80 years old his advice is sought by people all over the world.

(photo)

Back in 2007 he made a famous bet: "that an unmanaged, low-cost S&P-500 index fund would out-perform an actively managed group of high-cost hedge funds over a ten-year period from 2008 to 2017, when performance is measured on a basis net of fees, costs, and all expenses."

An elite firm of experienced, highly incentivized investment managers - "loaded with brains, adrenaline and confidence" - took him up on that bet. The ten-year result delivered what he called an unforeseen investment lesson.

(cont'd tomorrow)

Hoarding stopped

"A supermarket in Denmark got tired of people hoarding hand sanitizer, so came up with their own way of stopping it."

 photo

Forbes 400

Forbes creates a list every year of the four hundred richest Americans. The minimum net worth to be one of the 400 is $2.1 billion. Ernie Garcia III (yesterday's post) is the youngest of those who are on the list for the first time.

photo

Wealth like that raises the big question: how did they get so rich? In 2014, Forbes started rating each one with a "self made" score of one to ten. One means their money came from someone else, inherited or given, and they had no part in earning it. Ten means that they started out poor or low middle class and raised their own fortune.

Jeff Bezos is #1 on the Forbes 400, with a fortune of over one hundred billion dollars. His ex-wife is on the list for the first time, after receiving a divorce settlement of one-quarter of Jeff's Amazon stock.

Surprising fact: a total of 221 American billionaires failed to make the list.

from The Forbes 400

Blockchain 2

(cont'd from yesterday's post)

Money can be digital. There are 700 crypto currencies, bitcoin being just one of them. 

A young entrepreneur explains here that these currencies have no central control. Up til recently, all money transactions had to go through a central control of some kind, like a bank or credit card. But digital money doesn't.

Transactions flow freely between individuals who choose to participate in this open network, very like email, and tamper-proof blockchain is its ledger. That's what this young "digital  native" says:

Avoiding debt

(cont'd from yesterday's post)

Millennials (age 18-34, roughly) seem to value financial independence for themselves, maybe more than their parents. At the same time, a sizable number of millennials live with their parents, probably because of heavy student loans and the high price of homes today.

But according to a recent study, some young women in their 20's and 30's are making good money decisions that will have them spending less than that horrific average of $600k (yesterday's post) on debt service over their lifetime.

photo: forbes.com

"Creating wealth is all about choosing correct habits now," common sense from a finance expert.

Those young women ranged in income from $30k to $150k and had these things in common:

1) they knew their income, what they had to work with
2) they knew their expenses and had worked out a budget
3) they set spending priorities
4) they used some device to save or invest money, like an automatic savings deposit

Lifetime debt

Over a lifetime, the average American will pay . . $600,000 in loan interest. It's a shocking amount that's paid on car, house, college, student, consumer, and every other kind of debt.

photo: creditloan.com/debt

If a person feels like his money is slipping away, or that he doesn't have much to show for the income he's made, this could explain why. It's an enormous amount of money to pay for . . nothing more than the guy who bought the same stuff without borrowing.

Here's a graphic that shows debt accumulating during various stages of life.

(cont'd in tomorrow's post)

US air fares

On average, have air fares in the U.S. gone up or down in the last twenty years? You'd want to know that trend not in dollar prices, but rather adjusted for inflation.

So here's the result, adjusted for the inflation that's taken place since then: I'm a little surprised to see that air fares have actually declined from 1995 til 2015.

"Although real airfares have been relatively flat for the last decade at around $375, the trend line in the chart above shows the downward trend in airfares over the last 20 years. Compared to the peak in 1999 when airfares topped $475 in the first quarter of that year and were above $450 in 8 quarters between 1998 and 2001, consumers today are saving close to $100 on every round-trip flight." 

Kids saving

(cont'd)

To continue last week's topic, Hope International is a faith-based organization operating in 17 countries to make small loans and other financial services available to under-served people groups. They also encourage savings as a way to empower people in their financial resources.

Saving money is important for anyone to learn because it provides a "lump sum of money to invest in their potential—by paying school fees, saving for the future, or investing in businesses." Both loans and savings can be that "lump sum," but you don't have to pay back savings with interest.

In Rwanda, there are 8800 "savings groups," and 79 of them are populated by children. Some of the children intend to use their savings for school expenses,  even to become a doctor. Others provide for their family's future with the purchase of a pig or cow.

Most of Rwanda's population (61%) are under 24 years of age. The kids in these groups are preparing for a better future.

Paycheck

New grads starting to earn a substantial paycheck will have a few choices to make - what to do about 401k's, health savings accounts, IRA's, checking accounts, special benefits.  There's good information at "New Grads, Here's What to Do with Your First Paycheck."

It's the first in a series of four articles helping you, or someone you know who has recently entered the workforce, to get momentum & habit going in a successful direction for you right from the beginning.  Or the middle, or whatever stage you're in.