Archive for the 'Investing' Category

I posted a poll on the Somersoft forum asking about what rewards programs people prefer.

In the discussion that followed, someone wrote:

Sometimes we offer to pay cash for larger things, and get a discount rather than them taking the card

… to which I responded:

And that’s the key really – when you take into account the charges added to cover credit card costs for the retailer – especially for larger ticket items – plus the costs of maintaining the rewards program, and the hidden costs in redeeming some of these rewards, it’s often better to just negotiate a cash discount – you can come out significantly better off. Again, it all comes down to cost-benefit analysis.

It’s interesting – now there are 3 camps of rewards programs users.

There are the frequent flyers (like me) who will actually make use of frequent flyer miles and so just want a simple rewards program which maximises the number of miles you can earn (Qantas ANZ VISA was good in that it automatically transferred points to your FF account at the end of each month – no effort on your part). Some of the people in this category will sometimes spend large amounts of money on their credit cards just to try and maximise their points for their next flight – not really taking into account the cost of doing so – especially if there are discount tickets to be had if you are a little more organised (but less organised than you need to be to get the FF flights that you want – it’s an artform !!)

Then there are those who don’t fly much or don’t think they will ever get enough points for a flight, who go for the small ticket rewards – the vouchers and cheap digital cameras and such. These people can sometimes fail to do their cost-benefit analysis on things such as the rewards program fees, and may find that they actually spend more on fees and loss of discounts that they may have been better off without the rewards – especially if they had a no-frills credit card without the higher interest rates.

Finally there are those who just think the whole rewards thing is a load of baloney and you are much better off shopping around, and negotiating a better price to pay cash. These bargain hunters are most likely going to be the best off financially in general I suspect.

My spending patterns are still such that I think I can actually get something out of a frequent flyer linked credit or charge card, so I’m still intending to go that way – but I really think I will have to start looking at the cash option for those larger items – especially where more and more retailers are charging 2% or so extra for accepting credit cards.

I’m in the market for a new credit card – although I am seriously considering moving to a charge card – now that ANZ have just butchered their Qantas VISA card to the point where it is no longer worth paying their exorbitant fees and charges.

I run almost all of our expenses through our credit card and pay it off in full at the end of each month – so I never carry a balance. The amount of money I charge through the account each year has made it worthwhile in the form of Qantas Frequent Flyer miles up until now.

I’d like something with a decent rewards program – preferably with the ability to convert to Qantas Frequent Flyer miles – but the potential for earning rewards must be enough to offset any rewards program and card fees.

Since I pay the balance at the end of each month automatically anyway, a charge card would be okay instead of a credit card.

I’m tending towards an Amex card at this point.

There are a couple of consumer info websites recently which have done some comparison tables, but they are rather simplistic and don’t take into account individual’s spending habits.

What would be nice is a tool where you can enter in some personal details about your needs and spending habits and it would calculate a set of suggested credit cards or charge cards for you.

Leanne and I went to the Steve Navra Optimising Investment Structures course on the weekend in Sydney (the same one that PaulZag went to in Melbourne a couple of weeks back.

Was a pretty eye opening weekend – Steve certainly makes you think differently about some of the more “traditional” approaches to investing and building wealth.

I got quite a bit out of the seminar, but despite all of that, the thing I think the best part was actually getting Leanne to go to an investment seminar. She is a very smart woman, and picks most things up very quickly so I find it much more effective to have her hear an idea first hand and making up her own mind rather than me passing it on second hand and trying to convince her that a concept could work. It’s great to finally get her along to something like this – especially since she had a day off the day before, so wasn’t overtired from work, and even more so since we are about to embark on two weeks leave and will have plenty of time to talk about what we heard.

Will be interesting to see what we come up with.

I wrote some comments on ethics in investing in the Somersoft Forum, and thought I’d post it here as well for posterity.

Justification of unethical behaviour through legality and through an argument that it is “simply too difficult to define ethics clearly enough, so let’s stick to the black and white legalisms only” – this is nothing more than a cop-out.

Yes, trying to work the “ethical” way is difficult, mostly because this becomes a very subjective thing and there are no black and white rules.

However, this does not justify not trying.

Life is not a structured right and wrong environment. There are an infinite number of decisions we make in our lives which are neither perfectly harmless or perfectly legal. Life is full of greys.

What makes us decent human beings is when we “try” and do the right thing. What destroys a society is when people stop trying. The excuse is usually something about my definition of right not matching with your own definition.

None of this discussion about ethics can be rationalised – try to rationalise ethics, values, morals, feelings, love… that way lies madness.

I had one of those “a-ha” moments of understanding when I finally understood that there is no (or at least, not much) right and wrong when it comes to tax law – it is a fluid environment based on opinion, precedent and to a certain extent public opinion.

The sooner you come to terms with the concepts of ethics and right and wrong not being purely black and white, the sooner you will work out that you can actually play in this world and be have some form of ethics without torturing yourself through self deluded hypocracy.

To me, trying to observe some sense of moral balance and ethics while learning to live with the mentally lethal hypocrisy of it all is better than not trying at all.

“It’s just business” are some of the most damning words I’ve ever heard people use. At the same time, there is such as thing as business reality and all the greatest intentions in the world won’t help you when you have to make the tough decisions where not everyone wins. I can come up with many scenarios which are not win-win, more like some-win-some-lose.

Try this one. You run a manufacturing company that employs 500 people. Disaster strikes and you lose one of your factories (flood, fire, meteorite etc). The economy has been struggling lately, and cash is just not flowing the way you need it to. In order to stay afloat, you will need to cut costs dramatically – you need to sack at least half of your workers. If you try and keep all 500 workers on, you will surely go bankrupt, causing all of them to lose their jobs. So either way you cause harm … what do you do ? There is no win-win here and it’s through no fault of your own.

I think [someone else in an earlier post] said it well… we are only human and trying to do the best we can.

It’s the people who don’t try that I have a problem with !

Referring to PaulZag’s blog entry Brains or Money

So, if ‘A’ students go on to work for ‘C’ students and ‘B’ students go on to work for the government, yet I tend to be quite inconsistent with my results (get As in some subjects that I really enjoy and Cs or worse in others that I think are a complete waste of space)… then am I actually doing myself a financial disservice by persuing those areas which I enjoy and thus do well at ?

Should I actually be persuing those areas which I can comprehend and thus pass an exam about, but don’t actually enjoy, so don’t do well at in school ?

mmm… I’m sure this bit of reverse psychology wasn’t the intended outcome of that statement – maybe I’m just a little screwey :)

Actually I think it’s more an attitude thing. People who do consistently well with everything they do tend to have an attitude that they MUST do well, and work hard as a result. These types of people tend to be quite compliant in their behaviour and will generally go along with what is expected of them – and thus will make model employees.

I tend to be more emotion driven about stuff – if I enjoy it and see the benefits of doing it, then I will do well at it. For everything else it is a real struggle to motivate myself to put the effort in. Some people call this an attitude problem. I call it looking for meaning in life.

So I think I am probably better off sticking with the things I enjoy and staying clear of the areas where I am forced to do things I don’t think should be done. Where there are things I’m not good at, I should delegate them if it is important. Where there are things I am good at, I should delegate them if it is something I don’t need to be doing myself.