One of my longterm interests/hobbies has been accepting/evaluating/absorbing risks, and that quite naturally led me later to sports betting. I have known a number of entrepreneurs over many years and have been one myself and practically everyone without exception has taken on more than a fair amount of risk which ipso facto pretty much makes them one. But even in their private finances they take the same risks, at least that's been my perception.
Over the years i've met a few sports bettors. Interestingly, my observation (and it is just that; an observation) is that sports bettors are all over the map when it comes to accepting suitable risk in their daily lives. Some (closer to the way i am) take a lot of risks and others are content to play it safe and it's probably a bell curve.
The reason i think this is worthy to discuss is that i've always believed that by not accepting reasonable risks you are increasing the chance that you'll be at that 9-5 job the rest of your life until social security kicks in (which you may know will not be at 65 but 67 or higher for those born '60 or later (or something like that) and that's assuming it's even there when you or i reach that age. exceptions to this of course, if you're plastic surgeon pulling in a half million per annum then no need to worry about what car insurance to buy but most of us arent in that situation.
Here are five risks that i think are worthy of taking almost always (and i've been accepting/absorbing these risks for over 25 yrs in some cases without adverse consequences).
1. increase your home mortgage deductible to the maximum. on the current home that i have i went in initially to the agent and he only offered me the low to mid range deductibles so i mentioned something like, 'Just for laughs, what's the highest deductible you've got?' and he said it was $5,000. So i took that and saved litererally thousands of dollars over less than 4 yrs over taking the low to mid range deductible he was pushing, and the agent was more than a little dismayed because that cut into his profit margin but too bad.
2. life insurance is overrated. cash value life insurance is almost never a worthwhile endeavor and term insurance is even overrated except under obvious conditions (like you've got underage kids and/or a wife that's not able to bring home a decent income). i like the Grouch Marx line of why would i like to belong to a club that would have me as a member. So if the life insurance agent is offering me a policy that he's designed perfectly for me, i pretty much know it's not in my best interest.
3. staying with insurance-- health insurance. Consider catastrophic health insurance, again with deductibles that are very high. the one i've got is, you guessed it, $5,000. a healthy male under 50 without serious medical problems or family history of whatever isn't likely to benefit paying for health insurance with a low deductible, although if you get through an employer you may not have a great choice, not really sure there. and tons of exception, wouldn't cut corners on insurance for your children of course and females have more reason to have more frequent exams of course. also assuming you're not an alaskan lobster fisherman or smoke or involved in high risk whatever. not giving advice, just something to think about. Of course if you need an appendectomy it'll not work out so great but hey you'll only need that appendectomy once.
4. buy used cars instead of new. it's really not that risky to buy a low mileage used car and you can always work a deal with your mechanic to pay him $50 to check out the car before buying if you're oblivious to cars as i am. on the outside chance anyone here's heard of andrew tobias, he's well known for saying the new car smell is the most expensive fragrance in the world; and after all every car is used after they're driven off the lot and into your driveway. as an aside if you can get used to paying cash for cars you'll have a lot more control on your auto insurance as well.
5. know what people/companies are charging you to "manage your money". i'm really thinking about your tax deferred mutual funds through your IRAs/ qualified plans or whatever. i'm not exactly sure of the following numbers but they're ballpark. the annual expense ratio of morgan stanley is something like 1.5% but through Vanguard it's like 0.5% So you're paying an extra percentage point annually for probably not much help if at any at all and a unmanaged index fund will usually outperform a managed fund anyway. Significance is if you've got a $100,000 portfolio you're paying an extra $1,000 a year to morgan stanley versus vanguard. again, your company plan may not have a lot of options but if you switch jobs you can move that money to a more desirable company.
there's a lot more i could list if i got more specific but these are in my humble opinion "no brainers". and for those who want to tell me the exceptions to these, well that's fine, but just remember the exception to the rule is still not the rule. And i continue to look for opportunities to take a perceived small risk to save money where the potential adverse consequences are not catastrophic.
Or if the event is catastrophic but extremely remote to just not worry about it, like the chance you'll get West Niles Virus if you're bitten by a mosquito is potentially catastrophic but that doesn't mean you should wear mosquito netting to work.
And there's clearly other issues, the 70 yr old widow shouldn't be exposed to the same risk that her 25 yr old grandson is. And of course sleeping well at night is worth something but remember the insurance industry wants you to feel fearful without them (and conversely to feel safe with them--after all, you're in good hands with allstate; and like a good neighbor, state farm is there).
And of course taking a risk in and of itself itn't probably very smart as evidenced by the stock market bust in tech stocks a number of years ago and many buying over valued real estate with ARMs and lots of other examples.
-- did i mention the disclaimer that this isn't advice for anyone at all---do your own due diligence. past results are not indicative of future performance. your mileage may vary.
Finally, this post was in part about telling you something i got from Nolan a few yrs ago, he was writing about the Kyl bill or something similar and he wrote (and I'm perhaps paraphrasing), 'Gambling is the great metaphor of life.' This has become one of my favorite sayings, so Thanks Nolan!
Over the years i've met a few sports bettors. Interestingly, my observation (and it is just that; an observation) is that sports bettors are all over the map when it comes to accepting suitable risk in their daily lives. Some (closer to the way i am) take a lot of risks and others are content to play it safe and it's probably a bell curve.
The reason i think this is worthy to discuss is that i've always believed that by not accepting reasonable risks you are increasing the chance that you'll be at that 9-5 job the rest of your life until social security kicks in (which you may know will not be at 65 but 67 or higher for those born '60 or later (or something like that) and that's assuming it's even there when you or i reach that age. exceptions to this of course, if you're plastic surgeon pulling in a half million per annum then no need to worry about what car insurance to buy but most of us arent in that situation.
Here are five risks that i think are worthy of taking almost always (and i've been accepting/absorbing these risks for over 25 yrs in some cases without adverse consequences).
1. increase your home mortgage deductible to the maximum. on the current home that i have i went in initially to the agent and he only offered me the low to mid range deductibles so i mentioned something like, 'Just for laughs, what's the highest deductible you've got?' and he said it was $5,000. So i took that and saved litererally thousands of dollars over less than 4 yrs over taking the low to mid range deductible he was pushing, and the agent was more than a little dismayed because that cut into his profit margin but too bad.
2. life insurance is overrated. cash value life insurance is almost never a worthwhile endeavor and term insurance is even overrated except under obvious conditions (like you've got underage kids and/or a wife that's not able to bring home a decent income). i like the Grouch Marx line of why would i like to belong to a club that would have me as a member. So if the life insurance agent is offering me a policy that he's designed perfectly for me, i pretty much know it's not in my best interest.
3. staying with insurance-- health insurance. Consider catastrophic health insurance, again with deductibles that are very high. the one i've got is, you guessed it, $5,000. a healthy male under 50 without serious medical problems or family history of whatever isn't likely to benefit paying for health insurance with a low deductible, although if you get through an employer you may not have a great choice, not really sure there. and tons of exception, wouldn't cut corners on insurance for your children of course and females have more reason to have more frequent exams of course. also assuming you're not an alaskan lobster fisherman or smoke or involved in high risk whatever. not giving advice, just something to think about. Of course if you need an appendectomy it'll not work out so great but hey you'll only need that appendectomy once.
4. buy used cars instead of new. it's really not that risky to buy a low mileage used car and you can always work a deal with your mechanic to pay him $50 to check out the car before buying if you're oblivious to cars as i am. on the outside chance anyone here's heard of andrew tobias, he's well known for saying the new car smell is the most expensive fragrance in the world; and after all every car is used after they're driven off the lot and into your driveway. as an aside if you can get used to paying cash for cars you'll have a lot more control on your auto insurance as well.
5. know what people/companies are charging you to "manage your money". i'm really thinking about your tax deferred mutual funds through your IRAs/ qualified plans or whatever. i'm not exactly sure of the following numbers but they're ballpark. the annual expense ratio of morgan stanley is something like 1.5% but through Vanguard it's like 0.5% So you're paying an extra percentage point annually for probably not much help if at any at all and a unmanaged index fund will usually outperform a managed fund anyway. Significance is if you've got a $100,000 portfolio you're paying an extra $1,000 a year to morgan stanley versus vanguard. again, your company plan may not have a lot of options but if you switch jobs you can move that money to a more desirable company.
there's a lot more i could list if i got more specific but these are in my humble opinion "no brainers". and for those who want to tell me the exceptions to these, well that's fine, but just remember the exception to the rule is still not the rule. And i continue to look for opportunities to take a perceived small risk to save money where the potential adverse consequences are not catastrophic.
Or if the event is catastrophic but extremely remote to just not worry about it, like the chance you'll get West Niles Virus if you're bitten by a mosquito is potentially catastrophic but that doesn't mean you should wear mosquito netting to work.
And there's clearly other issues, the 70 yr old widow shouldn't be exposed to the same risk that her 25 yr old grandson is. And of course sleeping well at night is worth something but remember the insurance industry wants you to feel fearful without them (and conversely to feel safe with them--after all, you're in good hands with allstate; and like a good neighbor, state farm is there).
And of course taking a risk in and of itself itn't probably very smart as evidenced by the stock market bust in tech stocks a number of years ago and many buying over valued real estate with ARMs and lots of other examples.
-- did i mention the disclaimer that this isn't advice for anyone at all---do your own due diligence. past results are not indicative of future performance. your mileage may vary.
Finally, this post was in part about telling you something i got from Nolan a few yrs ago, he was writing about the Kyl bill or something similar and he wrote (and I'm perhaps paraphrasing), 'Gambling is the great metaphor of life.' This has become one of my favorite sayings, so Thanks Nolan!
Thanks