ONE of the easiest ways I’ve learned to make money is to take action when others are complaining about something. There is often a silver lining to every financial problem, and learning how to take advantage of that can bring you much reward 🙂 Here are 4 common financial problems I hear people complain about almost every day and my solution to each one.
The problem: Housing prices too expensive.
What other people do: complain they can’t afford to live in the city anymore.
What you can do instead: Offer financing or buy real estate. Take Vancouver as an example. It’s land size is not getting any bigger, but the population will continue to expand. The following tables show the development of the number of inhabitants according to census data of Statistics Canada.
The Greater Vancouver Area currently has about 2.2 million people. The population is expected to grow by 30,000 new residents each year, or 1.2 million residents by the year 2041, for a total population of 3.4 million according to a residential growth projections report by Metro Vancouver (report in PDF format.) So based on common sense, even if housing prices fall this year and next, they should in the long run still go up because of growing density. The only way city space would be less valuable decades from now is if we see zero population growth and zero inflation, which is highly doubtful.
Some people say they can’t afford to buy a house. But nobody is forcing them to buy a million dollar bungalow right away. New home owners can start small and slowly work their way up. My down payment was only $15,000 for the two-bedroom condo I bought in 2009. I plan to purchase larger properties over time as I build up equity. Besides, if prices are “too expensive” today how will people ever afford homes in the future when population density and demand will be even greater?
Offering real estate financing is another way to benefit from the housing market, especially if you don’t have a lot of money to put down. You can lend money to a home buyer like a mortgage so they pay you interest instead of a bank. This can be done through a private mortgage or a mortgage investment corporation. Higher real estate prices just means more wealth for me because I have exposure to that market. 😀 No complaints here.
The problem: Oil prices too expensive
What other people do: Complain they’re getting gouged by oil companies and they can’t afford to drive anymore
What you can do instead: Buy oil and gas companies. As it becomes harder to find and extract oil from the earth, prices will probably be higher 10 years from now than today using common sense. Most oil companies pay dividends to shareholders. A lot of them have a history of growing their dividends because their profits are growing over time as gasoline prices go up at the pumps. Every year for the last 4 years I’ve been investing thousands of dollars into Suncor, Exxon Mobil, Chevron, and other oil businesses. I was getting paid $10 a month in dividends from these companies in 2009. But with sheer sticktuitiveness and persistence, as well as ALL of these companies raising dividends in the last few years, I am now getting $81 a month in dividends from them collectively. Oil companies are now paying me MORE money, than I’m paying for gasoline every month 😀 No complaints here.
The problem: Food getting more and more expensive
What other people do: Complain how food inflation should be added to the CPI and how they can’t afford to eat as much anymore.
What you can do instead: Buy a farm or invest in agriculture. Historically farmland prices tend to out inflate food prices. When consumers pay for their food at the store eventually some of it or most of that money goes back to the farmers or producers of the food. So common sense tells us that if you own the means of production, or at least the land it’s being produced on, then you are in a pretty good position. Last year I bought a farm in Saskatchewan and rented the land to a farmer to grow his crops. Over time if the price of soft commodities increase, then I will increase the rent, and I’ll use that extra money to buy even more farmland. The farmer will still make lots of money too so everyone’s happy 😀 No complaints here.
The financial problems: Slow wage growth and stagnant career
What other people do: Blame their employer for underpaying them. Complain their taxes are too high.
What you can do instead: Ask for a wage increase. Use tax deferred advantaged accounts to put your savings in. Even if it’s $100 a month to start. And invest the money in income producing assets that will grow over time. I asked my boss for a raise because I’ve been working at the company for many years. He went to the accounting department and came back to me with a $5/hour increase. I spent the last several years saving at least a third of my gross income from working 2 jobs, and slowly investing that money to build up dividends and other passive income. The worst thing that can happen is my boss saying no. But most employers want to keep their workers happy.
Investment income such as dividends or capital gains are also taxed at a much lower rate than ordinary salary. And ANYONE can do it, even if you don’t have a lot of savings to start investing. A modest $500 can buy you some mutual fund and give you exposure to the financial markets 😉 $2,000 can buy you more than 100 shares of the index fund XIU. $5,000 is enough of a down payment to buy a small farm, and $10,000 for a small one-bedroom apartment. It DOES start off slow though and will be a decade before most people will see any noticeable results. But the year 2023 WILL come to pass, so when it does, common sense tells us people who starts investing today (in 2013) will most likely be in a much better position financially, than those who don’t. I estimate that in roughly 10 more years, my personal investment income combined with the salary from my full time job, will bring my total annual income to over $100,000 while lowering my average tax rate at the same time, just like how the rich do it 😀 No complaints here.
The solution to so many of our everyday problems in life are sometimes right in front of our eyes. A lot of it as you’ve seen is just common sense. We can complain like everyone else around us and do nothing about it, or take action and pave a better future for ourselves. Choice is yours folks 😉
Random Useless Fact: Sometimes looks can be deceiving. Either that or eating healthy and exercising isn’t as good for the body as people say it is.