Why 2.5 billion heartbeats might change the way you think about money: Preet Banerjee at TEDxUTSC
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- Опубліковано 29 сер 2024
- Preet Banerjee was originally trained as a neuroscientist, and after a brief stint as an aspiring race car driver, ultimately landed in the world of personal finance. Formerly a stockbroker, then an index fund wholesaler, he is now the new host of the television series 'Million Dollar Neighborhood' on The Oprah Winfrey Network, a personal finance columnist with The Globe and Mail, and author of three personal finance books. He is also a founding investor in Tunezy.com, a social e-commerce platform for music.
In the spirit of ideas worth spreading, TEDx is a program of local, self-organized events that bring people together to share a TED-like experience. At a TEDx event, TEDTalks video and live speakers combine to spark deep discussion and connection in a small group. These local, self-organized events are branded TEDx, where x = independently organized TED event. The TED Conference provides general guidance for the TEDx program, but individual TEDx events are self-organized.* (*Subject to certain rules and regulations)
I am a BMW guy but I don't carry any consumer debt, because BMW for me means Bike Metro Walk, which is much more enjoyable than sitting in downtown traffic at the wheel of a BMW bought on credit.
Philippe di Pizzo love it....bmw!
This needs waaaaay more many views.
No way an 18 year old had a starting salary of $80k when they started working in 1967. Average household income was ~$8k at the point...
JL Collins directed me here. He says credit is like a chainsaw. Powerful but dangerous. I'm sensible and well-educated and I still got in trouble with it in my early 20s. Just by slight overspending on a trainee wage. Compound interest - understand it and benefit from it on your investments or be paying it forever on your debts!
Good job, Preet. I just spent 0.75% of my net worth on my car. Had to finance for a month to get $1000 off, but I'm only going to pay ~$70 interest. I'm through borrowing from my future income.
Actually there are two kinds of debt - entrepreneurial leverage and consumer debt, the first taken to buy productive assets, the other to consume. The trouble is that it's hard to tell the difference. To make matters worse, sellers of debt are out to convince you that by taking on debt you're making an "investment" rather than just overspending. So the rule should be: only take on debt if you can positively prove that the lender is (much) more stupid than yourself (and just to be sure, do it via a limited liability company).
This message is so contrary to the grain of consumerism.
Glad to hear this. :)
I have had these same thoughts since 1980 or so. Grew up poor. Took a 200UKP loan for a motorcycle and hated paying every penny. Never had a loan since. No credit debt. I learned to fix motorcycles/cars as a teen - one skill I have is to buy a cheap car that is good. My current one - had it 4 years - cost $4000NZ. Is running fine - has not had any issues. If I sell it, will probably get my money back or more. I have had many motorycles and cars and enjoy fiddling with them as a hobby. When I get bored, I just sell it and find another. Rarely make any $, typically break even, and am not shy to spend $ to fix them up, but overall, I have rarely if ever lost or wasted money on vehicles. I have always been aghast at the money people waste on their overly expensive depreciating cars.
you either save up to a goal, or you borrow to have it sooner. buy a cheaper car, buy a cheaper house. crawl before you walk, walk before you run. dont buy shit you dont need, simple rules to live by
I used to hate all debt. As I've matured and gained experience into middle age and learned from my father's example, I now have a nuanced opinion on debt. I think consumer debt for frivolous spending above and beyond our means should be hated. Also purchasing a new car with debt every 2-3 years or borrowing to buy an oversized, overpriced house is also a disaster. However, using debt for investing in yourself, a business, a modest home, or for a reasonably priced used car you will own for 5-8 years is smart. The key is to have great credit, stable income, and live below your means while investing the surplus in securities (stocks). The conservative historical average stock market return is 8% before inflation, and with the keys I mentioned it should be no problem to get a loan with interest in the 3%-6% range in 2022. Over time, and with consistent dollar cost averaging the surplus income into stocks, you will have far more money in the end than if you use your cash for those large purchases! It's not for everyone, but debt, used responsibly is a powerful tool. That's why it's called "leverage." Archimedes said, "Give me a lever long enough and a fulcrum on which to place it, and I shall move the world." The lever is responsible debt, the fulcrum, is the key things I mentioned regarding, spending, income, and creditworthiness.
Finally, debt becomes less and less impactful as inflation increases, because your income should rise also with inflation, while the debt stays the same or decreases as it is paid down. However, the cash you would have used in place of the debt is worth less and less.
Love this! Great talk, Preet. Those numbers are terrifying.
+Bridget Eastgaard (Money After Graduation) Thanks Bridget! (I don't know why I didn't see this comment until now - sorry!) And thanks for the link from your blog. Hope you are enjoying your trip!
Preet, you're like a wise daddy to the people out there - you just don't look like it! Young, smart, good looking fellow :-P
Seriously, the information you share is what fathers (parents in general) out there should be "lecturing", or better yet, educating their children about the pitfalls of (or hating) debt, using money smartly, making budgets/ saving wisely. There is so much mass marketing and appeal or low or no interest on new cars, no payment for 18 months on furniture, 5 year of 7 year car loans, first 3 payments are `free'. This is capitalism working at its finest, but people need to know what they can manage and need to learn how to plan to buy smart i.e. without going into significant debt.
Your knowledge and the way you present it is done well, and I hope your message comes accross to those who need it. Keep doing it - a pleasure to watch you and the group on CBC!
Amen
Depends on where. Some places you often pay a lot in transit and especially more if you rent.
scary realty on interest & future debt - the just charge it ! "buy now - pay later" mentality -
Was inflation taken into account while calculated those credit taken debt opportunity costs?
This is thought provoking. we need to start hating getting into debt.
When you're young, live with roommates. Take public transit or bike to work and to other places (good exercise too). Try to learn how to cook your own food. Don't even sign up for a credit card, avoid the temptation.
Have your bank automatically transfer a certain amount from your checking account to your savings account every month. It's easier when you don't have to think about it. Finally, just remember that having money saved grants you power and safety. That's worth more than anything.
This is actually significantly understated. For one thing, you pay significant extra insurance costs to insure a new car - and if buying on credit, Gap insurance or additional risk, if your lender will allow you to forego Gap. Other thing, not only do you lose the money to interest (credit/auto/otherwise), there is the opportunity cost of the loss of the ability to invest that money and have it compound.
Or invest your money in income-producing assets to the point that your expenses which you have worked on reducing as well as a used car you hunted for can be covered through solely the income from those assets. You know, simple stuff
Well I do have a bike and I do use it often.
Cars are an analogy, paying interest by borrowing from your future self is what he is getting at.
Nah, he used to be a neuroscientist. He's a helluva smart guy.
Nine cars? I bought my first car in 1983, paid it off in 2 years, kept it for 20 years, but a new car in 2003, paid it off in two years again, been driving it for 13 years. If/when I buy my third car, it will be my last one. Nine cars? Is this guy for real?
Richard Person Ya! This guy is for real. Because you are smart when it comes to keeping your cars for a looong time. I too do the same, but, I buy a used car and keep it for several years - currenly on my 6th yr of a 2002 CR-V at only 191,000km. However there are others who have the need to keep the "show" of having money by buying a newer car, or what "others will think" if they drove an older vehicle. And others think that an old car will mean it's not as safe, or more maintenance. This is not always the case especially if you buy a well rated vehicle with a good safety / low maintenance cost history.There are many folks like you and I, but there are many folks who do most likely buy 9 or more cars in their lifetime!
Richard Person 80 yrs old - 16 yrs old = 64 yrs9 cars = a new/different car every 7 years. That's not that crazy. Most people in America who have cars at all, probably get new/different cars close to this often. You're certainly abnormal.
Richard Person not all. some people buy cars just to show off.and i am talking about middle aged family people
Ah, well then public transit expenses must not be a huge issue for you!
he switched careers 3 times? his family must be loaded
Interest is evil.
Sounds like you need to get a bike. :-)