5 Things High-Value Men are Doing about their Personal Finances

Updated: May 8

COVID-19 is ripping through the global economy like an F5 tornado. This financial uncertainty is causing money stress levels to spike off the Richter scale. According to the American Psychological Association (APA), money is the top cause of stress in the United States ( As we face this scenario of low visibility and high anxiety of the future, there are five things high-value men are doing about their personal finances.

Thing 1: They Don't Hold Too Much Cash in the Bank

Every financial crisis is different. COVID 19 is different to 2009, which was different to the crisis of 1999 etc. One thing that most crises have in common is the Pavlovian response of central banks to these crises. They cut interest rates in the hope they can electrocute the economy back into coherence. Cheaper money nudges consumers to borrow money. As interest rates move closer to zero in some countries and deeper into negative territory in other countries, the return on your bank cash savings start to look ugly.

1) Cash is a paper asset that has no intrinsic value

Ever since the world moved off the gold standard in 1971, cash stopped being an asset and turned into a liability. Before 1971, you could take your bills to the central bank and exchange them for the equivalent value in gold. Now, if you go to the central bank, they will just give you newer paper of the same value. This paper is nothing more than an IOU backed by the full faith and credit of that bank, and one thing we learned after the 2008 financial crisis is that high quality banks can fail.

2) Interest rates are at record lows

We are living in a world in which interest rates are at record lows. More than 16.5 trillion US dollars of bonds were paying NEGATIVE interest rates as at the end of 2021. A negative interest rate means that if you invest 101 today (for example), you will receive 100 when the bond matures. This is nuts – it means that you are paying the bond issuer to look after your money.

3) Missed opportunities

When you lock your money into a savings account, earning record low returns, there is an opportunity cost (in addition to an inflation cost).

So instead of saving money, look to invest the money and make that money work for you.

Thing 2: They Owe the Banks MORE than the Banks Owe Them

John Maynard Keynes, the third most famous Briton after David Beckham and Mr Bean, said that if you owe the bank $100 it is your problem. When you owe the bank $1 million, it is the banks problem. In 1988, when Trump bought New York's famed Plaza Hotel, he paid $407.5 million. He got a $425 million loan. "If the world goes to hell in a handbasket, I won't lose a dollar," Trump bragged to a reporter.

While I hate to use Trump as an example of sound financial engineering, I have to give him kudos for this brag. In times of uncertainty and low interest rates, you would be a fool not to leverage up. Debt is not Lucifer. Financial advisers have spent decades vilifying debt. In the 17th century, Christian's believed that the Catholic Church was the antichrist. In the 18th century, the French believed that it was Marie Antoinette after she told the starving masses that if there was no bread, let them eat cake. In the 19th century it was Napoleon, 20th century Adolf and Joseph (nice name for an ice-cream) and 21st century, the mention of DEBT caused people to lunge for the holy water.

Not all debt is bad and not all debt is good. There is good debt, bad debt and ugly debt. Let’s start off with the ugly. Some credit cards charge north of 30% APR but this does not deter some people from maxing them out and then using another card to pay that one off, and so on until they get into a satanic spiral of debt. Smart people pay on a monthly basis the amount they need to avoid interest which means they can get up to 40 days of free money.

Now for the bad debt. This is when people borrow against the equity in their home. This turns your home into a liability - because it takes money out of your pocket as you make the monthly payments without receiving any income. Your only hope is that the house price appreciates - but that means getting into the game of property speculation.

Now you have the good debt. This is where you use the debt to buy assets that generate rental income. The interest on the debt is tax deductible and the debt allow you to generate cash flow which puts money into your pocket. The key here is using the debt to acquire high quality assets that generate a reliable cash flow.

Thing 3: They Invest in the Stock Market

There are two reasons high value men invest in the stock market. Firstly, it is very accessible, and secondly, it is one of the greatest generators of wealth on the planet, yet only a small percentage of people exploit it. This is what high-value men do.

Step 1: They Relax

We are terrified of the stock market because of its wild and volatile swings. In the short term (days and weeks), the market can be crazy. Over the long term (months and years), it is more predictable and benign. High-value men relax, are patient and take a long-term view on the stock market.

Step 2: The Make Monthly Contributions – Annual Consultations

Every month, they commit to investing a minimum amount of cash into the stock market and they only check their account statements once per year.

Step 3: They Choose a Low-Cost ETF

An ETF is a powerful financial tool. It is a share that owns many shares. One of the world's most popular ETFs is the Invesco QQQ. If you buy one share in the QQQ, you become the owner of 100 of the world's biggest technology companies - including Apple, Microsoft, Amazon, Tesla, Facebook, Google etc.

Step 4: They Invest At Least $100 a Month

To understand how extremely attainable $100 per month is. I did a quick Google search on what $100 can buy you these days: Eight or ten movie tickets, 10 months of Netflix, four or five new movies on DVD, fifteen used DVDs at a yard sale, lunch for four at a fairly nice restaurant, 40 cheap burgers or 90 candy bars.

Over the past 30 years, the Standard and Poors 500 Index has delivered compounded returns of approximately 10 percent. So how much would your 30-year religious investment in this broad-based US stock index yield? The answer is $226,048. That is a lot better than investing in a savings account or Treasury bonds.

How much would you need to invest every month to be a millionaire in 30 years, 20 years, 10 years and 5 years? Assuming the same total returns of the Standard and Poors 500 index, here are the monthly investments that will yield $1 million after the stipulated period

30 years: $442

20 years: $1,316

10 years: $4,881

5 years: $12,913

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