Day: January 27, 2018

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What are the top bad habits to stop immediately or I’ll regret big time later in life?

My advice is to stop the following bad habits:

  1. Stop keeping cash in your bank account: save money and, after you have set up a good emergency fund in cash, invest everything else in one or more low-commission, index-tracking, ETF funds, as soon as possible. The Vanguard 500 ETFis a good starting point. This must be a priority. Because compound interest takes time (like a decade or more) to produce its amazing results, the younger you start, the better. (Since many asked in the comments, I also recommend to Google: compound interest+ dollar cost averaging in order to understand the benefits of this double-pronged strategy).
  2. Stop smoking, doing drugs, drinking alcohol: these things do not add anything to your life, and only subtract cash from your bank account (that you should rather invest in ETFs).
  3. Stop watching TV: same as alcohol, TV does not add anything to your life. By not watching TV, you can spend more time reading interesting non-fiction books to educate yourself about the most different topics. Knowledge has a powerful compound effect: as you progress putting different knowledge eggs into your basket, your analytical firepower will gradually increase and the benefit that you will derive will be exponential. TV does not add anything to your knowledge basket. Sell it, and invest the money (either by buying ETFs or by buying many interesting books) instead.
  4. Stop eating outside: learn to cook your own meals. Cooking at home will naturally push you to learn new recipes from different countries: many of these new recipes that I learnt turned out to be new “classics” at home. Delicious!
  5. Stop Facebook: it’s even worse than TV. You lose your precious time while Zuckerberg & Thiel make millions out of your eyeballs glued to some cat videos, fake news & holiday pics. It makes no sense. The first step should be to delete the Facebook app from your iPhone (do not close the account, just delete the app): in this way you will not receive a million of useless notifications every day and you will very easily reduce the wasted time by 90%.
  6. Stop sitting on the couch playing PS4: it’s probably as bad as Facebook. Every time you want to play a game, go for a run outside instead.
  7. Stop surrounding yourself with all these fake friends you don’t care about: they don’t care about you either and they will dump you at the first time you will be in need. It is better for you to be prepared not to count on them (or on anyone, actually). Text/call/see your parents/grandparents more, instead.
  8. Ditch your accountant: learn how to do your own taxes, instead. This will save you a lot of money and will give you insight on the mechanics of the tax system (which is unexpectedly very useful in many fields of life & business). Once you have learnt to do your own taxes you can hire your accountant again and you will then be able to give him guidance, check for potential mistakes, take informed decisions so to minimize your tax burden.
  9. Stop shopping to impress or please other people. It doesn’t work. They will still hate you even if you have a new car or some ridiculous Gucci shoes. The rare, true friends will like you and be at your side regardless of what you own. Once you will start doing this you will learn that you are not what you own. We do not need99% of the stuff for sale out there anyway. Acquiring this mindset will free you from a thousand mental layers that cloud many of our life choices. It feels amazing.
  10. Stop accepting wrong things in the status quo: you can change things for the better. It just needs a brain and hard work.
  11. Stop being a cheapskate: show the fewpeople that matter to you how much you care about them. Bring flowers to your girl/wife/mum/grandma. Make a nice wedding gift to your best friend. Offer discreetly to pay a dinner out if your friend cannot afford. Be a gentleman for all people you interact with. Write a thank you card to a colleague who was helpful in a difficult situation (I still remember the “thank you” card that one of my first bosses left to me — a young and inexperienced trainee at the time — 19 years ago just saying: “You are a star!”) . Be grateful, very grateful, for these good people that touch your life kindly. Do not be afraid to spend money for those who are important for you and deserve your attention, kindness and generosity. The sky will not fall if you spend money and give them your attention and, most importantly, they deserve it. I have seen countless of truly good persons being hurt, friendships broken-up in horrible ways, just because of people being outright stingy. Also, remember to give a part of your profits to a charity that is important for you: the good these people do to this world is invaluable.
  12. Stop not taking (calculated) risks: career-wise,with time we all get lazy and tend to accept the current status quo: our job, our boss, our colleagues, our commuting, etc. This translates into fantastic opportunities being lost because we are too scared to abandon what we consider our current safe harbour (which most of the times is not much more than a steady salary). If you hate your job, if every Monday morning feels sour, if at work you are not respected for who you are, if your boss does not appreciate your efforts, if you are not paid enough, if your last salary increase was ridiculous: these are all signs that should push you to reconsider your career choices and check if anything better is available on the market. Nothing out there? Not all hope is lost: keep in mind that there has never been a better time in the history of civilization to be your own boss and start your own business.
  13. Stop taking new debt. Ditch your credit cards. Pay all the new stuff you want to buy upfront. No exceptions. If you cannot afford something upfront, simply do not buy it (most likely you will not need it anyway). Same for the “mortgage” (from the French “death pledge”): rent / share a cheap place and invest your savings in stocks instead. If you already took debt, repay it as soon as possible: sell stuff & work double shifts if necessary.
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What are the cleverest scams you have come across?

This scam was quite elaborate but guaranteed success many times over and it involved a delivery of a (non-existent) large order of steel from Asia to Europe.

A man with perfect and in-depth knowledge of the steel market calls an Italian, French or German company manufacturing products which require huge quantities of steel: usually big construction companies, large pipes manufacturers, etc. This is an industry with fierce competition and razor thin margins where companies are fighting every day to catch some lucrative business.

The gentleman claims to be the representative for Italy / France / Germany of a Swedish company called XYZ Ltd which works in the metal business (there is fake website arranged with fake phone numbers, fake registered office, etc.).

The gentleman knows in depth what he is talking about, he shows connections with other big and international companies in the steel market, has worked with this and that guy, he has been in the business more than 30 years, etc. etc.

The gentleman offers to negotiate a large scale delivery of steel for a large (but not “impossibly large”) discount from a big and well known steel company either in South Korea or China as long as the purchaser was willing to pay 100% of the (discounted) purchase price upfront.

We are talking about an order of a few million USD of steel.

All communication was done by fax or by e-mail attaching other faxes, letters, documents, quality certificates, etc.

The whole communication from the Korean or Chinese companies was totally forged with fake email addresses and fake phone numbers.

In order to prevent any scam, at the moment of purchase the parties exchanged the money paid with a First Demand Bank Guarantee issued by a well reputed European Bank: by holding the original of the Bank Guarantee the buyer was 100% safe that if the metal was not delivered they could go to the Bank and ask for the money back without any exception whatsoever (this is standard practice for large scale contracts among big players). Please note that this required the scammers to have a bank account with the bank and deposit there at least an amount of money equal to the value of the Guarantee the Bank was going to issue (i.e. these guys were professionals with millions of USD at their disposal).

At the moment of exchanging the guarantee the parties met at the Bank’s premises and, with an excuse, the scammers were able – almost like magicians – to take possession of the original of the Bank Guarantee (which was supposed to be in the hands of the buyer the whole the time) and while people were amiably chatting about the steel market, they changed it with an almost identical color copy (they kept the original and gave the buyer’s representatives the color copy) under the eyes of the Bank’s and the buyer’s representatives. Keep in mind that this was done at the Bank’s premises, so this required amazing manual skills, speed of execution and cold blood.

Delivery of the steel was supposed to happen in 60/90 days from the exchange of the price with the Bank Guarantee.

24h after the exchange, the scammers went back to the Bank handing back the original of the guarantee and claiming that performance had already occurred so there was no need for the guarantee anymore.

Once received the original of the Bank Guarantee, the Bank immediately cancelled it (and the underlying obligation protecting the buyer vanished) thus releasing the money deposited by the scammers in the bank account.

The buyer remained in contact with the (fake) representative of the Korean and Chinese companies for a few weeks: after a month or so they stop answering the emails and phone calls.

Immediately the buyer realized that maybe there was something fishy.

After some further investigation and realising that even the Swedish intermediary company has now disappeared, they decide to rush to the Bank and request the payment of the Bank Guarantee.

The Bank confirms that the Bank Guarantee has been already cancelled 24h after being issued by returning the original document of the Guarantee that was now in their hands.

The parties compared the two versions of the Guarantee and realise that the one in the hands of the buyer was just a well made color copy of the original in the hands of the Bank.

In the meantime the scammers had all the time to transfer the purchase price to various bank accounts in Switzerland and then Cyprus and then elsewhere leaving no trace.