10 Questions With Sport Of Money

Today’s edition of 10 Questions features Rich from Sport Of Money. He has an impressive story. He grew up poor, living in a suboptimal 400 square foot apartment in a family of 5:

The bathroom was so small it couldn’t fit a bathtub. The tub was located in the living room. Showers were taken in the living room and singing in the shower was completely out of the question. 

That didn’t stop him from accumulating an 8 figure net worth.

I think of people like Rich whenever someone complains about their lot in life. It’s going to be harder for some of us who have baggage or were born into a bad situation, but I believe that there is a path to wealth for almost everyone.

There are approximately 476,492,292,928 personal finance blogs last time I checked. Why should we read yours?

Look, your time is valuable (I assume but maybe not). You shouldn’t read my blog, Sport of Money, unless you think you can learn from my experience.

Here’s a quick snapshot about me: I grew up in a financially poor household but it never felt that way to me. I grew up with loving parents, a safe home with a roof over my head, and three warm meals a day. I always had clean clothes to wear, obtained a great public school education, and had the feeling there are limitless opportunities all around me.

I am in my late 30s now, with a family of my own, live in New York City and have over $10,000,000 in household net worth. I earned my wealth through hard work, discipline, a can-do attitude, staying focused and making good life choices.

Of course, a little bit of luck never hurt considering I grew up in the good old US of A. It is still the land of opportunities and I believe fervently the American Dream is alive and well.

Read my blog if you want to insight into how I view the world and financial matters. Hopefully, you can learn a thing or two on your own financial path to success.

What is one post that you’ve written that you wish would have gone viral?

I believe anyone can follow simple rules to achieve great financial success. There really isn’t any secret to it, except many people still live paycheck to paycheck.

I’ve written this post titled “7 Secrets From Two 401(k) Millionaires To Turbocharge Your 401(k)”. My wife and I both got to a 7-figure 401(k) account balance in our 30s. The “secrets” we employed can be followed by anyone.

We might work with bigger numbers because we are fortunate to be in high paying jobs and can contribute more to the 401(k). But, nonetheless, you can still turbocharge their 401(k) accounts by following these simple steps. In fact, I believe most of those secrets not only apply to building a sizable 401(k) balance but can also aid in building a robust net worth. 

As a side note on our high-income jobs, we chose to be in decent paying professions with the potential for good income growth. We are just average Joe and Jane who worked hard to climb the corporate ladder. If we can do it, you can surely do it too!

Do you rent or own? What are your thoughts on homeownership?

I own. I am a big believer in homeownership. It is a great vehicle for wealth accumulation for the average American household.  

I purchased my first home 3 years after graduating from college. I’ve moved a few times since but always to a property I own.

My advice to someone just starting out, especially as a young single person, is to be smart with your purchase. If you don’t plan to live there for up to 10 years, then buy a place that would give you an acceptable level of return if you need to rent it out. Always keep an eye out to the future.

Don’t just buy solely for today. Of course, if you are older, with a family and kids and can see yourself living in the home for decades upon decades, then rental income and potential return as a rental property do not matter as much.

Overall, I am a big fan of real estate and I believe it should be a cornerstone of your investment portfolio.

You rub a magic lamp and an evil genie pops out and says this: “You must pick one, specific investment to have all your money in for the next decade!” What do you pick?

My choice: S&P 500 ETF (Ticker: SPY). I am a big believer that the US economy will outperform other countries in the next decade. Therefore, I want to have long equity exposure to a diversified pool of US-domiciled companies. (A little inside baseball: I picked this question to help lower the word count of this post J).

If you were a dinosaur, what kind would you be and why?

I would be a triceratops – my favorite dinosaur. Triceratopses were herbivores and did not hunt other dinosaurs for food or for fun. This is very similar to my motto of doing no harm, being kind and respectful to other human beings.

Triceratopses also had the 3 horns for attack if engaged to fight or backed into a corner. I would like to think that I too can be dangerous if backed into a corner or forced to fight.

They also had the large hard neck frill to protect themselves in their most venerable spot around the neck area from attacks by predators. I, too, would like to be well protected on my blind or venerable spots. 

What is one thing you believe that most others do not?

I believe anything is achievable. We are only limited by our own mindset and the lack of action.

If you want to be a real estate mogul, go out, get educated and then do it. If you want to fatFIRE at 40, go out and learn how to do it. Then apply that knowledge, lay out a game plan, and then just do it. If you want to be President of the United States, read up on how the other 45 people have gotten there and then go out and get the ball rolling. You can do anything. 

As previously mentioned, I grew up in a financially poor household. I am a multi-millionaire before the age of 40. There is nothing special about me. I do not have special abilities or out-worldly intelligence. I am your average Joe.

I decided at a young age I wanted to be on solid financial ground and to accumulate a nice financial nut for peace of mind. I went out and did it. Now I want to aim a lot higher because there are a lot of advantages in accumulating more wealth now that I already have some money. I tell people close to me my goals. They all shared the common reaction of “yeah right, good luck with that one, overreaching much?” I’m using their response as extra motivation to get me to where I want to go. 

Don’t limit your mind on what you can do. 

If your 18-year-old child told you this: “Parents, I want to go to a $250,000 school and study doorknob design,” what would you tell him or her?

I am hopeful that I would have raised my 18-year-old kid right and that the child would know money is needed to survive and to build a life. Hopefully, the 18-year-old child would also know that there is not a lot of money in doorknob design. There is a high likelihood that years after graduating from college, the child might still be living paycheck to paycheck.

Now, if my child knows all this, and still decides to pursue a degree in doorknob design at $250,000 a year – I would strongly remind the kid of the aforementioned points. As long as my kid is jumping into it with both eyes wide open and has strong conviction doorknob design is the true calling, then I would encourage him to hang tough given the challenging financial road ahead.

With that said, I would also gradually Inception (like the movie, to convince by planting the seed but let the kid thinks it’s the kid’s idea) the kid to pursue something more practical if I end up getting a whiff that the kid wants to study doorknob design at an early age. 

Ideal vacation: road trip, beach, mountains, forest or city?

Beach.

Growing up, I never understood the attraction of a beach vacation. “What do you do at a beach?” I often wondered. “Do people really sit in the sun for 7 days, swim occasionally, eat, drink and sleep? Isn’t that just a waste of my time?” I had those thoughts of a beach vacation up until my 20s.

Now I love going on beach vacations for the exact same reasons why I thought a beach vacation was a waste of time back then. I want to be in one place, enjoy the sun and sand, hit the water when I want to go for a swim, eat, drink and caught some ZZZ’s.

Of course, having 3 young kids only enhances the benefits of a beach vacation versus a road trip or hiking a mountain. Have you ever tried hiking up a mountain with 3 kids under the age of 10? I wouldn’t recommend it.

What is the best thing you ever bought? The worst?

I like to buy things which provide me utility and can also appreciate in value at the same time. It is as if someone is paying me to use the item. A win-win situation and the best part is that I get both the wins.

Real estate is one such purchase. I first purchased a home back in 2005. I lived in it for a number of years before moving. I rented the home after my move out for 5 years before selling it. I netted a profit of over $400,000 on the sale.

It was a great win. Not only was I able to, in essence, live rent-free for all those years because of the $400,000+ in gains, I was able to walk away with more money in my pocket. It is the equivalent of someone paying me a monthly stipend to live in my home for 10 years. How great is that? 

Additionally, real estate provides a lot of tax advantages. Because of the tax benefits, I am able to generate over $400,000 of income without paying any taxes.

The worst purchase was a put option on an internet stock I made 10 years ago. I lost 100% of the amount I put into that investment. I tried my hands at option investing at that time. I had a small win in my first foray into option investing of a few thousand dollars. That gave me the confidence (in hindsight really more cockiness) to place a $35,000 wager on this put option. Suffice it to say, I have never invested in options again after that loss.

What is one thing you firmly believed 5 years ago that you no longer believe?

Neutrality of the major news outlets in reporting only the news.

5 years ago, I used to believe CNN was a neutral news organization, along with a lot of the major networks. But if you look at what they report on today, especially around politics, you can quickly tell there is a slant to one side of the political spectrum in their reporting. I believe a free press is very important in the maintenance of a well-functioning democracy. But is the free press really free when it tries to shape a narrative biased to one side or tries to advance a social or political agenda?

Now I get my news by reading numerous news organizations such as CNN and Fox News together on the same topic for more balanced facts and representation of events. This way, I can formula my own opinion of a situation by getting information from more than one side.

I think this mentality can be applied to everything you read including regarding investing. If Douglas Elliman Real Estate published a glowing story about the real estate market, it is important for you to keep in mind that Douglas Elliman has a strong incentive to hype up the real estate market. Therefore, be a bit more skeptical about the story and try to get more information elsewhere in order to develop a more well-rounded view.

Thanks Rich for your answers! I appreciate your story that shows the value of hard work.

You may learn more about Rich over on his blog, Sport Of Money.