Start Up Blog

Top 10 financial hacks

Posted in entrepreneurship by Steve Sammartino on April 13, 2011

There is no point being a successful entrepreneur, or selling a startup if we have no idea how to handle the money we get. So here is my top 10 financial life hacks.

  1. Spend less than you earn, no matter what that amount is. The net result is happiness.
  2. Allocate cash to savings & investments before anything the day you get your profits, pay or dividends.
  3. Never go into debt for anything which does not appreciate in value.
  4. The real definition of an Asset: Anything that puts money in your pocket. The accounting definition of an asset is flawed.
  5. Do not trade stocks. Trading makes the broker and tax man rich and you poor.
  6. The greatest financial instrument is ‘compounding’. It only happens when we hold assets, not by trading them.
  7. If you can’t afford a consumer product in cash, you can’t afford it.
  8. There is no such thing as ‘financial engineering’. It was invented by Wall street to trick you.
  9. The best type of share investment is an Index Fund. They are investments in civilization. If that fails, we have bigger worries than our money.
  10. Invest more in education than entertainment & ‘things’ and you will outdo society financially.

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Short memory – GFC

Posted in entrepreneurship by Steve Sammartino on October 18, 2009

Reading the New York Times this weekend it seems clear that the Global Financial Crisis has not diminished the ability of investment bankers to extract bonuses from poorly performing assets and even losses.

I still believe that private profits should also result in private losses. I remember back last year having a discussion with a prominent Australian Venture Capitalist. He held a strong view that the bailout activities were justified, while my view was strongly opposed.

He said:

“If a child trips and skins its knee that’s fine, but there is no point letting it fall from a 10 story building. The consequences are too great”

I said:

“It’s not a child, they’re investment bankers. And maybe what we need right now is a few of them splattered on the sidewalk.”

My view has not changed.

But it seems the general populous has a short memory as the rot is returning very quickly. In fact, it might do both our economy and our environment good to let the current system bleed for a while. Why not allow time for new eco-friendly industries and  egalitarian reward systems arrive?

Startup Blog wonders what your think?

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Quit your job

Posted in entrepreneurship by Steve Sammartino on April 26, 2009

You should really quit your job on Monday. Yes tomorrow today . If you are working for a salary or wages  and have no equity in the business that is.

And here’s why:

You are living someone else’s dream.

You are exchanging the days of your life to build the vision of someone else. You are not doing what you dreamed about as a child.

The reality is this: once you have a place to live and food to eat, the rest is ego. Chances are you are working in a job just to feed your ego. I know because I was this person for more than 10 years. I had jobs I didn’t like – high paying ones, to buy things I didn’t need, to impress people I didn’t care for. It’s a pointless treadmill which the government encourages to maximise consumption, generate higher tax rates and PAYE deductions and enforce control through a passive education process which says consumption equals success. We must remove this idea of the power structure from our minds and remind ourselves that real wealth is defined by the cool stuff we are doing, rather than the stuff we buy.

Quite your job, de-gear your life and do something  of value. To further encourage this process I’ll leave you with one final thought I tweeted a while ago:

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Cheers, Steve

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Quirky facts & contingency plans

Posted in entrepreneurship by Steve Sammartino on January 15, 2009

Here’s a surprising, actually not so surprising business fact:

The IRS (USA tax department) tax manual has instructions for collecting taxes after a nuclear war!

Wow – that is some heavy contingency planning. Even a bit over the top….

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Although I’m not a huge fan for planning, in startup land it’s still worth having a back up plan if things really go astray. Contingency plans for things like running low on cash, losing interest in your startup, or falling out of love with your business partner. Don’t obsess over it, just have some written ideas of how you’ll deal with it, if it happens.

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