Saturday, May 12, 2012

A case for spending your money

I think one of the nicest problems to have in this life is the problem of having too much money. Of course right now this is just a thought on my part because I have never actually had this problem before. So let's just say that this problem really does exist, then I think it would be something along these lines.

You are filthy rich. Rich as in Chuck Bass kind of rich. You are driven around in a limo, portfolio of companies that you own. You don't think in millions anymore. You think in billions. This really brings home the concept of relativity. As I have always said, when you are a billionaire, you would not think twice about getting a 100k handbag. You would buy the art that you want. Heck, you can even ask people to create art for you. Chance is that you would become their muse, and instead of just creating one piece, they create a whole collection for you.

So you don't have a problem in buying things - in fact, you may discover that there are so many things that money can buy. You may even come to the realisation that everything has a price and you can pay that price. I mean, it's like this. (Sorry, this is going to be digressing a little.) A while back, my friend asked me if I would have sex with an old rich guy for a million dollars - I kid you not. My friend was and still is a male. In case you haven't figured this out, I am a female. There was no one else in this conversation. I said  no. I am way more expensive than that. Not because I don't want a million dollars - I do, I just prefer to attain it by exercising my brain rather than my body. So if I were to let my body be used for sexual exploitations of a transactional nature, then my price is way higher than  that. But point is this: there is a price. And when you are rich, as in stinking rich, you may be able to buy it without thinking too much about it.

What is the problem of having too much money? Now that I am like 3 paragraphs down, I am not even sure that this actually qualifies as a problem. I guess you can always have the sort of gold-diggers (both male and female) who pretend to be your friends, but they really only want access to your lifestyle and of course, your money. Yet when you are stinking rich, you will be hanging out with other people who are in similar boats, so the chance of this sort of problem occurring should be very little. I guess another problem would be that, you don't know what to do with your money. I refuse to believe that this is a problem because quite frankly, money is meant to be ... er... spent. At least in my opinion anyway.

Anyway, the real reason I am thinking about this is because of what happened on Friday. I went to the bank that day. I hate going to places where the receptionist is always on the phone, or too busy to be a receptionist because she was too engrossed in typing out her documents. I hate even more the person that I am supposed to meet who needs to be called into the meeting room, instead of being there on the dot. Yes, this is somewhat extreme, I know, but when it comes to the bank, trust me, they don't treat you like a person. They treat you like you are a walking $. Maybe with the exception of NAB - but I was not at NAB on Friday.

After waiting for about 5 minutes, we walked into this meeting room and started talking about a structured product, that basically goes like this (in summary): put a minimum of X amount with us for 18 months, and in exchange for that, you get 8% pa return and you stand to lose all of your initial investment if A, B or C happens in the next 18 months. Are you fucking kidding me? If I were to lose all of my money like that, I much rather spend it all and enjoy it right now rather than giving it to you in exchange for a measly 8% pa if I am lucky. (My risk free rate, for all of you nerds out there, is 5.51%.)

I don't even know where to begin in explaining why I found the structured product so offensive. I guess I find it offensive because it clearly doesn't match my risk profile. Or it clearly does not meet my expectations. Or both. Or maybe it is just logically wrong to me. This is precisely why I think money should be spent. Because at least you are in a position to dispose it the way you want to, however you see fit. Buy shares and watch the price tank, for example, but you still have the shares (ok, they worth less, but you still have them). Buy foreign currency and watch it depreciate, ok, they worth less, but you still have them. Buy a car and suffer massive depreciation expense over the years, bla bla bla, but you still have the car. Buy anything and watch it loses its value, but you still have it despite it not having a market value altogether.

So yeah, I guess either way, the chance of you "losing" your money is very real. Yet the fact that a bank is expecting me to do that, I find that fact most offensive.I think this is because the additional rate of return of 2.49% in exchange of potentially losing the initial investment sounds like a joke-that-doesn't-make-me-laugh to me. Of course the bank would structure deals like this, because it wants to make money. At your expense. This is how they get rich. (They then spend that money to attract new customers - I swear at this rate, I should be switching banks every 6 months. Why the fuck can't you spend that money on making your current customers happy? Do you not place a value on loyalty?)

If I am starting a business, I am going to start a business that make people switch banks every 6 months. In fact, I would automate that process for them so that for a small fee, they get these benefits that every bank seems to be showering their new customers with (think like $50 versus $500). Heck, I might even do a groupon on this and negotiate the terms with the banks every time I am organising a massive transfer of potential clients. This business model will crumble as soon as the banks start rewarding their current customers, which is the right way to do business, I think. The chance of having the banks change their business practice - very slim. But NAB is already doing this apparently, so let's see if the others would follow suit.

Despite references to NAB, NAB is not paying me to write this post out. Furthermore, whatever that I say about NAB is just my opinion, so feel free to disagree. Speaking of NAB, by the way, a while back I got a call on my mobile from a person who claimed to be a NAB representative who asked me to identify myself. Now, whenever someone from the bank calls me and ask me to do this, I always say no. My reason: how do I know you are from NAB. You can start by identifying yourself. Afterall, you called me. In this instance, the response I got was, "I don't know how to identify myself". To which I said, "well, that's your problem." Then he said, "I am afraid I have to terminate the call if you don't want to identify yourself." I said "It's fine, bye."

The story did not end there. I called NAB back and after pressing so much random keys, I got to speak to a representative who was laughing her ass off when I told her the above story. I guess it must have been a funny story. Then she said, I have to ask you to identify yourself. I said, it's fine, because I called you. I know you are from NAB. This is different, you see. Then she laughed again. I don't know what she typed on my file that day, but I imagine it must have been somewhat rather hilarious.

Long story short, after checking the ten thousand possibilities of the endless departments that could have possibly tried to get in touch with me (with my account manager being on holiday, so there was no way he could have made the call), turns out no one from NAB was making the call to my mobile earlier. This freaked me out. Was I the potential subject of an identity theft? I swear sometimes I am not being paranoid when I don't want to identify myself.

Moral of the story - you can either be semi-paranoid like me and refuse to identify yourself (some people call it prudent, by the way). OR you can just spend all of your money so that you don't have to worry about anyone stealing your money.

Of course when I say spend, what I really mean is to assign a purpose for every dollar that comes your way, not necessarily having them leaving your hands. When you do this, of course you have to exercise precautions, like my semi-paranoia above. I mean, really, it might end up saving your life in ways that you would never have imagined.

Happy weekend!

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