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Tuesday, March 29, 2011

Financial Planning Talk

A random group of people invited me to give a talk about financial matters. It was deemed better to have the talk off-site, so that's what I did. While I could not put all the slides up, I've put up a mostly sanitized version of the slides below in a Google presentation.

The talk went for about 50 minutes, and then I took about an hour or so of questions. Not all the questions were directed at me, as there were other financial experts at the talk. A pleasant surprise was Jeff Rothschild. I did not expect to see him there, since Jeff has probably forgotten more about financial planning than I've learned, but it was great to see him.



Someone did ask me a question about real estate, and XiaoQin pointed out that I should have answered it like this: it's one thing to hold REITs passively, it's another to buy real estate to make money as a business. The people who successfully run real estate as a business (like John T Reed) did it full time. Reed, in particular, no longer advocates buy-and-hold as a viable strategy for making money in real estate. (He said this even before the housing bubble!) He believes that you make money by buying below market value, or for cash flow with a cap rate of 10% or better. For everyone else, treat housing like a consumption decision, not an investment decision.

4 comments:

Life@BayArea said...

Guess no one here knows the meaning of 250 in Chinese.:P

David Reis said...

Hello Piaw. Thanks for the slides. Most everything there makes a lot of sense. Only one thing sounded weird to me: your slide on insurance. What's the financial rationale of buying insurance to the max?
I always taught that self-insuring for things that you can afford loosing was the best option. Following this principle, I buy life insurance, but not auto or an extended insurance on my notebook. What do you think about that?

Xianhang Zhang said...

If you're financially stable, what's the argument for buying car insurance if you can afford to pay yourself without sweating it?

Piaw Na said...

Liability. If you run over a rich doctor and he sues you for what you've got, you need liability insurance. Most umbrella policies will only cover you if your car/house/rental insurance is all maxed out.