Barefoot Investor: Would you let Amazon into your home?
THE Barefoot Investor says he won’t be investing in digital currencies and he doesn’t recommend anyone else does either. Here’s why.
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You should think twice about investing in digital currency, says Barefoot Investor Scott Pape.
TAM ASKS:
What are your thoughts on Regal Coins? Are they the new Bitcoin? My partner seems to think they are, and is pouring hundreds of dollars into them. We are a one-income ($60,000) family of four, in massive debt. I would love your input.
BAREFOOT REPLIES:
Your husband is acting like a drongo, and you hereby have my permission to hit him repeatedly with a sackful of 50 cent coins if he ever brings this rubbish up again.
Seriously, he has a wife and kids to look after … the time for get-rich-quick schemes is over.
Now, I am not an expert in ‘cryptocurrencies’, but I do defer to the experts, like the Wolf of Wall Street, Jordan Belfort, who recently said that initial coin offerings are “the biggest scam ever”.
And, credit where it’s due, that lying thief, convicted fraudster (and motivational speaker!?) sure knows a lot about ripping people off.
By the way, it feels like everyone is asking me whether they should get into cryptocurrencies right now.
I’m on record as saying that I won’t be investing in them — and I don’t recommend anyone does either.
Why?
Well, it’s not because I think there won’t be a dominant internet currency in the future.
On the contrary, I’m almost certain there will be. It’s just that I’m honest enough to admit I don’t have a clue what that currency will end up being — Bitcoin or Regal Coins, or something from Amazon, Facebook or Apple (or, most likely, something my two-year-old hasn’t even yet dreamt up yet).
And it’s also because I’m a student of financial history and I know how this bubble will end.
You want to know how it will end too, don’t you?
Okay, I’ll share it with you.
It’s not on Snapchat, or Facebook, or even the Dark Web.
The answer can be found in a good-old-fashioned analog book.
It’s called Extraordinary Popular Delusions and the Madness of Crowds, by Charles Mackay.
And here’s the clanger: it was first published in 1841, the same year the first photograph was taken in Australia (a selfie by a convict in Botany Bay, #thuglifeoz).
The book is understandably light on cryptocurrencies, but there are plenty of stories of drongos who did their dough betting on things they didn’t understand.
SHOULD I SELL MY INVESTMENT PROPERTY?
ALLY ASKS:
Back in 2008 I bought my first home for $126,000. I have paid it off since then and started renting it out in 2012, when I moved into my husband’s home. My rental property is now worth about $150,000 and, to be honest, I do not think it is ever going to rise much in value. The only upsides are that it is relatively easy to find tenants for it ($220 per week) and I make about $5000 a year from it. I am considering selling and using the proceeds to invest in shares, and to renovate our home. Or should I just keep it? It would be nice to rent it to a single mum with four kids!
BAREFOOT REPLIES:
What an awesome achievement!
In years to come, how powerful would it be to show your kids — especially your daughters — the home that Mum saved up and bought on her own, before she met Dad? Who cares if it’s a poky little joint? Stories are powerful, especially for kids.
Having said that, if you’re not emotionally invested in the property, I’d probably sell it, cop the tax, and move on.
What tax?
Well, it’s likely you’ll be up for capital gains tax (CGT), though you’ll only pay it on any gain you’ve made since 2012 (when you moved into your current home). Better yet, that capital gain will be further discounted by 50 per cent as you’ve held the property for over 12 months.
So why sell?
Well, you’re already questioning the likelihood of future capital gains, and you wouldn’t hold on to it just for the 3.3 per cent rental yield ($5000 a year). Besides, let’s face it, being a landlord can be a triple pain in the rump — hello renters, repairs, and real estate agents.
If I were in your shoes, I’d sell the place, make a tax-deductible donation to a woman’s shelter in your area, spend as little as I could on renos on your current home, and put the bulk of it into super.
THREE IS EN OUGH, BAREFOOT!
JESSICA ASKS:
You seem like a smart guy, but I think your wife is even smarter in wanting to limit the number of children you have to just three. The environment is freaking out, and curtailing the number of children born into our consumer society is one of the greatest contributions anyone can make. And all that money you save by not having those kids can be donated to worthwhile charities that help the environment, animals and people instead!
BAREFOOT REPLIES:
You must be a real hoot at a baby shower.
I’m naturally an optimist, and on almost every measure right now is simply the best time in history to be alive.
Case in point: in his book Abundance: The Future Is Better Than You Think, Dr Peter Diamandis reveals that in the past century the average lifespan has doubled, and the average income has tripled. At the same time, food is 10 times cheaper, electricity is 20 times cheaper, transport is 100 times cheaper, and communications are 1000 times cheaper!
Besides, a wise person once told me “no one ever regrets the kids they have … only the ones they don’t”.
AMAZON WANTS THE KEYS TO YOUR HOUSE
‘AMAZON KEY’ is a security camera and locking system that lets you get deliveries inside your home when you’re not there.
Here’s how it works:
When the Amazon delivery driver arrives at your front door, he (or she) scans your package.
If the package is approved, the door unlocks, and the camera starts recording. Now here’s the cool part: you can watch the delivery driver from your phone ... and apparently even talk to them:
“Put the ice-cream in the fridge please cobber.”
After the driver has dropped off the package, the door automatically locks behind him. (And if you’re busy working you’ll get an email with a recorded video of the drop-off.)
Amazon Key costs $249 and is currently available in 37 cities across the US — but if it’s successful you can be sure it’ll be quickly rolled out here in Australia.
Righty-o. So what does this all mean?
First point: this is just another reason that Amazon is fast becoming the ‘everything store’.
In the coming months Amazon Home Services is rolling out 1200 different services — from cleaners to dog walkers — who will all synch into the Amazon Key system.
The bottom line for Aussie businesses is brutal: if you don’t have the chops to compete globally, then the best companies in the world will eventually come Down Under and cut your lunch (and most likely deliver it by drone).
Second point: is this ‘1984’?
Are consumers seriously going to allow a conglomerate to set up a camera in the privacy of their homes?
Sure!
In fact, Amazon Key perfectly complements Amazon Alexa, the voice-activated speaker that is constantly listening in to your conversations (and awaiting your Amazon orders), and the cute-looking Alexa Alarm Clock, which has an in-built camera and microphone (in your bedroom!)
Yeah, but what about letting strangers into your home?
Well, think about the intricate security system most of us have now: you keep a spare key under the doormat so that Sally (surname unknown) — the cleaner you met for 10 minutes as you showed her through your pigsty of a home — can get in. Good old Sally wouldn’t use your toothbrush to clean the toilets, right? … Hang on, give me that security camera!
Tread Your Own Path!
The Barefoot Investor holds an Australian Financial Services Licence (302081).
This is general advice only. It should not replace individual, independent, personal financial advice
Originally published as Barefoot Investor: Would you let Amazon into your home?