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Vanguard and the apocolypse

Tanisha

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mj you talk about passive money systems which includes vanguard, now since we dont own vanguard we cant control it isnt that risky, what if they close it down and all our money disapears from it?
 
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InspireHD

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Vanguard holds around $4 trillion in assets. You don't "control" it, but you're trusting their reputation. Even if they decide to close down, money would be returned to its investors. When you invest your money into Vanguard, you aren't giving up your rights to your dollars and the money doesn't just disappear into nothing.
 
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Tanisha

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Vanguard holds around $4 trillion in assets. You don't "control" it, but you're trusting their reputation. Even if they decide to close down, money would be returned to its investors. When you invest your money into Vanguard, you aren't giving up your rights to your dollars and the money doesn't just disappear into nothing.

i truly hope so, what if they have a change in ownership with different vision like greedy sons and daughters or grandchildren who just want things for themselves
 
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InspireHD

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i truly hope so, what if they have a change in ownership with different vision like greedy sons and daughters or grandchildren who just want things for themselves

They don't really change in ownership, only in who runs the company, which they've changed several times. There are directors who won't just let someone come in wipe out the company. There are regulations around running a company like that so your money isn't just going to evaporate into nothing. You still have every right to your dollars in Vanguard as you do holding them under your mattress.

I mean, if you don't trust them, then don't open an account there. I've had accounts with Scottrade, TD Ameritrade, Fidelity, Interactive Brokers, and some random company in Chicago when I was daytrading. Every time I wanted to withdraw my money, I've gotten every cent back.

Think about this. They have around $4 trillion in assets under management. Do you really think there is anything to be concerned about? Why would the millions of other people invest their money into Vanguard if there was a chance the company could steal your money and run away with it?

Do some research, learn about the company, get familiar, maybe start small, and get comfortable with how everything works. You might find understanding in all of it if you educate yourself. **I'm being sincere so not trying to make that come off as sounding rude.**
 

mike24601

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Of all the investment firms, I'd say Vanguard is one of the most respected. They sell a mutual fund that has been running since 1929 with an 8% average return. Of course, with any investment, there is always going to be risk involved, but not exactly the type you are most worried about.

The stock market can be very volatile at times, which is why an index or mutual fund is a better choice than picking individual stocks. But some funds expose you to more risk loss than others. The higher the average returns, the more risk involved, usually. But even a very modest 4% return on $2 million amounts to $80,000 a year before taxes--passive income!

With index funds / mutuals, your risk can be spread out across multiple industries that aren't going to react the same way to changes in the market. Vanguard has a reputation to uphold and thus has great incentive to hire very competent people to manage their funds. If you keep a close eye on your account, and choose a company that makes it fast to turn your fund back into liquid cash, you lower your risk.
 

Mr_Maravish

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You also have SIPC Insurance which covers you for up to $500k if the firm goes belly up and is a member of SIPC. They cover both cash and securities with a cash limit of 250k. Vanguard is a SIPC member.
 
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jon.a

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mj you talk about passive money systems which includes vanguard, now since we dont own vanguard we cant control it isnt that risky, what if they close it down and all our money disapears from it?
Approximately how much money are we talking about here?
100k?
500K?
A million?
 

Raoul Duke

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scottmsul

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I think I understand your question...are you referring to control in the sense of "commandment of control"? The commandment of control is in the context of fastlane businesses, not passive money systems. For example, if your entire business depended on putting sponsored links on a popular facebook page, but then facebook decided you were violating their terms of service and closed your page, that would be failure from violating control (eg, facebook has control over your entire business model). But passive money systems like Vanguard don't really violate this...first, you need to already have millions saved up, second you can shop around and move your money easily (Vanguard isn't the only such system), third I believe such systems are insured, whereas violating control in a business is not.
 

Tanisha

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Jun 16, 2017
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They don't really change in ownership, only in who runs the company, which they've changed several times. There are directors who won't just let someone come in wipe out the company. There are regulations around running a company like that so your money isn't just going to evaporate into nothing. You still have every right to your dollars in Vanguard as you do holding them under your mattress.

I mean, if you don't trust them, then don't open an account there. I've had accounts with Scottrade, TD Ameritrade, Fidelity, Interactive Brokers, and some random company in Chicago when I was daytrading. Every time I wanted to withdraw my money, I've gotten every cent back.

Think about this. They have around $4 trillion in assets under management. Do you really think there is anything to be concerned about? Why would the millions of other people invest their money into Vanguard if there was a chance the company could steal your money and run away with it?

Do some research, learn about the company, get familiar, maybe start small, and get comfortable with how everything works. You might find understanding in all of it if you educate yourself. **I'm being sincere so not trying to make that come off as sounding rude.**

i understand and that is very relieving i'll research more into it
 

Tanisha

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Approximately how much money are we talking about here?
100k?
500K?
A million?

well if its stable id like to someday put in at least around the $5 million dollar mark thats where mj says that compound interest starts kicking in
 
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jon.a

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well if its stable id like to someday put in at least around the $5 million dollar mark thats where mj says that compound interest starts kicking in
What do you have your 5 million in now?
 

mike24601

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The $5 million number regarding compound interest is arbitrary. All that matters is how much you need to quit your job and live the way you want to live. If you can do that on $50,000 a year, you could easily earn that off $1 million invested in a fund that earns an average 5% return. That kind of rate is usually provided by lower-risk funds or even municipal bonds. Do you need $100,000 a year of passive income to enjoy the life you want? Then $2 million invested in the same portfolio earns you that. If you need $500,000 a year passive income to live your ideal life, you will need an investment of $10 million.

A 5% return on $5 million earns you $250,000 a year, or around $20,000 per month before taxes. I can sip a lot of margarita's by the pool with that much income coming in. In another thread, @MJ DeMarco mentioned that his actual monthly living expenses total something less than $2,000 because his home is paid for, as well as his vehicles. So let's say you earn $5 million over the next few years and exit your company. Take some money and buy yourself a nice place in cash right off the bat, then place the rest of your loot into a diverse group of investments that you can move around easily and return to cash quickly.

Your money system will continue to provide you a nice cashflow while you eat, sleep, or while you sit back and do what you want to do. You DO need to be wary about where the money goes, you'll need attorney's and CPA's to help manage any tax implications, and you will have to keep up with inflation--especially if you're very young and need your pot to keep providing at your preferred standard of living for a long time.
 

Tanisha

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Jun 16, 2017
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I think I understand your question...are you referring to control in the sense of "commandment of control"? The commandment of control is in the context of fastlane businesses, not passive money systems. For example, if your entire business depended on putting sponsored links on a popular facebook page, but then facebook decided you were violating their terms of service and closed your page, that would be failure from violating control (eg, facebook has control over your entire business model). But passive money systems like Vanguard don't really violate this...first, you need to already have millions saved up, second you can shop around and move your money easily (Vanguard isn't the only such system), third I believe such systems are insured, whereas violating control in a business is not.

thank you for helping ease my fears
 

Tanisha

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Jun 16, 2017
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sacramento
The $5 million number regarding compound interest is arbitrary. All that matters is how much you need to quit your job and live the way you want to live. If you can do that on $50,000 a year, you could easily earn that off $1 million invested in a fund that earns an average 5% return. That kind of rate is usually provided by lower-risk funds or even municipal bonds. Do you need $100,000 a year of passive income to enjoy the life you want? Then $2 million invested in the same portfolio earns you that. If you need $500,000 a year passive income to live your ideal life, you will need an investment of $10 million.

A 5% return on $5 million earns you $250,000 a year, or around $20,000 per month before taxes. I can sip a lot of margarita's by the pool with that much income coming in. In another thread, @MJ DeMarco mentioned that his actual monthly living expenses total something less than $2,000 because his home is paid for, as well as his vehicles. So let's say you earn $5 million over the next few years and exit your company. Take some money and buy yourself a nice place in cash right off the bat, then place the rest of your loot into a diverse group of investments that you can move around easily and return to cash quickly.

Your money system will continue to provide you a nice cashflow while you eat, sleep, or while you sit back and do what you want to do. You DO need to be wary about where the money goes, you'll need attorney's and CPA's to help manage any tax implications, and you will have to keep up with inflation--especially if you're very young and need your pot to keep providing at your preferred standard of living for a long time.

yikes attorneys and cpa's the cost of those alone would wipe out whatever gains i was earning is it necessary to get so many people getting a hand out on what i earn?
 

CareCPA

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yikes attorneys and cpa's the cost of those alone would wipe out whatever gains i was earning is it necessary to get so many people getting a hand out on what i earn?
1. We're probably not as expensive as you think.
2. I wouldn't consider the fees I earn a "hand out" on what you earn. You should only be paying professionals who provide value to you. The same way people are paying you for your product because it provides value in their life, right?
 
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mike24601

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Hell, there are savings accounts out there earning 1.50%. On $5 million that's 75k a year in interest alone virtually risk free.
 

cutthroughstatic

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My question is, why five million? Sounds like you're setting your sights too low.

Tai Lopez says if you read enough books you can earn any amount of money. I mean, might as well get reading and reset that target to 10 million.

Grant Cardone's 10x rule? 50 million it is.

Then you can start your own Vanguard and meet the commandment of entry.

;)
 
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Tanisha

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1. We're probably not as expensive as you think.
2. I wouldn't consider the fees I earn a "hand out" on what you earn. You should only be paying professionals who provide value to you. The same way people are paying you for your product because it provides value in their life, right?

hmmm well thats fair
 

EvanOkanagan

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If you respect and appreciate MJ, stop making these kind of threads.

Do you think he wants to take time out of his day to answer these ridiculous, hypothetical questions? And especially to someone who doesn't listen and isn't providing any value exchange?

This is the Fastlane Forum--not "Ask MJ Anything!"
 
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ddzc

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If you respect and appreciate MJ, stop making these kind of threads.

Do you think he wants to take time out of his day to answer these ridiculous, hypothetical questions? And especially to someone who doesn't listen and isn't providing any value exchange?

This is the Fastlane Forum--not "Ask MJ Anything!"

I think she's secretly in love with MJ. All of these MJ call out threads, the flowers, etc.
 

Tanisha

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If you respect and appreciate MJ, stop making these kind of threads.

Do you think he wants to take time out of his day to answer these ridiculous, hypothetical questions? And especially to someone who doesn't listen and isn't providing any value exchange?

This is the Fastlane Forum--not "Ask MJ Anything!"

rude, but oh well
 

Jose L. Nimmons

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Just like how banks are backed (up to 250K per account held) by FDIC insurance, investment companies like Vanguard and Fidelity are covered by Securities Investor Protection Corporation (SIPC) insurance in the event that the company goes under.
There is the nuclear/zombie apocalypse scenario, in which case likely unconcerned as much with the state of our investment accounts as much as wondering where we'll hide from the undead/nuclear fallout. =)
 

Sequential

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Even though this thread is now landfilled, I wish to thank Tanisha for giving me two lessons.

1. I know more about Vanguard than I did before.

2. I know if I ever have children, not calling them Tanisha might be a good bet.
 

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