Save Big, Invest Smart: 7 Life Hacks to Grow Your Investment Capital

Save Big Invest Smart: 7 Life Hacks to Grow Your Investment Capital. Tired of reading endless budget cuts for lattes? This video dives into practical, real-life strategies to save significant sums without sacrificing your lifestyle. Investment adviser Brian Regan, who successfully built his investment capital, shares 7 actionable tips that have worked for him. Watch the video Save Big Invest Smart: 7 Life Hacks to Grow Your Investment Capital to learn more and find more free videos on FinStream about saving money at this link: https://www.finstream.tv/videos/saving/

Key Takeaways

• Focus on big wins: Instead of sweating small expenses, target larger areas like housing, transportation, and childcare.
• Location, location, location: Consider slightly less expensive neighborhoods with similar amenities. You'll save on housing and taxes.
• Fixed-rate mortgages are your friend: Lock in lower payments over time and benefit from potential future refinancing opportunities.
• Embrace roommates: Share your living space for significant cost savings, especially when young or single.
• Used cars win the depreciation race: Enjoy lower starting costs, insurance, and excise taxes. Remember, a new car smell doesn't equal smart investing.
• Creative dates don't break the bank: Ditch expensive dinners and explore free or low-cost options like hikes, picnics, or coffee dates.
• Shop around for childcare: Don't settle for the first option. Explore family daycare, nanny-sharing, and compare prices to find the best fit for your budget.
• Find affordable hobbies: Indulge in your passions without breaking the bank. Utilize used equipment, explore alternative options like boat clubs, and adjust your participation frequency.
• Remember: Compounding works wonders over time

Article: Smart Money Moves: 7 Practical Ways to Save Big and Live Well

If you think life is too expensive and you can't afford what you want, think again. Investment expert Brian Regan shares some great tips to save money while living well.

By Brian J. Regan

Investing advice is not worth very much if you do not have the capital to invest. If you have $10,000 and the market goes up 20%, you’ll have $12,000. That’s great, but it is not life-changing. If you have $200,000 and the market goes up 20%, then the proceeds are close to the average wage of a US worker and the compounding can start to become very significant. The key to growing the capital base is saving. There are untold amounts of articles on cutting back on your morning latte, but here are some larger things that have worked for me over the years to save a lot of money for investing. 

1. Choose wisely when you buy your home

Most homebuyers have the ideal place they would like to buy. It might be the heart of the city, the place with the best school system, or the place with the nicest beach. It can be valuable to identify the ideal town or neighborhood and then look at the adjacent neighborhoods. You will often find less expensive homes with the same amenities you want with a very similar location to your ideal situation. I have done this. I live a few hundred yards from the “it” neighborhood. My kids go to school in that neighborhood. I frequent the same stores and restaurants, but my mortgage is about $1,500 less than a comparable home in the “it” neighborhood. Of course, you’ll also benefit from lower real estate taxes. The bonus: people tend to learn this with time, driving the value of your new home up.

Why will this be hard?

People will constantly say: “Why do you want to live there?” These same people will likely be in credit card debt as they keep up with the Joneses. 

2. Opt for fixed interest rates on mortgages

When buying a home in the adjacent neighborhood at the reduced price with access to the same amenities, choose the fixed rate mortgage. Luckily, most Americans have gotten the memo as 85% of mortgages are fixed. I love fixed-rate mortgages and we’re lucky to have them so easily available in the United States because it is not the case everywhere. Fixed-rate mortgages get less expensive over time as your wages rise. They are also adjustable downward because you can refinance when rates fall. Refinancing in the past has saved me around $200/month in cash flow, but I was also able to make it a cash-out refi where I received investable proceeds.

Why will this be hard?

Adjustable-rate mortgage rates are lower. This is just to tease you into doing something that is good for the bank in the long run but not for you.

3. Always have roommates

I looked at the available apartments near me to see the difference in price between a one-bedroom and a two-bedroom. You may assume that a two-bedroom is twice as expensive. However, it looks like they are more like 25% to 35% more expensive. That means it is significantly cheaper to share an apartment with a roommate. Save for a couple of months between my roommate moving out and my wife moving in, I have had roommates my whole life. For the majority, it has been family, but I have had Craigslist roommates and lived with close friends as well. If you want a giant hole in your pocket then you can choose to live alone.

Why will this be hard?

Some people dislike having roommates. Some people are uncomfortable finding a random person to live with. I understand all of this, and I do not expect everyone to utilize every tip, but if you can – have roommates.

4. Consider buying a used car

Buying used can save you a substantial amount of money. Used cars often have lower depreciation rates, and their insurance premiums tend to be more budget-friendly. Little talked about, but often an annoyance, can be the difference in excise tax bills which are indexed to the book value of your car. Auto loan rates are not as cheap as they once were. A Google search shows Bank of America offering 6% loans. A 6% loan on a new $60,000 car over 5 years leaves a payment of around $1,300 a month vs $325 for a used car. That's $1,000/ month in savings on top of lower insurance premiums and excise taxes.

Why will this be hard?

People love the new car smell. They like to show off their cars and impress their friends. New cars are cool and fun with the latest bells and whistles.

5. Discover inexpensive ways to date

I’m happily married and luckily past the dating scene, but I remember dating to be a very expensive time. Admittedly, I am likely not the best person to give advice on this topic as I know the unspoken rules of money change from generation to generation. However, I have two thoughts on the subject that I hope will help:

• First dates do not need to be expensive. In fact, I think both parties would typically prefer something light and casual for the least amount of commitment. This should not require too much money.
• During the pandemic, I saw a lot of creative dates that did not involve handing money to a restauranteur including hikes, picnics, coffee, and even wine in a Yeti. This may seem minor, but if you’re single and regularly dating you might appreciate this nudge.

Why will this be hard?

There is a lot of pressure to impress while dating. Please take comfort that the first and second dates do not need to be a trip to Paris or even an expensive French dinner in town. Casual and easy are often preferred.

6. Shop around for childcare services

For parents, childcare costs can be a significant expense. Don't settle for the first option you find. Shop around, compare prices, and explore alternative arrangements such as family daycare or nanny-sharing. I visited 10 facilities and found some that charged $10k more a year for non-existent additional benefits.

Why will this be hard?

You want the best for your children. Often, it could be assumed that more expensive is better.

7. Find affordable ways to pursue hobbies

I have “Country Club” hobbies despite never setting foot inside a country club. I golf, ski, and boat. There are affordable ways to pursue these hobbies rather than break the bank. Here are a few ways that I have saved.

Golf

I am not too picky about where I play golf. I enjoy low-rent courses. It is a treat to play somewhere special. I have never bought a club brand new. I like to play 9 holes instead of 18, especially since it gets me back to my family quicker. I walk the course instead of riding. I buy large packs of used balls on Amazon. It may not shock you that I am an average golfer, but I do not think that is because of my used balls and clubs.

Skiing

Skiing is a very expensive sport, but I have found a few tricks. There are ski passes like the Ikon or Epic passes that can make the marginal trip cheaper. I especially recommend this if you ski the Rockies. Night skiing passes at your local mountain may also be a deal. Weekday-only passes could add more savings if you can swing that in your schedule. Keep your skis and boots for a long time before replacing them.

Boating

Find a boat club. It allows you to share the cost of boating with the members of the club.

Why will this be hard?

I really want a boat of my own. That’s why it is hard for me. I also want my kids to go to college, so I do not own a boat.

The power of compounding becomes evident as your savings grow. I've found success in saving by concentrating on larger expenses that will work with my lifestyle. As we embark on a new year, consider incorporating these approaches into your financial resolutions and start to build that capital base.

About the Author:

Brian J. Regan, CFA®, MBA, is the chief investment officer for Asset Management Resources, LLC.