👋 Hey there, hope you’re having a good weekend! Welcome to the WalletBurst monthly newsletter for the month of February 2023.
🥾 Understanding the ‘Boots Theory’ of Socioeconomic Unfairness
- The boots theory of socioeconomic unfairness is the idea that people who can afford a higher upfront cost for an item actually end up saving more time and money over the long run.
- Some examples of this are buying a high efficiency laundry machine rather than going to the laundromat, and buying a reliable new car with a warranty, rather than continually fixing an older, less-reliable car.
- This theory aligns closely with the subreddit r/buyitforlife which highlights durable, quality, and practical products that are well-worth their often higher price.
- “Its cheap to rich and expensive to be poor”
📉 What rising rates are doing to asset prices (and why)- Newsletter by Travis Jamison
- Rising interest rates mean that all assets – from real estate to e-commerce businesses – have to fall in price to take into account the risk premium.
- When you can get a 5% yield on risk-free US Treasury Bills, buying real estate with a 6% cap rate or a business with a 9% cap rate simply isn’t worth the additional risk.
- A key takeaway is that whenever possible, own assets where the asset value has less of an impact on you than the cashflow that it generates.
US 2 year treasury bill yield over the last 25 years
📉 An interesting thread by Tyler Tringas about the impact of rapidly rising interest rates on venture capital.
📊 Employee Stock Purchase Plan (ESPP) simulator
- Handy tool that allows you to simulate different scenarios of participating in an employee stock purchase program (ESPP).
🤑 An Ongoing Stimulus in the Economy For Years to Come – A Wealth of Common Sense
- This article examines the impact that ultra-low mortgage rates during the pandemic could have on the economy going forward.
- Did you own a home before the pandemic started or not?
- I did not – and I still don’t (I live in an attic studio in the SF bay area😅) – and not buying a property out-of-state in 2020 is one of my biggest regrets in life thus far.
- “… those who locked in ultra-low mortgage rates are receiving an ongoing form of stimulus.”
New on WalletBurst
Nothing new this month…
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