Why ninjas are awesome at saving.

September 16, 2011 · 11 comments

The following is a guest post (stick figure art and all). Like it, love it, enjoy it….

Crouching shrouded in darkness, patiently waiting for the right moment to strike. The ninja is focused, patient and deadly… and that’s why they would make excellent savers!

I’m not saying that the best way to invest money in savings is to sit in the dark with a handful of cash waiting to spring out at the bank manager as he opens up shop first thing in the morning – that’d probably get you into trouble.

What I am saying (I think) is that the skills required to join the ranks of Ninja and his brotherhood of ninjutsu warriors are also great transferable skills for when it comes to investing money in savings.

I’m going to labor this metaphor for a little longer, if you don’t mind, to show you just what skills and qualities I mean, so that you too can be a savings ninja.

Patience:

The ninja knows that the price of success is patience. The ninja does not rush in, but instead waits until the best possible moment to strike. When it comes to savings, patience is certainly a virtue.

Depending on the savings account you choose to invest in, you’ll be rewarded for your patience in terms of earning more interest on your cash. Moreover, some accounts penalize you for withdrawing cash from the account within the agreed term, making patience even more important.

Tactical Prowess:

The ninja is a tactical and strategical master, planning for every conceivable outcome. If you want to save like a ninja then you must have the foresight to know if you are the sort of person who will need to withdraw cash from their savings – and to choose an account which does not penalize you for it.

Idealism:

The ninja fights for a greater goal, follows a moral code and a set of ideals which governs the way he or she lives his or her life. When it comes to savings, this means having faith and discipline in your goals. Willing yourself to leave your savings alone in order to reap greater rewards later down the line shows great discipline, just like that of the ninjutsu. The ninja is a master of self-control, and if you want to make the most of your savings, you need to be too.

Master Escapist:

The ninja knows how to make a quick, clean exit, leaving no trace. As a saver, if you find that you are unable to maintain the account, and that you keep dipping into it to fund your day-to-day living costs, then you need to be able to concede defeat and make an exit.

First you must know what the rules of your savings account are. The ninja is a master planner, and will have already done reconnaissance to gather this intelligence. If you are able to, withdraw what is left and cancel the account, leaving no trace.

The ninja knows that personal finance is a war fought in individual battles, and must keep and eye on the bigger financial picture. You may lose the battle, but if you are willing to concede defeat you will better equipped to fight the rest of the war.

1 Kevin @ Thousandaire.com

Saving money is easy if you’re a ninja. You never have to spend money because you can just steal everything you need and never get caught.

2 Rafiki

Liked it. Loved it. Enjoyed it. Awesome post. The contrast was done very well.

@ Kevin – lol. So right

3 Mo D.

I wasn’t borth with a lot of patience, and it’s something I have to be mindful of when I see our savings account not growing as fast as we’d like, but we’ll get there… all in due time…. all while PDITF!!

Have a FAB weekend Ninja and GN!!! :-)

4 Jenna, Adaptu Community Manager

Such a good blog post. Loved your similarities between being a ninja and being an awesome saver!

5 krantcents

I would ike to think that I am very “ninja” like in my patience for the right deal or price.

6 Briana @ 20 & Engaged

I’d love to be a ninja but there’s just too much secrecy involved. Any way I could be a ninja temporarily, just to save money?

7 Drew

I am a relatively newcomer to your blog. Love the blog.

I wanted to say though, Roth IRA’s are not as magical as you think they are in my opinion.

Two Options – Roth vs Pre-Tax Deferral –
Your current rate of taxes – lets say 28% –
Growth 5% a year – 30 years
Amount: 10,000

Roth:
10,000 – 2800 (taxes) = $7200 x 4.32 (1.05^30) = $31,117

Pre-Tax
10,000 – 0 (no taxes) = $10000 x 4.32 (1.05^30) = $43,219 – you retire, your current tax rate MIGHT be even lower than your working/earning tax rate, but lets say it is the same because of social security (28%) $43,219 * (1-.28) = $31,117 same thing as ROTH

Furthermore when you are making a good salary in your mid career your tax rate might be HIGHER than what it will be during retirement. So you may suffer a loss.

The only situations where Roth IRA is better:

You are making virtually NOTHING and your tax rate is lower
You think tax rates will be higher upon retirement than current rates
You are withdrawing and receiving TONS of money during retirement therefore being taxed at a high rate

The situation where ROTH IRA is worse:

Tax rates fall by the time you retire
You pay taxes at a higher tax bracket than you would have been taxed upon reaching retirement (very possible, but less likely for govt employees)

Sure your return is not taxed, but you also take a 28% hit from day one. Your growth is weaker.

Roth can be an amazing tool to manipulate tax brackets, but usually it pans out to a relatively neutral situation in the real world because of SS and what you are pulling to live while retired (its hard to avoid tax brackets).

Is it a bad method of saving for retirement? Heck no. Its fine.. But its just that.. Fine.. Not amazing.. not free money.. Unless you think tax rates are going to go sky-high by the time you retire. Also I want to make enough money in my career where Roth DOES NOT make sense (Implying I’ll be in a higher bracket while working). Also if you are $10,000 into the next tax bracket.. What is better. Pay the higher tax-bracket rates on that 10k and get it into a Roth or Deferral it tax-free.. If you chose Roth in that situation.. You fail at finance.

My opinion aside. Keep up the blog

8 Ninja

I totally plan on having so much money come retirement that I’ll still be in a higher tax rate. Your points are valid, but not ones that I have not considered before :)

9 Drew

Fair enough – I hope that you retain those high tax brackets upon retirement.

I am very similar to you in fact. Federal Worker, work at home — 25 years old and a thrifty son of a gun.

Gotta love that Pension + 5% Match + SS.. Sure we don’t have uber pension like the previous generation — but its pretty darn close to the same. Lets just hope they let us have our COLA after this year.

10 Mona

Great post! I agree with all the things you said you need in order to be able to save especially patience. Many don’t realise this and are in crazy amounts of debt. Howver there are solutions to help you get out of debt such as starting an IVA but before doing it is absolutely vital to seek IVA advice. However to avoid debt the tips given are great for being able to save.

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