The Human Side of Investing
- Uncle8888's blog, excerpt from Robert Huebscher
"One of my favorite adages is this one: Never forget the six-foot tall man who drowned crossing the river that was five feet deep on average. The important thing to remember about investing is that it is not sufficient to set up a portfolio that will survive on average.The key is to survive at the low ends. It is the “I know” school who concentrate and leverage and so forth, who got into trouble in 2008. It was leverage in particular that prevented people from making it through the low points, and that is what we must do.In particular, most investors ignore the possibility of extreme outcomes – the so-called back swans, the things that have never happened before, or happened so infrequently that they are dismissed."
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- Uncle8888's blog, excerpt from Robert Huebscher
"One of my favorite adages is this one: Never forget the six-foot tall man who drowned crossing the river that was five feet deep on average. The important thing to remember about investing is that it is not sufficient to set up a portfolio that will survive on average.
The key is to survive at the low ends. It is the “I know” school who concentrate and leverage and so forth, who got into trouble in 2008. It was leverage in particular that prevented people from making it through the low points, and that is what we must do.
In particular, most investors ignore the possibility of extreme outcomes – the so-called back swans, the things that have never happened before, or happened so infrequently that they are dismissed."
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The Anatomy of Annoying
"My biggest takeaway is that the key leap wasn’t in discovering that the sounds came from a radiator. The lesson is that acting like it comes from a radiator completely solves the problem."
A story that pointed out our quirky psychology. She didn't learnt how to "let go" in her meditation. Yeah, we don't need meditation to "let go" of some things.
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The Most Important Number
"My biggest takeaway is that the key leap wasn’t in discovering that the sounds came from a radiator. The lesson is that acting like it comes from a radiator completely solves the problem."
A story that pointed out our quirky psychology. She didn't learnt how to "let go" in her meditation. Yeah, we don't need meditation to "let go" of some things.
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A story that pointed out our quirky psychology. She didn't learnt how to "let go" in her meditation. Yeah, we don't need meditation to "let go" of some things.
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The Most Important Number
This is related to what I talked about on wealth above.
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This is related to what I talked about on wealth above.
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11 Skills That Millionaires Master - Valuetainment
Check out some of the other valuetainment videos, there's some pretty neat stuff to learn.
Check out some of the other valuetainment videos, there's some pretty neat stuff to learn.
Doubling wealth vs Creating just enough wealth
FIRE concept seems to advocate creating just enough wealth so that we can do nothing (sing Bruno Mar's The Lazy Song) and simply enjoy life.
Just for fun...
Try tabulating how long it takes for you to double your wealth. Do it till the point which you find it's "just enough". Then do some deep reflections on how you did it.
(Congratulations if your starting figure falls beyond this table.)
| 1000 | |
| 2000 | |
| 4000 | |
| 8000 | |
| 16000 | |
| 32000 | |
| 64000 | |
| 128000 | |
| 256000 | |
| 512000 | |
| 1024000 |
Reflections...
1) Do you earn far more than your spending?
2) Does your earning increase yearly? By how much?
3) Do you generate any side income?
4) Do you trade securities / assets to generate income?
No? Only rely on dividends by buying but not selling?
Here comes the trick question:
Are you confident in doubling your wealth for x years to come? (Even if a recession strikes.)
No?
Then what makes you confident on a "just-enough" FIRE?
Yes.
Then why are you settling for "just enough"?
Think about it... Doubling our wealth is like the 'mean', FIRE is like the 'end'.
As I ruminate how youth passes by ever so quickly, I come to realize that first we find solace in having meaningful relationships with family and friends; then we find security and fulfillment in life from our capability in "work" through building our skills, mindfulness, and character, achieving personal goals etc. With those in place, we may naturally find our wealth - both tangible and intangible.
Once we FIRE, we will switch over to the side of consumerism. We stop wanting to better ourselves. We stop wanting to contribute more. We stop wanting to achieve more. The wheel (will) to double our wealth stops.
There is also another school of belief that instead of chasing wealth, we should learn to attract wealth. In another word - don't be too desperate for money. I will leave this for another day's debate.
As I ruminate how youth passes by ever so quickly, I come to realize that first we find solace in having meaningful relationships with family and friends; then we find security and fulfillment in life from our capability in "work" through building our skills, mindfulness, and character, achieving personal goals etc. With those in place, we may naturally find our wealth - both tangible and intangible.
Once we FIRE, we will switch over to the side of consumerism. We stop wanting to better ourselves. We stop wanting to contribute more. We stop wanting to achieve more. The wheel (will) to double our wealth stops.
There is also another school of belief that instead of chasing wealth, we should learn to attract wealth. In another word - don't be too desperate for money. I will leave this for another day's debate.
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| Photo by Deniz Altindas on Unsplash |
If we want to double our wealth there's 4 crucial elements to look at -
hard work, patience, luck & discipline.
Hard work -
Hard work -
You probably have an idea how hard work should be like when you did the reflection exercise above. Are you working hard enough? We know we always harvest what we sow.
Patience -
Patience -
Stay invested in growth and dividend stocks in the market. Always maintain a certain percentage of cash as war chest for deployment in the big crash.
Luck -
Luck -
Beyond our control, sorry.
Wait... we can interpret luck as good opportunities that come to us. Bear in mind that opportunities mostly come knocking for the prepared, aka we can create our own "luck".
Discipline -
Discipline -
The will to stick to doing something even when the going gets tough and stay consistent about it. Things like saving, investing, trading, paying off debts, learning... all require our discipline.
Tackle these elements, make changes and see how your wealth journey progresses.
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Girls can just married well and your husbands do heavy lifting of financial and retirement planning. You can just need to spend wisely your own money and keep it safe and invest safely. Your money is for safe keeping. That is hallmark of good husband who care and provide for the family. Their job! They choose to marry. LOL!
ReplyDeleteHi Uncle8888,
DeleteThat is like telling someone - you got to invest well, then the dividends will provide for you for rest of your life. Haha.
Nowadays many women marry but still cannot FIRE hor.