Winning At Investing

Investing takes patience. It also takes a mindset.

You hear about your friend’s big investment win. You see the car he bought or the trip she took, claiming it was from some hot stock pick. How do you react?

Do you start to doubt your strategy? Do you fear you’re losing in some way? 

When you feel this doubt, look at your lifetime returns.

Has it risen? Has it…

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The Isolation Of Financial Independence

The Dr. Seuss classic, Oh the Places You’ll Go is one of my favorite books to read my young child. It’s an amazing synopsis of what a kid can emotionally expect to experience in the future. In just a few pages it captures the ambition, thrill, excitement, boredom, trepidation and isolation of life.  

So many of the lines are pertinent, even for adults. It’s this one, discussing loneliness, that always stands out to me:

“All Alone!

Whether you like it or not,

Alone will be something

You’ll be quite a lot.”

It’s true. As we become young adults, and move into our careers, it’s this isolation that we try to avoid at all costs. It can often lead us to spend more than we want. It’s often why we go out to the clubs, restaurants or extravagant outings. It’s often why we purchase the nicer car, the bigger home, the better jewelry. 

We want to show people we have value so they will want to remain near us. We want to outrun – or outspend – this loneliness.

As you take your initial steps towards financial independence

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Sequence Risk Is Like Your Drunken Friend

Whether you’re retiring in your 40s or 70s, the biggest risk to your post-work wealth is what’s known as sequence risk.

It’s the threat that a recession or downturn will hit at the beginning of your retirement, instead of a few years in. Experiencing a downturn right as you begin to tap your portfolio for funds can deplete its ability to grow at the rate you need it to during your retirement. 

Say you and your friends decide to go out to the bars. You know you plan to have a few drinks, mingle with your buddies and maybe meet some new people.

As you enter the bar, there’s the risk that one of your buddies started much earlier than you. It’s possible that they’ve already drunken far too much, causing a disturbance, bothering people and getting sick. Right as you enter, they’ve already sabotaged your night. Instead of having a few drinks and laughs, you’re stuck…

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It’s Hard to Imagine

It’s hard to imagine when you’re earning your first paycheck, loaded with debt, waiting for the future, struggling to pay your bills, desiring everything your friends seemingly have, that this is the time to think about what you NEED for your future.

If you know what you NEED then you can pinpoint the amount you must make in your career to quit.

The sooner you understand your number, the easier it will be to determine what matters to YOU. You’ll shed the expenses that you accrue living up to an imagined life, focusing on the costs that actually fulfill you. Your car, restaurant and bar expenses will likely fall while your enjoyment…

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The Power of 1

Think small changes can’t make a difference in your finances? Then think about the power that the lowly number 1 has in building your wealth.

By upping your savings rate by just 1% a year, you can increase it from 10% to 20% in ten years, vastly improving the probability you can safely retire one day.

Saving $1 more per day can save you $30 more a month, and $365 more a year.

Having one car versus two can save you over $800 a month, on average, or nearly $10,000 a year.

A difference of 1% in investment fees can result in a difference of hundreds of thousands of dollars by the time you retire.

Imagine…

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The Optimal Financial Performance

The textbook says to stock 15% away each paycheck into a tax-advantaged account, and over 40 years you will have enough saved for retirement.

People save far more than 15%, though, trying to reach retirement in a decade or less.

What’s the optimal choice for you?

The textbook says buy a house that’s under 30% of your income.

Others buy houses that are 20% or less than their income.

What’s the optimal choice for you?

The textbook says that people, on average, spend $3,000…

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Take Ownership

When we don’t understand something we’ve learned to outsource the problem.

We don’t understand website design then we pay someone. We don’t understand a home repair then we hire a contractor. We fear tax time then we tap an accountant.

Outsourcing basic finances, though, helps those in the financial services industry make such large incomes.

They sell you with no fees, hiding the fact they’ll sparse out your future into bad products that pay them a commission.

They sell you insurance…

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Test Your Savings Rate

Entrepreneurs test like crazy. They test the different prices for products they sell. They test different marketing tactics. They test different technologies. They probably test different clothes they wear. They -- seemingly -- test everything.

Why don’t we do the same when saving?

Think you can only save 5% this month? Why not try 10%? What’s the worse that could happen? If you can’t make it without putting your family at harm, then simply tap the funds you planned on not spending.

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