Jeff Bezos once said: I very frequently get the question: “What’s going to change in the next 10 years?” That’s a very interesting question. I almost never get the question: “What’s not going to change in the next 10 years?” And I submit to you that that second question is actually the more important of the two. You can build a business strategy around the things that are stable in time....
We make decisions based on our unique experiences that make sense to us in a given moment. We all come from different generations, backgrounds and have our own unique experience with how the world works. What seems crazy to other people might make sense to you. For example: Stocks: If you were born in 1970, the S&P 500 increased almost 10-fold during your 20s. However, if you were born in 1950, the market had only about 0-2x returns in your 20s....
Fragile things are exposed to volatility, robust things resist it, antifragile things benefit from it. The antifragile system is made up of fragile parts. The weak one dies in the process while the strong one stays. Individual failure can provide helpful information to strengthen the system as a whole. Shock and stressors strengthen antifragile system by forcing them to build up capacity. When human bounce back after traumatic accidents, hardships or failures, they become stronger....
Paying too much attention to your investments (more than once per quarter) costs more than just your time: Make you more risk-averse. The shorter the time the returns are generated from, the less risk investors are willing to take. You’ll see loss 50% of the time if you check performance daily, 25% if one a year, 1% if 7 years. Mislead about future return. Knowing which stocks performed the best last month won’t tell you which ones will perform the best this month....
When it comes to weight loss, the keys are to eat less and exercise more. But instead of focusing on these 2 fundamental things, we discuss trans fat, supplements,… It’s the same with personal finance. There are only 3 key points: Cut costs Earn more Optimize your existing spending Spend consciously: Define your rich life standard. What being rich means to you since it’s different for everyone because we value things differently....
Focus on long-term value. Don’t fall into the trap of only looking at short-term gains or risky investments in companies that are trending. It’s easy for human to trick themselves into seeing a pattern when there’s actually just randomness. Instead, look at the big picture of the company’s financial history, its current value and future potential. Diversify investments. Never put money on one stock, no matter how promising it appears....
The Slowlane is to get a good job, invest in the stock market, max out your 401k and be rich by 65. It demands a long time of employment. You have limited leverage and limited control with a job. Fixed income: the pay rate is fixed for a year and it takes a long time to get a raise. Fixed hours: you can only do so much. $10,000 investment with 15% return will worth $2....