How to have “fuxk you” Money ?
Another finance book by Tony Robbins after “Money master the game”, this one is less informative but easier to digest compare to that one, still worth a good read
You will never going to earn your way to financial freedom. The real route to riches is to set aside a portion of your money and invest it, so it compound over many years.
Few facts for financial freedom :
- On average, correction occur once a year
- Less than 20% of all correction turn into a bear market
- Nobody can predict consistently if market rise or fall
- Stock market rise over time despite short time setback
- Historically, bear market have happened every 3-5 years
- Bear market become bull market, pessimist become optimism
- The greatest risk is being out of the market.
Most successful people aren’t just lucky. They have different set of beliefs, strategy. They do things differently than anyone else. we could recognize these consistently successful pattern to model them.
Core Principle 1 : Don’t lose
Best investor are obsessed with avoiding losses. Defense is 10 times more important than offense. Asset allocation is to establish a right mix of different types of investment, diversifying in such a way that you reduce your risk and maximize your rewards.
Core Principle 2 : Asymmetric risk / reward
Reward must be bigger than risk in a 5-1 ratio.
Core Principle 3 : Tax Efficiency
There is only one number matter : The amount you get to keep.
Core Principle 4: Diversification
- Diversify across asset class
- Diversify within asset class
- Diversify across market, countries
- Diversify across time
Its great to get coaching from expert but you cant outsource the final decision. If you want to be certain you will never lose, you can keep your saving in cash but you will never stand a chance of financial freedom. As Warren buffet said – you pay high price for certainty.
What count is not reality, but our belief about it. Our belief are what deliver command to our nervous system. Belief are nothing but feeling of certainty govern our behavior.
Psychology either make you or break you. Its imperative to have a robust system that enable you stay on target.
Few mistake we have to avoid
Mistake 1 : Seeking confirmation of your belief – People have confirmation bias. Your brain is wired to seek out and believe information that validate you owning it.
Mistake 2 : Mistaking recent event for ongoing trend – Recent experience carry more weight in our minds when we have evolutionary odds of something happen in the future. The solution for this can be instead of panic sell out, do a re-balance.
Mistake 3 : Over confidence
People have tendency of believing they are better than they really are. Men are prone to overconfidence when it come to investing. The solution can be get real and get honest to yourself
Mistake 4 : Greed, Gambling and quest for home run
The best way to win the game is to achieve sustainable long term returns. Its tempting to swing for home run, especially when you think other people getting rich faster than you. The solution can be think investment like marathon, not sprint.
Mistake 5: Stay home
People stay with what they familiar, because there are home bias. The solution can be expand your horizon
Mistake 6 : Negativity and loss aversion. The best investor who override natural tendency to be fearful during period of market turmoil. Solution for that is – preparation is the key
The science of achievement cab be summarized as
- Focus – what intense focus unleash burning desire
- Massive action – change your approach until you find what work best
- Grace – deep sense of appreciation bring more grace
The art of fulfillment is you must keep growing, the secret of happiness is progress. You also have to give, we are driven by our desire to contribute. If we stop feeling deep sense of contribution, we can never feel truly fulfilled.
Human brain isn’t designed to make you happy / fulfilled. It’s designed to make us survive.
Mental and emotional state in which you live is ultimately the result of where you choose to focus your through
- Suffering trigger is “loss” – when we believe the illusion of “loss”, we suffer
- Suffering trigger is “less”
- Suffering trigger is “never”,
Good luck investing !
Until next time