As I got more into investing over the past year, it has also become a
more prevalent topic in my life. I have made many observations about
how people around me react to this, and I think quite interesting.
I'll break down these observations into 2 separate posts, this one on
investments, and the other on financial management.
When it comes to investing, I have encountered 2 major groups of people in my social circle.
Those who are completely uninterested in the topic
They
view investing as something dangerous, risky, and roughly equivalent to
gambling. I think maybe they watch too much drama, or news of people
jumping off buildings during financial crisis. I was such a person in
the past - and today one of my biggest regret is learning about
investing 10 years late.
Do you know that $100 now can only buy $50 worth of things in 20 years time?
Do
you know that if you invest 'conservatively' in the market, your $100
will grow (past on historical results) to $400 in 20 years?
People
spend 8-10 hours a day working, 40+ hours a week working and they don't
even spend 1 hour a month to learn about growing their money. That 1
hour is worth much much more in dollar value than your salary.
Those who speculate/do trading
I think these are the people who give investing a bad name.
These
are people I know who time the market actively, buying/selling based on
chart patterns, some even buying without even knowing what the company
(usually penny stocks) do. Worst: Some employ leverage and trade using
borrowed money. My intention here is definitely not to laugh at them,
although I think some of them feel this way. In fact, it pains me to see
people I care about sink deeper and deeper into the hole.
Studies have shown again and again that 95% of traders lose money. On the other hand, if you invest your money in the market for 20 years at ANY point of time, you would never have lost money. Time in the market matters, not timing the market.
Even
the best fund managers and companies in the world, who do these as
their full time job, have gone bankrupt from speculating. Do you seriously think you are better than them?
I
think that is the problem with 'young people' nowadays? They want to
get rich fast, and they want to get rich NOW. (yeah it makes me sound
like an old man)
---
Whenever I tell people I am investing, they automatically categorize me as the 2nd type.
Then
they start sharing macro economic trends, simi simi patterns, simi simi
penny stocks. It really is a stereotype linked with the word
'investing'. Even my own family had the same reactions. They do not
believe there is such thing as buying a company 'for the long term'. To
them, long term = 6 months. Growing your money means putting it into
banks fixed deposits.
And hence, my observation is this:
The
2nd group of people 'scares' the first group of people from ever
starting to learn about investing. And if somehow the first group of
people got started, they became the 2nd group of people.
Long Term Investing
Very few of my
friends actually share the same investing methodology as me. Luckily, I
have a huge group of "enlightened tutors" (启蒙导师) that I follow online.
It makes me feel that I am not alone on this arduous and misunderstood
journey.
If you bother, take a look around the local blogosphere
community: There are many examples of normal, working class 'peasants'
who are recording their step by step journey towards financial
independence (and some already 'reached their destination'). They are
not born with a silver spoon. They are not multi-millionaires giving
generic, motherhood statement advice. They are middle class citizens who
got a
median income job just like you and me. Just google them:
AK71 - Semi retired
at 40+, with a 6 digit passive income every year yet still live a frugal
lifestyle. Blogs about saving money, investments, CPF and many other
topics.
Dividend Warrior -
Started investing in 2008 and accumulated a portfolio generating $1000
per month by early 30s, before starting his own business.
15HWW Couple
- A couple who recorded their expenses monthly, married and saved $250k
before 30. Earned $8K passive income last year. (how lucky is it to have a
SO who share the same financial dream as you!)
Got Money Got Honey -
A 25 year old chap with a $20K portfolio, $300/year passive income who
writes really entertaining articles. He has a clear goal of what he
wants to achieve at each stage of his life.
And many more which I can't possibly list.
As you can see, they are all at different stages
of life with largely different "networth". Some started earlier, some started late, but that's not what is
important at all.
What
is important is they all largely believe in long term investing, in
creating passive income to ultimately achieve financial independence.
Accumulating durians no longer works in the world we live in today. We
need to plant durian trees where we can harvest year after year.
"Measuring
returns at the start of every month from 1988 to August 2013, if the
index was held for a year, there’s a 41% chance of sitting on negative
nominal (i.e. unadjusted for inflation) returns. Hold it for 10 years,
and losses occurred only 19% of the time. Double the holding period to
20 years however – here comes the kicker – and there were no losses." (Straits Times Index, Motley Fool)
No comments:
Post a Comment