The huge financial services industry and the much smaller community of Financial Independence and Retire Early (FIRE) bloggers differ on many fronts. Yet, we all agree on one principle – sustainable withdrawal and retirement success through simulation models. Of course, we all need to know our sustainable spending rate. But, as we saw earlier, focusing solely on the simulated probability of financial success only increases the relative probability of a non-financial event wrecking our plans. Today, we seek a new angle to one such non-financial risk factor that impacts your financial future.
Fitness, that is! In the professional world, we spend a lot of effort trying to look good. This ‘looking good’ can happen by dressing, demeanor, dialogue or documentation (the last one is also part of how you are judged). All of this looking good business can leave you tired and chasing the wrong habits. There are coping mechanisms to retain your sanity and stay mentally fit.
It is not easy to peek into the mind of a top tier 1%er for most of us 99%ers, no matter how close we are to the cut-off line. They travel in different groups, socialize with their own limited peers and generally frequent places that we don’t get admitted to or where the price of admission would not be justified even for those with ‘entry-level’ seven figure net worths.
“Even an eye-less needle doesn’t come with you on your last journey” says an old proverb. A sewing needle is a trivial item anyone can afford and its essential part is the hole or the ‘eye’ where you pass the sewing thread. If that is broken, the sewing needle is useless. You cannot carry even such a useless item on your final journey, leave alone the nice things and the people you love. This is the inner meaning of that proverb. It may be depressing but that’s the stark truth. (more…)
English is an interesting language. We bring financial concepts into daily expressions and vice versa. All the English-speaking countries in the world trace their English language origin to some connection, if not a straight colonization, to The British Empire or the East India Company. Many of the old British expressions have survived centuries and are used even today in many countries that have historical connection to the language. This post takes an old British expression, back to the days of William Shakespeare (The Bard), that a good venture “pays rich dividends”. Even as a poet, he knew about the rules and ruthlessness of business, seen in his classic The Merchant of Venice.
In my earlier article on working abroad, I mentioned the example of my American friend living and working in India. In the same article, I mentioned that India does not offer permanent residency or retirement visas for foreign citizens, unless they can prove Indian ancestry. My friend sent me an article last night that I want to share with you.
Guess what? Looks like the Indian government deliberated on my post and came up with this announcement. 🙂
But there is a problem.
“I would like to avoid risk as much as possible” is what we often hear or even say. That’s understandable for a conversation but the attitude we show towards risk is the single largest determinant of our success. And that attitude was likely formed even before you entered your teenage years. There could be any number of triggers for it.
Haven’t we seen a lot of those already? The personal finance blogosphere is filled with material, both strongly for and vehemently against, homeownership. Due to my preference for a globally mobile career and the ‘invincible’ DC market saga, you know which side of the fence I am on. But the real estate asset class can’t be broad brushed by individual experiences. It can be a delicious entree or a nice side dish in a fulfilling financial meal, if done well and in moderation. I will give you my personal recipe here.
Of course, you are! We all are. We just don’t want to admit it. The biases we have are so hidden and yet, so effective, that they pretty much control how we think, speak and act in many situations. That’s a pretty tall claim, I know. In my life and in my corporate experience, I have often found that those who feel they are objective or unbiased often have deep-rooted biases that they think actually make them unbiased! Ironical, isn’t it? Such is the nature of cognitive bias (as psychologists call them) that it spares no one on its path. They can stop you from investing efficiently. They are enemies on your path to financial independence.
My past articles have been on many essential topics relating to life, work, savings and even relationships. Those posts serve as preparatory work for getting into a serious topic in this article – on investing. Before starting on our investing journey, it is clear that we should learn to save more and be sensibly frugal. The next step is to understand what efficient investing is – nobody taught me this but I learned the hard way by making mistakes, which I hope you will avoid. You are smart to learn from my past investment mistakes. Efficient investing is an important concept that will make a huge impact on your future, easily adding over $100,000 to your retirement stash with no effort on your part!