Investing

Making money is one thing but learning how to make money make you money is another. Robert Kiyosaki always talks about the cashflow quadrant. The left side is the employees and the self-employed. The right side is the investors and business owners. He said if you want to be wealthy you need to be on the right side. If you want to be well-off, make a salary and invest it well. If you want to be really wealthy, start a business and invest it well.

The sooner that you invest the better off you’ll be. Albert Einstein said that compound interest is the eighth wonder of the world. Invest your money and have compound growth work for you. Warren Buffet said, “My wealth has come from a combination of living in America, some lucky genes, and compound interest.”  My tiger mom always said, “It doesn’t matter how much you make, it matters how much you keep.” Pretty wise if you ask me.

Learn to make money and learn how to invest it well. Don’t try to keep up with the Jones’. Live below your means until your discretionary spending is a tiny fraction of your overall wealth. (This is me speaking to myself. Your own personal level of live style and wealth creation will determine your money making, spending, savings, and investing profile)

Below is my personal investing philosophy that I’m continually refining. It’s hard to iterate on your personal philosophies without writing them down. This helps me refine my investing philosophy as I learn more about it. You don’t have to be a genius to be wealthy. You just have to learn from others that have done it before you.

Resources:

• Khan Academy – Finance and Capital Markets
• Ray Dalio – A Template for Understanding Big Debt Crises
• Investopedia

Investment Philosophy:

Wealth Creation Strategy for recessions:

• Have available cash to buy bargain deals
• Be aware of the market
• Have a profit-taking strategy during a bull market
• Invest in real estate when the market crashes
• Invest in the stock market when the market crashes
• Buy when others are fearful
• Always have the cash to buy firesale deals when they come and they will come from people who over-leveraged and didn’t expect a market correction.

Investment Reminders:

• Invest 20% of income after all high-interest debt is paid off
• Compound growth is the mother of all investment beauties
• Don’t waste money (Compounded over 30 years you’re spending about 15x PV)
• Start early and don’t pull out investments
• Transaction fees are killer to real returns
• Management fees are killer to real returns
• Factor in taxes and reduce them legally as much as possible
• Maximize tax savings vehicle
• Most people can’t beat market returns factoring in transaction and management fees
• Dollar cost average your purchases in investments. 
• Yearly portfolio rebalancing (Takes advantages of buy low/sell high philosophy)
• Maximize free money (401k match)
• Make asymmetric investments (High reward, low risk)
• When you see a huge opportunity and you’ve assessed the risk and reward, bet big
• Most people should just invest in index funds with no managers taking fees

Investment Vehicles:

• IRA
• 529 Student College Fund
• Index funds
• REITS

Portfolio Mix:

• 30% – Index funds (Domestic/International)
  • Tech Companies
  • Biotech Companies
  • Energy Companies
  • Agriculture Companies
• 20% – Real Estate (Physical/REIT)
• 20% – Private Equity
• 10% – Angel Investments
• 10% – Bitcoin
• 10% – Individual Public Company Investments

Quotes:

• “Be fearful when others are greedy and greedy when others are fearful.” – Warren Buffet
• “Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble.” – Warren Buffet

Books on investing:

• The Intelligent Investor – Benjamin Graham
• Principles – Ray Dalio
• Rich Dad Poor Dad – Robert Kiyosaki
• The Only Investing Guide You’ll Ever Need – Andrew Tobias
• The Bitcoin Standard – Saifedean Ammous
• Unshakeable – Tony Robbins