beingdetermined
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Have you noticed yourself selling your #assets eve Have you noticed yourself selling your #assets every time there’s panic/fear or a downturn in the #financial markets? Maybe it is because you don’t have enough Risk Capacity in your #finances. A lot of people confuse Risk Tolerance and Risk Appetite with Risk Capacity. So, what is Risk Capacity? Risk Capacity is the amount/ability of risk that you can to take on and/or support, and Risk Tolerance is the amount of risk that you are willing to take. Risk capacity will depend on personal factors like age, income levels, stability in job, investment horizon, health, stage of life, net worth, etc... In simple words, there’s a big difference on what you can actually do and what you want to do. Maybe you want to be really risky with your #investments because you are looking for that alpha, but the reality is that there’s a high probability that you will sell your assets during a downturn in the markets. Why? Because intuitively you know that you are lacking some foundations in your #personalfinances. These are some foundations that will increase your Risk Capacity: Liquidity, Marketable skills, Zero consumer debt, Multiple sources of income, A proper asset allocation, The right mindset, education and information, The right context and perspective, Knowing your own behaviors and biases, Not realizing there’s a price to pay for high returns, Time and Self-Awareness. •••••• A big margin of safety is the difference between risk capacity and risk appetite. The bigger the margin of safety you have, the bigger bets you can make. At the same time, the bigger margin of safety you have, the less risk you need to take. Like everything in Finances, it all boils down to personal factors/circumstances. So, maybe you can take more risk that you are currently taking or maybe you need to take less risk that you are currently taking. Let this bear market be a teacher in your #financialjourney.
I have always taught you to have enough liquidity I have always taught you to have enough liquidity at all times. You don’t have to be 100% invested in the markets for you to become a #millionaire. What do I mean by liquidity? In simple terms, liquidity is when you have enough #cash reserves that you can take advantage of opportunities. Liquidity is when you have enough cash reserves that you can survive anything. A lot of #Financial Gurus advice on having an Emergency Fund, and that’s the way it should be. You should always have an #emergencyfund for a rainy day. However, a while ago I decided to change the phrase Emergency Fund for Liquidity. Why? Because it helped me understand the importance of having big cash reserves. Yes, I know what you are going to say, “#inflation is eating your purchasing power”. That is true. However, it’s also true that I will be able to capitalize on opportunities because of my liquidity. So, I will take the short-term loss of inflation. In his book, The Psychology of Money, Morgan Housel said: “Planning is important, but the most important part of every plan is to plan on the plan not going according to plan.” And that my friend it’s why is important to always have liquidity. Just ask yourself why #warrenbuffet has big amounts of cash. Same as all these big companies like: Apple, Google, Amazon, etc… are they worried that inflation is going to eat their cash? No, they are not worried because they will deploy the cash as soon as they see an opportunity. Based on my readings and observations, it will serve you better to develop and have an #assetallocation that you can hold for long periods of time. You don’t become #rich by selling #assets, you become rich by holding quality assets for long periods of time. Cash needs to be part of that Asset Allocation. Today is a great time to #invest. Do you have enough cash to invest? Let this #bearmarket be a lesson in your #financialjourney.
Cash is trash, until it is not! #cash #cashisking Cash is trash, until it is not! #cash #cashisking
People set New Years resolutions they never achiev People set New Years resolutions they never achieve. Instead, focus on daily habits to achieve your 5, 10, and 20-year plans. We are what we repeatedly do. Focus on the habits, not the goals!
Have you ever noticed these in Costco? Price Ancho Have you ever noticed these in Costco? Price Anchoring: By putting their most expensive products at the front of the store, Costco uses price anchoring to make your mind think anything less than that $1,000 TV is a great deal. Price Relativity: You likely have a general sense of what a TV costs, right? Even though TVs may be one of the big-ticket items at Costco, they still sell brand-name TVs for significantly less than other retailers. The price of the TVs relative to our expectations sets a good first impression. This comes in handy later. Why? Because while we may not know how much an 8-gallon jar of mayo should cost, we assume we’re getting a deal—like with the TVs. Sunk Cost Fallacy: Once people buy their Costco membership, their minds tell them they better use it (or risk wasting their investment). This is “sunk cost fallacy” in action. •••••• Costco clearly understands buyer psychology, but you also need to understand how the buyer psychology triggers you.
#wealthbuilding #millionairemindset #millionaire # #wealthbuilding #millionairemindset #millionaire #financialindependence #financialindependenceretireearly #fatfire #ficommunity #debtfreecommunity #debtfreejourney #realestateinvestor #realestateinvestor #investing #investment #investmentstrategies
All of these events should be in mind when impleme All of these events should be in mind when implementing a #investment strategy. #indexfunds #stockmarket #stocks #dividendstocks #dividendos #dividends #dividendincome #passiveincome #financialfreedom #financialindependence #fatfire #financialindependenceretireearly #financialliteracy #wealthbuilding #wealthmindset
I’m striving for #fuckit #money! What are you st I’m striving for #fuckit #money! What are you striving for?
Another successful launch this morning! Another successful launch this morning!
#sales #salesmotivation #motivacion #careercoach # #sales #salesmotivation #motivacion #careercoach #careergoals #goalsetting #goaldiggers #goaldriven #salestips #mindset #mindsetiseverything #mindset #letsgo
U.S. Market Sentiment The CNN Fear & Greed Index i U.S. Market Sentiment The CNN Fear & Greed Index is a compilation of seven different indicators that measure some aspects of stock market behavior. They are market momentum, stock price strength, stock price breadth, put and call options, junk bond demand, market volatility, and safe-haven demand.
#financial markets are melting and I’m still doi #financial markets are melting and I’m still doing the same thing, over and over again. Getting #rich is a #habit!
#perspectiveiseverything #financialliteracy #finan #perspectiveiseverything #financialliteracy #financialindependence #financialindependenceretireearly #financialdomination #fatfire #wealthbuilding #wealthmindset #wealthmanagement
#indexfunds #indexfund #vti #vtsax #thesimplepatht #indexfunds #indexfund #vti #vtsax #thesimplepathtowealth #riskmanagement
This is an awesome graph from Morning Star! There This is an awesome graph from Morning Star! There may be opportunities arising for #investors in the #stockmarket. Make sure you have some dry powder in your portfolio!
You want to build #wealth? Then, you will need a l You want to build #wealth? Then, you will need a long-term plan. Know where you want to be in 5, 10, and 20 years from now. The longer your horizon, the better decisions you'll make.
Inflation, and specifically stagflation, makes inv Inflation, and specifically stagflation, makes investing more challenging. Stagflation is when #inflation is high, but growth is low or negative. Cash and bonds are obviously a rough place to be, because their yields are often below the level of inflation in an inflationary environment. Stocks often don’t fare much better. If the purchasing power of currency is relatively stable, then it’s easy for companies to plan for the future, make long-term contracts, and so forth. If the currency is unstable, it makes planning much harder. A company’s revenue is rising as they raise prices, but their expenses are rising too, and it’s hard to predict whether revenue or costs will rise faster. In addition, as bond yields rise, it puts valuation pressure on highly-valued equities. Real estate tends to do better than stocks and bonds, especially if you have a fixed-rate mortgage attached to it. The house price (asset) typically adjusts upward with inflation over time, while the fixed mortgage (liability) gets inflated away. This depends on valuation though; in inflation-adjusted terms, a given house price might stagnate sideways for quite a while. Industrial commodities (e.g. oil and copper) tend to be the big winners in inflationary environments. Almost by definition, if inflation is high, it means commodity prices are rising. Usually during inflationary environments, commodities are under-supplied, and it often takes years to bring on enough new supply, which weighs on real economic growth and contributes to a stagflationary situation. However, commodities can be very volatile, with sharp pullbacks even in environments that are beneficial for them. Monetary commodities (e.g. gold and bitcoin) have an eventual correlation with inflation but not necessarily at the exact moment of high inflation like industrial commodities do. Gold in particular tends to do well during stagflationary environments, where economic growth is decelerating but inflation is still pretty high. It also tends to hold up well in outright recessionary/disinflationary environments, at least compared to equities.
#increaseyourincome #incomestreams #incometips #in #increaseyourincome #incomestreams #incometips #income #incomeopportunities #debtfreecommunity #debtfreejourney #financialindependence #financialindependenceretireearly #financialliteracy #passiveincome #financialadvisor #moneymotivated #highpayingjobs #highpayingskills #millionairemindset #wealthmindset #wealth
The #sp500 was introduced in 1957 as a stock marke The #sp500 was introduced in 1957 as a stock market index to track the value of the 500 large corporations listed on the New York Stock Exchange. •••••• Here is how much the S&P500 has returned with dividend reinvested since inception. It has Consumer Price Index (CPI) data integrated, so it can estimate total investment returns before taxes. The data used is from Robert Shiller. •••••• A lot of people forget to adjust for #inflation when they are talking about the #stockmarket returns. This is why I want to show you the returns adjusted for inflation so you can make the right assumptions when planning for #retirement. •••••• This data goes back from January/1957 to December/2021. •••••• Maybe you were expecting the data to show a 10% adjusted for inflation. Sorry, to bust your bubble. The adjusted for inflation return is 6.7% and that is not including taxes. Once you put taxes in the mix, then, the return is much lower. This shows you that the most important thing in finance is: 1) an asset allocation that you can hold for decades so it can compound, 2) your savings rate. Savings rate and living below your means trump everything. Increasing your #income is your best #investment.
Great illustration form SuccessPictures! Great illustration form SuccessPictures!
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