<p><strong>The risk of unpleasant things happening is always there for everyone</strong>, and though it seems that job loss, divorce, financial fraud etc. only happens to other people, <strong>no one is exempt from these things</strong>, given enough time.</p>

Bad Stuff Can Happen To You

Money & Investments

<p>To save like a pessimist and invest like an optimist sounds like a contradiction, but life is about duality and certain contradictory actions have to be taken. </p>
<p>One has to survive in the short run and enjoy the good results in the long run.</p>

Save Like A Pessimist

<p>When purchasing a new flashy phone or car, we tend to overestimate its social benefits and <strong>think that we would be admired.</strong></p>
<p>Most people who notice the nice stuff are imagining it having themselves, not giving you any importance because you own it. Buy stuff for yourself, not to show off.</p>

The Social Benefits Of The Things We Buy

<p>The world is always in flux. One has to be patient and even stubborn in the right proportions instead of strictly adhering to some investment strategy that may be obsolete in this rapidly evolving world.</p>
<p>Any investment strategy needs to survive a disaster or a drastic change to be proven.</p>

Change Is The Only Constant

<p>Money lets you do what you want, when you want, how you want and for as long as as you want, something which is often overlooked when we waste money on impulse purchases and unnecessary expenses.</p>
<p>Investing for your own independence and freedom should be the greatest motivator.</p>

Money As Freedom

<p><em>Cheating or taking shortcuts leads to financial mistakes</em>. Money can work hard by itself to generate more money, provided it is not forced to do it faster than required.</p>
<p>One has to embrace the inherent flaws and work towards investing by taking into account the various financial mistakes that keep on happening.</p>

Compounding Takes Its Own Course

<p>We have to make sure that we and our future generations understand what scarcity of money feels like.</p>
<p>We have to endow them essential skills for surviving without money, and help them realize what’s needed and what’s simply desired.</p>

The Power Of Scarcity

<p>While a few universal laws do exist, there are as many right answers as there are people in this world.</p>
<p>One cannot compare with everyone’s unique situations and personalities and make investment rules that they think would work for all.</p>

There Is No Right Answer That Applies To Every Situation

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        <h1>Personal Finance Philosophies</h1>
      
      
        

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  <time>Jan 21, 2021</time>
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    <p><strong>It can happen to you</strong>. Job loss, divorce, a string of disastrous investments, succumbing to your emotional flaws, being a victim of fraud, getting hit by a risk you didn’t see coming – to people in good financial shape these tend to be viewed as things that happen “to other people.” But they can happen to <em>you</em>. And given enough time, at least one likely will. Some are more susceptible than others, but no one is exempt from being humbled.</p>

<p><strong>Save like a pessimist and invest like an optimist</strong>. They’re different skills that can contradict each other. But you need both to build wealth over time. Survive the short run to enjoy the fruits of the long run.</p>

<p><strong>No one is as impressed with your possessions as much as you are</strong>. It’s easy to overestimate the social signaling benefits of having nice stuff. The quirk is that people who see your nice stuff spend more time imagining themselves with your stuff than they do admiring you for having that nice stuff. I like nice stuff. But I try to only want it when it’s comfortable, convenient, efficient, or delicious, rather than fooling myself into imagining it’ll bring some higher level of importance.</p>

<p><strong>Managing lifestyle can have the same impact on your net worth as increasing returns</strong>. And it’s easier more in your control. Wealth is just the gap between what you have and what you spend/want. It’s a two-sided equation, but the “MORE” side gets 99% of the attention. There are investors who work 80 hours a week to add 10 basis points to their returns when there are two or three full percentage points of dumb lifestyle bloat in their finances that can be exploited with way less effort. A Taleb quote I love: “He did not depend on the bull market, and, accordingly, does not have to worry about a bear market at all.”</p>

<p><strong>Extreme adherence to an investment strategy is dangerous in a world that changes all the time</strong>, so an important question to ask when things aren’t working whether you’re being patient or stubborn.</p>

<p><strong>I value independence more than anything else in finance</strong>. Doing what you want, when you want, with whom you want, for as long as you want, is the most incredible thing money offers that too often goes overlooked. Viewing every additional dollar of wealth as “Haha, there’s a little bit more independence and a part of my future I now own” is a fun way to think about it.</p>

<p><strong>Most financial mistakes come when you try to force things to happen faster than is required</strong>. Compounding doesn’t like when you try to use a cheat code.</p>

<p><strong>Embrace and accept your flaws and build a financial plan around them</strong>, rather than assuming you can alter your susceptibility to dopamine and cortisol by reading a blog post.</p>

<p><strong>The best way to teach your kids about money is to make them feel the power of its scarcity</strong>. So I get nervous around big allowances and parents who always say “yes.” Making sure your kids understand the scarcity of money teaches them the difference between necessary and desirable. It’ll force them to budget. It’ll make them learn to enjoy what they have and fix what’s broken. These are essential survival skills.</p>

<p><strong>Investing ability is unproven until it’s survived a disaster</strong>. So be careful when identifying skill, whether your own or others’.</p>

<p><strong>There are few universally right answers</strong>. Just lots of shades of gray that work for people’s unique personalities and situations. A lot of finance arguments happen when people get upset after realizing that not everyone has, or wants, the same life as you.</p>

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<p><strong>It can happen to you </strong>. Job loss, divorce, a string of disastrous investments, succumbing to your emotional flaws, being a victim of fraud, getting hit by a risk you didn’t see coming – to people in good financial shape these tend to be viewed as things that happen “to other people.” But they can happen to <em>you </em>. And given enough time, at least one likely will. Some are more susceptible than others, but no one is exempt from being humbled. </p>

<p><strong>Save like a pessimist and invest like an optimist </strong>. They’re different skills that can contradict each other. But you need both to build wealth over time. Survive the short run to enjoy the fruits of the long run. </p>

<p><strong>No one is as impressed with your possessions as much as you are </strong>. It’s easy to overestimate the social signaling benefits of having nice stuff. The quirk is that people who see your nice stuff spend more time imagining themselves with your stuff than they do admiring you for having that nice stuff. I like nice stuff. But I try to only want it when it’s comfortable, convenient, efficient, or delicious, rather than fooling myself into imagining it’ll bring some higher level of importance. </p>

<p><strong>Managing lifestyle can have the same impact on your net worth as increasing returns </strong>. And it’s easier more in your control. Wealth is just the gap between what you have and what you spend/want. It’s a two-sided equation, but the “MORE” side gets 99% of the attention. There are investors who work 80 hours a week to add 10 basis points to their returns when there are two or three full percentage points of dumb lifestyle bloat in their finances that can be exploited with way less effort. A Taleb quote I love: “He did not depend on the bull market, and, accordingly, does not have to worry about a bear market at all.” </p>

<p><strong>Extreme adherence to an investment strategy is dangerous in a world that changes all the time </strong>, so an important question to ask when things aren’t working whether you’re being patient or stubborn. </p>

<p><strong>I value independence more than anything else in finance </strong>. Doing what you want, when you want, with whom you want, for as long as you want, is the most incredible thing money offers that too often goes overlooked. Viewing every additional dollar of wealth as “Haha, there’s a little bit more independence and a part of my future I now own” is a fun way to think about it. </p>

<p><strong>Most financial mistakes come when you try to force things to happen faster than is required </strong>. Compounding doesn’t like when you try to use a cheat code. </p>

<p><strong>Embrace and accept your flaws and build a financial plan around them </strong>, rather than assuming you can alter your susceptibility to dopamine and cortisol by reading a blog post. </p>

<p><strong>The best way to teach your kids about money is to make them feel the power of its scarcity </strong>. So I get nervous around big allowances and parents who always say “yes.” Making sure your kids understand the scarcity of money teaches them the difference between necessary and desirable. It’ll force them to budget. It’ll make them learn to enjoy what they have and fix what’s broken. These are essential survival skills. </p>

<p><strong>Investing ability is unproven until it’s survived a disaster </strong>. So be careful when identifying skill, whether your own or others’. </p>

<p><strong>There are few universally right answers </strong>. Just lots of shades of gray that work for people’s unique personalities and situations. A lot of finance arguments happen when people get upset after realizing that not everyone has, or wants, the same life as you. </p>

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Bad Stuff Can Happen To You

Personal Finance Philosophies · Collaborative Fund