Compounding Takes Its Own Course - Deepstash

Compounding Takes Its Own Course

Cheating or taking shortcuts leads to financial mistakes. Money can work hard by itself to generate more money, provided it is not forced to do it faster than required.

One has to embrace the inherent flaws and work towards investing by taking into account the various financial mistakes that keep on happening.

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MORE IDEAS FROM Personal Finance Philosophies · Collaborative Fund

When purchasing a new flashy phone or car, we tend to overestimate its social benefits and think that we would be admired.

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.

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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.

Investing for your own independence and freedom should be the greatest motivator.

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We have to make sure that we and our future generations understand what scarcity of money feels like.

We have to endow them essential skills for surviving without money, and help them realize what’s needed and what’s simply desired.

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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.

Any investment strategy needs to survive a disaster or a drastic change to be proven.

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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.

One has to survive in the short run and enjoy the good results in the long run.

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Bad Stuff Can Happen To You

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

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While a few universal laws do exist, there are as many right answers as there are people in this world.

One cannot compare with everyone’s unique situations and personalities and make investment rules that they think would work for all.

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RELATED IDEA

Common Causes Of Bad Decisions: Social Pressure
  1. People push their moral boundaries due to incentives and rewards.
  2. No one wants to be kicked out of a tribe or community so they play along.
  3. People do not think through the consequences.
  4. Little things and tiny, overlooked details snowball into something big.
  5. Other people's errors are easier to spot than one’s owns, leading to blind spots and denial of one’s faults.

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Most of us understand probability and the likelihood of certain things to happen, or not happening, but still do not fully believe in it. For us, it’s about right and wrong, black or white.

Example: Nate Silver(a numbers guy) said in 2016 that Hillary Clinton has a 72 percent chance to win. This didn’t mean he was wrong when Clinton lost, but most people believed he was.

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Some downsides are unavoidable

Life is a little easier if you expect a certain chunk of it to go wrong no matter how hard you try.

Smart people screw up. Good people have bad days. Nice people lose their temper.

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