Financially intelligent managers understand the four distinct skill sets:<ol><li>The Foundation. They can read an income statement, a balance sheet and a cash flow statement. Can differentiate between profit and cash.</li><li>The art of finance. They can identify the artful aspects of finance and know how applying them differently can lead to different conclusions.</li><li>Analysis. They use ratios, return on investment (ROI) analysis, etc. to make better decisions.</li><li>The big picture. Numbers can’t (and don’t) tell the whole story. Financial results should be understood within the framework of the big picture.</li></ol>

Four skill sets of finance and accounting

The art of accounting is taking a limited set of data to get an accurate description of how well a company is doing. Definitions to understand.<ul><li>Revenue is when a service/product is delivered.</li><li>The income statement shows sales/revenues, costs/expenses, and profit. You can often tell what’s important to a company by looking at the biggest numbers relative to sales.</li><li>Operating Expenses: Day-to-day costs needed to keep the business going, e.g., salaries.</li><li>Capital Expenditure: The cost of purchasing an item is considered a long-term investment, such as computer systems or equipment.</li></ul>

You can’t always trust the numbers

Accountants use accruals and allocations to attempt an accurate picture of the business for a month.<ul><li>Accruals: An accrual is the part of a revenue or expense item that is recorded for a specific period, e.g., product development costs. The purpose is to match costs to revenues in a given timeframe.</li><li>Allocations: Theses are apportionments of costs to different departments or activities in a company.</li><li>Depreciation: Allocated cost of equipment and other assets to the total cost of product and services shown on the income statement.</li></ul>

Spotting assumptions, estimates, and biases

Understanding how the numbers are used and what are assumptions puts you in control of the decisions. <ul><li>Goodwill: The difference between the net assets acquired and the amount of money the acquiring company pays form them.</li><li>Balance sheet: The balance sheets show the assets, liabilities, and owners’ equity.</li><li>Cash shown on a balance sheet is money in the bank and things like stocks and bonds that can be turned into cash.</li></ul>

Reason for increasing your financial intelligence


It consists of three main categories:<ul><li>Sales or revenue during a given time period. It includes sales (revenue) and Earnings-per-share (EPS)</li><li>Costs and expenses: “Above the line” are the cost of goods sold (COGS), cost of services (COS). “Below the line” are operating expenses, interest, taxes, depreciation and amortization.</li><li>Profit: Profit is an estimate. You can’t spend estimates. </li></ul>Different kinds of profit:<ul><li>Profit = Revenue - expenses</li><li>Gross profit = Sales - COGS</li><li>Operating profit (EBIT) = Gross Profit - Operating expenses</li><li>Net Profit = Operating Profit - (interest + taxes + other costs)</li></ul>

Cracking the code of the Income Statement

A balance sheet shows what a business owns at a particular time. A balance sheet always balances. Assets = liabilities + owners’ equity.<ul><li>Assets: What the company owns. It is more estimates and assumptions. Assets include cash; accounts receivable; inventory; property, plant, and equipment (PPE) minus accumulated depreciation; goodwill; intellectual property, patens; accruals.</li><li>Liabilities: What the company owes.</li><li>Equity: The assets - liabilities.</li></ul>

Understanding the balance sheet

A good manager is aware of how both cash and profits affect a balance sheet. A balance sheet shows if a company is financially healthy. The balance sheet answers the following questions:<ul><li>Do the assets outweigh the liabilities?</li><li>Can the company pay its bills?</li><li>Is the owner’s equity growing?</li></ul>

The income statement always affects the balance sheet

Profit is not cash. A healthy business needs both profit and cash. Inflows: Cash moving into a businessOutflows: Cash moving out of a business Types of cash flow:<ul><li>Cash from operating activities</li><li>Cash from investing activities</li><li>Cash from financing activities</li></ul>Financing a company: Getting a company the cash it needs to start up or expand. Cash flow can be calculated by looking at the income statement and two balance sheets. When you know a company’s cash situation, you can understand what’s going on now, where the business is headed, and the priorities of senior management.

The language of cash flow

Explains what business numbers mean and why they matter, and addresses issues that have become more important in recent years, including questions about the financial crisis and accounting literacy.

moneyandinvestments

Money & Investments

business

Business

books

Books

Inc. magazine calls it one of “the best, clearest guides to the numbers” on the market. Readers agree, saying it’s exactly “what I need to know” and calling it a “must-read” for decision makers without expertise in finance. Since its release in 2006, Financial Intelligence has become a favorite among managers who need a guided tour through the numbers—helping them to understand not only what the numbers really mean, but also why they matter. This new, completely updated edition brings the numbers up to date and continues to teach the basics of finance to managers who need to use financial data to drive their business. It also addresses issues that have become even more important in recent years—including questions around the financial crisis and those around broader financial and accounting literacy. Accessible, jargon-free, and filled with entertaining stories of real companies, Financial Intelligence gives nonfinancial managers the confidence to understand the nuance beyond the numbers—to help bring everyday work to a new level.

Karen Berman

Joe Knight

Financial Intelligence, Revised Edition

Financial Intelligence

<ul><li>Your DNA dictates what you were born to do. Follow your passion, don’t listen to what society has to say about success.</li><li>There is enough success out there and if you want it badly enough, you will get it.</li><li>When building your personal brand, focus on the quality of the relationships with your followers and not on their numbers.</li><li>Be authentic and produce quality content.</li></ul>

Success Is In Your DNA

“There is no excuse for anyone living in the United States or anywhere else right now to slog through his or her entire life working at jobs they hate, or even jobs they simply don’t love, in the name of a paycheck or a sense of responsibility.”

Gary Vaynerchuk

“Quality is a tremendous filter. Cream always rises, my friends, no matter how many cups of coffee you pour.”

<ul>
<li>Plan to develop and grow your own brand and business alongside your current job. This is how you will open opportunities in the digital economy.</li>
<li>As long as you are working for someone else, you will never be living entirely true to yourself and your passion.</li>
<li>To monetize your personal brand, you need two pillars: product, and content. Great content is what will attract people to your blog.</li>
</ul>

A Whole New World

Someone with less talent and poor content can beat you if they work harder than you. Before you invest in yourself, you have to invest in your long-term future.When building your personal brand, focus on creating communities by starting conversations. Once you have created your online brand, do some online advertising. You can also engage in affiliate marketing.

Keep It Real

<ol><li>Identify your passion</li><li>Make sure you can think of at least fifty awesome topics and posts.</li><li>Answer the following questions: Am I sure my passion is what I think it is? Can I talk about it better than anyone else?</li><li>Name your personal brand.</li><li>Buy your user name.</li><li>Choose your medium: video, audio, written word</li><li>Start a Website.</li><li>Hire a designer</li><li>Select all of the platforms to which you want to distribute your content.</li><li>Post your content.</li></ol>

Your Personal Brand: Starting Your Thing

<ol><li>Start creating community by leaving comments on other people’s blogs and forums.</li><li>Find more blogs that are relevant to your subject on Google</li><li>Join as many active fan pages and groups relating to your blog topic as possible.</li><li>Repeat steps 11 through 15.</li><li>When you feel your personal brand has gained sufficient attention and stickiness, start reaching out to advertisers and begin monetizing</li></ol>

Your Personal Brand: Small To Big

Do you have a hobby you wish you could indulge in all day? An obsession that keeps you up at night? Now is the perfect time to take that passion and make a living doing what you love. In Crush It! Why NOW Is the Time to Cash In on Your Passion, Gary Vaynerchuk shows you how to use the power of the Internet to turn your real interests into real businesses. Gary spent years building his family business from a local wine shop into a national industry leader. Then one day he turned on a video camera, and by using the secrets revealed here, transformed his entire life and earning potential by building his personal brand. By the end of this book, readers will have learned how to harness the power of the Internet to make their entrepreneurial dreams come true. Step by step, Crush It! is the ultimate driver’s manual for modern business.

career

Career

mindfulness

Mindfulness

Do you have a hobby you wish you could indulge in all day? An obsession that keeps you up at night? Now is the perfect time to take that passion and make a living doing what you love. In Crush It! Why NOW Is the Time to Cash In on Your Passion, Gary Vaynerchuk shows you how to use the power of the Internet to turn your real interests into real businesses. Gary spent years building his family business from a local wine shop into a national industry leader. Then one day he turned on a video camera, and by using the secrets revealed here, transformed his entire life and earning potential by building his personal brand. By the end of this book, readers will have learned how to harness the power of the Internet to make their entrepreneurial dreams come true. Step by step, Crush It! is the ultimate driver’s manual for modern business.

Crush It!

Doing well with money is not necessarily about what you know, but about how you behave. Is what Morgan Housel explores in his popular book, where he shares 19 stories that explore the behavioral aspects of personal finance.To Note:<ul><li>Financial success is not hard science, it’s a soft skill where how you behave is more important than what you know.</li><li>To grasp why people bury themselves in debt, you need to study the history of greed, insecurity & optimism.</li><li>Not all success is due to hard work, and not all poverty is due to laziness. Keep this in mind when judging people, including yourself</li></ul>

Money = Behaviour

Everyone looks at money through the lens of their past experiences.You can read what it was like to lose everything during, say, The Great Recession, but you will never bear the emotional scars of those who survived it and are now afraid to invest again. It’s important to remember, then, that until you’ve lived through a financial crisis and felt its consequences, you will never understand why people behave the way they do.

No One’s Crazy

Nothing is as good or as bad as it seems. Every outcome in life is guided by forces other than individual effort. Bill Gates had a competitive advantage over millions of other students because he attended one of the only high schools in the world that had the cash and foresight to buy a computer. In finance, luck is as much a force as risk.<ul><li>Be careful who you praise and admire, and be careful who you look down upon.</li><li>Focus less on studying specific individuals and more on studying broad patterns.</li></ul>

Luck & Risk

Success is a lousy teacher, it seduces smart people into thinking they can’t lose.

Rich people do crazy things. Bernie Madoff had everything only to lose everything because he had no sense of enough. The lesson? There is no need to risk what you have and need for what you don’t have and don’t need.<ul><li>The hardest financial skill is getting the goalpost to stop moving.</li><li>If expectations rise with results there is no logic in striving for more because you’ll feel the same after putting in the extra effort.</li><li>Happiness equals results minus expectations.</li><li>Social comparison is the problem.</li><li>Accept that you might have enough, even if it is less than those around you.</li></ul>

Nothing is Ever Enough

Our minds are not built to handle the reality that compounding leads to logic-defying results.Warren Buffett’s fortune isn’t due to just being a good investor. Rather it’s due to being a good investor since he was a child. Simplifying we can say he then just waited. The counterintuitive nature of compounding leads even the smartest of us to overlook its enormous power.Linear thinking is so much more intuitive than exponential thinking. You never get accustomed to how quickly things can grow with compounding.

The Compounding Of Money

Good investing is not about making good decisions. It’s about consistently not screwing up. There are a million ways to get wealthy. The only way to stay wealthy is some combination of frugality and paranoia.<ul><li>Money success in a single word: survival. The ability to stick around for a long time without wiping out, or being forced to give up, is what makes the biggest difference.</li><li>Getting money requires taking risks, being optimistic, and putting yourself out there.</li><li>Keeping money requires the opposite of taking risks, it requires humility.</li></ul>

Getting Wealthy vs. Staying Wealthy

You can be wrong half the time and still make a fortune.Anything that is huge, profitable, famous, or influential is the result of a tail event, an outlying one-in-thousands or millions event.<ul><li>Most of our attention goes to things that are huge, profitable, famous, or influential.</li><li>When you accept that tails drive everything in business, investing, and finance, you realize that it’s normal for lots of things to go wrong, break, fail, and fall.</li></ul>

Tails, You Win

Controlling your time is the highest dividend money pays. The highest form of wealth is the ability to wake up every morning and say, “I can do whatever I want, when I want, with who I want, for as long as I want.” This is the highest dividend money pays:<ul><li>The ability to do what you want, when you want, with who you want, for as long as you want, is priceless. It is the highest dividend money pays.</li><li>Using your money to buy time and options has a lifestyle benefit few luxury goods can compete with.</li></ul>

True Wealth Is Freedom

No one is impressed with your possessions as much as you are.People tend to want wealth to signal to others that they want to be liked and admired. But in reality, those other people often bypass admiring you, not because they don’t think wealth is admirable, but because they use your wealth as a benchmark for their own desire to be liked and admired.<ul><li>You might think you want an expensive car, a fancy watch, and a huge house. What you really want is respect and admiration from other people.</li><li>Having expensive stuff will never bring people to respect and admire you.</li></ul>

Man in the Car Paradox

Spending money to show people how much money you have is the fastest way to have less money.We tend to judge wealth by what we see because that’s the information we have in front of us. But the truth is that wealth is what you don’t see. Rich is a current income. Nice cars purchased. Diamonds bought. But wealth is hidden. It is an option not yet taken to buy something later. Not knowing the difference is a source of countless poor money decisions. Someone driving a $100,000 car might be wealthy. Or he may just be poorer by $100,000.

True Wealth Is What You Don’t See

Aiming to be mostly reasonable works better than trying to be coldly rational.“Do not aim to be coldly rational when making financial decisions. Aim to just be pretty reasonable. Reasonable is more realistic, and you have a better chance of sticking with it for the long run, which is what matters most when managing money.” You’re not a spreadsheet, remember. You’re a person.

Reasonable > Rational

Building wealth has little to do with your income or investment returns and more to do with your savings rate. The value of wealth is relative to what you need. A high savings rate means having lower expenses than you otherwise could, and having lower expenses means your savings go further than they would if you spent more.<ul><li>If you view building wealth as something that will require more money or big investment returns, you may become too pessimistic.</li><li>You can build wealth without a high income but have no chance of building wealth without a high savings rate.</li></ul>

Save Money

History is an unassailable guide to the future. A trap many investors fall the “historians as prophets” fallacy: an over-reliance on past data as a signal to future conditions in a field where innovation and change are the lifeblood of progress. Past performance is not indicative of future results—the world changes.<ul><li>Good ideas taken too far are indistinguishable from bad ideas.</li><li>People underestimate the need for room for error in almost everything they do that involves money.</li></ul>

Mistakes & Errors

Long-term planning is harder than it seems because people’s goals and desires change over time.We’re such poor forecasters of our future selves that there’s a term for this phenomenon: The End of History Illusion. We’re aware of how much we’ve changed in the past, but we grossly underestimate how much our personalities, desires, and goal will change in the future.You can’t prepare for what you can’t envision.

The Uncertain Future

The most important part of every plan is planning on your plan, not going according to plan.Have room for error when estimating your future returns. For his own investments, Housel assumes the future returns he’ll earn in his lifetime will be ⅓ lower than the historic average. So, he saves more than he would if I assumed the future will resemble the past. It’s his margin of safety.<ul><li>Avoid single points of failure. If many things rely on one thing working, and that thing breaks, you have a catastrophe.</li><li>The biggest single point of failure is a reliance on a paycheck to fund short-term spending.</li></ul>

Leave Room for Error

Everything has a price, but not all prices appear on labels.The price of investing success is not immediately obvious. It’s not a price tag you can see, so when the bill comes due, it doesn’t feel like a fee for getting something good. It feels like a fee for doing something wrong.Most things are harder in practice than they are in theory. This is often because we are not good at identifying what the price of success is, which prevents us from being able to pay it. The price of successful investing is volatility, fear, doubt, uncertainty, and regret.

Nothing Is Free

Avoid taking financial cues from people playing a different game than you are.Few things matter more with money than understanding your own time horizon and not being persuaded by the actions & behaviors of people playing different games than you are. Go out of your way to identify what game you’re playing and ignore the rest.<ul><li>Bubbles happen when long-term investors playing one game start taking their cues from short-term traders playing another game.</li><li>It is hard to grasp that other investors have different goals than u do.</li><li>Rational people can see the world through a different lens than their own.</li></ul>

You & Me

Optimism sounds like a sales pitch. Pessimism sounds like someone trying to help you.In finance, pessimism is paid more attention than optimism and is, therefore, more persuasive. “It’s easier to create a narrative around pessimism because the story pieces tend to be fresher and more recent"<ul><li>Optimism is the belief that the odds of a good outcome are in your favour over time, even when there will be setbacks along the way.</li><li>An iron law in economics: extremely good and extremely bad circumstances rarely stay that way for long because supply and demand adapt in hard to predict ways.</li></ul>

The Seduction of Pessimism

Stories trump statistics. The more you want something to be true, the more likely you are going to believe a story that overestimates the odds of it being true.<ul><li>The more you want something to be true, the more likely you are to believe a story that overestimates the odds of it being true.</li><li>Everyone has an incomplete view of the world, but we form a complete narrative to fill in the gaps.</li><li>Coming to terms with how much you don’t know means coming to terms with how much of what happens in the world is out of your control.</li><li>The illusion of control is more persuasive than the reality of uncertainty.</li></ul>

Believing In Narratives

Psychology of Money: how to have a better relationship with money and to make smarter financial decisions

Understand yourself and those around you.

psychology

Psychology

The Psychology of Money

The Psychology of Money is a collection of short stories exploring the strange ways people think about money and teaches you how to make better sense of it.

Doing well with money isn’t necessarily about what you know. It’s about how you behave. And behavior is hard to teach, even to really smart people. Money—investing, personal finance, and business decisions—is typically taught as a math-based field, where data and formulas tell us exactly what to do. But in the real world people don’t make financial decisions on a spreadsheet. They make them at the dinner table, or in a meeting room, where personal history, your own unique view of the world, ego, pride, marketing, and odd incentives are scrambled together. In The Psychology of Money, award-winning author Morgan Housel shares 19 short stories exploring the strange ways people think about money and teaches you how to make better sense of one of life’s most important topics.

Doing well with money isn’t necessarily about what you know. It’s about how you behave. And behavior is hard to teach, even to really smart people. Money—investing, personal finance, and business decisions—is typically taught as a math-based field, where data and formulas tell us exactly what to do. But in the real world people don’t make financial decisions on a spreadsheet. They make them at the dinner table, or in a meeting room, where personal history, your own unique view of the world, ego, pride, marketing, and odd incentives are scrambled together. In The Psychology of Money, award-winning author Morgan Housel shares 19 short stories exploring the strange ways people think about money and teaches you how to make better sense of one of life’s most important topics.

Morgan Housel is a partner at The Collaborative Fund. He is a two-time winner of the Best in Business Award from the Society of American Business Editors and Writers, winner of the New York Times Sidney Award, and a two-time finalist for the Gerald Loeb Award for Distinguished Business and Financial Journalism. He lives in Seattle with his wife and two kids.

Morgan Housel

“Without the knowledge your soul is sick.”

“It doesn’t matter how slowly you go as long as you do not stop.”

“All progress takes place outside of your comfort zone.”

“The expert in anything was once a beginner.”﻿

"Every accomplishment starts with the decision to try "

"Learning is the only thing the mind never exhausts ,never fears and never regrets. "

"An investment in knowledge pays the best interest. "

"There is no elevator to success .You have to take the stairs. "

"You are never too old to set another goal or to dream a new dream. "

“If you cannot do great things, do small things in a great way.”

productivity

Productivity

personaldevelopment

Personal Development

motivationandinspiration

Motivation & Inspiration

education

Learning & Education

Motivational quotes in students learning 

Unfortunately, people have a habit of spending their hard-earned cash on goods and services that they don't need.It’s important to realize that it's usually not just one item or habit that must be cut out in order to accumulate sizable wealth. Usually, in order to become wealthy, one must adopt a disciplined lifestyle and budget. This may mean eating out less frequently or cutting back on expenses.This doesn't mean that you shouldn't go out and have fun, but you should try to do things in moderation and set a budget if you hope to save money.

Stop Senseless Spending!

When individuals earn money, their first responsibility is to pay current expenses such as rent or mortgage and food. Once these expenses have been covered, the next step should be to fund a retirement plan.How much difference will funding a vehicle such as a Roth IRA early on in life make?If you're 23 years old and deposit $3,000 per year (that's only $250 each month) in a Roth IRA earning an 8% average annual return, you will have saved $985,749 by the time you are 65 years old due to the power of compounding in comparison to $724,753 if you waited 10 years later.

Fund Retirement Plans ASAP

Sometimes, individuals think that doing their own taxes will save them money. In some cases, they might be right. However, in other cases, it may actually end up costing them money because they fail to take advantage of the many deductionsavailable to them.Try to become more educated as far as what types of items are deductible. However, if you're not willing or able to become educated about filing your own income taxes, it may actually pay to hire some help, particularly if you are self-employed, own a business, or have other circumstances that complicate your tax return.

Improve Tax Awareness

Many of us rent a home or an apartment because we cannot afford to purchase a home, or because we aren't sure where we want to live for the long term. And that's fine. However, renting is often not a good long-term investment because buying a home is a good way to build equity.Unless you intend to move in a short period of time, it generally makes sense to consider putting a down payment on a home. At least this way, over time, you can build up some equity and the foundation for a nest egg.

Own Your Home

There's nothing wrong with purchasing a luxury vehicle. However, individuals who spend an inordinate amount of their incomes on a vehicle are doing themselves a disservice, especially since this asset depreciates in value so rapidly.How rapidly does a car depreciate?Obviously, this depends on the make, model, year, and demand for the vehicle, but a general rule is that a new car loses 15% to 20% of its value per year. So, a two-year-old car will be worth 80% to 85% of its purchase price; a three-year-old car will be worth 80% to 85% of its two-year-old value.

Avoid Luxury Wheels

Some individuals are extremely loyal to their employers and will stay with them for years without seeing their incomes take a jump. This can be a mistake, as increasing your income is an excellent way to boost your rate of saving.Always keep your eye out for other opportunities and try not to sell yourself short. Work hard and find an employer who will compensate you for your work ethic, skills, and experience.

Don't Sell Yourself Short

Becoming a millionaire won't happen by any luck, such as winning the lottery, or some other unforeseen circumstance. The only way to become a millionaire is by diligently working to do so. Expecting luck to bring a financial windfall will only delay the time you have to build your wealth. The money spent on lotteries and other get-rich-quick schemes will be better utilized as savings and investments.

Don't Rely on Luck

Becoming a millionaire is not as hard as you might think—it just takes time.

7 Simple Steps to $1 Million

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Girish Botale on Nov 01

In the future everybody will be world famous for 15 minutes.

Art museum in Stockholm with one of the foremost collections of modern and contemporary art: Pablo Picasso, Salvador Dalí, Henri Matisse, Meret Oppenheim...

health

Health

communication

Communication

Moderna Museet | Modern Art Museum in Stockholm Sweden

Studying a specific person can be dangerous because we tend to study extreme examples—the billionaires, the CEOs, or the massive failures that dominate the news—and extreme examples are often the least applicable to other situations, given their complexity. The more extreme the outcome, the less likely you can apply its lessons to your own life, because the more likely the outcome was influenced by extreme ends of luck or risk.

To make money they didn’t have and didn’t need, they risked what they did have and did need. And that’s foolish. It is just plain foolish. If you risk something that is important to you for something that is unimportant to you, it just does not make any sense

People like to feel like they’re in control—in the drivers’ seat. When we try to get them to do something, they feel disempowered. Rather than feeling like they made the choice, they feel like we made it for them. So they say no or do something else, even when they might have originally been happy to go along.

Jonah Berger

Freedom of time is what money can give you that makes you happy. Not the ability to buy things

We tend to judge wealth by what we see, because that’s the information we have in front of us. We can’t see people’s bank accounts or brokerage statements. So we rely on outward appearances to gauge financial success. Cars. Homes. Instagram photos.Modern capitalism makes helping people fake it until they make it a cherished industry.But the truth is that wealth is what you don’t see

<ul><li>Pessimism just sounds smarter and more plausible than optimism.</li><li>Tell someone that everything will be great and they’re likely to either shrug you off or offer a skeptical eye. Tell someone they’re in danger and you have their undivided attention.</li><li>If a smart person tells me they have a stock pick that’s going to rise 10-fold in the next year, I will immediately write them off as full of nonsense.</li><li>If someone who’s full of nonsense tells me that a stock I own is about to collapse because it’s an accounting fraud, I will clear my calendar and listen to their every word.</li></ul>

17. The Seduction Of Pessimism

<ul><li>There are many things in life that we think are true because we desperately want them to be true</li><li>Hindsight, the ability to explain the past, gives us the illusion that the world is understandable. It gives us the illusion that the world makes sense, even when it doesn’t make sense. That’s a big deal in producing mistakes in many fields</li></ul>

18. When You'll Believe Anything

<ul><li>Go out of your way to find humility when things are going right and forgiveness/compassion when they go wrong</li><li>Less ego, more wealth. Saving money is the gap between your ego and your income, and wealth is what you don’t see. So wealth is created by suppressing what you could buy today in order to have more stuff or more options in the future</li><li>Manage your money in a way that helps you sleep at night</li><li>If you want to do better as an investor, the single most powerful thing you can do is increase your time horizon. Time is the most powerful force in investing. It makes little things grow big </li></ul>

19. All Together

<ul><li>Become OK with a lot of things going wrong. You can be wrong half the time and still make a fortune, because a small minority of things account for the majority of outcomes</li><li>Use money to gain control over your time</li><li>Be nicer and less flashy. No one is impressed with your possessions as much as you are. You might think you want a fancy car or a nice watch. But what you probably want is respect and admiration. And you’re more likely to gain those things through kindness and humility than horsepower and chrome</li></ul>

19. All Together (continue)

<ul><li>Define the cost of success and be ready to pay it. Because nothing worthwhile is free</li><li>Worship room for error. A gap between what could happen in the future and what you need to happen in the future in order to do well is what gives you endurance</li><li>Avoid the extreme ends of financial decisions</li><li>You should like risk because it pays off over time</li><li>Define the game you’re playing, and make sure your actions are not being influenced by people playing a different game</li><li>Respect the mess. Smart, informed, and reasonable people can disagree in finance, because people have vastly different goals and desires. </li></ul>

<ul><li>But everything I’ve learned about personal finance tells me that everyone—without exception—will eventually face a huge expense they did not expect—and they don’t plan for these expenses specifically because they did not expect them</li><li>Every investor should pick a strategy that has the highest odds of successfully meeting their goals. And I think for most investors, dollar-cost averaging into a low-cost index fund will provide the highest odds of long-term success</li><li>That doesn’t mean index investing will always work. It doesn’t mean it’s for everyone. </li></ul>

20. Confessions

Beating the market should be hard; the odds of success should be low. If they weren’t, everyone would do it, and if everyone did it there would be no opportunity. So no one should be surprised that the majority of those trying to beat the market fail to do so. (The statistics show 85% of large-cap active managers didn’t beat the S&P 500 over the decade ending 2019.

20. Confessions (continue)

<ul><li>Everyone have different financial goal and definition of financial freedom. Be careful when following others advice because we all bound by different circumstances</li><li>Social Media and advertisement made us feel like we're not enough and we need that "shiny object" in order to be happy. That makes us made irrational decision with money and end up with debt</li><li>There's no such thing as overnight success. It is compounded effort that succeed in one night. Observe the effort and process, not the result.</li><li>Be frugal with your money</li></ul>

My Take From This Book

Highly recommended, cause this book is not typical financial advice book. The book explains why we spend money on something we don't need based on emotional decision, not based on mathematical calculation.

habits

Habits

Creating a yearly budget for your business allows for effective management. A budget guides your intended business decisions and helps you lay out expansion plans. Make your money work smarter and harder by re-evaluating your income and your spending habits.

Consider the budget

<ul><li>Digital platforms allow you to organise your business data and documents and have a backup.</li><li>Online invoicing and accounting tools can help to keep efficient and accurate records.</li><li>Automate your bill payments, such as utility bills or credit card payments and ensure you have sufficient funds available for paying the bills.</li><li>Be extra vigilant about cyber security when making electronic payments, using e-commerce platforms and technology.</li></ul>

Keep the business paper-free

Partnering with the right investors is critical to the success of the business. Investors can be key assets as they can gather more funds than you could through loans. Research the most recent ventures of your potential investors, and understand how involved they would like to be.

Partner with the right investors

Financial institutions, partners, suppliers and prospective customers may use your credit score to determine the worthiness of the business and if you are likely to default on a payment. It is important to learn how to overcome a poor credit score. A good credit score could improve the financial success of the business.

Maintain a good credit score

Debt management: It's not ideal for debt to carry over to the next financial year. It's advisable to develop a strategy to repay your debts before taking out loans. Increase your savings: Savings can help to keep the business afloat in difficult times. Consider if your savings are enough to cover potential business losses in the next financial year.

Debt management and savings

Discover the world of business and economics.

economics

Economics

How To Improve Your Business Financial Management

Investors who disregard where they are in cycles are bound to suffer serious consequences. In order to get the most out of this book, an investor has to learn to recognize cycles, assess them, look for the instructions they imply, and do what they tell him to do.Investors need to study three main areas:<ul><li>Trying to know more than others about the “knowable,” the fundamentals of industries, companies, and securities.</li><li>Being disciplined as to the appropriate price to pay for participation in those fundamentals.</li><li>Understanding the investment environment we are in.</li></ul>

Investors are always in Cycles

<ul><li>The likelihood of permanent capital loss</li><li>Opportunity risk, the likelihood of missing out on potential gains</li></ul>Risk is all about uncertainty. Even though many things can happen, only one will happen.

The Two Risks

A: Recovery from an excessively depressed lower extreme, toward the midpoint.B: The continued swing past the midpoint, toward an upper extreme or high.C: The attainment of a high.D: The downward correction from the high back toward the midpoint.E: A continuation of the downward movement past the midpoint, toward the new low.F: The reaching of a low.G: Recovery from the low back toward the midpoint.Keep in mind that:<ul><li>Excessive optimism is dangerous.</li><li>Risk aversion is an essential ingredient for the market to be safe.</li></ul>

Cycle Phases

The output of an economy is the product of hours worked and output per hour. Thus the long term growth of the economy is determined by fundamental factors like birth rate and the rate of gain in productivity. Long term trends have given the economy and stock market a strong uptrend over several decades:<ul><li>Macro Environment</li><li>Corporate Growth</li><li>The Borrowing Mentality</li><li>Popularization of Investing</li><li>Investor Psychology</li></ul>

The Economics Of Cycles

Central bankers have dual responsibilities that are in opposition to each other:<ul><li>Limit Inflation: which requires restraining the growth of the economy.</li><li>Support Employment: which calls for stimulating economic growth.</li></ul>GovernmentsWhen governments want to stimulate their country’s economy, they can:<ul><li>Cut Taxes</li><li>Increase Government Spending</li><li>Distribute Stimulus Checks</li></ul>When governments want to slow their country’s economy, they can:<ul><li>Increase Taxes</li><li>Decrease Government Spending</li></ul>

The State Involvement: Banks and Government

The mood swings of the securities markets resemble the swing of a pendulum. They swing between the following:<ul><li>Between euphoria and depression</li><li>Between celebrating positive developments and obsessing over negatives</li><li>Between overpriced and under-priced</li><li>Between greed and fear</li><li>Between optimism and pessimism</li><li>Between risk tolerance and risk aversion</li><li>Between urgency to buy and panic to sell</li></ul>

Investor Psychology and Emotion

<ul><li>Investing is basically “bearing risk in pursuit of profit.”</li><li>The ability to understand, assess, and deal with risk is the mark of the superior investor and an essential requirement for investment success.</li><li>The way investors are collectively viewing risk, and behaving in regard to it, is of overwhelming importance in shaping the investment environment in which we find ourselves. </li><li>The state of the environment is key in determining how we should behave with regard to risk at that point. </li><li>The rational investor is diligent, sceptical, and appropriately risk-averse at all times.</li></ul>

The RIght Attitude Towards Risk

Superior investing doesn’t come from buying high-quality assets, but from buying when the deal is good, the price is low, the potential return is substantial, and the risk is limited. These conditions are much more the case when the credit markets are in the less euphoric, more stringent part of their cycle. <ul><li>Capital: all the money used to finance a business.</li><li>Credit: the portion of a company’s capital that is made up of debt rather than equity.</li></ul>

The Credit Cycle

A NEW YORK TIMES, WALL STREET JOURNAL, AND USA TODAY BESTSELLER The legendary investor shows how to identify and master the cycles that govern the markets. We all know markets rise and fall, but when should you pull out, and when should you stay in? The answer is never black or white, but is best reached through a keen understanding of the reasons behind the rhythm of cycles. Confidence about where we are in a cycle comes when you learn the patterns of ups and downs that influence not just economics, markets, and companies, but also human psychology and the investing behaviors that result. If you study past cycles, understand their origins and remain alert for the next one, you will become keenly attuned to the investment environment as it changes. You’ll be aware and prepared while others get blindsided by unexpected events or fall victim to emotions like fear and greed. By following Marks’s insights—drawn in part from his iconic memos over the years to Oaktree’s clients—you can master these recurring patterns to have the opportunity to improve your results.

Mastering the Market Cycle

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