I often write on Quora.com, where I am the most viewed writer on financial matters, with over 290.5 million views in recent years.
In the answers below I focused on the following topics and issues:
- II have $1m to invest. What are my options? I explain the key factors to look out for when investing above $1m, and why it isn’t much different to investing $100,000
- If you are new to investing, where should you start when it comes to research?
- Should the average retail investor engage in short-term trades or play it safe by buying and holding long-term?
- Would I prefer to live in the UAE, or Japan, as somebody who has only lived in one of those places? I explain the huge differences, from an expat perspective, of living in these two places.
- Could poorer people become better off with some good advice from wealthier people? Do schools have a bigger role to play when it comes to educating tomorrow’s workers and business owners about personal finances?
Some of the links and videos displayed on the original answers might not show up on here, and if so, you will need to refer to the original answers to view that.
If you want me to answer any questions on Quora or YouTube, or you are looking to invest, don’t hesitate to contact me, email (firstname.lastname@example.org) or use the WhatsApp function below.
Investing $1million isn’t that much different from $100,000 in many ways. What matters more is:
- Your age
- Your circumstances
- Sometimes where you live. For example, non-Americans should usually avoid owning certain US assets for tax reasons.
- How much risk you are willing to take
- If you have access to an advisor who can assess risk properly.
Let me give you an example. If you are 30, you shouldn’t have a high degree of government bonds relative to stocks in your portfolio.
There are exceptions to this rule depending on your personal circumstances and situation.
If you have inherited a large chunk of money, or are a celebrity, there might be an argument in favor of being more conservative.
The reason is simple. In these situations, you might have already earned a decent chunk of your lifetime earnings.
In comparison, a 30 or 40-year-old who is a self-made executive or business owner, might have a lot more to contribute.
There is an unlimited number of options including:
- Stocks (individual)
- ETFs including stocks and bonds.
- Direct real estate
- REITs and alternative ways to get into real estate.
- High-net-wealth assets like private equity and hedge funds
- Various alternative assets
Yet unless you have access to advice, or are a professional investor or real estate person, I would keep it simple.
Have a small amount of cash for emergencies. Keep to buying the entire stock market through ETFs.
Adjust your bond ETF component. If you are older, own more bonds. If you really want something high-risk, keep it down to 10% of the portfolio.
My biggest tip would be to either do a lot of reading yourself or get advice from somebody who has.
So many do-it-yourself (DIY) investors invest based on emotion. Studies have shown people are more likely to buy stocks if:
- They work for the company
- There is a company office nearby. For example, people are more likely to invest in Amazon if they live near an Amazon warehouse
- The company in question is from their home country.
Sometimes this is for rational reasons surrounding taxes, but usually, it is for emotional reasons like familiarity.
People feel more comfortable doing this. Likewise, whenever something uncomfortable happens, like a market crash, so many people just sell out.
So, I would:
- Learn the technical aspects of investing or outsource it
- Also, learn about “behavioural finance” and why many people fail. Emotions are a bigger reason for failure than lack of knowledge.
Books like this can help with the last point:
As a final point, I would also consider anything specific to your situation, If you are an expat or a high-net-worth individual, your needs might be very different to most.
And those are just two examples of many.
The vast majority of retail investors fall into one of the following categories:
- They can’t afford to lose the money
- They can afford to lose some money, but deep down, they would hate that, even if they say otherwise
- Aren’t high-net-worth
- Are even using debt to invest. That could be through leveraged ETFs or something like Lombard loans which many DIY brokers offer.
In addition to that let’s consider the following things
- The vast majority of DIY investors don’t beat the S&P500 or MSCI World over a career, or even 20 years. Some manage it over a few years though.
- In most countries, every time you buy and sell you pay fees and taxes. That makes it even harder to make short-term plays work. For example, let’s say you bought the stock market at the best moment last year (in March 2020 when the Dow was at 17k). It is very unlikely as most people who wait for the markets to crash never seem to get in, but let’s just take the example. Now let’s say the person sold the sold a few weeks ago at 34. They have doubled their money right? Only they haven’t as the taxes bring it down to maybe 80% or less, whereas a buy and hold investor can often invest more tax-efficiently.
- The stock markets are unpredictable. Take last year. Markets had a bad October. People were feeling pessimistic coming into November as there were worried about a disputed election. Then there were two big bounces. Once after the election and then after the vaccine was announced:
Markets kept doing well. People who focused on the short-term got out, just as they did in 2016.
Those who worried about a Trump Presidency in 2016, also worried about the 2020 election.
Both times people got it wrong. It is far better just to stay the course. Short-term plays for decades seldom pay off.
They can pay off for a few years, but often it is just luck. I know countless people who have profited short-term for a few years, and then the luck ends.
I have never lived in the UAE, whereas I know Japan well. I have visited the UAE though.
The positives of Japan are
- It has been a developed, democratic, society for a few decades now. It is one of the most stable places in the world.
- You will get more of a local experience, as even in Tokyo, the expat population isn’t like in the UAE. Therefore, you might learn some new skills like the language.
- A great going out scene, with some of the best restaurants in the world.
- Even though Japan is seen as high-tax and expensive, it is no longer super expensive like during the bubble economy, and there are tax benefits for short-term expats who have overseas income, as opposed to locally sourced income.
- The climate is nicer for my tastes, and I guess most people’s. There are four seasons which means you can go skiing in the winter, and to a beach in the summer. It doesn’t reach 50 degrees even in August!
- More relaxed laws for the most part.
The positives in favour of the UAE are
- Zero taxes for most people unless you are American or another country that taxes them. This is indirectly a huge reduction in cost of living.
- A more international, expat-friendly, environment.
- Better English, which indirectly means more business and work opportunities.
- Closer to home for people from Europe, the Middle East and Africa.
If Japan was also low tax, most expats would prefer it I think, but it is about personal preferences.
One negative about both countries is they aren’t a suitable place to retire and grow old.
Unlike some places in Europe which attract a lot of retirees, few people want to stay “forever” in any of these two countries, unless they are married to a local.
Not in isolation. Consider this. In most parts of the world, the internet is close to free.
In fact, there are many publicly available free WIFIs out there. Anybody can watch some of the best advice online for free.
Whether it is Bill Gates, Warren Buffett, Elon Musk or somebody less wealthy, there is tones of free advice out there.
Yet advice is pointless unless you implement what you have learned. One of my favourite videos in recent times was from this man:
Gary Vaynerchuk explained two or three years ago that he thought that TikTok and LinkedIn would be the two next big social media channels.
LinkedIn isn’t new but was moving away from being a CV portal a few years ago.
One audience member asked him if he thought it would become too saturated. He responded that it won’t be a while.
The reason? “98% of people in this room won’t implement my advice”. Half of the other 2% probably would give up if there wasn’t any kind of early payoff.
The reality is, advice and ideas in isolation are worthless. What is very worthwhile is implementing those ideas, and that advice, in the long term, even when the going gets tough.
I will give you an even better example
This book was written by a man who won some business investment on Shark Tank.
In the book, he listed five of his best ideas that he wants to implement in the coming years.
Why did he do that? To illustrate a point. Even if one million people bought the book, few would credibly try to “steal” his idea.
Most of those who did, probably wouldn’t he kept going long-term. Yet most people think “I don’t want to share my ideas as others will steal them”.
That isn’t the case at all unless most people in your network are the doers who focus on implementation.
Even a relatively poor idea, product, or service can do well if the implementation is good.
How many products, including world-famous ones, do you consider to be sub-par?
I can think of many, yet the implementation of the business, marketing, sales or distribution strategy was excellent.
The same is true in investing. “Everybody” knows these days that you can get wealthy slowing by investing for decades, due to compounded investment returns.
Few people do it in reality, even if their personal and life circumstances allow it.
I will tell you one area where advice could work much better – when people are young.
Most people, myself included, didn’t get any good financial education at home or at school.
That is natural as most people’s parents won’t be financial people, but schools need to do better.
That doesn’t mean that 100% of people will implement good ideas just because they received excellent information at a young age.
Habits are formed early though, so it would help a lot.
Pained by financial indecision? Want to invest with Adam?
Adam is an internationally recognised author on financial matters, with over 290.5 million answers views on Quora.com and a widely sold book on Amazon
In the article below, taken directly from my online Quora answers, I spoke about the following issues and subjects:
- Is it really worth starting your own business given the risks, stress and hard work?
- Is buying a luxury car at 30 a good idea?
- Can you make 1% profits per month with minimum risk? I explain why this is often misleading.
- What are the worst decisions most 20 somethings make financially speaking?
- What are some underrated investing tips?
- Would raising interest rates really result in an economic collapse?
To read more click on the link below.