My Top 20 Quora answers: Part 1

A few readers have asked me what my top Quora answers are in terms of views.

Here is the list:

  1. How do you invest as an expat if you do not know where you will eventually settle?

12.4 million views

“I have been an expat for 9 years. Where you live now, is largely irrelevant to your investments.

Sure, some things make a difference. For example, if you live in US as an expat, there are tax implications.

But in general, there are loads of expat focused accounts, which are designed to be flexible, that are portable, and move with you when you move to another location..

Often all you need to do is update your credit/debit card payment or just send from a new bank account.

What matters is what you invest in, as well. The best way to invest, according to a lot of academic research is;

  • In low cost funds
  • Investing 80% in long-term assets and 20% in something “sexier”.
  • Long-term beats market timing
  • Low-cost diversified index funds beat over diversification
  • Markets beat property long-term

Most DIY investors, whether expats or non-expats, fail for the same reasons.

They don’t understand risk – they either take none and lose to inflation in the bank, or get seduced by get rich quick scheme .

One of the key changes these days is the “death” of the lifetime expat.

No longer are expats having just one assignment. Often expats are being moved around every 3–4 years.

So an online solution which is portable and can be “taken with you” when you move is essential”

2.What is the best for savings or investments in the UAE?

7.34 million views

Consider some inescapable facts if you are an expat in the UAE:

  1. You will probably return to your home country one day, or keep moving around the world
  2. You won’t retire in the UAE unless you have a lot of money invested
  3. Regardless of how high your salary is now, you might be investing less than people back at home, because there is no compulsory investment schemes in the region. Whereas, back home, the taxes partly pay for that
  4. We will all probably get sick or old, unless we die in our sleep unexpectedly

So given these facts, it makes sense to invest in something which is globally portable, meaning you can take it with you if you leave the UAE.

I have clients, friends and associates all around the world. Sometimes people get overly invested in the country of residence and investing.

I saw it with Dubai property in 2011–2014. So many Dubai expats got their fingers burned and couldn’t sell their condos.

So in the `Dubai expat market` , the fundamentals are the same as any other place

  1. Be globally diversified
  2. You will probably one day move home or go to another market. So you need something which is globally relevant
  3. You are probably busy as an expat. So best to have an option that will save you time and money. Online options are good in that regards
  4. Low cost index funds which are long-term orientated. Not get rich schemes
  5. Not focusing too much on the local stock market.
  6. Not investing in too many individual shares and the speculative behaviors
  7. It is best to ignore media sensationalism about events like elections, virus and other indicators.
  8. Watch your currency risks

So a good investment in the UAE isn’t much different to a good investment for an expat in Hong Kong, Singapore or Belgium.

By definition, a UAE-only investment, isn’t a good option if you are an expat moving around.

So focus on long-term, quality, diversified and global investing.

3. How should I invest my money during the coronavirus crisis?

3.21 million views

This answer might shock you because it will show why investors during the Great Depression, actually could have made a profit barely a few years later……but more on that below.

Firstly, a good investor should imagine they are controlling a catapult.

You need to load it with “balls”. The more balls you loads into the catapult, the better for your “attack”.

This is what an investor often needs to do. In your working years, you need to fill the catapult with units, and then “fire” (sell) these units in retirement.

The lower markets get, during the virus, means the more units you can “fill up on”.

So take the Vanguard Total Stock Market ETF (VTI) as an example.

The price now is $123.31. So if you have $15,000 to invest toddy, you can buy 121.64 units.

In comparison, imagine the price was $62 – about half of what it is now.

In that case you can buy 241 units. So rationally speaking, a young investor should want markets to fall, and somebody approaching retirement should want them to rise, as they will want to be net sellers.

I will give you a simple example of somebody profiting from the Great Depression.

Let’s say somebody bought the Dow Jones in 1929 right at the outset of the biggest financial crisis ever – I know index funds weren’t available in 1929 but stay with me when I illustrate a point.

Let’s keep this simple and say they invested $10,000 a year (adjusted for inflation) from 1929 until 1960 when they retired.

They would have made an absolute fortune. More than if markets had kept going up in a straight line!

In fact, they would have made about 12x-14x more than they put in, despite all of the deflation of the 1930s.

Why? The markets had a brutal 90% fall from the absolute peak to the absolute bottom and stayed low for years.

So during those years that young invested (or even middle aged person) in the early 1930s, could have “loaded up” his balls for the catapult for a few years.

What about somebody with a lot of money already invested?

You might say, the last example only works because somebody who invested $10,000 a year (inflation adjusted) from 1929 until 1960, only invested during a few “awful years” when they had less invested.

In other words, it wasn’t as if they had 100k invested on day 1. They were only getting started during the worse of the crisis.

So let’s look at another example:

“Person 2” had a 100k lump sum (inflation adjusted again) invested in 192 + they add 12k a year in each subsequent year.

How scary you might say! They invested 100k just before a 90% decline!

So how many years would it have taken their portfolio to recover?

1930 = 112k contributed. Account value = 76k. A big drop

1931 = $124k contributed. Account value = 54k. A massive drop

1932 = 136k total contribution. Account value = 54k. An even bigger drop!

1933 = 148k contribution. Account value = 90k. Green shoots!

1934 =160k contribution. Account value = 98.7k

1935 = 172k contributed. Account value = 150k

1936 = 184k contributed. Account value =……….232k!

So the account is up substantially within 6–7 years of a Great Depression…..despite having a decent sized lump sum at the beginning!

The reason is simple. Markets might have declined 90% from the very top to the very bottom, but by patiently investing during this down market, this investor has “filled up their catapult with units”.

And that isn’t factoring in:

  1. Deflation which was huge in the 1930s
  2. If you rebalanced from bonds the figures above would be huge
  3. Of course if this investor would have carried on for 10–20 years more, the returns would have been bigger.

A more recent example – The Nasdaq

From 1995 until 2018, the Nasdaq produced about 12%-13% per year for a lump sum investor but from 2000–2002, it fell by 76%!

Yet somebody who bought extra units during that period would have gotten even higher than 13% returns for obvious reasons.

Why? The Nasdaq was 900 in 1995. 5,050 before the crash in 2000.

It hit 1,200 at the bottom in 2002 and stayed low for years, before hitting 10,000 1–2 months ago, before the recent fall. It also fell a lot in 2008.

So somebody who rebalanced from bonds into the Nasdaq from 2000–2002 and 2008–2010, and monthly invested via their salary, could have made up to 15% per year, by taking advantage of the lower valuations.

I am not implying that people should focus on the Nasdaq over the S&P500.

I am merely saying an investor shouldn’t fear big falls if they rebalance and/or are young enough to deal with the volatility.

So surely an investor should just wait for the right time to get into the markets?

It isn’t that simple. Nobody can predict what will happen to markets, even though they have always historically came back to hit record highs.

So the easiest thing is just to buy index and bond funds. Short-term government bonds went up during the last month, but medium term ones fell.

If you have $100,000 invested and $70,000 is in markets and $30,000 is in government bonds, and markets dip again, add more and rebalance from the bonds.

Don’t try to focus on if your portfolio is going up or down during the crisis.

Focus on what things will look like in 20–30 years or whenever you plan to retire.

4. How difficult is it to get money out of China?

2.74 million views

In terms of getting money out of China, on smaller amounts it is easy.

Even unsophisticated techniques like changing $2,000 to USD or GBP and taking it on the plane with you is legal and simple, for younger expats like teachers.

For those that want to move significant sums, there are many ways.

For me, I invested my RMB into USD and GBP investment accounts.

In other words, it can appear as a “bill statements”. So if you invest $1,000 a month into a financial plan, as an example, 7,200rmb will be taken from your bank account, or whatever the exchange rate is.

Considering expats are outside their home country’s social security system, this can be a way to “kill two birds with one stone”.

The negative about this is that it only tends to work with Visa and Mastercard, and not UnionPay.

Other techniques include using some currency companies, AliPay, PayPal and even Bitcoin.

However, each technique has positives and negatives and depends on how much you want to send.

For lump sums, the currency company option often works. One or two currency companies I have used are only good value at $50,000 or above.

So they aren’t a realistic option for smaller amounts. They are more used for buying property overseas or other big purchases.

5. How realistic is getting rich in investing?

2.49 million views

This answer will shock you.

It isn’t just realistic. 100% of people have gotten rich from investing if they:

  • Started investing early enough. That doesn’t need to mean starting at 16, after your first pay cheque, but that helps. People who start at 25, 30 or 35 can still achieve it, but it is better to start asap. You are never younger than you are today.
  • Invest in good quality investment funds.
  • Have reasonable spending habits.
  • Never time the markets. Always be long-term.
  • Be 90% in stocks and 10% in bonds when young, or even 100% in stocks. Increase bonds to 25%+ with age
  • Avoiding all kinds of vices in excess. Drugs. Excessive alcohol. Gambling. Gold diggers if you are already high income.
  • Have a middle-income or better. Together with good spending habits and compounded returns, you will get wealthy

One of the best stories I read a few years ago was this woman – a “mere” secretary in NYC who was worth $6m-$8m on her death bed:

Think she is an extreme case? Read the book below. It is quite normal.

The key thing is taking action and not procrastinating.

6. Should I wait for the economy to crash before investing?

2.24 million views

I am going to tell you about one of my closest friends. I am not going to mention his full, or even first name, as he does follow me on Quora and know he reads many of my answers.

But I know he doesn’t mind me telling this story, provided I don’t mention his name.

He was one of the few people in my network to successfully predict 2008–2009.

However, even during March 2009, the lows for markets at 7.300, he wanted to wait until `further falls`.

Then markets hit 10,000 in 2010. He thought it was a dead cat bounce.

By 2013 or so, he was even more worried. Markets were at 14,000. Record highs! Higher than during 2007–2008.

Surely this was a bubble! Then 16,000, then 18,000. But now Trump was running for election.

Then Trump won!

Surely, now markets would fall incredibly? Then markets hit new highs.

When markets fell 20% or so in December, he finally bought in, but suddenly the reality dawned on him.

He got in at 21,000–22,000, a discount of 20%+ compared to where prices were a few months previously, and yes he has made 20%+ in the space of 6 months or so.

Yet he realized something. `I should just have invested from day 1`. He missed out on all those gains, and dividends.

People forget that point as well. Even stagnant markets give dividends.

The FTSE 100 is a great example of that. It has been much more stagnant than most markets.

Yet it has a high dividend yield. So this is what reinvesting dividends does:

So when you are out of the market, you miss out on dividends being reinvested, alongside chances to rebalance from bonds when markets fall.

He has finally realized that now. So always invest, for decades. Never be out of the market.

Never be pained by financial indecision because of the media and doomongers. Speak to people who have seen it all before.

But some people never learn their lesson and we are seeing that with the current coronavirus situation in an election year as well.

7. Do you think the economy will boom again once the coronavirus blows over?

2.15 million views

The last few months should have taught everybody that predictions are a fool’s game.

Who would have thought on January 1, that even liberal democracies would be closed down?

So I will make a few predictions, on the caveat that they might be completely false!

  1. Existing trends will continue – we were going into a digital world with less face-to-face contact even before the crisis. Now Netflix, Amazon et al. are benefitting further. Even smaller time online operators, are seeing demand skyrocket. I spoke to an owner of a niche online education company. His sales and indeed profits have almost doubled.
  2. Inequality will increase eventually – as per number one and the online trend. I also agree with Bob, the economist below, when he says that asset price inflation is the more likely result of the QE than general inflation. Meaning that stock prices (or the indexes not all stocks like airlines obviously) and maybe real estate will eventually go up. Now sure, there might be a time lapse, especially for real estate. Many people won’t want to put down 500k on an illiquid asset bought on mortgage, during a virus! However, we have already seen markets partly recover from the bottoms, and that trend will eventually continue. Fewer people and businesses will want to get 0% in the bank, especially amidst all the liquidity in the system. Dalio speaks to this trend – Ray Dalio Still Thinks ‘Cash Is Trash’ as Printing Presses Roll
  3. The economy will boom again – however, it is more likely to boom for those who are online (working for an online company or own one) and people who own assets. So the middle-class who own assets and wealthier people, unless those wealthy people don’t pivot away from their face-to-face businesses
  4. Longer-term there will be recovery for a wider range of people – Recessions and “resets” allow business to be more productive. We have gotten used to wasting time, money and energy on pointless activities like numerous face-to-face meetings, taking 1–2 flights, to see customers. Not me personally, I gave up on that a few years ago, and it has been great! But most people were struggling to deal with the move from an analogue world to a digital world. Longer-term, I think people will adapt, and get rid of old-fashioned beliefs and ideas.

I could be wrong, though. Let’s see. This is one reason most people struggle to own their own business.

There are many moving parts and variables, some of which you can control, and some of which you can’t.

So a rational individual or businessperson shouldn’t worry about the things he or she can’t control.

All that somebody can do is do some rational things. Spend less on discretionary spending for a few months, to build up more capital.

Invest away from cash, but be long-term, not caring about if markets go up or down tomorrow or next week.

Pivot if you have a private business and you aren’t already operating effectively online.

8. Why do we waste our life working for retirement?

1.77 million views

Have you ever been in McDonalds and seen some old person flipping burgers:

Or if you are from the UK, I guess we have all seen those old workers at B&Q:

Some love their job. Some hate it. But in general, what is life like for 55–85 year olds who never planned for the future?

In the main, it isn’t good. Marketeers and society love to tell people `live every day like it is your last`, but it is bad advice.

We are all, statistically, going to live longer. And besides, there is something marketeers don’t tell 21 year olds: without money and wealth your life gets harder as you get older.

Women love 21-year-old `bad boys`. They aren’t so thrilled by the 35-year-old who has nothing and is still living like a student.

Employers understand why a 25-year-old might be `lost`. They aren’t so understanding about a 45-year-old who keeps quitting jobs, complains that they don’t have enough money to relocate for the job.

In other words, social and other opportunities dry up as you get older, especially if you don’t have income, and aren’t building on what you previously created.

It gets harder to create your own (fresh) opportunities at 30 than 20. Even harder at 40.

And besides, more and more people these days know the facts. In particular, more people realize that:

  1. Retirement can be at 40 or 70
  2. You can retire and travel the world. Retirement doesn’t need to be `typical`.
  3. You don’t need all that stuff. It doesn’t make you happy anyway. Going out twice a month as opposed to every day won’t `destroy` your life. Being frugal and minimalist actually can make you happier as life is more simple.
  4. The more wealth you have, the more choices you can make. You can say no to people. You have `fyou` money. You can walk out at work if the boss changes and is obnoxious. The person with no wealth due to spending can never do that, no matter how much they earn.

So the key is having choice. Without choice, you have less freedom.

And let’s face it, a better question would be, why do so many people waste their entire life, trying to impress people they don’t even like:

Most of the people I know that overspend aren’t happy. They are just engaging in peer-pressure.

I spoke to one associate of mine a few weeks ago, and he admitted that his partner is quote, “a gold digger”, and a lot of his activities on Instagram are to show off to people he doesn’t like.

And yet he continues to do it, out of habit.

9. Will anyone be richer than Jeff Bezos?

1.6 million views

Does anybody know who this man is? Well, he was the richest man in the 1980s and even as recently as 1990.

His name is Tsutsumi Yoshiaki. Now he is down to his last $1billion according to many reports.

Once he dies, inheritance tax will ensure his kids get much less than $1billion in all likelihood.

The point is, these things don’t last. Performance comes and goes. He was in a very profitable business (real estate).

That didn’t last with the various crashes. Likewise, Bezos’ model may not work forever.

Just look at historical records. Many people were richer than Bezos historically, in inflation adjusted terms.

People like Carnegie, Ford and Rockefeller. Fortunes are lost over time.

So yes, I am sure there will be somebody richer than Bezos, sooner or later.

For the rest of us, merely being wealthy enough where we don’t need to have so many money worries and can live with more freedom, is enough!

10. Why don’t people invest in times of crisis like this?

1.52 million views

Well they do. In fact people with “balls of steel” can make a lot during times like this.

There are always different types of people:

  1. The buy and hold investors. They usually buy and hold but occasionally get a bit “shaky” and reconsider their decision.
  2. Those that never invest
  3. People that try to time the markets
  4. Investors that get more fearful and greedy than others
  5. Finally those investors who see big falls as a huge opportunity, as well as buying and holding no matter what. The kind of people that follow this advice:

Sensible buy and hold investors, usually buy every month, for decades.

They are excited by any falls, not disappointed. That strategy reduces risks.

There are those that will never invest, because they wrongly think that even long-term investing is risky.

Then there are those that are fearful. The same people that panic sold in 2008, and 2001.

That is one of the key reasons why we see these results:

There are some ‘good’ reasons for this. Some people didn’t invest in 2008 due to job insecurity.

However, blind panic and emotions is a key reason for the above.

I have lost count of the number of regretful investors I have met, who panicked during the bad times.

I have yet to meet anybody who regrets long-term, patient, investing, especially during times like these.

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