TOP QUORA ANSWERS FOR THE WEEK – PART 2

This article will list some of my top Quora answers for the week.

How much money do I need to stop working?

Source: Quora

There is a short and long answer. The short answer is between 50%-80% of what you previously made.

If you are low income, you might need to replace a high proportion of income to avoid being in poverty.

If you are a high flying executive who has been used to a lot of travel, then living off half of that amount is realistic.

Let’s remember a few facts though:

  1. The average cost of retirement is extremely high. The key word is average. People who move overseas to a cheaper country, or find a way to automate some passive income streams, aren’t in the same boat as most people who spend a lot in retirement:

2. Most people underestimate how much they need, rather than overestimating, especially as age expectancy is going up. Especially if you are easily bored, you can actually spend more in retirement than working age.

3. The key is planning. If you semi-retire first and/or plan out your retirement budget before you quit working, you are in a much better situation.

The easiest way to work out your realistic number is to do this

  1. Take your salary. Let’s say $40,000
  2. Now take 80% of that as an example – so $32,000
  3. Work out what is 4% of 32k – so 800k is your number you need to retire. More on the 4% rule below

Once you have that basic “formula” you can adjust it according to your circumstances.

If, as an example, you live in a country which doesn’t have free at the point of use healthcare, you might have to assume you need much more than 80% of your previous wage.

If, on the other hand, you have retired overseas with a second income source, it is sometimes possible to retire tomorrow. There is no one size fits all but the above basics give you something to work on.

I have seen people run out due to wishful thinking and unexpected events like a huge fall in one currency vs another. Therefore, it does make sense to have a margin of error.

An alternative route is semi-retirement/part time working. That often opens up additional doors.

What are the 42 rules of your life for someone who wants to be insanely successful?

Source: Quora

42 rules is very specific so I will start with one rule to get everything going – don’t assume there are easy answers and short cuts all the time!

41 of the other rules I can think of are:

  1. Know what you want. It sounds obvious, but unless you can define success, how can anybody be successful. Is success having more time, money, status, helping others or a combination of those things?
  2. Regardless of your answer to part 1, don’t allow society, your friends or family to define what is success. Only you can know that. Many people buy and do things due to peer pressure.
  3. Take calculated risks
  4. Read a lot. University is the start of the learning process and not the end
  5. Get a job. Get good at it and then start your own business. Not the other way around
  6. Play the numbers game in all areas of life with persistence. If you only apply for 10 jobs, you could get “beaten” by a far inferior candidate who applies for 1,000. The same is true in business or any domain.
  7. Break industry norms. Normal stands for normal. Normal actions leads to normal results. Extraordinary results are more likely to come from abnormal actions.
  8. Live below your means
  9. Start investing from a good age. It is 10x easier to get rich investing if you start small at 19 or 25, than starting big at 45.
  10. Linked to point 9, focus on the 80/20, 64/4 and 50/1 rules and all kinds of productivity hacks. Work hard but also work smart:

11. Don’t care about what the majority of people think about you but treat people fairly as much as possible. You only need to impress a small percentage of people in your life.

12. Be nice to ageing family members whilst you still have the chance

13. Don’t cheat others intentional in business or personally for short-term gain. Always focus on long-term gain

14. Don’t always focus on what is “fair”. There are many occasions when it is rational to accept an unfair settlement.

15. Always adapt to changes in life. What works in business in 2020 might not work in 2025. Reading helps with this.

16. Delay gratification as much as possible.

17. Don’t give up too soon. Many people give up right before they are due to become unsuccessful.

18. Make the most of youth. When you are 21, it doesn’t really matter how much you are earning at 24. You have the chance to take calculated risks and set yourself up for your 30s.

19. Live overseas at least once, ideally in a culture which is very different to your own. You will learn a lot.

20. Take care of your personal health when you don’t need to care

21. Buy time rather than things once you are in a position to do so. In other words once you are a business owner and have a successful model

22. The biggest disease of already successful people, to quote Sir Alex Ferguson, is complacency. Don’t think success will keep maintaining itself if you don’t adapt

23. Don’t put all your eggs in one basket no matter how well that one area is going. I have ran out of the number of previously successful businesspeople who have suffered due to the lockdown, or political crisis in various countries.

24. Focus on scale and yield. Simple example. If you are a maths teacher, you might charge $30 an hour. If you have online maths classes which are always available, how much you earn is unlimited.

25. Be as disciplined as possible.

26. Exercise a lot as this is one of the keys of productivity and mental health

27. Spend more time with people outside your industry than those inside it, to avoid thinking in bubbles. The more time you spend outside of your industry, culture and business, the more you can relate to others like your clients and other people

28. Don’t be afraid to put yourself out there.

29. Don’t burn bridges

30.Surround yourself with people that are better than you

31. Get rid of toxic people and fake friends

32. Don’t focus on impressing people you don’t even care about it like. Many people overspend and focus on the wrong things for this reason. For example, many men spend their 20s trying to impress women with money and other things, rather than developing their careers or improving themselves.

33. Remember that everybody you meet knows something you don’t.

34. Ideas don’t count. Everybody has great ideas. Well implemented ideas are the key.

35. Don’t be naive but also don’t get cynical. Most people get overly cynical after they get let down. It is easy to forget that the bad experiences we have are with a small minority of people.

36. Stay in touch with childhood friends where possible.

37. Nothing that is worthwhile is easy.

38. Don’t lie to yourself and be delusional. This is especially important if you aren’t making progress but convince yourself that you are.

39. Make quick decisions. That doesn’t mean rushed decisions. However, as time is money, make decisions based on actionable information. Therefore, if you can make a decision instantly, great. Ideally a decision should take 1–2 days maximum. “Thinking about something” is usually procrastination. Everybody has time. Make things a priority. Also get out of your comfort zone when it comes to making decisions.

40. Take personal responsibility and don’t blame your society, government, “the rich”, immigrants or anybody else for any troubles you have.

41. Focus. Both Bill Gates and Buffett think focus is the number one key to success. Combined with persistence, this one is huge.

Why is Warren Buffett not investing in gold now even when it’s rising more than ever?

Source: Quora

Firstly, it is not rising more than ever. Its price is lower in inflation adjusted terms than during various times in history as per the graph here – Inflation Adjusted Gold Price.

More importantly, gold over 2,000 years, has matched inflation or slightly beat inflation at best.

Even gold bugs admit it is only really a source of value, and it doesn’t really increase over time and that is shown by this graph:

What is true though is that gold can have its great periods, as seen in 2000–2011 and after 2018.

However, I have yet to meet a person that has consistently timed the gold market.

I haven’t met one person who bought in 2000, sold in 2008 before the financial crisis, bought again in 2009, sold in 2011 and then bought again in 2018!

To the contrary, most gold bugs assumed that due to QE and 0% interest rates gold would keep going up after 2011 – sound familiar?

Now the same people say……due to QE and 0% interest rates gold will go up forever!

Moreover, as gold doesn’t pay a coupon or dividend, its price is based on hoping that the person coming after you will pay more for it than you did.

Jack Bogle, the founder of Vanguard, has a similar view about gold to Buffett.

Especially that it isn’t even an investment at all and he explains that in the video below

That doesn’t mean that gold can’t go up or down this year, or have a terrible or great 10 year run.

Nobody knows that. It doesn’t make it a sensible investment though.

Also remember how long has behaved in the last 20 years. It had its best run during times of geopolitical stability (2000–2008).

Its 11 year bull run until 2011 was cut short in the middle by the financial crisis of 2008–2009 when it went down, unlike government bonds.

It fell from 2011 onwards despite a lot of QE and 0% interest rates.

It started to rise again a couple of years ago and had a very good 2019 despite the US Federal Reserve increasing interest rates.

It then fell again during the worst of March 2020, when bonds once again did better than gold, before rising once the worst of the crisis was over.

So it isn’t a “safe heaven asset” that performs very well during crashes and there is no correlation. between QE, 0% rates and gold prices.

If that were the case it would have done very well after 2011 when central banks doubled down on QE.

I have also yet to meet a person that has gotten rich slowly from gold.

Why can’t rich people be rich forever?

Source: Quora

Well you can be rich “forever” and some families have ensured that wealth lasts hundreds of years.

It usually doesn’t happen though as this Chinese expression states:

The main reasons wealth don’t usually last for three generations or more is:

  1. Giving the money to charity. Some wealthy people don’t want their kids to inherit the money
  2. Complacency. If you have had a family business that has been successful for 2 or 3 generations, where is the incentive to diversify away from it?
  3. Following on from the last point, putting all your eggs in one basket – one country, one industry, one company. Look at the last ten years. Coronavirus, Egypt and Tunisia (2011), the military coup in Thailand (2014) are just a few recent examples where many successful business owners became broke due to unforeseen events and lack of diversification.
  4. Many second and especially third generation rich know how to spend money, but they don’t always know how to earn or manage it. So unless the money is placed in trust like ma y royal families do, which therefore means the money is being managed and new members don’t have a lot of direct access to it, it isn’t easy to maintain wealth forever.
  5. Divorce and other unexpected events
  6. A reversion to the mean. Over-performance in business doesn’t always last in the same way that it doesn’t in sport or politics. Somebody who had the touch in 1995, might not have adapted in 2020. Therefore, it is import to take advantage fo good times, and fix the roof when the sun is shining.

Complacency is a huge reason though. Events like wars and radical governments can’t explain it in isolation.

Somebody who diversified their assets is less likely to be affected by a radical government or other unexpected events.

Simple example. After what happened with Chavez, many local business people complained about the attacks on middle-class businesspeople and quite rightly so.

But the sensible businesses people held a percentage of their assets outside the country in any case, just in case somebody like Chavez was elected. Many could then flee the country and carry on.

So events like hyperinflation and increased taxes isn’t a reason in and of itself.

It is always sensible to hope for the best but prepare for the worst.

Will you consider someone to be wealthy or millionaire if he has close to a million dollars in stock investment only and live in a rented place (because he own no property)?

Source: Quora

Well somebody who has “close” to a million isn’t yet a millionaire until they cross the $1m threshold.

To answer your question though, it depends on their age and where they live.

If they have $950,000 and are in their 20s or 30s, they are wealthy compared to most people in most countries at that age.

All they need to do is carry it on, and due to compounding, that should become millions by retirement.

If somebody is 65 and has $900,000, that isn’t enough to retire in some cities in the US and beyond so isn’t wealthy:

However, it depends where somebody lives. If you have $950,000 and live in a cheap country, you are wealthier in real terms than somebody who is worth $2m who lives in central London or Singapore.

Property is related to this. In fact, a primary residency can actually decrease your net wealth and is very different to a rented property.

Somebody who has $950,000 in investments but a $2m mortgage is in a much more precarious financial situation than somebody with $950,000 and $0 mortgage debt or any other form of debt.

Now sure, that mortgage debt might well help your net worth long-term if, and only if, you can keep paying the mortgage and the house goes up in value.

But the idea that you can’t be wealthy if you don’t own property isn’t true of course.

In fact, the world is full of struggling people who “look rich” on the surface with big flash houses and cars.

They call it “house poor”:

According to Doctor Thomas Stanley’s research in the Millionaire Next Door, most million dollar homes aren’t owned by millionaires.

They are owned by people with big mortgages who have high incomes.

Some of those people are struggling.

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