I often write on Quora.com, where I am the most viewed writer on financial matters, with over 280.8 million views in recent years.
In the answers below I focused on the following topics and issues:
- I was asked “what important business lessons have you learned from Amazon’s Jeff Bezos?”.
- What are some investment options apart from the stock market?
- Is the UK a good place to retire?
- Is it better to take one or two big risks or many small investment risks?
- What are the best banks for expats in South Korea?
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For me, the key thing is which of his business techniques are replicable even for smaller players?
In that context I have learned:
1.The path of least resistance is key. Many people focus on Amazon’s business stagey and some of the more fancy techniques.
Yet they forget one key thing – Amazon makes it easy for people to buy.
Even if Amazon became cheaper in 2022, with even better products, but buying become more difficult (more clicks and so on), revenues would fall. Silicon Valley understands this which is why they actually measure things like “clicks to buy”.
Yet in some businesses, many people assume you still need to do certain processes.
When I started to be completely remote years ago, many people in my industry thought “face-to-face” was the way to go, and even that some people were reassured by loads of paperwork (it looks professional!).
How wrong they were. Making processes simple was the best decision I made.
2. Scalability is key. Even if we go down three or four steps from Amazon, a high portion of the wealthy people I know who are younger, did e-commerce in business.
The reason is simple. If you are producing hourly advice as a lawyer, you can’t physically do 25 hourly meetings in a day.
If you, in comparison, produce a legal course, you could sell one or a million. It won’t matter as the link between time and money has been broken.
Look at the firms which are growing more quickly even in traditional areas.
Wise/TransferWise are doing an IPO. They are growing much faster than say HSBC.
Why? Technology and the ability too scale.
3. Play the long game
Look at Amazon’s share price. For years they didn’t look profitable on paper.
They didn’t do as well as some firms during the 1999–2000 mania.
However, they were reinvesting back into the business.
4. Never stop experimenting
Even the best firms tend to get most things wrong. Often you need to play the numbers game to get to better ideas.
Failing regularly with many smaller ideas works. Again, let’s look at much smaller players.
The YouTubers who are now big often got there from experimenting with hundreds of ads, many unprofitable, until they get targeting right.
This works provided the experiments are measured.
5. Be different
In his final letter to shareholders, he mentioned how the world wants you to be conventional, but resist it.
Typical actions leads to typical results. Extraordinary actions often require different techniques and ways of thinking.
Again, you often find this works even for smaller players. The top 1% in any industry tend to not care about doing things in a conventional way.
There are many.
The typical ones are:
1.Bonds. Government and corporate. Longer-term government bonds and corporates pay more, but the risks are higher than shorter-term ones.
The returns are typically much longer than the stock market long-term, but holding bonds has some benefits.
It not only adds diversification, but short-term bonds often go up when markets go down, giving you a rebalancing opportunity to sell some bonds and buy some stocks.
Just because bonds don’t pay much now, doesn’t mean this will always be the case. “The death of bonds” has been predicted many times over the decades.
2. Real estate. Direct and conventional real estate, or something like real estate investment trusts (REITs) which can be held as ETFs.
These kinds of ETFs are similar to stock market indexes in some ways, in that they track a specific basket. For example, the iShares Global REIT will track real estate firms globally.
3. Commodities. Gold, silver, oil etc. They tend to perform poorly long-term, however, but they have their years where they outperform.
4. Private equity, angle investing and hedge funds. These instruments tend to be used by wealthier investors to diversify holdings.
5. Peer-to-peer lending. This is riskier than bonds. Most corporates and especially governments can easily find lenders and can do it through an ETF structure. However, some people aren’t considered credit worthy by the banks.
These people, therefore, can apply on peer-to-peer websites. You can get 6%-8% or more with this method, but the risks are much bigger than conventional investments as the person might default.
Now sure, you can lend small amounts of money to hundreds of people to reduce your risks, but you are taking a relative big risk without a huge upside.
There are some other options too, like trading, but I wouldn’t get involved in that, because it is more like speculation.
For beginners, it is better to be long-term and start with conventional investments.
One reason. for this is that most people don’t have access to advisors who can comment on the true risks involved, and few understand the more complex instruments out there.
It is also possible to get wealthy, albeit slowly, from investing in a conventional way.
There is an argument for diversification when people get wealthier though.
It is a misconception that all parts of the UK look like the rainy picture above, 365 days a year!
However, the UK attracts very few retirees who are non-British, unless they have lived in the UK for years.
I don’t think the UK even has a retirement visa, as the demand is so low.
The reasons are simple
- The climate isn’t as warm as some places in Europe and beyond
- The costs, in general, are higher than some retirement destinations
- Getting visas isn’t easy these days, even if you are married to a British person and want to retire on a marriage visa.
- For some EU citizens, there is a lot of post-Brexit uncertainty.
- You can live a great lifestyle if you are willing, and able, to spend a lot of money and have great friends, associates and family members around. But as an outsider? It isn’t easy to make new friends even as a British person above a certain age. Many older British people are lonely. If you come as a university student as a non-Brit, it is easy to make friends, but not as a 70-year-old. It is possible but the effort required will be higher than going to a retirement community in Spain or Greece.
If you are semi-retired, and still can meet people, the UK could be decent.
The UK is also a good place to retire if you are British, rely on the National Health Service and realistically can’t afford private care in some other places.
This is also assuming that you have good friends and family around to avoid the kind of loneliness that many old people get.
Otherwise, I would seek alternatives.
Firstly, it is a huge misconception to suggest that risk and return are always correlated, which has been taught to us.
Now sure, they are usually correlated, but not in all situations. Let me give you an example.
Stocks have always produced more than bonds long-term, say over a 35–45 year-career:
Holding a bond, or especially bond market index, is much safer than even a broadly-diversified index like the S&P500, over a one year period.
Stock market indexes are regularly down over a one year period, and even five years.
Yet long-term, the picture is different:
So, whilst holding both stocks and bonds in tandem usually makes sense, it is simply wrong to suggest that holding a stock market index is riskier (long-term) than a bond market index, just because the returns and volatility are higher.
Now coming onto your question, it depends what people want to achieve.
Most people, as mentioned, don’t need to take huge risks, provided they are long-term.
But let’s say somebody is really shooting for the stars, and wants to be one of the few people to beat the market.
In that case, the best strategy is to go for one or two individual stocks, and therefore take a huge risk with a very uncertain outcome, or focus on assets like private equity/private placement.
Again very risky. Taking many smaller risks is probably more likely to work.
For example, let’s say you invest 80%-90% of a portfolio, and take big risks with 10%-20%.
At least with this strategy you are taking some risk of the table, and you only need to be right once in a career to make it workable.
Most people still struggle to beat the market though, even with this strategy.
One huge risk such as investing 100% in one individual stock after getting a sizeable inheritance, in comparison, is even riskier than the aforementioned strategy.
This isn’t just for South Korea, it is a more general comment. If you are an expat, you will probably be moving around.
Therefore, you need, ideally, at least one portable expat-friendly bank account.
There are some expensive options for this like HSBC Expat, which I wouldn’t recommend unless you are desperate.
These days, the likes of Wise, formerly TransferWise, allow you to open up multiple currencies.
It comes with a debit card, and you can open up new currencies with a click of a button.
Already have a Wise account? You should be able to click “add South Korean Won’, and you will instantly get a new account.
If you have multiple balances, for example Won, USD and Pounds, the card will automatically convert in Won if used in say Starbucks in Seoul, but then automatically take from USD if you take a holiday to the US.
So, it is much better than traditional solutions. Quicker, cheaper, more convenient.
If Wise doesn’t work for any reason, try some other digital banks, ideally ones that will also keep your account open.
If your employer insists on sending money to a traditional Korean bank account, I don’t think there are any restrictions on foreigners with residency permits.
All banks accept and most are much of a much. The wider point is that we are in a digital world now.
The idea that because you live in location A, your bank needs to also be in location A, is very outdated.
There are currently millions of people with Revolut accounts who have never set foot in the UK or US.
The same is true for Wise, which was started somewhere in the EU I believe.
The bottom line is I would avoid the traditional players. They tend to make money money out of the country tiring and expensive for one thing.
Pained by financial indecision? Want to invest with Adam?
Adam is an internationally recognised author on financial matters, with over 280.8 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:
- Why isn’t Warren Buffett into real estate investments? What does this mean for the average investor?
- If you aren’t succeeding at 31, is all lost? I explain why people tend to peak at different times and why you shouldn’t compare yourself to others.
- What habit/habits have given me amazing success?
- What are some unconventional business and investing tips?
To read more click on the link below.