In this blog I will list some of my top Quora answers for the last few days.
If you want me to answer any questions on Quora or Youtube, don’t hesitate to contact me.
I was listening to a YouTuber a few days ago and he made a surprisingly excellent point.
He bought some courses from a business coach. He enjoyed the first few courses he bought and got value from them.
Then he noticed that there were courses on sale for real estate even though, quote, “I know much more than him about real estate”.
He admitted that he reacted emotionally at first. He thought things like:
- This guy knows less than me about this topic. How is it fair that he is making loads of money selling such “knowledge”.
- This guy isn’t offering good value!
- People buying this course are getting ripped off as he is deviating from his core competencies.
- I have education qualifications in these areas and he doesn’t.
But when he thought about it more carefully, he started to think logically.
If this guy is a better marketeer and communicator than he, then that shows that he is smart. He can learn from this experience and up his game.
The point is, the market doesn’t care about fairness. The above example is only one example I could have used.
Is it fair that somebody can get rich investing smaller amounts of money from a younger age, compared to investing more at an older age, due to compound interest?
Probably not. Is it fair that somebody can make more money in business focusing on their top 10% of clients, and working less hard?
Or that technology has made it easier for some people to earn more, with less effort?
Again, probably not, but the market doesn’t care about what’s fair, yet many people react emotionally to these things.
Apart from that, the biggest mistakes are:
- Not focusing on holistic financial planning. How much tax you pay and how much money you spend can matter even more than your income in terms of your total wealth.
- Trying to impress others with your lifestyle and spending habits, especially online on InstaGram and other social media platforms
- Not investing soon enough
- Panicking about whether stocks will crash tomorrow. It is better to invest and forget about it.
- Caring too much about what other people think. This doesn’t just affect spending habits. It also means people don’t promote themselves in job interviews, or promote their businesses. Money follows attention.
- Waiting for perfection. Production usually beats perfection. Getting something out there at 70% today usually beats 100% in 5 years.
- Giving up too soon. Many people give up just before they will become successful. Sometimes you might have to play the numbers game and try hundreds of ideas for some to work.
- Not taking calculated risks, especially when you are young enough to be able to take big calculated risks.
- Spending time with the wrong people. We are often the sum of the 3, 5 or 10 people we spend the most time with. Get rid of toxic people.
- Not being focused enough. Working hard is good. Working hard and smart is even more important. Working hard and smart in a focused way is perfect.
There are two aspects to your question.
The first one is easy enough. If you are living in Switzerland or the UK, it is simple to open a trading platform.
What is more difficult is investing long-term productively on a DIY investment account, because people tend to get emotional investing.
We saw that this year after people panic sold after seeing events like this on the news:
The difference between what investors on DIY platforms get and the market has been documented by firms like MoringStar, in their “mind the gap report”.
Essentially, people get less than the market due to emotional reasons when they invest themselves.
The stats below speak volumes:
You only have to look at Quora to see why this occurs. Every time markets hit a record, there aren’t many questions on it.
Every time there is a crash or even correction, then thousands of people are asking questions about it!
The second part of your question is much more difficult. If you are living in the European Economic Area (EEC) or EU, there are many platforms that accept for the whole continent.
Yet countless only accept for one or just for the EU. Hargreaves Lansdown only accepts UK and (sometimes) EEC residents as an example.
Very few platforms accept for almost every country in the world.
I have ran out of the number of people that have approached me after firms like Degiro closed down their accounts.
This was often due to them moving outside the 18 areas which they accept for.
This can often cause numerous problems including tax liabilities if they force you to liquidate the positions.
As an expat, people never know where they will move. In Japan after the natural disaster of 2011, countless expats were moved home or to another location.
The same thing has happened globally after Covid. Therefore, the only safe thing to do is invest with a firm or platform which has a great track record of accepting for almost any country in the world.
It is much safer than relying on only being in one country, area or continent as an expat, in an uncertain world.
There is no simple way to answer that question because it depends on many things including:
- Your age
- How long you want to invest for. This is sometimes linked to your age but not always
- How much money you have coming in after the 50k. Investing 50k as a one off is very different to 50k + 2k a month.
- What you want to achieve
- Sometimes where you are based or especially where you want to retire. That can sometimes influence risks like currency exposure
I will simplify it a bit though, as we don’t have all day to explain all the different things to consider.
If you are relatively young, it is best to invest 90%-100% in stock market indexes and 0%-10% in bonds.
Avoid individual stocks, for the most part, as it is very unlikely that you will beat an index-linked ETF as a do it yourself (DIY) investor ……long-term at least.
You will want to increase your bond market exposure as you age, and rebalance from stocks to bonds yearly, or whenever there is a big market crash like in February-March.
The reasons for this are simple. Stocks beat bonds long-term, but are more volatile.
Therefore, rationally speaking, you should be mostly in stocks when you are young or relatively young.
The two most important thing you can do are diversify and use time to your advantage.
If you invest 100% of 50k into one stock, then that is risky. If you invest 50k into one ETF, that can be risky.
If, on the other hand, you invest 100% in a broadly diversified index like the S&P500, that isn’t risky…..provided you are long-term:
What is even less risky is having at least two broadly diversified ETFs + a bond market index:
Try to add to the 50k on a monthly or yearly basis as well. That will further reduce risks and likely compound gains.
Keep it simple and you will be fine. People lose money when they try to be more clever than they really are.
Analysis paralysis leads to people doing silly thing with their money like panic selling during crashes.
In my network, people with MBAs, masters in finance or have gone to business school underperform.
So do many of the people I know that work at banks and hedge funds. I think the reason is simple.
They try to be too clever.
I presume you mean how should I manage my personal finances. Everybody’s situation is different.
In my case, I have found these things to be the most useful
The main ways are:
- Keep things simple as much as people. Simplicity can beat complexity.
- Firstly, avoiding any own goals. Doing silly things with my money, regardless of whether that is spending on stupid things or trying to time the stock market.
- Living very far below my means. That doesn’t mean having no balance or treats though.
- Admitting when I am wrong and adapting. This is especially important in business and for income, but can be useful beyond that. One example is this. A few years ago, I focused on old fashioned ways to in business. I would have clients in just 1–2 countries as I would meet them in person. I changed and admitted to myself that I was too slow to adapt.
- Keep fixed costs (like rents) low, as you can’t cut back as easily and quickly as variable costs. This applies for personal and business expenditure.
- Focus is key. Execution matters in all areas of life – including financially.
- Focusing on time. Time is the one resource you can’t get back and we only have 24 hours in a day. So, leveraging time is key. Examples of leveraging time include investing asap due to compound investment returns and investing in tech in business. Think about it this way. In the old days you could call 200 people a day or knock on doors. If you invest in tech, you can be seen by millions or even hundreds of millions globally.
- Never, deliberately at least, trying to impress other people. Nobody cares anyway and it is the worst thing you can do. Let’s put this another way. If I found out that one of my competitors had just bought a mansion or luxury car, I would know they are making a lot of money, regardless of whether they can afford to invest and save a lot of money. I would then check them out and see if I could learn something new. Rationally speaking, boasting doesn’t make sense and the quote below is accurate.It only makes sense in very limited situations like a job interview or if you need to impress somebody else.
The last point, indirectly and directly, can affect a lot of financial planning decisions.
People are more likely to overspend to impress others, and they are less likely to “put themselves out there” for fear of ridicule.
It depends on culture, personality and circumstances. There are people who think everybody owes them something.
These people typically assume that the government, their family and everybody else should help them out!
They are the kind of people who think that if oil is found in their country then they are automatically entitled to a portion of it.
Therefore, by nature they will assume that their family owes them sometimes, regardless of the circumstances.
For some other people, common sense comes into play. If you have been looked after by your parents for two decades and then they get sick, you probably owe them something.
You don’t owe a distant family member something, if they have never done anything for you, and only showed interest in you after you achieved success.
As Chiarra said below though, unfortunately some people will only be close to you once you have achieved success.
The people that you should keep close are those that stuck with you during the bad periods, and not just the good times.
Otherwise you will just delay the inevitable problems that come with not being able to say no.
Being a millionaire is still seen as impossible in most parts of the world, even though there are more self-made millionaires than ever.
This article will therefore answer a simple question. Can everybody become a millionaire in this day and age?