- You will only have unwavering faith when you're completely unshakeable, and can stand right in the rain. When many doubt you, you have the presence of mind to capitalize on the uncertainty that consumes you
- To win this game you don't have to foresee the future: you just need to reflect on what you can manage
- Many people you believe who give impartial financial “advice” are just brokers who make big profits off the stocks, shares, mutual funds, savings portfolios, insurance plans, or anything else they see, only to finance their next vacation
- Many of the mutual funds you hear about are managed professionally. That is to say, experts often switch in and out of places, seeking to outdo the market. In the end, you overpay to receive less
- A hedge fund is private, is only open to people of large net worth, is professionally run, and pays massive fees in anticipation of better returns
- On the other hand, a mutual fund is transparent, open to all, actively run, pays fees and seldom beats the market
- An index fund is public, open to everyone, but has no individual investors and very small fees. Instead of going in and out of stocks, bonds and cash, you own and retain all of the securities in the portfolio when you buy a portfolio fund
- The true path to riches is to put aside a portion of your profits, accumulate it, and over several years let compounding go to work for you. This is how you will truly get rich
- How big should your nest egg be? Most so-called analysts say it should be your salary but 10 times greater. Tony Robbins wants you to double it to 20
- A recession occurs if every stock declines below its high by at least 10 percent
- A bear market is when every stock declines below its high by at least 20 percent
- Corrections occur on average about once a year, and last fewer than two months
- Around 20% of losses are turned into bear markets
- No one, not even the best or the brightest, will be able to forecast the demand reliably with accuracy. It's crazy to believe you and I could.
- In spite of certain short-term losses, stock market movements over time still go upward
- Historically, bear markets occur every four years, only once. They usually last for a year
- Bear markets turn into bull markets and, as this happens, pessimism turns to hope. Yet ordinary investors panic and make the wrong move at this time
- The greatest risk is not bad timing. It is going out of business. Many of the gains come from the best selling days, the days with the highest profits, that are almost always close to the worst days
- When you're outside a tax-delayed portfolio, such as an IRA or 401(k), investing in actively trading securities is a double whammy: you not only pay extra in commissions, but you also incur taxes
- What's the answer, then? Index funds, of course! Since they are passive, there is virtually no overhead that you need to support and protect. This will save you 2-3 percent annually and comfortably. Not only that, but since you’re “buying and holding,” you remove the human error element
- About 90 percent of America's 310,000 financial advisers are just traders peddling consumer goods. Legally, they are not expected to behave in your best interests
- Aim for a risk / reward asymmetric. No drawback, very big upside. How do you do this? Through buying undervalued securities while the economy gets pummeled and there is strong pessimism. Never forget that losses are gifts, and so are bear markets
- Think fiscal efficiency. It's not what you gain. What truly matters is all you keep
- Diversify across classes and categories (for example, don’t just keep stocks)
- Don’t invest in gold or hedge funds
- Your own brain is the biggest obstacle to your financial health. Psychology is eighty percent of success, while mechanics are 20 percent
- In general: buy and keep, trade less, think long term, slash fees and taxes, try listening to people's opposing opinions, diversify globally and monitor fear
- Some methods of spreading capital without paying taxes: you might naturally donate to charity; pay for somebody's medical expenses, contribute to college tuition for children or grandchildren, place money, savings and/or life insurance plans in an irrevocable trust that also covers you from litigation and so on
Hope this helped you!
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