Jan 272020
 

Why it’s hard to replicate success

After celebrating my millionaire status last year I reflected on my past and examined what factors contributed to my financial growth. I’ve realized that a big part of my wealth comes from simply being in the right place at the right time. πŸ™‚ Sometimes good things just happen to me for no apparent reason. In order to make better decisions going forward I believe I need to understand what my undeserved privileges are, and not take them for granted.

Here are 5 advantages that I had no control over, yet have helped me grow my net worth. πŸ˜€ And due to the serendipitous nature of these advantages, it’s not likely for others to make use of them all.

  1. I’m a millennial.
    Fund manager Peter Lynch says regular retail investors have an advantage over professional stock pickers. We can identify opportunities in our areas of expertise. What has been the best performing stock sector over the last 10 years? Technology. πŸ™‚ Which investor age group is the most familiar with technology? Millennials. πŸ™‚ This inherent advantage has made me so much money as I followed Peter Lynch’s advice: Know what you’re buying. And know why you’re buying it. Millennials are better educated about stocks than any prior generations. We have so much information at our disposal. And we know how to use it. We grew up with Google, Apple, Amazon, Netflix, Tesla, and other tech companies. We know these brands intimately because we use their products and services religiously, and have a better sense of which brand will become the next big thing. This gives us a unique advantage over older generations. If something attracts you as a consumer, it should also interest you as a potential investment. πŸ™‚
  2. I started my career in 2008.
    Lots of companies were restructuring in 2008 and didn’t have the budget to hire expensive senior workers. They could however afford to bring in juniors at that time. As someone who just finished school I was cheap, available, and eager to prove myself. Since most unemployed people were looking for jobs that required experience, I didn’t have much competition at my salary level. It didn’t take long before I landed my first job in the graphic design industry.
  3. I was given a large severance.
    My employment abruptly ended a couple of years ago. But I already had a contingency plan prepared. So I got back on my feet pretty fast. I actually started to make more money than before. πŸ™‚ Plus I received a five figure severance package from my old employer since it was a no-fault termination. Things couldn’t have turned out better for me. πŸ˜€
  4. I’m not American.
    Several years ago I tried get into a venture capital deal in the U.S. I asked the company if they accept Canadian investors and they said yes. So I wired them $55,000 to put into a startup business which delivers online music streaming, and some other companies. I imagined my seed money was going to turn into $500,000 when the company eventually goes public. πŸ˜€ But a few months later they refunded my $55,000. It turns out they can’t accept my money after all because I’m not American. Thankfully my investment didn’t go through – I just found out that the music streaming company ceased operations last month. Its user base has been shrinking and it ran out of operating money. So I definitely dodged a bullet there. Phew. πŸ™‚ I clearly didn’t know what I was doing. But something beyond my power saved me from making a huge mistake.
  5. I grew up in Vancouver.
    Vancouverites talk about real estate more than we talk about the weather. Most already own their homes, and the rest are just waiting for the right entry point. So growing up in this environment has made me naturally biased towards favouring home ownership. I purchased a condo in 2009. Property prices here have doubled since then. But the same can’t be said about other Canadian cities like Calgary or Ottawa where price growth is slower. A big part of my net worth today comes directly from the tremendous growth in the local real estate market. So where you live can have a big impact on your finances. And I just happened to be lucky enough to live in a city with a strong real estate market.

Making smart financial choices obviously helps. But not everyone can save and invest their way to wealth. Some are just born with certain privileges. Even Warren Buffett admits that luck is important to success.

Buffett said he is lucky to be born in America. If he had started his life in Africa he would have become some animal’s lunch because he can’t climb trees very well, lol.

We all have different stories, different beginnings. There are many things that we cannot change. But it’s important to develop a positive, growing mindset to face the world. The more we concern ourselves with the things we can’t control, the less we can affect the things we can control. πŸ™‚

I believe everyone has innate advantages that aren’t shared by most people. πŸ™‚ Let’s all keep our eyes open for opportunities that are unique to ourselves – or else they will pass us by and we will have squandered our privilege.

 

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Random Useless Fact:

Actor Leonardo DiCaprio has never been married before.

Oct 182017
 

Knowledge is not enough. It must also be applied.

Good financial advice is easy to come by, but not always implemented effectively. The tips and suggestions on personal finance blogs are, for the most part, pretty generic. Unfortunately most people would read a few articles and quickly become bored of the topic because they don’t get anything meaningful out of them. Only personal finance enthusiasts are committed to read new material about money regularly, because they know how to turn generic advice into a more personalized form of advice that is practical and effective. Let’s look at some examples of this below. πŸ™‚

How to turn generic advice into personalized advice.

A good rule of thumb to follow is to spend less than we earn. Well, okay. That’s great. But this is generic advice. Most people will roll their eyes at something so obvious. To personalize this principle, we can find a way to apply it practically. For example, we can pay ourselves 20% of our income by transferring money to an investment account. This can be automated to re-occur every paycheck period. This insures that we always spend less than we earn. Setting up a systematic rule based approach before we even start to save will improve our odds of success. πŸ™‚

Another generic advice is to look for value when investing. Once again, this is pretty good advice, but not practical. So let’s find a way to personalize it. For example, the capitalization rate of a house in Toronto, Ontario is about 3% which is not a great return on investment. But a similar house near Barrie which is a smaller municipality in the same province can have a cap rate of 4% to 5%. So by simply zooming out and looking at a broader area, we are able to find more opportunities for value. If we search countrywide, we will find more, and possibly better bargains, than in any single city.

My favorite generic advice is don’t put all your eggs in one basket. To personalize this we can determine which different asset classes we should hold in our portfolio, how much of each we should have, and find low cost index funds to satisfy each class. The 100 minus age rule is a good place to start when it comes to determining one’s asset allocation.

Generic advice is good. But personalized advice is always better. Generic advice tells us what to do given a certain situation. But personalized advice shows us how to do it, and how to make a practical plan to tackle any situation. πŸ™‚

Continue reading »

Jul 122011
 

1. Make more money than you spend. Continue saving and investing.
2. Make sure your career is interesting and fun to you relative to other jobs. Passion leads to skill which leads to good pay regardless of what industry you choose.
3. Pay off high interest debt, and consolidating your debt.
4. Borrow money to make money. Take advantage of low interest rates. It’s hard to find anyone who has invested in real estate or the stock market indexes for decades and have lost money consistently.
5. Keep your investment fees low to maximize returns. For example consider buying ETFs instead of mutual funds, especially if you live in Canada.
6. Don’t get divorced.
7. Don’t spoil your kids. Support them emotionally, but let them learn the meaning of gratification through hard work by themselves. They will thank you one day when they become independent, and will not feel entitled to ask you for money when you retire.