Welcoem to posts!!
in the future - u will be able to do some more stuff here,,,!! like pat catgirl- i mean um yeah... for now u can only see others's posts :c
"How do you invest if you believe in a chance of a global war in 2024?"
I wouldn't worry about a nuclear or catastophic conflict. If that happens, everything will become worthless.
If you are worried about more limited conflict, it is best to avoid:
- not being diversified across asset classes and countries.
- holding too much cash and bonds unless they are inflation-protected
Ray Dalio, the billionaire investor, explains more here:
qr.ae/p2temr
Global conflict in 2024 or 2025 is unlikely, but some principles about preparing for the unexpected still hold.
Let's put this another way. People who have seen local and regional conflicts have been largely unaffected if they have wealth in numerous countries and across asset classes.
Those with only local investments suffer the most.
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#howtoinvest #assetdiversification #portfoliodiversification #globalconflict #RayDalio
Q and A originally from Quora.
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"What is the best advice for those who are young and haven't found their passion yet?"
Should you follow your passions to begin with?
Maybe, but if you are passionate about becoming a DJ or a tennis player, it probably won't work unless it becomes clear early on that you can make it.
The top people make almost all the money in those industries.
As professor Scott Galloway says (he is also a successful entrepreneur with a net worth of over 100m), people who tell you to follow your passion are often rich themselves and made money from selling cement or some other down-to-earth activity.
It is often better to focus on what you are good at. Mastery of that thing will make you passionate about it.
The biggest mistake I have seen business owners make is overestimating the importance of their ideas and passions versus executing on an idea the market likes.
That doesn't mean you shouldn't follow your passions if you think you can make it a commercial success.
But the key is knowing when the market is giving you a signal.
If you start something you are passionate about, it is probably a hobby you can do on the weekends if it isn't working after two or three years.
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#passion #shouldIfollowmypassion #adviceforyoungpeople #ScottGalloway
Q and A originally from Quora.
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"How important do you think diversification is when it comes to investment?"
In 1900, Egypt had the fifth biggest stock market in the world, as Larry E. Swedroe said.
The UK had the biggest stock market.
At the same time, many people expected Argentina to be the next Switzerland.
As recently as 1945, Argentina and especially Venezuela had a higher GDP per capita than almost every country, which resulted in many people speculating that they would have large stock markets.
Things change, and sometimes they change rapidly.
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#diversification #globalmarkets #stockmarkets #assetdiversification #assetmanagement #wealthmanagement
Infographic source: Virtual Capitalist
Q and A originally from Quora.
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"Is losing friends normal as you become successful?"
Andrew Wilkinson went from being a barista to a billionaire in a relatively short period.
He wrote this recent book, which tells his story.
Once he became successful, the former schoolyard bullies tried to befriend him and sell him real estate and other things.
Maybe that doesn't surprise you.
What might surprise you is that some of his long-term friends (and soon-to-be ex-friends) would ask him passive-aggressive questions like:
- we are honoured to be in your presence
- that must be like a dollar for you (after he took a bill)
Moreover, he was showing off if he agreed to take a bill. If he didn't, he was accused of being a Scrooge.
In reality, you often realise who your real friends are when you are either struggling or have made it in a big way.
Then you understand who wants the best for you and who feels envy.
It reminds me of a quote from the author of the Lord of the Flies, who was asked what he understood more after winning a huge award.
He said, "I realised who hates me."
It is sad, but sometimes you outgrow people.
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#friendship #neverenough #tobillionaire #howtobecomeabillionaire #howtobecomerich #ifyoubecomesuccessful
Q and A originally from Quora.
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"Why is investing in stocks considered risky and dangerous? Is there no risk involved if you invest for long-term growth without day trading?"
Investing in stocks is only risky if you buy individual positions and aren't long-term orientated.
The medium stock hasn't done that well for the last hundred years. But a few have done magnificently.
That has produced the S&P500's average return of around 10% annually.
We see that recently with the magnificent seven tech stocks versus the entire market (the first graph below).
So, non-professional investors can't beat the market long-term. They might get lucky and pick Tesla in 2018 or Nvidia today, but that doesn't mean that will continue.
However, we have to also factor in time. If you invest in the entire market just for a year or two, you take a much bigger risk than investing in it for decades.
Nobody has lost by investing 80% in markets and 20% in bonds for decades.
Many people have lost by panic selling when the market is down.
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#stockinvesting #stockmarkets #howtoinvestinstocks #howtoinvestinstockmarkets #magnificentseven
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(Graph source: WSJ, X)
Q and A originally from Quora.
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"Why are investors exiting their positions in the Australian stock market?"
I saw this graph on Reddit a few days ago.
It showed the S&P500 versus the average retail investor from 2022 to 2023.
Stocks fell hard in 2022 and then fully recovered in 2023 and 2024. New highs were hit.
Yet, as per the chart, retail investors trailed severely.
The reason is simple.
Too many people want to buy during the highs and panic during the lows.
We saw a more extreme version of this in 2020. "Nobody" wanted to buy during the initial panic when markets fell 50% quickly.
Then, "everybody" wanted to buy after it became clear the market was recovering fast.
It is a herd mentality which doesn't just affect the Australian stock markets. It is a global thing.
The patient investor avoids such pitfalls.
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#stockmarketfall #australianstockmarket #stockmarketvolatility #stockmarketfluctuation #howtoinvestsmart
Q and A originally from Quora.
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"Why is the stock market falling today?"
Stocks are down, and bonds (long-term especially) are up.
There is speculation that there could be a recession or slower growth, meaning lower interest rates.
That has driven bond funds higher, as bond funds and ETFs tend to do well when interest rates are down.
Conversely, it has not been good for stocks.
However, medium-term lower interest rates will be better for stocks than bonds.
Buffett says it best below.
If interest rates fall, people and institutions will likely invest more in higher volatility assets. We saw something similar in 2008 and 2020. Lower interest rates helped the stock markets over the medium-term.
Firms can easily use debt/leverage to grow, making them more profitable.
Even if bonds have a good run, they likely won't benefit as much during a whole investment cycle as bonds.
So, I wouldn't pay too much attention to the short-term news.
After all, stocks are still up versus bonds and cash in 2024.
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#stockmarkets #interestrates #stockmarketcrash #longtermbonds
Q and A originally from Quora.
qr.ae/p2IVEp
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"Are trusts only for the wealthy?"
Consider this. If you own UK assets worth more than 325k, or 650k for a married couple, you pay inheritance tax in most situations.
There are indeed exemptions and the threshold increases to a million pounds if it is a first home.
However, the basic premise still holds - many people could pay this tax and it is likely to increase in the future decades due to the ageing population in the UK and many developed countries.
Already, there is speculation that the new Labour Government will increase this tax.
This tax can also affect UK expats living overseas - just because you don't pay income taxes doesn't mean inheritance tax doesn't apply.
Many people are also interested in avoiding the lengthy process of probate.
If you can go to bed at night knowing that your kids or grandkids will quickly get the money, that can be worth paying for.
That doesn't mean that everybody should get a trust.
It depends on:
- where you live. some jurisdictions don't accept trusts
- the alternatives. getting a life insurance policy to pay for future tax obligations is cheaper for some people. What is more, trusts and foundations can always be affected by changes in the law, so many people need to update their structure, whereas life insurance payments are less sensitive to this.
So, it all depends on your situation.
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#trusts #inheritancetax #IHT #trustsforexpats #wealthprotection
Q and A originally from Quora.
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"Do you think people today are more materialistic than previous generations and why do you think this is?"
There are many myths about "back in my day".
"Kids overeat sugar these days."
Actually, sugar sandwiches used to be a thing in the. UK! They made sandwiches like this look healthy!
So, back to the question.
It is a myth, at least in part, that people are vastly more materialistic than before.
If you exclude very young people, most people don't want money and material security for purely financial reasons.
They want it to:
- reduce how much they work later on to spend more time with loved ones.
- see a reduction in stress due to failing to prepare financially for hard times or old age.
- take control. More specifically, to control tomorrow, today. So, they take action to prepare for retirement and other life events.
- for much wealthier people, building a lasting legacy.
- avoid losing what you already have. Especially losing the ability to maintain your current lifestyle if something goes wrong - for example, your jobs (or health) are lost.
Speaking about the last point, I once knew a man who made hundreds of thousands a year in a developing country for decades.
From the UK, he was well-known in his industry, and many people respected him. However, the wrong decisions with marriage partners and money resulted in him needing to work past the age when he was mentally strong.
It was sad to see him go downhill so quickly. It was a bit like watching Joe Biden today versus ten years ago.
As an expat, he didn't easily have the social safety net that he had back home, which reduced his options.
Many people have seen similar things and want to avoid being that person.
Even crudely materialistic people often show off to gain the respect of others, a process known as social signalling.
But people eventually work out that most people don't care enough. The freedom to take control and retire when you want is more valuable than the ability to impress random people.
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#materialism #consumerism #howtogetrich #howtobecomerich #financialfreedom #retirementplan
Q and A originally from Quora.
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"What are some of the best index funds to invest in for long-term growth and diversification?"
Some would say valuations are key.
If you look at valuations, forward p/e ratios are the most expensive in India, Denmark and the United States right now.
They are the cheapest in Turkey, China, Brazil, Italy, South Africa, Hong Kong, South Korea, Spain and the United Kingdom.
Japan is also relatively cheap despite the recent stellar performance of the Japanese Nikkei.
If we look at excess CAPE we can see that the US looks expensive.
The first graph below.
The blue line, representing the US, is miles more expensive than Europe (the orange line), the UK (green line) and Hong Kong (the cheapest market and the purple line).
These are all developed markets.
If we compare the US to some emerging and mid-income markets, it looks even more expensive: the second graph.
However, we have to remember something. Stock markets aren't always efficient, but they aren't stupid either.
US markets are perceived as being safer long-term.
That doesn't mean you shouldn't invest global. Global diversification makes sense. However, it doesn't make sense to put all your eggs in say emerging markets.
So, to answer your question, something like MSCI World can work well for many amateur investors.
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Graph source: Barclays
Q and A originally from Quora, dated 23 July 2024.
#globaldiversification #diversifiedportfolio #bestindexfunds #bestindex #howtoinvestlongterm #longterminvestment
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