"The one investment that will always generate returns is investing in yourself"
Sept 4, 2016
Last week I was attempting to figure out what is the best course for my career, either going for that 1 in a million chance to become further specialized in my field or taking a side route. After a long period of discussion with my wife, I have settled on the side route. Normally this would be because I was too lazy or unmotivated to work for this other job, but this time it is because I want to take that time and energy to invest in myself.
Working in my field is great but all the financial advice I have gotten have led me to the conclusion that diversifying your income stream is best. And since there are only so many hours in a day, and days in a year, I know that passive income through stocks, technology, and real estate will be my goal. I have started using Robin Hood for stock investing, Android Studios to learn app building, and Bigger Pockets for real estates.
I will not allow myself to use the time I would have had needed to simply relax and enter a vegetative state, I will improve and develop. I want to be able to retire early, work only if I want to, not because I have to.
Monday, September 5, 2016
Gambling vs investing
Sep 5, 2016
Financial Safety
Financial Safety
Is the picture above gambling or investing? How can we spot whether something is a gamble or an investment? Is blackjack a gamble or investment? What about stocks? A business? If you ask different people in different situations, they will tell you a different answer for each of those examples. Gambling and investing has a lot in common but one small difference but important difference makes it wildly different.
Both gambling and investing involve risk. Whether you put your money on a blackjack table or into an index fund, there is always the risk of walking away with less money than when you started.When you go to a casino to play blackjack, the odds are against you. Just being forced to act, having to decide whether to get dealt another card or not, before the dealer increases your risk of busting and you losing. Most people would consider money you put in at a casino gambling because the odds are greater that you would lose money than you would win money. Stocks and even index funds have risk as well. On any given day, a stock or index can go up or down. Index funds consists of hundreds or thousands of stocks, and attempt to reduce the risk of losing all of your money all at once. The argument is that historically index funds have always increased over time, however even the best investors will tell you that past trends are not indicators of future performance. Historically, stocks spend more time in a bear or slow market than a bull or rising market. That means if you own an index fund, you would need to know if your stocks are in bear or bull mode. Eventually you will have to sell that index fund to make money, which means you will have to time the market, trying to figure out if your stocks are ready to sell or being sold prematurely. Timing the market is a big taboo for people who do buy index funds. So now you have a bunch of stock, that you believe we will increase over time, but not know how long to hold it for or when to sell. Also most people have no idea the make up of an index fund. If your index fund is full of junk stocks, then you will simply have hundreds of well diversified junk stock. You only have to look at the stock market crashes of 2009 and 1987 to see recent examples of the magnitude of risk involved when you put money in the stock market. There is an inherent risk in either blackjack or stocks.
Gambling and investing also involve reward. People play blackjack at a casino because they want to win money. If they just wanted to have fun, they can easily pick up a deck of cards for $1 and do the same thing at home; it sure would be much less expensive. Each time the player decides whether to hit or stay, they are hoping that they will win money. Each time a stock trader or investor buys or sells, they are hoping that they had bought and sold the stock at a good price. In either situation, there is no guarantee that the gambler or the investor will come out ahead, but they are certainly hoping that they do. That reward is what they are playing for, and they take on the risk of losing their initial investment in order to achieve that potential gain.
The biggest determinant that separates a gamble from an investment is knowledge. Knowledge of the product and risks and rewards involved.Warren Buffett, one of the richest men in the world, often advises the average investor to put their money into low cost index funds. However, Warren Buffett does not put his money into index funds. Is he being hypocritical? No. That's because the average investor does not have the knowledge and resources that he has. Warren Buffett spends much more time and energy analyzing companies to figure out which has the best return on investment. The average person would have no idea, and therefore would take on a much larger risk betting on individual companies than a large swath of companies that represent the overall economy (such as the S&P 500). In the case of blackjack, if you are playing blackjack, chances you are gambling. If you are new to the game, then you may not be fully aware of the rules or strategies that you can utilize. However if you are the casino, then you invest in blackjack. You know that on average the gambler will lose 5% of whatever they play with. In the picture above, it did not matter whether the player wins or loses that one hand, the casino knows that if enough players keep playing, the casino will make money.
Knowledge can mitigate and change your risk therefore altering your risk to reward ratio. In blackjack a player can learn to odds given what they have in their hands versus what the dealer is showing. They know for example that the dealer has to abide by certain rules such as staying on a 17. If the odds are that the dealer has 17, and the player has 18, then he is more likely going to stay. He is able to use that knowledge to his advantage to reduce his risk of busting and losing. The advanced players can even make use of surrender bets where they would give up their bet for half of what they bet initially and even keep track of the number of each card that has been dealt to mitigate their potential loses. They are able to utilize these advantages such that when they play for the long term, they will win overall even if they end up losing any given hand. These advanced players have changed the game of blackjack from gambling to investing. In the stock market, Warren Buffett is able to analyze the companies he wants to invest in. He does not rely on someone else to create a batch of stocks, instead he has the knowledge necessary to pick individual stocks and companies. So even when Warren Buffett buys individual stocks, he is investing and not gambling.
In any situation that comes to money, knowledge is the key. If you do not understand where your money is going, and the full business of what you are putting your money into, then you are gambling. It does not matter if you are buying bonds, stocks, indexes, housing, rentals, commodities, or commercial buildings, if you do not know the business, then you are gambling. You are putting in money, just like the blackjack player, and hoping that money comes back. To be an investor, you must put in time to gain the knowledge needed to mitigate your risks and maximize your potential returns.
Friday, September 2, 2016
Privacy Policy
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Thursday, September 1, 2016
Man With a Plan
Aug 31, 2016
Self Growth
I play a little game with my brothers call Million Dollar Idea. The whole idea behind the game is that if you can come up with one million ideas that are worth a million dollars each, then even if you have a one in a million chance of becoming a millionaire, then chances are you will become a millionaire. That may be a bit of a tongue twister and perhaps a brain twister, but the idea boils down to a fun exercise of coming up with potential business plans and strategies. For example, what if we made top ramen more refined and luxurious, for those college students that are on a budget but still want to eat well. The ramen could have more than just noodles, or is organic, or whole wheat, or some other unique feature that would appeal to a slightly different clientele than those that eat top ramen. It can have unique flavors, vegetables, sauces, oils, and a medley of proteins. Surely we would make millions.
Well after a few months of this game, my wife challenged me to actually write out a business plan and proposal. I took her up on the proposal, because who honestly does not like a good challenge.I had toyed around with so many ideas already it made sense to take my favorite idea to the next level and create something more formal, to assess the strengths and weaknesses of the idea. I found a template online and sat down to begin writing. To my surprise, the template was Twenty-Nine Pages long! Wow, I had no idea that the plan would take this long to actually develop. Having a 29 page template would likely mean that the business plan would be 50 or more pages and may take days or weeks to create. As I begin reading through each of the prompts on the template, I realized how undeveloped our Million Dollar Ideas actually were. It took much more time to figure out financing, competitive advantages, growth in the industry, etc. Even my favorite idea would require much more time and energy before it can become worth of a million dollars. What I also noticed was that although some of the prompts had features that I had not considered before, they were questions that can be answered with additional research. I can find industry growth charts and stock values of companies a proxy on growth. I can research wholesale acquisition cost and price per square foot on real estate rentals. There is so much that I still need to learn but this does appear to be a worth challenge worth taking up.
On a side note, I had previously attempted to write an app for Android. Since the bug incident, I have uninstalled and re-installed Android Studios and the Java Development Kit but the program still will not boot. I am starting to lose heart that I will become a programmer, but for now I have more pressing issues and a business plan to write.
Self Growth
I play a little game with my brothers call Million Dollar Idea. The whole idea behind the game is that if you can come up with one million ideas that are worth a million dollars each, then even if you have a one in a million chance of becoming a millionaire, then chances are you will become a millionaire. That may be a bit of a tongue twister and perhaps a brain twister, but the idea boils down to a fun exercise of coming up with potential business plans and strategies. For example, what if we made top ramen more refined and luxurious, for those college students that are on a budget but still want to eat well. The ramen could have more than just noodles, or is organic, or whole wheat, or some other unique feature that would appeal to a slightly different clientele than those that eat top ramen. It can have unique flavors, vegetables, sauces, oils, and a medley of proteins. Surely we would make millions.
Well after a few months of this game, my wife challenged me to actually write out a business plan and proposal. I took her up on the proposal, because who honestly does not like a good challenge.I had toyed around with so many ideas already it made sense to take my favorite idea to the next level and create something more formal, to assess the strengths and weaknesses of the idea. I found a template online and sat down to begin writing. To my surprise, the template was Twenty-Nine Pages long! Wow, I had no idea that the plan would take this long to actually develop. Having a 29 page template would likely mean that the business plan would be 50 or more pages and may take days or weeks to create. As I begin reading through each of the prompts on the template, I realized how undeveloped our Million Dollar Ideas actually were. It took much more time to figure out financing, competitive advantages, growth in the industry, etc. Even my favorite idea would require much more time and energy before it can become worth of a million dollars. What I also noticed was that although some of the prompts had features that I had not considered before, they were questions that can be answered with additional research. I can find industry growth charts and stock values of companies a proxy on growth. I can research wholesale acquisition cost and price per square foot on real estate rentals. There is so much that I still need to learn but this does appear to be a worth challenge worth taking up.
On a side note, I had previously attempted to write an app for Android. Since the bug incident, I have uninstalled and re-installed Android Studios and the Java Development Kit but the program still will not boot. I am starting to lose heart that I will become a programmer, but for now I have more pressing issues and a business plan to write.
Wednesday, August 31, 2016
We Had A Bad Time (And Why That's Great)
Aug 30, 2016
Self Growth
Today's Toastmaster session was different than the rest, today we had a humor contest. One of the contestants, a former stand up comedian, delivered a wonderful set. He had the audience laughing over and over captivating his audience with his every word. However, he did say one thing that really stuck out to me: "Bad times make for really great stories."
The comic, John, was describing a time when he was performing in a tiny tavern where the audience consisted of 7 guys sitting at 2 tables. Everyone else was passed out, playing darts, or flirting with the bartender. So John starts doing his bit, sets up the audience, delivers his punchline...and silence. No a smile, not peep from the 7 guys. He was tanking hard. He looked over his audience, these were not the high society sophisticated type so he made his new joke more low brow, talking about dumb politics. He sets up his audience, delivers his punchline...and silence. One guy smiled... or perhaps he just twitched, it was hard to tell, the room was not well lit. Still no laughter could be heard. He felt he needed bring his comedy even lower, and delivered the most vulgar laced dirty joke he had in his repertoire. A couple of the guys looked surprised, and even looked at each other but still no laughter. This was possibly the toughest crowd he had ever had to perform in front of. There was not even a pity laugh thrown his way. John saunters away feeling absolutely defeated. The next day John went to a concert, and was recognized by one of the 7 guys at the bar. "Hey you're that comedian from the bar, I thought you were pretty good". John replied "Thanks" but in very much a thanks-for-the-charity tone of voice. "I have got a confession for ya, before your routine, I made a bet with my friends that whoever laughs first would have to buy a round for everyone." John could not believe it, the whole reason he was doing so bad and having such a bad time was because there was this bet going on in the back. The whole situation turned out to be a pretty funny story.
The idea that bad times are just good stories is a great concept. For many people we are too afraid to go for what we want because we are afraid we will have a bad time. This often means we will not even attempt that job or career or investment. We do not try because the risk of having a bad time is too overwhelming. Think about all those rags to riches stories that we have heard about and how wonderful they make us feel. If it was simply a story of riches to riches, we would not be very impressed. It is the hard times that help build and define who we are. Those are the stories that we can talk about, where we truly test our metal, and came out on the other end. We can use this tool to get us over what is holding us back. We know that if we succeed, we win; if we fail, then we have a great story.
Self Growth
Today's Toastmaster session was different than the rest, today we had a humor contest. One of the contestants, a former stand up comedian, delivered a wonderful set. He had the audience laughing over and over captivating his audience with his every word. However, he did say one thing that really stuck out to me: "Bad times make for really great stories."
The comic, John, was describing a time when he was performing in a tiny tavern where the audience consisted of 7 guys sitting at 2 tables. Everyone else was passed out, playing darts, or flirting with the bartender. So John starts doing his bit, sets up the audience, delivers his punchline...and silence. No a smile, not peep from the 7 guys. He was tanking hard. He looked over his audience, these were not the high society sophisticated type so he made his new joke more low brow, talking about dumb politics. He sets up his audience, delivers his punchline...and silence. One guy smiled... or perhaps he just twitched, it was hard to tell, the room was not well lit. Still no laughter could be heard. He felt he needed bring his comedy even lower, and delivered the most vulgar laced dirty joke he had in his repertoire. A couple of the guys looked surprised, and even looked at each other but still no laughter. This was possibly the toughest crowd he had ever had to perform in front of. There was not even a pity laugh thrown his way. John saunters away feeling absolutely defeated. The next day John went to a concert, and was recognized by one of the 7 guys at the bar. "Hey you're that comedian from the bar, I thought you were pretty good". John replied "Thanks" but in very much a thanks-for-the-charity tone of voice. "I have got a confession for ya, before your routine, I made a bet with my friends that whoever laughs first would have to buy a round for everyone." John could not believe it, the whole reason he was doing so bad and having such a bad time was because there was this bet going on in the back. The whole situation turned out to be a pretty funny story.
The idea that bad times are just good stories is a great concept. For many people we are too afraid to go for what we want because we are afraid we will have a bad time. This often means we will not even attempt that job or career or investment. We do not try because the risk of having a bad time is too overwhelming. Think about all those rags to riches stories that we have heard about and how wonderful they make us feel. If it was simply a story of riches to riches, we would not be very impressed. It is the hard times that help build and define who we are. Those are the stories that we can talk about, where we truly test our metal, and came out on the other end. We can use this tool to get us over what is holding us back. We know that if we succeed, we win; if we fail, then we have a great story.
Monday, August 29, 2016
Anyone Got Bug Spray - Attempts at Coding Java
Aug 29, 2016
Self Growth
During the last few days, I have experimented with using Android Studios to design a new app. A customer had recommended using Udacity as a learning vehicle. Everything was so new and the whole process was exciting. I was able to create a simple greeting card and even got a tutorial application to run on my phone. Just Java 1.0 was up and running. I was so excited I shared the fledgling app with my brothers, who were not too impressed. Of course the app at the time was only able to calculate how much it would cost for x number of coffees if each coffee cost $5 but that was not the point, I had created it and it was working and it was wonderful. With a bit more tinkering, I was able to add some more functions then suddenly DOOOM! There was some type of bug in the code and now the app was no longer running. It was hard to distinguish where the bug was located and trying to figure out if I was missing a letter, a command, a definition, a comma or a some other tiny little mark. I tried doing Ctrl+Z to undo the damage but no luck. I searched and dug through forums and webpages for assistance, but what I tried likely broke it even further. At this point not only was my fledgling app no longer functioning, even the program for writing it was down as well. I was devastated. The nuclear option would be the only way, uninstalling then reinstalling the entire system. I will have to start from the ground up, putting back the pieces of Android Studio to it's original glory before I can even hope to get my app going again. I wonder if they called this app Just Java because they knew we would need quite a few coffees to get it going.
.
Self Growth
During the last few days, I have experimented with using Android Studios to design a new app. A customer had recommended using Udacity as a learning vehicle. Everything was so new and the whole process was exciting. I was able to create a simple greeting card and even got a tutorial application to run on my phone. Just Java 1.0 was up and running. I was so excited I shared the fledgling app with my brothers, who were not too impressed. Of course the app at the time was only able to calculate how much it would cost for x number of coffees if each coffee cost $5 but that was not the point, I had created it and it was working and it was wonderful. With a bit more tinkering, I was able to add some more functions then suddenly DOOOM! There was some type of bug in the code and now the app was no longer running. It was hard to distinguish where the bug was located and trying to figure out if I was missing a letter, a command, a definition, a comma or a some other tiny little mark. I tried doing Ctrl+Z to undo the damage but no luck. I searched and dug through forums and webpages for assistance, but what I tried likely broke it even further. At this point not only was my fledgling app no longer functioning, even the program for writing it was down as well. I was devastated. The nuclear option would be the only way, uninstalling then reinstalling the entire system. I will have to start from the ground up, putting back the pieces of Android Studio to it's original glory before I can even hope to get my app going again. I wonder if they called this app Just Java because they knew we would need quite a few coffees to get it going.
.
Sunday, August 28, 2016
24 Hours is Not Enough
"All I want is to do better than I did yesterday"
Self Reflection Sunday
Aug 28, 2016
I am at a cross roads in my life and my career. One of my goals in life is to achieve financial independence, where I can set my own schedules and do as I wish and become the master of my own time and development. I recently came upon an opportunity, a one in a million chance to go for a higher paying job in a potentially better career. This job is with a big company, and the job security and to opportunity to work with other professionals is very tempting. The higher income would mean I can pay down debt faster, potentially investing more money earlier. However this new job would likely require much more time than my current job, likely meaning I will be working even when I am not on site Not having free time would also mean that I will be less likely able to create my income, and to invest in myself. How do I decide whether I should invest in a career working for someone else or invest in myself working for myself. There is no easy answer. The former is prestigious and the increased pay would mean I can get out debt faster. The latter is riskier, more likely to fail, but also has the potential to blossom into something I cannot even imagine and potentially get me to financial independence.
Since my first self reflection, I have began several projects in addition to this blog. I know that being productive with my time is more important than idling by. My current projects include learning HTML to edit this blog, learning java to develop an android app, and learning to invest in real estate. Unfortunately none of these projects have been completed and are all partially done. I will need to revisit these project and complete them, turning them from a dream to something much more tangible. There never appears to be enough hours in day. My time get diverted to working, sleeping, eating, shopping for groceries, laundry, and the occasional Youtube and Facebook break. Admittedly I should cut out Youtube and Facebook to gain more time, perhaps by deactivating my WiFi as I used to do when I was in school, but unfortunately what I am trying to learn is also only available with WiFi on. I will need to figure out a way to focus my time an energy away from the distractions, or find a way to get the material I need to learn offline. One more step in learning to succeed.
Self Reflection Sunday
Aug 28, 2016
I am at a cross roads in my life and my career. One of my goals in life is to achieve financial independence, where I can set my own schedules and do as I wish and become the master of my own time and development. I recently came upon an opportunity, a one in a million chance to go for a higher paying job in a potentially better career. This job is with a big company, and the job security and to opportunity to work with other professionals is very tempting. The higher income would mean I can pay down debt faster, potentially investing more money earlier. However this new job would likely require much more time than my current job, likely meaning I will be working even when I am not on site Not having free time would also mean that I will be less likely able to create my income, and to invest in myself. How do I decide whether I should invest in a career working for someone else or invest in myself working for myself. There is no easy answer. The former is prestigious and the increased pay would mean I can get out debt faster. The latter is riskier, more likely to fail, but also has the potential to blossom into something I cannot even imagine and potentially get me to financial independence.
Since my first self reflection, I have began several projects in addition to this blog. I know that being productive with my time is more important than idling by. My current projects include learning HTML to edit this blog, learning java to develop an android app, and learning to invest in real estate. Unfortunately none of these projects have been completed and are all partially done. I will need to revisit these project and complete them, turning them from a dream to something much more tangible. There never appears to be enough hours in day. My time get diverted to working, sleeping, eating, shopping for groceries, laundry, and the occasional Youtube and Facebook break. Admittedly I should cut out Youtube and Facebook to gain more time, perhaps by deactivating my WiFi as I used to do when I was in school, but unfortunately what I am trying to learn is also only available with WiFi on. I will need to figure out a way to focus my time an energy away from the distractions, or find a way to get the material I need to learn offline. One more step in learning to succeed.
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