Rich, Safe and Comfortable

cliff_face

This is a follow up on the idea that everyone wants to be rich but most people don’t prioritize it and don’t achieve it. I touched on this in yesterdays post titled Financial Independence that discusses a life transition I am starting.

The order of priority is important. Robert Keyosaki wrote in his book Rich Dad Poor Dad that we all want to be rich but not everyone achieves it. Most people put comfort and security ahead of being rich. Most people underestimate the potential upside of choosing rich heavy actions and overestimate the risks associated with those actions.

It costs money to be safe and comfortable. You end up trading opportunity in time, options, learning and raw capital that could be used on investments that return a higher rate. My suggestion is to sacrifice comfort and security in the beginning of your investment timeline. This will hopefully allow you to make higher returns with most of your resources then buy back your comfort later and be way ahead of those other guys who paid for comfort from the get go.
A lot of people worry about what would happen if the don’t have the safety of a regular job or guaranteed and stable returns from low risk investments. Most people don’t want to deviate from the investment strategy their friends, colleges and family use typically stocks and bonds invested through a fund at a local bank.
If you were to go against the advice of your peers and fail you may not only lose your investment but potentially feel foolish. But that’s actually in reality not such a bad thing. The idea of going to maximum growth up front means that if your strategy fails you can try again and again a few times learning as you go and you still have the opportunity when you are older to invest with time to save for retirement when you need it.
Iterations on ideas, strategies and investment types.
The more times you do something the better you get at it. There is a saying, when a man with money meets a man with experience, the man with experience ends up with the money and the man with the money ends up with the experience. Cheeky but the point is that while you may fail at your investment plan at first as long as you keep trying you will improve and overtake the vast majority of people who passively invest in the market.
Because of compounding most investments really pay off at the end so it doesn’t really make sense in my opinion to sit on investments without high potential when you are starting out or have a base net worth of zero.
Having a risky asset class or a risky allocation of only a few asset classes carries lower inherent risk when carrying a lower net worth. So the benefit of diversification or the type of investment you choose plays a smaller role than most people assume. For example if you are investing your first one thousand dollars and decide to buy Bitcoin rather than a stock index fund and plan on saving two million dollars for retirement, exactly what is the difference in the long run between those two options? The stock market could double or triple in thirty years, Bitcoin could go up five or ten times. Nobody knows but as you continue to invest you will have the opportunity to keep adding to each of these different asset classes and give yourself the most amount of time exposed to the highest gains you can anticipate.
Risk weighted against opportunity.
A lot of people look at risk factors in isolation but what should matter more is the ratio of risk relative to estimated gain.
Investing to be rich rather than safe can look like investing in an asset you think will return the highest after ten years rather than a good investment that will return a fixed consistent amount each year. The ten year play may sit at a loss for nine years and only pay off when its ready. This is where the price of comfort and safety is paid by you. If you need the money unexpectedly or want the reassurance of steady growth you will have to make do without or make other arrangements. But when the long term plays pay off you can usually buy 10x the safe consistent investments you would have otherwise because your investment capital would be smaller and spread out.
The method.
If there are fundamentals in an asset class or patterns that repeat the buying into undervalued assets and selling or reallocating overvalued assets is a good option.
When starting out in a wealth accumulation phase rather than a safe wealth preservation phase, I would invest in asset classes I think will have the highest risk weighted return. Currently in my opinion some precious metals like silver and cryptocurrencies fit into this bucket. I will explain in another post the some factors that could affect these asset classes both negatively and positively.
My personal strategy:
Buy assets with strong estimated future fundamentals. I.e. things people need that are rare or becoming more rare. Buy when the price is historically low and going up, Sell when the price is high relative to historical trends and starting to go down. Use the money to buy other assets that are undervalued. Use a ten to twenty year price history if available. Trade small amounts over time relative to the rate the price rises and falls in the past and based on your target allocation.
Examples: 
Some Random Asset Categories:
Realestate: REITS, Investment properties. In Canada the housing market is at a 100% fifteen year bull run.
stocks: Index Funds. Markets in the US and Canada are also in a ten year all time high.
bonds: National both foreign and domestic. Interest rates are low so these pay out low interest.
Structured Notes: Banks offer options for gains with some investment protection.
Private Quity: Business opportunities sold as Investment Bonds,  TFSA and RRSP eligible.
Precious Metals: PMs used in industry are at a ten year price low and could potentially become rare in the future.
Crypto: Bitcoin, and alternatives. Seeing increased user adoption and upward trending.
Allocations:
Rich- 
90% High
0% med
10% safe
Safe-
30% high
30% med
40% safe
These allocations illustrate a possible interpretation of investing for gain vs. safety.

Financial Independence

Its been a while since I last posted and a lot has changed for me in the past couple of years. Going forward I am thinking about starting a YouTube channel for interactive dialog, both solo and with others, as it relates to some projects I am working on and in order to share progress and to create more fun experiences.

A big goal for most of my life has been to become financially independent so that I can spend all of my time growing personally, leaning what I really want and the skills I need to more effectively get there.
We are very fortunate to live in this time with so many other like minded people and also unlike contrasting ideas. We all make our own choices based on our desires and our understanding of what we want to achieve.
I have been thinking about this idea of effectiveness. Everyone has their own idea of what a fulfilled life looks like but not everyone can get there. While being happy or not is a matter of perspective in that a homeless person can live a life of ecstacey,
Eckhart Tolle comes to mind, and others with riches can feel perpetually empty, the take away is that we have lots of examples of others achieving different results from varied mindsets and actions.
One fascinating idea to me is that some people can make an obscene amount of money with very limited but targeted action. Being a software developer i’m familiar with a few other entrepreneurs starting successful online business that make a lot of money but primarily I think of Internet marketers who made staggering amounts of money buying ads to affiliate products. The market is always changing and these people rarely do it for long periods of time but the amount of money would set them for life.
Contrast that with someone who works a nine to five job from the time they finish school to retirement earning just enough to live, raise a family pay for all of the things most people buy like a nice house or condo, a car, a TV they spend every day watching, two weeks vacation per year, etc. In the social circle that I grew up in that is what almost everyone does and tells you to do. Go to school get a good job with benefits and work until you retire. Not bad but I can’t get excited about that. So what would it take for those few people who don’t go to work a nine to five every day and instead do something that makes them millions of dollars? Well they have to believe that they can find a way to make the money so they must spend their time learning about others that have different key pieces of information that they use in a plan and commit to it.
Someone always makes the comment, oh they were just lucky, implying the outcome they received just fell on their lap. This is the most tragic loss in my opinion. It reminds me of an anecdote I heard about an elementary school class experiment. They separated the students into two groups ordered my grade. Half of the top performing students on one side and the underperforming on the other. Each group was asked why they thought the successful students were able to perform so well. The students with the low score predominantly said they students with high grades were just born that way. The students with high scores predominantly said they received high grades because they work really hard. Thats the key, we all spend similar amounts of time awake living learning, trying, failing, changing, improving. By dismissing important pieces of information that especially pertain to skills or network opportunities is only to your detriment.
Everyone wants the same things, they just put them in a different order or importance. Do you want to be rich? Live in an ocean front mansion, traveling the world? Probably yeah. Do you want to feel safe and comfortable? Rely on a consist set of resources and routine? Have food and shelter? Probably yeah if I can put words in your mouth. But the ones that put being rich above security and comfort tend to get all of them to a much higher degree.
The Pareto principal applies so only certain actions result in your target goal. You can, and many do, spend their entire life working on things that fill a nine to five and never push them forward from their current more. Congruent beliefs with success are also required, If you don’t believe you can achieve your ultimate life changing goal why would you look for the opportunity and dive into the fear of actually committing to achieve it.
As for how this relates to me personally, I have made some investment gains over the past few years. It’s still early in my plan but so far I have paid off my living accommodations and in several scenarios have achieved financial independence. I have some investment diversification to do this year to reduce my exposure in some areas but if I was to lose my job tomorrow I would not likely have to find another one ever. My plan is to work for another year, make some planned investments then start a few ventures that I will document here in later posts.
Going forward I am approaching a life transition. Up until now I have been focused on my job but that has meant that my time is committed and my opportunity to pursure projects and experiences has been limited. So now instead of focusing on my particular job skills I will be expanding my social circle, committing time to new businesses outside the scope of my past work and leaning to have more fun.
I will be documenting these new business projects and the pieces that you can use as well as the investment opinions i hold and how I used them to achieve financial independence all coming soon.

Letting Go and Embracing Change

Rock-Climbing

Changing directions in life can be difficult. If you’re like me you can spend years working on a career path, a business venture, a personal or business relationship or an investment strategy.

These activities require a certain level of commitment. You can’t just put them down and pick them back up again and generally have to focus your energy, time or money to the exclusion of others.

At some point if what you are doing isn’t working out you will probably start to feel the uncomfortable sensation that something is wrong. You might recognize that you have to change but that would mean forfeiting money or abandoning progress towards your goal and starting over from scratch. There is also going to be uncertainty about finding a replacement and what that might look like in your life.

 

It’s easy to personally identify with a routine that we spend years with.  

In the past I have spent many years at a job that wasn’t right for me before finally leaving. I didn’t want to quit because I worried that I wouldn’t be able to pay my bills if I couldn’t find another and that if I did it would be another bad fit. In hindsight staying was a bad decision. I wasn’t satisfied, I was working harder to fit mismatched needs/skills and my employer didn’t know that they should be looking for a better fit for them.

I have also spent many years on several failed business ventures both individually and in partnerships. The moment when you realize that it won’t be viable can be challenging. All of the time and energy spent on something that will never pay off or meet expectations can be a let down.

The same applies to personal relationships. Over time our needs and expectations can change. Sometimes this means that once compatible matches become incompatible.

It’s interesting to think about what other ramifications in your life are caused by pushing through when you could always just go around.

 

If what you are doing has become a familiar routine and acts as a your go to plan to achieve your goals it can be hard to let go. If you had to give it up right now then you’re back at square one and have to start from the beginning. If you know your path is not viable the worst thing you could do is just keep plugging away. This is known as the sunk cost fallacy. When you rationalize that you can’t quit now because you have invested so much already. Even if logically starting over is the better option. Its easy to see as an outsider but not so much as it applies to yourself.

Even if there is no obvious replacement the best thing to do is accept that what you’re doing isn’t working. Give yourself the full resources of time and mental faculty to work on finding a new better direction. Let go of what you don’t want to make room for what you do.

On the occasions where I pulled the plug on multi year projects, relationships, jobs and investments it was personally challenging each in a unique way. What helped me in these times is to refocus on my end goals and imagine what it will be like to achieve them instead of focusing on this gap between where I was and where I wanted to be. I formalized my new objectives to give them a place in my mind. I bought notebooks just for writing notes on each goal and carried them with me or kept them by my bedside table. Every time I think of an idea, I write it down. I cleaned up any loose ends with customers, contracts and other obligations so that I wouldn’t have to spend any more time on them. I also bought a pack of post it notes to write ideas and stuck them to a wall in my home. I would constantly add or remove and sort the ideas by best fit for me, practicality and other factors. Figuring out what I needed to do was the highest priority for me and I changed my living environment to reflect that. The post its on a wall are always easily accessible and act as a reminder to take action.    

There is an old joke about smokers saying they aren’t quitters as if to imply that quitting is bad. If follow through is holding you back then perseverance will serve you but there is no point going down the wrong road. Being clear about the difference between those two extremes is the key. Pushing though or letting go, thats up to you.

Subliminal Goal Achievement

Your environment is almost certainly affecting your mood and productivity. You can make big improvements and achieve new successes by making simple changes to your work and living spaces. The idea is to choose specific objects, words, imagery, smells and music that you have a positive association to and place them in the areas you live. The intention is to create subliminal triggers that subconsciously influence you to act and improve on goals. These could include working on business ventures, doing chores, thinking more positively, getting more exercice, generating a million dollars or eliminating bad behaviours. It’s a good way to start something new or improve on what your currently doing.

The process starts by choosing some goals and laying out reminders for yourself. For each of your goals come up with related written words and phrases, images or objects and place them in your work and home spaces to guide action. Make them part of your daily experience. The reminders you choose should be associated with a feeling you want to foster but can include itemized todo lists. This means using words and pictures that you would experience with the successful completion of your goals.

The magic of this exercise is that the mind absorbs your experiences and influences your thoughts and actions without you even being aware of it. The semantic meaning of written words and images doesn’t even have to be fully comprehended each time you look at them. You just have to be exposed to the reminders and your reaction will be subconscious.

This process will also help you remove blocks to a more productive day. If you find yourself deliberating on decisions then adding more positive influences will encourage action. 

Preparation is critical to success. Because we are purposefully trying to encourage automatic behaviours we need to make sure those behaviours are chosen thoughtfully ahead of time. The reminders placed in your environment will also form habits and allow your subconscious to anticipate and plan moment to moment what to do next. This creates a calming effect on your overall state.

We have an emotional budget of decision making power available to us each day. If we exceed our limit we hit burnout and start making bad decisions. When you’re running low on energy you slow down and loose focus. Optimize your day by dedicating time once a week to choose tasks for goals. I.e. if you want to start going to the gym every day but find it difficult remove some unnecessary steps. Keeping all of the things you need in a bag by your front door so all you have to do is grab it and your ready. Then when you decide to go everything you need is in that bad and there is no time for deliberation and hesitation.

You can support new actions with rewards while transitioning to new behaviours. This can include tasty prepared food items, music you enjoy and planned activities that have pleasant experiences like walking through a park.

Here are some specific ideas for implementing reminders:

  • Use post -it notes, a chalk or white board or custom paper/card stock to hang reminder words on the walls. You could also create artwork with pictures and large print words to serve both artistic and influential roles.
  • Set up your computer to cycle through motivational desktop pictures.
  • If you share a space with others and don’t want to disrupt the feel you can change the medium and format to fit. This might mean todo lists on notepads in an office and framed word art work at home.
  • Create a board and place on it all of the associated images and text goals that you are working towards.
  • The size of text you prepare can also be used to influence the priority you have attached to it. Place multiple reminders to reinforce the message.
  • When using descriptive words or todo lists include words you associate with positive feelings. This way you will think of the feelings along with action goal based words. Your subconscious is not logical like your conscious mint and thinks more in terms of feelings.
  • Smell and scents can act as powerful reminder.

Use location to your advantage so that the objects you choose support the type of behaviour you want for each areas.

  • Work – At work you may want to create a mood of alertness, concentration and low distraction. Some starting ideas: Supplement low light levels with a lamp. Ambient non vocal music or flowing water feature. Light energy rich foods. Organization folders.
  • Bedroom – In your bedroom you may want to create a restful calming mood. Some starting ideas: Add a dimmer light. Use words like Relax, Calm Rest. Add smells with plants or scents. 
  • Living Areas – In your living spaces you may want to create a mood for brainstorming, health or long term planning. Some starting ideas: Use words, photos that support income/achievement goals or activity planning. Prepare a gym bag or healthy snack food next to written words or other objects.

When using written words choose the ones that inspire and make you feel good as well as words that describe your goals. Identify specific goals that you would like to achieve and select the words and images for each. Imagine yourself having achieved the goal and choose words that describe that state.

Ideas for working options:

  • $ 10 K / mo
  • Millionaire
  • Enjoying Physical Fitness
  • 4 Dates Out Each Month

The reverse of positive reminders also applies to negative influences in your life. Try removing things from your environment that negatively affect your actions. This may be clutter, excess furniture, excessive noise, unhealthy foods, TV, destructive relationships etc.

Optimize for results. Every once in a while review how you feel about the spaces you have created. Try changing the wording and placement over time. Some things may not work for you so try new things and experiment.

I have found this exercise very useful for goal achievement after just starting recently and noticed a few things. It’s good to have lots of reminders everywhere so that a lot of your time is spent around them. I don’t pay attention to them often I just let them be. Most of the reminders are subtle and just appear to be decoration by others. The build quality of words and pictures on any wall make a big difference. When using post-it notes or low quality card stock I notice it feels like clutter after a while so i’m switching to using  frames and other materials.

Let me know if you try any of these and any improvements you notice.

The Red Pill – a Mindset

Thoughts both positive and negative affect our expectations, choices, actions and ultimately our results.

At the very least, when you are thinking negatively about something you are not thinking about solutions or planning for success. But more likely is the case that negative thoughts lead to a spiral of other negative thoughts. You may not even recognize them as negative because they are only marginally unpleasant and don’t cause a strong reaction for you.

Any thought that makes you feel bad can be considered negative. Some that jump to mind include fear, threat, exclusion, nervousness, apprehension, sadness, being misunderstood, confusion, timidness, jealousy, inadequacy, self doubt, denial, hatred, dishonesty, boredom etc.

 

What if you could take a pill that would cause an alarm bell to ring in your head every time you formulate a negative thought? It would allow you to recognize when you have negative thoughts and stop them instinctively. You would likely change the things you spend your time thinking about and ultimately guide yourself to more productive actions and achieve better results.

Obviously this pill doesn’t really exist but as a thought experiment you can imagine that it does and as you go through your day, every time you feel unpleasant, ring an alarm in your head as loud as you can. I have been holding this idea for a few days and noticed that it has stuck with me and has some measurable results so far. You should give it a try too.

This will do several things for you:

  • Firstly it will stop you from continuing to draw out negative thoughts preventing you from spending your time on them.
  • It will also show you the situations, places and activities in your life that are triggers for negativity and you could recognize when they happen and make changes to your environment to avoid them.
  • Most significantly it will force you to shift your life direction towards getting the things, people and experiences in your life that would be completely fulfilling. Can you imagine what those things would be and what that would feel like? If you’re not already there now It should feel exhilarating and possibly uncomfortable if it’s far outside of your comfort zone and you can visualize it with enough detail.

Now Imagine that this pill is real and you just took two. Try visualizing it working for you and every time you have a thought that is negative, fear, boredom, sadness, futility, jealousy, discomfort, pain, ring the bell and focus on changing your thoughts. For the next seven days this pill will ring after each negative thought.

Use the prospect of a much more fulfilling life inspire you to put in the extra energy it takes to be consistent with this thought experiment over one week. If it can become something that you want to have in your life then thinking about the outcome you want to achieve will give you the motivation to follow through. If you can’t hold the idea one hundred percent of the time thats ok just pick it back up when you remember. Make post-it notes or make a reminder with pen on your hand where you will see it.

 

How would you rate the things in your life? Use a scale of one to ten, where ten is the maximum happiness you can feel about something and one is the worst imaginable. Some categories to think about: health and physical well being, career satisfaction, wealth and finances, relationships and friendships, contributions, experiences etc. If you rate anything less than ten think about what would have to change and how it would feel to actually have those things in your life that you would rate tens.

After visualizing this pill affecting your life for a few days you might notice that as you imagine experiencing the things you initially rated as ten are actually not the best that you can achieve. Though the repeated process of seeing a new goal and achieving it often a new even better goal for you will appear. If you fully applied this to your life you could end up stepping outside of your current comfort zone. You might find yourself quitting your job, starting a business, moving to a new city, finding new friends and enjoy new relationships. You could end up living a completely new and totally different life.

 

If the pill was real It might have such a drastic effect on your life that if you were to look at your future self you might feel discomfort or shock. If you had an outside source pushing you to overcome blocks in all areas of your life twenty four seven, you might feel like you’re riding the top of a rocket ship going faster than you can handle. You might end up giving up the things in your life you currently consider important and have an attachment to. These things may not be a part of the life of the version of you that is fully satisfied. You might lose some of your friends, your job, your relationship partner and find yourself in a completely different city, have a different career or life purpose. It’s good to put this into perspective and balance it with with the alternative of going with your current course and continuing to get what you have now.

With this pill would you continue to plug away at a job you don’t love all the while an alarm is going off in your head? What if instead you thought about getting a new job that makes you fully happy or transforming the one you have now into something new. Can you imagine what it would feel like to be completely satisfied in every area of your life? The idea is something I hadn’t ever fully imagined in vivid detail up to this point. What realistically is stopping you from making that life real?

 

What would your life look like in a week, month or a year from now. You might have to work through it slowly because it’s hard to anticipate how changes now will affect your decisions later on.

What interactions in your relationships now are not congruent with complete fulfilment? What would it look like if you made decisions that were motivated by positivity and excitement rather than fear or compromise.

Would you work to become more financially independent and secure for your future.

Would you start public speaking, or performances at work or for fun?

Do you have a fear of speaking in public? What if all of the thoughts in your life that lead you to the decisions that keep you from being more bold and free in front of large groups could be turned off?

Would you change your living conditions by moving to a new home? Would it be cleaner, or have a new colour, furniture, lights or artwork?

Would you pick up new hobbies like sky diving, base jumping, motorcycle racing?

Would you spend more time in nature, walking or other recreational activities. Or would you travel the world to see new sights and experiencing other cultures?

 

Self sabotage can prevent us from fully realizing the changes we work towards. I recall a few personal experiences of involuntary discomfort when good things have happened to me. They were totally irrational responses and not at all what I would have expected my reaction to be.

Many years ago on a Christmas morning my girlfriend at the time gave me a freaking iMac computer. She knew I wanted one to start a small business. The business was my big passion and the old computer I had at the time wasn’t cutting it. When I opened the box and saw the computer I literally felt a surge of panic and adrenaline, in that order. That thing was expensive and money was tight, I couldn’t believe what I was seeing. I thought to myself I really have to make this business work to return the favor. It was nice to know someone trusted in me enough to make that investment though. I recall reflecting on my reaction and appreciating that if I was to achieve every other goal in my life then I would probably feel very different about it in reality from how I imagine it.

The second instance was when I was younger, a very beautiful girl passing on the street smiled and waved at me. I was so taken back that I couldn’t even respond. Now that I think back on it I can say to myself as it smack my forehead: stupid, stupid, stupid. I want relationships with new people and I realized that there are mental blocks in social situations that jump up unless I work through them.

What I find interesting about these two situations is that my reaction was something I wouldn’t have expected, it was involuntary and occurred in a split second. These types of reactions are based on a large set of collective memories, beliefs and habits. While the reaction was only momentary I recognize that the reasons for it occurring are also affecting my thoughts and decisions through the day all of the time. Subconsciously they affect what I think about, and decide to pursue at a very low level.

Become comfortable with the idea of living a congruent life with positive thoughts. This will help prevent situations where split second reactions work against you and allow you to seize the moment. Become comfortable holding the mindset you imagine the most successful version of yourself would have.

This will help in many situations. Maybe it’s a business relationship and your natural reactions give other parties confidence in you. Maybe it’s a social setting and the only way you meet an important new connection is by recognizing the opportunity and acting before it’s gone.

 

In some situations we can find ourselves stuck in negative behaviour because of bad habits. Habits can be tricky to change but there are some strategies that can make it easier.

Change things up and make automatic actions require conscious control so you can more easily evaluate if you want to continue. Smokers quitting will do this by using the opposite hand. All of the automatic motions of pulling out a cigarette, lighting, holding it now require conscious effort because it’s an uncommon set of motions like writing a letter with your non dormant hand. While that is happening you have the opportunity to say to yourself, do I really want to be smoking this?

You may need to remove certain actors from your environment. If it’s tv you can move it to another room or get rid of it entirely. If it’s a person you may need to set up boundaries. If it’s your living environment you may need to rearrange furniture or paint to make it feel different.

Another approach is to use overwhelming force far beyond what you expect is reasonable. Then even if you fall short there is enough leftover effort to still get the job done.

 

After holding onto this thought experiment for the past few days I found that it actually had a surprising effect. Because it’s not a real pill I missed a lot of negative thoughts and my behaviour isn’t always one hundred percent affected by this. The excitement from the possibility that everything in my life could be changed if I had the courage to act makes it easy to retain the experiment. The first tangible result is this blog. I have been thinking about writing it for years but only now have I started.

If you spend your life thinking and feeling negatively it doesn’t really matter how many goals you achieve, great friends you have or millions of dollars you have in a bank account. None of that can change the enjoyment of your life. The only way to do that is to decide in each moment what thoughts you want to hold.