5 Life and Money Principles I learnt as a 90s kid that helped me amass a 6-figure wealth
#5 is a gamechanger
5 Life and Money Principles I learnt as a 90s kid that helped me amass a 6-figure wealth
It was August 2016.
As a blurry eyed fresh graduate, I was starting my first full-time job in an MNC.
I was excited for what’s to come, looking forward to a bright future (whatever that might mean).
Fast forward to 2023, the feeling is somewhat different.
The past 6 years have been a rollercoaster ride, bringing with it many ups and downs.
Normal human behaviour makes us remember the downs more vividly than the ups.
In the stock market, losses always feel twice as painful as wins (even of the same magnitude).
Experiences shape and change us human beings.
My approach towards finances and life has shifted quite substantially since then.
In this article, I will be sharing 5 of my greatest learnings which have helped me build my wealth to 6-figures and live a more aligned and purposeful life.
1. Diversify your income
Gone are the days when workers can rely on a single job for their entire career.
Having a single income stream is like investing all your money in a single stock.
You will either go big or go home (more likely than not, it’s go home).
It’s why I’ve been experimenting with building different income streams.
One of which is a trading strategy which requires you to enter only once at the start of every month, then re-assess at the end of each month.
2. Inaction is the best form of action in long-term investing
The average investor can’t beat the market.
Not because they’re dumb, but because their emotions get in the way.
The trick is to remove your emotions from investing.
My returns this year in my “Do not touch” Saxo account is 34%.
That’s almost double the returns of the index.
All while making a total of ZERO trades.
The truth behind why I don’t touch this account is because I’m terribly lazy.
Laziness doesn’t work in most professions, but it works wonders in investing.
Investing should be emotionless and boring like watching paint dry.
An easy way to get better returns is by automating your investments (and not touching them).
A set and forget strategy so you don’t sell in panic when the market goes south.
How I do this is by using the SMART savings plan feature in uSmart.
3. Avoid the 3Ls
According to Warren Buffett, there’re only 3 ways a smart man can go broke.
They are liquor, ladies, and leverage.
Liquor
It helps that I don’t enjoy the taste of alcohol.
Every time I drink, I become like the Merlion in Singapore.
Headaches and hangovers that come with the after-effects of alcohol only compounds matters.
Ladies
“Do you have a girlfriend?” is a question I always get asked from relatives.
Every time without fail, my unapologetic answer is “No”.
Despite being in my 30s, I’m in no hurry to get hitched just for the sake of it.
Marrying right is better than marrying early and wrong.
If it means being single forever, then so be it.
Most people would rather die than be seen doing things alone.
In contrast, I love the unparalleled freedom that comes with being single and spending time alone.
Leverage
In Warren Buffett’s words, it’s crazy to borrow money on securities. It’s insane to risk what you have and need for something you don’t really need.”
You’ll do fine without leverage.
Sure, the returns might be lower, but the downside will also be lower.
There’s no point in risking money you have for money you don’t need.
We all know Berkshire Hathaway is a fundamentally good company to invest in.
But, if you had leveraged just 2x to buy Berkshire Hathaway shares, the 50% decline during the global financial crisis would’ve wiped you out completely.
It’s why they say leverage is a double-edged sword. It magnifies both your returns and your losses.
4. Identify the things that are worth spending on
Spend extravagantly on the things you love, and cut costs mercilessly on the things you don’t.
There’s no one size fits all to this.
Here are some things I spend on that have given me exponential returns (may not be monetary wise).
Chiropractic
Back pain has been haunting me since my early 20s.
It’s only a decade later that I decided to nip this in the bud.
A chiropractor I’ve been visiting is Arc of Life.
If you’re based in Singapore and need help with pain management, I’d highly recommend them.
You also get a 50% off your initial consult fee when you quote my name “Benedict Goh”.
Exercise
As my new job is fully WFH, it’s easy to fall into a sedentary lifestyle.
I’m avoiding this by taking intentional effort to get out more and incorporate more physical activity into my life.
Rock climbing and yoga are 2 of my favourite physical activities.
I used to hate exercise.
As I grow older, I’m starting to see its importance.
If, like me, your job requires you to WFH, you may want to consider incorporating some exercise into your daily life as well.
ClassPass is my go-to app as it keeps me accountable and motivated to stick to my exercise regime.
I’ve found that spending money causes a pain just enough to keep me accountable.
Experiences
I’m starting to prioritise spending on experiences over material items.
Material items only provide temporary happiness, whereas experiences create memory dividends that can last a lifetime.
It’s perfect that my 9-to-5 gives me the flexibility to work from anywhere.
One reason why I’m taking this chance to work from Australia in August 2023.
5. Understand your personality
“Who am I?”
This is a question everyone should ask themselves. The answer may be elusive at times.
After some long deep soul searching, I’ve come to realise that I am a passive person.
As a hands-off, passive person, I do not enjoy monitoring the markets (although I know many do).
I prefer to just spend 5 minutes placing a trade or investment and not looking at it.
This is why inactivity in the stock market has worked for me.
Knowing this helps me to identify where to focus my attention and energy towards.
For the longest time, I’ve been trying to learn how to trade consistently, to no avail.
It’s only when I realised I do not like to be glued to the screen reading charts and indicators that things started to click.
Even though I do trade now, it only takes me about 5 to 10 minutes a month, without having to analyse chart after chart.
Without truly understanding your personality, all of the above points will not matter.