Sunday, 10 July 2022

Review and Summary of “Just Keep Buying” by Nick Maggiulli [Part 2]

Continuation from the first part

  1. Retirement is about more than money

    I think this is a very important point and I find it the thing that makes your retirement time fulfilled. A lot of people know why they want to retire and work towards that by managing their finances well but knowing what you will retire into eg volunteer work or hanging out with a group of friend or basically how will you spend all that extra time you have is important. Having money can make your retirement more interesting but you need to also know how you will be spending all that money.

  2. Invest to replace your waning human capital with financial capital

    I am sure if you are reading my article, you definitely have started or is wanting to start investing. So yea, you know the drift.

  3. Buy quickly, sell slowly

    As the markets over the long term perform better based on past data hence buying quickly and selling slowly is the optimal way to maximise your wealth hence explaining why most would advise to have a long term horizon for your investments.

  4. Invest as often as you can

    Of course, as often as you CAN, don’t overstretch yourself and always ensure that you have the foundation ready eg, emergency funds, liquidity for short-term payments, insurance. Also, there are many kinds of investments available depending on whether you are investing for capital growth, cash flow or a little growth and more on capital preservation. Once you have the right and suitable vehicles, invest as often as you can.

  5. Don’t fear volatility when it inevitably comes

    As we have seen in the past, the market eventually recovers from the lows although the past does not necessarily predict the future. Volatility is something that you have to experience if you invest in the stock market for the long term and keeping your emotions in check is very essential.

  6. Market crashes are (usually) buying opportunities

    I guess so but make sure you have enough or incoming income to supply your buying purchases as no one knows how long the dip/bottom might last. Market crashes are usually good opportunities to build up positions as you can buy more when prices are down but if you have no cash flow or available cash, holding on is also equally important. Do not panic sell as you would be selling at a bottom unless the investment thesis has changed or you need to cut losses.

  7. You’ll never feel rich and that’s okay

    We will always think we do not have enough especially in a competitive and expensive city like Singapore as there will always be someone richer. We are usually humble in nature and hence will think that we are not rich and even if we are really not rich, to be honest, if you have good health and friends and family around you, it really is all you can ask for as money can be earned again and again. But good health and relationships are much harder to regain if they are lost.

  8. Investing isn’t about the cards you are dealt, but how you play your hand

    Being born rich might give a head start in being able to invest earlier as you have the capital but it doesn’t mean that not being born rich means you cannot invest and work towards being financially free. Especially so in the age and time where investing is available to most. Of course, there are many macro-environmental factors that make it tough to have available cash to invest but if you are able to slowly build up, remember you are not competing with anyone but just trying to achieve your goals. As the rich can also lose money if the risk is not properly managed as we can see in the cryptocurrency space in recent times.

  9. Time is your most important asset

    Time and again, I am sure you have heard Albert Einstein once said “Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn't, pays it”. Compound interest can make you reap the benefits on a long term horizon so starting early is key so that it compounds.

Conclusion

The book definitely brings back a lot of basic theories on why people start investing and over time I have to admit that I forgot about why I started investing as I look for assets that are riskier and might not bring about that growth that I am anticipating. After revisiting this book, it has made me rethink on how to position my portfolio for the long term. I will be introducing some changes in my portfolio allocation and will be sharing them so that I can see if they really will benefit me in the long run as I visit back this decision. Do give this book a read and wishing the world peace and stability.

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