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  1. #11
    FRACTALICIOUS phobik's Avatar
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    *bump*

  2. #12
    Administrator highlander's Avatar
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    Quote Originally Posted by ygolo View Post
    [*]Where money is concerned, it is all about Net-Present-Value(NPV).

    You can calculate your assets minus your liabilities to get your "net-worth".

    But this sort of calulation is not "design-oriented" (paying homage to my most recent hero R.D. Middlebrook), in that it that the analysis does not yeild insight into what we "should" do.

    The NPV calculation, can in theory be used to look at how desicions you make now will likely affect you. There is a whole system of cashflows and tables that allow you to make these calculations. The math is simple, and the idea even simpler.

    You can look into it yourself, but it can be sumarized it as aim to "maximize the return on investment". Of course, when you make any type of coherent plan it is good idea to test for sesitivity of your NPV to the assumptions you make.
    [*] The first principle overrides the second when there is a conflict. One of my goals (which is largely a financial one) is be free to do what I want for the rest of my life. The current scheme I am pursuing is regarding finances is
    1. Own my home free-and-clear, so I only have to pay property taxes, and repairs (not rent or mortgage).
    2. Get enough residual income (rental property, dividends, interest payments, royalties, pension?, social security?, and the like) to pay for whatever is left (which will be mainly food and entertainment)
    3. Get there as quickly as possible. Being financially free early is worth a lot more to me than eventually being filthy rich.
    [/LIST]

    That's it. That is my whole philosophy of money.
    Quote Originally Posted by ygolo View Post
    I did all that, but I am not going to give out too many details on a public forum. I figure if I own my home free-and-clear, I will only need 60% of my original income. And yes, I know how much, I will likely save, and how well mysavings will grow in resonably good and bad (but not catistirophic) market senarios.

    Well there are three senarios. Assuming medioce stock, and real estate markets:
    1. Under good job market conditions, I can retire at 48-49.
    2. Under mediocre job market conditions I can retire at 55.
    3. Under poor job market conditions I can still retire but may have to work till 67.
    At least you're planning and you're considering different scenarios. My principles are:

    - Live below your means
    - Save at least 10% of income each year; never dip into it
    - Eliminate debt
    - Diversify your investments, adjusting your risk profile as you get older
    - Buy mutual funds with very low expense ratios

    I'm conflicted about a mortgage. You get to write off the interest but then you still have to pay interest. I guess as I get older, I think the primary result of debt to keep us all enslaved. So my current thinking is to avoid it at all costs. I live in a big house and if I had to do it over again, I'd have a smaller one that would be paid off by now.

    Outside of a mortgage, any kind of debt should be avoided at all costs (though clearly this is not always practical).

    With regards to retirement, it's all about standard of living and what I hear is that people tend to underestimate what they are accustomed to.

    Please provide feedback on my Nohari and Johari Window by clicking here: Nohari/Johari

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  3. #13
    nee andante bechimo's Avatar
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    Short term investment decisions should be handled like guerrila warfare. In and out in a hurry. Greed goes hand-in-hand with bear behaviour.

    Long-term investment decisions are self-explanatory. Make wise investment choices, ones not fraught full of over-hyped, over-inflated glam stocks. Diversify and balance your portfolio.

    Don't panic. Being a lemming isn't the way to maximise returns. Lemming behaviour includes investing in mutual funds. You're overpaying for negligible services with little to no transparency.

  4. #14
    Administrator highlander's Avatar
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    Quote Originally Posted by Metaphor View Post
    Short term investment decisions should be handled like guerrila warfare. In and out in a hurry. Greed goes hand-in-hand with bear behaviour.

    Long-term investment decisions are self-explanatory. Make wise investment choices, ones not fraught full of over-hyped, over-inflated glam stocks. Diversify and balance your portfolio.

    Don't panic. Being a lemming isn't the way to maximise returns. Lemming behaviour includes investing in mutual funds. You're overpaying for negligible services with little to no transparency.
    I agree with diversification, balance, and wisdom. I also agree that it is easy to overpay for "negligible services". Note I say Low Expense Ratios.

    I used to invest in individual stocks. I used to spend a lot of personal time and energy on it - following these individual companies - analyzing the financials, etc. A good friend of mine who is in the investing business basically told me I was gambling. He recommended investing in index funds. I should have taken his advice.

    Yeah - it's boring.

    You accumulate wealth through discipline of saving, living below your means, avoiding debt and compounding of your investment over time. You can also be an entrepreneur.

    Please provide feedback on my Nohari and Johari Window by clicking here: Nohari/Johari

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  5. #15
    pathwise dependent FDG's Avatar
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    Quote Originally Posted by highlander View Post
    Outside of a mortgage, any kind of debt should be avoided at all costs (though clearly this is not always practical).
    I agree when it comes to personal finance, disagree when it comes to business finance (esp. if you can manage to found a limited liability company).
    ENTj 7-3-8 sx/sp

  6. #16
    shadow boxer strawberries's Avatar
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    i've invested in managed funds since my late teens - i don't have the time to manage my own stuff closely, but i know people who work in investment banking and they helped me find fund managers to suit my risk tolerance/goals.

    the branding of this conversation in terms of philosophy reminds me of a series on the BBC called million dollar traders. a dutch hedge fund manager - lex van dam - gave a million dollars to a bunch of amateurs from all different backgrounds to trade with - it was around the time of the crisis.

    it was fascinating seeing which types of personalities suit trading, how personal values and personality affect a person's trading choices and how different people react to the stresses/volatility of the market. from memory the most successful traders were a former soldier and a single mum…? some of them cracked and quit from the pressure.

    i'm sure it's on youtube somewhere if people feel like checking it out.

  7. #17
    meinmeinmein! mmhmm's Avatar
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    i diversify modestly, but my long term goal is to build concentrations.
    i never invest in businesses i don't know, and never ever use my
    feelings. ever. when investing i strictly stick to data and reasoning.
    it doesn't come naturally, so i surround myself with the best at
    what they do. that's how i eliminate self doubt--there's no
    place for it. being wrong is inevitable, but you
    can eliminate self-doubt by self-educating.

    i also invest invest locally, regionally and internationally.
    every normal man must be tempted, at times,
    to spit on his hands, hoist the black flag,
    and begin slitting throats.
    h.l. mencken

  8. #18
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    These days I would stick with companies that manufacture tangible goods. I'd stay out of financials, IT, and service-industry stocks, but that's just me.

  9. #19
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    I'm currently raking in cash from BP, I need to re-analyse if it is worth holding on to them after Christmas.

  10. #20
    & Badger, Ratty and Toad Mole's Avatar
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    We all have twenty-four hours in a day - no more, no less. And not one of us can increase it by a minute by investing.

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