New normal – are we fked? – Part 1

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Just my thoughts on the “new normal” that has been talked about in both social media as well as government official announcements. What I observed other people’s behaviour after a year and a half under COVID-19 influence, and how did I respond to the same circumstance.

Tl; dr;

I think we are heading towards a cliff as a whole. Big explosions are expected to go off at anytime. However, it depends on what can I do if and when they happen.

I choose to hold close to my investment assets, and not selling anything as of now. Holding as much cash as I can in the offset accounts, while looking for more investment opportunities. I will only expand my portfolio if I find something that fits my calculations and risk tolerance.

The economy

Did you ever look back 2 years ago, when a 2-litre bottle of milk is $2.00? Now, it is $2.40. Same brand, same bottle. What happened? Did inflation go up so much that we did not even notice? Other food products have gone up too, maybe not 20% in the case of milk, but surely, 10% is the norm. While people are looking, researching on stocks, real estates, cryptocurrencies, other aspects of our lives are also going up at a high pace. And nobody bats an eye.

So why did it happen? According to investopedia, there are 3 forces that may affect the inflation rate of a certain product. Cost-pushing, Demand-pull, and Expansionary Fiscal Policy.

  • Cost-pushing: with the restrictions in travelling as well as worsened relationships with foreign countries, we are not importing as many materials in the last 2 years. As a result, a lot of subsequent products are going up due to the lack of materials. We can see it in the increment of new property builds.
  • Demand-pull: this probably can be observed the most when there are disconcerting news, like the first lockdown in Melbourne last year. People flocks to purchase food, and not surprisingly, toilet papers. We did have some people hoarding them and resell with a higher price. And sadly some people bought the items.
  • Expansionary Fiscal Policy: I strongly believe this is the cause of all food prices going up. With various supports coming from the government, suddenly there is more money in people’s pocket, and they can afford more. Corporations are probably the best people to take advantage of this fact, and they raise the price, just a little. I don’t blame them, if I were in their shoes, I would probably do exactly the same.

However, our economy has not been thriving at all. Lots of money going into people’s hand end up in properties. Let’s consider 2 streams, one is purchasing established properties, the other is purchasing new builds.

  • Established properties: this purchase, in my opinions, does not contribute to the productivity of the whole economy. It’s just moving money, or mostly credits in this instance, from one bank to another. And because the price of properties has been rising, there is more and more credits being created every time properties change hands. Which may lead to the breaking point where people realize that there are just too much debt to pay, and we have a time bomb waiting to explode.
  • New builds: contribute a temporary boost of productivity and jobs, due to the fact that someone has to build the property. However it is not sustainable. Some people will argue that we can keep building houses, but we only have like 30 millions population. Who are you building these properties for? Unless the government has a better migration policies, and hoping that people will flock into Australia, we might not end up where we think.
Source: ABS

Since when are we borrowing to buy properties more than we invest into our business, and therefore the economy???

Employment

I have seen companies who wants to employ an experienced level person for 6 months, but unable to do so. They put their compensation to more than $160,000 per annum but there was no hope. At the end, they needed to source the resource from oversea.

We are facing an issue where most of our senior level employees are from migrations, and not a lot locally. This may be the reason why employment is still high, and even if it’s low, the people who got employed may not worth it. The longer our border restriction is, the companies become more desperate and they will need to either go for offshore resources, or agree to a sub-optimal local one.

I know about this because I’m running a service to help businesses finding their offshore resources. The business is called VA For Everyone. And I talked to a lot of business owners with resounding answers that are similar to what I described above.

Summary

I guess that’s long enough for a rant. The economy and the employment aspects are pretty weird and I manage to take advantage of it by providing people what they need. However if this drags out for another year, I am not sure what is going to happen.

Next part I will share my thoughts on people’s psychology from observing people in my circle.

“You see, but you do not observe” – Sherlock Holmes

By Tuan Nguyen

stock investment

My guess on CBA Share buy back

lightbringer Leave a comment

Recently I received an offer from CBA about their share buyback program. They are offering to buy back shares with the total value up to $6 billions. And I am curious of how it affects my existing holding. I took a bit of researching and come up with a guess on how the share price will change.

Tl; dr;

The share price may drop slightly (4.44%) due to the difference of share outstanding and shareholder equity, before and after the event. The drop is too small to do anything meaningful and fit my investment strategy.

What is share buy back?

A company can offer investors to buy back shares from their portfolio. This reduces the floating shares on market, and decreasing the market capitalization as the result.

In the case of CBA, they offer to buy back shares from investors with a certain discounted price, as specified in the booklet. I am sure there are cases where people need to relinquish the share that they are holding, but it is not easy to dump a few hundred millions worth of share into the public market. Therefore these share buy back may be a great way to get rid of the shares without people knowing.

Assumptions

  • The Price/Book ratio is unchanged.
  • CBA successfully buys back the maximum amount of shares that worth $6 billions.
  • CBA buy back price is the market price at the time this blog is written.

The calculation

First, let us see what are the current figures of CBA. For the calculation, I need to find the following details.

  • Current share price;
  • Current share outstanding;
  • Current market capitalization; and
  • Current Book value, or Price/book ratio

Luckily, we can easily find all these information in Yahoo Finance.

At the time of writing, the information is as follows.

CBA current figures
Current CBA related figure

Note that the green values are the manual input value, while the other fields are calculated from the green field.

Next, I attempt to calculate the new share price, by following this logic.

  • After share buy back, the outstanding share will be $6 billions worth of share less.
  • CBA will spend $6 billions from its pocket to buy back these shares, which means the shareholder equity will decrease by $6 billions.
  • The new book value per share will be recalculated by dividing the new shareholder equity by the new share outstanding.
  • Recalculate the new share value by multiply the book value by the price/book ratio.

The result will look like this.

After buyback calculations
Final calculations

As we can see the expected share price is smaller than the current share price. However it is a very small amount. And therefore it is meaningless for me to do anything about it.

Summary

Off market share buy back is a good way to release capital from CBA shares. However since I don’t like selling shares, especially shares of a seemingly stable company like CBA, I will not participate in this buy back opportunity. And based on the above calculation, I feel that there is no use in doing anything related to the price drop estimations.

I will keep an eye out for the price. The buy back date is 04 October, so I expect the share price to be adjusted to the price above within days of 04 October.

Everyone has the brainpower to follow the stock market. If you made it through fifth-grade math, you can do it. – Peter Lynch

By Tuan Nguyen

A cocktail in your hand, and on your wrist

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Imagine you’re in a bar, you walk to the bartender and say “Get me something that looks like my watch.”

The bartender looks at your wrist, and say, “A mockingbird, sir?”

You laugh.

He laughs.

Seiko laughs.

Tl; dr;

I bought a Seiko Presage watch for my birthday. It is the most valuable watch in my collection so far.

The watch signifies a milestone in my career, and my life. Looking at it reminds me of that milestone, and in the future, it will be an invaluable memory. And this timepiece will be there to remind me of that.

The watch I bought.

Seiko was my choice of brand when I decide to buy a watch for my birthday. Mainly because I need a dress watch, and it fits my budget.

Seiko Presage Mockingbird
Source: seikowatches.com

This watch is part of the Midnight Cocktail collection. There are 5 different designs, which represents 5 different cocktails. I chose the Mockingbird due to the simple design, and suitable for a good dress watch on my wrist.

I almost picked the one that features a whisky-based cocktail, however decided against it because I don’t feel like the face and the strap has the same colour. Maybe in the future when I can ask for a strap replacement, I’ll consider purchasing that kind of watches.

Price differences

It is very hard to track the watch price in the market. The Presage Mockingbird RRP is $699, but a quick google search and you can find various pricing from different dealers.

I have been browsing the market for a while, and have my eyes on a few other watches from different brands, such as Rolex and Omega. However the price is surprisingly unpredictable and there are a lot of people buying/selling for a profit.

Google image for Seiko Presage Mockingbird prices
Source: google.com.au

I ended up picking the one in Myer, mainly because I can obtain the watch in store and can inspect it immediately. It was an exciting day when I picked up the watch and tried it on my wrist.

The feeling

Wearing this watch is very comfortable, the strap and face is not too big to overwhelm my wrist. It sometimes feels like I don’t wear a watch at all, very lightweight. I feel a lot more confident, more empowered when I have it with me.

The great thing is that there is no battery, it recharges itself through my movements. So theoretically, it can run with me until the end of days, and plus 2 more days. 😀

Symbols of the watch

So what is this one signifies?

Well, it is my 30th birthday. And people have an expectation that these kind of round-number birthdays need to be celebrated differently. So as part of the excuse to mask my true reason, I can simply use this one as an important milestone of my life journey.

For the true reason? I would like to only disclose that to only people that I trust. So if you see me going around wearing this watch, it is an important event. I will treat this as a special jewellery for special occasions.

Summary

This is the first watch that I bought for myself, and for sure it will not be the last. I am somewhat of a watch enthusiast, and I will continue collect other timepieces as part of my life journey.

By Tuan Nguyen

financial review

Financial review – How do I do it?

lightbringer Leave a comment

Every month, I conduct a financial review for myself. I go through what I spent in the last month, making sure that I recognize all transactions and categorize them into different sections. From there I plan my spending for the next month, and have a better forecast for my finance over the next year or so.

Tl; dr;

The steps that I go through (should take less than an hour to do)

  • List out all bank transactions
  • List out all credit card transactions
  • Put the transactions into several categories.
  • Put the final numbers into a spreadsheet.
  • Split the income into the same categories, and move them to corresponding bank accounts.
  • (Quarterly) Review investment portfolio.

You can’t control what you can’t measure

measure tape
Source: wikipedia.com

If you aim to achieve financial freedom one day, you need to control your finances. And the only way to control it is to measure what you have done over a period of time. I get paid monthly, so that’s why I do this once a month. I encourage you to do it in conjunction with your pay day.

It is even more important to me because I one day will work full time for my own company, and at the beginning, my income will drop significantly to keep the funding inside the company for growth. That’s why I do need to know how much my expenses are; and from there determine how much I need to take out of my company for living.

I begin the financial review with listing out all bank transactions within the last month in a text document. You don’t need to have the bank statement, just transactions history is fine. Don’t forget your credit card transactions as well. I myself have quite a few bank accounts, so pulling all of them together requires me to log into each and everyone of them at least once a month. I just copy and paste them into a text document. Below is an example.

bank transactions
Bank transactions
transaction text
Transaction list

If you do this step, you’re probably ahead of many many people in terms of financial control. At least you have a rough look at what you spent over a period of time. Therefore it triggers something in your mind, and every change begins with the mind.

Categorize transactions

So, when you have a list of transactions, it’s time to put them into several categories. For me, I follow the Barefoot Investor categorization. You can read more about it in his book.

The categories are as follows:

  • Income: all your income sources (you can split it into salary, reimbursements, side income, etc. if needed)
  • Daily expense: all your necessary living expenses, e.g. food, electricity, gas, water, home loan mortgage payments, etc.
  • Splurge: all your optional expenses, e.g. eat out, TV/internet subscriptions, coffee, etc. Anything that you can live without, but choose not to.
  • Investment: all your investment expenses, e.g. putting money into stock market, purchase of something for work, charity donations, etc. Basically anything that potentially making you money, or at least can claim back on tax.

Note: I don’t count my investment income in this calculations, since I would like to reinvest all of them back into the market. So I keep them in an investment bank account, and only look at that once every 3 months.

The Excel spreadsheet for financial review will look similar to this. I also attach a sample file at the end of this section for you to try out. For people who can use accounting software, I’d recommend Akaunting because it’s free and should be enough for this.

Excel spreadsheet showing financial calculations
Sample Excel financial sheet

Here is the link to the sample document. Each month you just need to add another column to the right, and continue the calculations. Overtime, you can see what’s the average spending is; and from there, calculate your own financial plan. Every year I change to another sheet for clarity purposes.

Plan your expenses

Now you know how much you earn in the last period, it’s time to plan your expense for the next month.

Following The Richest Man In Babylon, I immediately pull 10% of total income into my investment account.

For the first time, I have no average number to plan my expenses, so I can only estimates how much do I spend for each categories. Your last expenses total is a good place to start. The average numbers should be around 6-12 months accumulations to be accurate, which means you need to adjust your plan every month until it becomes stable.

So let’s say your income is $3000.

  • 10% to investment ($300) – put this in a separate account, and review/plan it every quarter.
  • 30% to rent/mortgage ($900) – I split this because I need to measure whether I can move to another rental place, or move back into my own place. You can just put it together with the daily expense.
  • 30% to daily expense ($900) – You will have $900 to buy food and pay various necessary bills.
  • 30% to splurge ($900) – You have $900 to buy all the things you want to buy, no question asked.

The percentage will change based on your own spending habits. However, the aim is that no matter what you spend, at least 10% will need to go into investments for the future. Once the planning is done, move the money into each of their own bank accounts.

Congratulations, you have finished reviewing your financials for the month. In future posts, I’ll share my way of determining the expense a bit more accurately, so that you don’t trip on unexpected bills.

Summary

Financial review, in my mind, is what you must do, not what you want to do. It has to be done regularly so that you have a chance of having a better future. The hard part is doing this repeatedly over a long time. I have done this for almost 2 years now, and my numbers are getting better and better everyday.

By Tuan Nguyen

property investment

Discussion – Real Estate stimuli

lightbringer Leave a comment

Australian Government has been throwing quite a lot of stimuli for real estate market in 2020-2021. Most of them aim to ease the effect of COVID-19 pandemic. Some of the stimuli include the Home Builder grant, the Stamp Duty exemption/reduction. Let us have a look and discuss who actually benefits from the grants, and what should we do to make use of them.

Tl; dr;

  • The grants aim to increase the moving of currency within the society, to pull money out of savings and into the circulations.
  • They mostly are beneficial to business owners whose companies service in real estate space, which in turn increase the business activities in that sector.
  • I myself, decided to freeze most of my assets in place and observe the market. I have done something but would like to keep it closer to my chest until I finalize the paperworks.

What comprises real estate?

To understand the next few ideas, we need to understand what is real estate. As we all know, real estate, in the context of physical property where we live in, are the combination of the land and the content that is placed on top of it.

Now, this brings us to a thought, should we treat land and the contents differently? If so, what are they and why are they different? I am going to give you a definition of each, and you can decide on which one you want to focus your money in.

Land is a commodity (sort of)!

different commodities
Source: fleetowner.com

As per Investopedia, a commodity is a basic good that is used to manufacture other goods and services. Why is it “sort of” a commodity? Well to be a commodity, a piece of land has to be equals to another “equivalent” piece of land. And we have not been able to have a universal system where we compare land with land and see if they have the same value.

A characteristic of land that I would like to share with you, is that land itself is not very useful, but more like a heavy baggage when we see it as a financial asset. As an empty block of land, it is definite that we need to pay Council Rates and (possibly) Water rates every year. It is a possibility that the land appreciates in value. However, that is a speculative play and therefore carries some risks, which we will discuss in future blog posts.

The land only becomes useful when there are developments on top of it. The development can be anything, such as crops, cattle, houses, apartments, offices, etc. Once there are contents on the land, there are chances that they will produce income that provides us cashflow, which is important to keep us in the game.

House is a consumer good.

person pushing shopping cart in supermarket
Source: axial.net

Have you ever thought of why only the building got depreciated and not the land? I take a shot in the dark here and say any fixed development on the land, are consumer goods. They are items that you buy to use, to consume. These things only lose value over time, unless there is an aspect of rareness in them, e.g. unique architecture.

Good thing about the depreciation rule in Australia is that we know exactly how much value the developments are losing over time. For example, residential properties slowly lose value over 40 years period. I will not go into the details here as you should talk to a quantity surveyor to know more.

What are the grants for?

The Australian Dream

With the above concepts in mind, we can clearly see that the Home Builder Grant is for building houses, which essentially just like giving you $10 to purchase a consumer item priced at $100. Note that I didn’t say said item valued at $100. I have seen the developers of House and Land packages pump up the price of their packages to as far as $25,000 to match the Home Builder Grant amount. As a result, anyone who utilized this grant with a House & Land package, or even Off the Plan in some cases, are getting minimal benefits, if any at all. The money is going from the Government, through the buyer, and into the bottom line of the developers. At the end of the day, the buyers have their Australian dream fulfilled, the developers exit the project successfully, the government gets the money moving around and pull some out of our savings. So it is a win-win-win scenario, right?

Let’s talk about the other scheme, which is the reduction in Stamp Duty. As we know, the Stamp Duty is temporarily adjusted until 01 July 2021 with a discount of up to 50% for purchasing properties. Combining with the Home Builder Grant, this may have convinced a few investors to purchase another asset. As a result, more money is going out of savings and into the circulation, which is good for economy. Same formula as above, win-win-win scenario.

Is it the greatest opportunity of a lifetime to buy real estate?

There is no denial that these grants change the gameplay of Real Estate investment in Australia. Some people are happy to take the leap, some others are quite concerned. In my opinion, one should not purchase anything because of external push, but to careful assess his or her situation internally, and make decision upon them. There are risks associated with purchasing real estates that unaware buyers are not prepared for. The crash in 2008 is caused by the Mortgage Back Security policies, allowing people to take out mortgages that they cannot repay. When allowing to be greedy, people has no difficulty pushing the boundary, and sometimes drive themselves off the cliff.

This is why I don’t actively follow the news and react to it. Rather I choose to learn how to control my own financial situation and from there, I make financial decisions knowing that I can tolerate the risk that may or may not come.

Summary

I just want to congratulate the people who actually does something during the pandemic. You are already better than others who waits on the sideline. I always tell my friends that it does not matter if your first investment turns out to be a total disaster. The main thing is that we are still young and have the time to correct our mistakes, as long as we learn something out of it. However with these purchases in a sensitive time, careful considerations of personal finances should be carried out to ensure you are safe no matter what.

“The secret to happiness is freedom… And the secret to freedom is courage.” – Thucydides

By Tuan Nguyen

travel the world

Discussion: Adelaide trip part I

lightbringer Leave a comment

Going to Adelaide this Christmas opened my eyes to the whole new world. People here are different than Victorian, and the feelings are vastly distinctive.

Tl; dr;

  • Adelaide people seems to be a lot more relaxed comparing to other states. This can be an opportunity for us to penetrate the market.
  • The economy orbits the idea of being cheap and/or affordable.
  • Scenery is beautiful and there is good maintenance from the government bodies. However there are still spaces to improve.

Relaxation and no-pressure nature

I have had many conversations with both local and migrated people. There is a similarity in the way they describe how Adelaide people works. Mostly they are portrayed as relaxed and have decent amount of red-tapes. And it is best to contact people somewhere in the middle of the day.

With my personal experience when dealing with contacts in the South Australian state, it is not consistent. It may be because people I have been dealing with are business owners and they are more proactive than normal people. However I have experienced people who do not possess the ability to respond in a timely manner.

Affordable economy

A lot of places in Adelaide promote the idea of being affordable and cheap is good. I think it may reflect the purchasing behaviour of the people here, as well as mirroring the economy. Adelaide experiences a slow growth in recent years and this can be one of the explanations. Without greed, I find it hard to move forward by creating innovations and improvements.

Beautiful scenery

There are lots of natural places that awe me. I went to mainly beaches and waterfront in Adelaide area. And some of them are exceptionally beautiful, like Port Willunga beach, Sellicks beach, etc.

Port Willunga beach
Port Willunga beach
Sellicks beach

Some beaches are well-kept by government bodies, with theme parks and other tourist attractions. Some other beaches are wild and have less touch from human. It depends on what you want to see. However I think there are rooms for improvements in some beaches that have not-so-updated facilities.

Summary

While the above are my first impressions of the first few days arrived in Adelaide, I strongly believe that there are opportunities to do business here. Adelaide seems to be behind Melbourne at least 10 years, therefore I will take the chance to drive some changes into the “regional” city of Australia.

By Tuan Nguyen

property investment

Discussion – Real estate supply

lightbringer Leave a comment

During my readings of The Armchair guide to Property Investing, there is a good section discussing about the supply and demand of properties. Let’s have a summary of the supply side.

Tl; dr;

Supply is determined by the following factors:

  • Available land that can be rezoned/released in the future.
  • Possible subdivisions in the area.
  • Current property types, e.g. apartments, houses, units, etc.
  • How fast between approvals and new properties entering the market.

Future available lands

Just a caveat here, I am interested in residential properties, so this blog will only consider that aspect of real estate.

Also my timeline is as follows:

  • 0-6 years: speculative
  • 6-10 years: short term
  • 10-25 years: medium term
  • 25+ years: long term

Considering you are looking at a suburb, e.g. Elizabeth, SA 5112.

map of Elizabeth SA
Source: maps.google.com

It is the CBD of City of Playford, and we can see that there is no more land to be released. Therefore new land supply is basically non-existent, and as an investor, this ticks the first box of restriction of supply.

Now let’s look at a nearby suburb in the same city council.

map of Craigmore SA
Source: maps.google.com

There are a lot of lands available in the east and south part of Craigmore, therefore the council can decide whether they should release the land in the future. Considering I am going for a long term buy and hold, i.e. 25+ years; this is a real possibility if I were to purchase in this suburb.

Possible subdivisions

This is a bit trickier, but can still be done by looking at the current and approved development applications for a certain suburb. For example, let’s look at the list of current applications in Elizabeth, SA.

Source: playford.sa.gov.au

The text can vary, but generally the description is something like “Land Division”. And my job is to determine of how many has been approved, how many has been applied for a given time; e.g. last 3 years, accumulated by year to determine the trend.

This information is public information. For Playford city council, we can pull application data from 1993, which is helpful when trying to determine trends. All councils should have the development applications tracking page, and you just need to look for it in their websites.

The more subdivisions are approved, and the speed of them being approved will determine how many new dwellings will enter the market in the near future. Forecast that number into the future using the past 3 years trend and you get a rough number of new dwellings in the next, say 10-20 years.

Current property types

If the suburb is dominated by detached houses, this will not be a problem in the next few years. However, in the longer term, there’s nothing to say about the council not easing the requirements to build semi-detached houses, townhouses or even apartments. Lucky for us, the plan of the city council normally goes for 15-20 years ahead. Therefore we have a rough idea of what do they want residential properties look like in the next decades.

If there are apartments being built, especially high rise apartments, then the supply is going to be massive, since there is no telling how many high rise can be done in the next 15-20 years, and each of them can accommodate many households. We will come back to this when we discuss the demands, but for now it will be a red flag when determining the supply of the area.

One of the easiest way to determine what types of properties are dominating the market is going there yourself. But if that is not possible, asking several real estate agents should do the trick.

Speed between approvals and actual properties enter the market

This is actually a bit easier to guess, normally a small build like 2-3 townhouses takes around 6-12 months to complete after being approved. However, it varies depending on the suburb. It is much easier to figure that out by checking the approved applications from 2 years ago and see if the address was on for sale or for lease. As mentioned above, the application history is available online, as well as the records for sale or for lease.

It will give us a good indications on the delay of stock, for example, if it takes a long time from the approved stage to the actual building entering the market, there will be more stress on the supply in the short term. Therefore the price can go up a bit more than it should be.

Summary

Supply is one crucial part of the supply-demand matrix. Understanding what supply comprises of will help me to determine roughly a good area to invest in. There are a lot of manual work involved but I think it will be worth it in the end.

“To acquire knowledge, one must study; but to acquire wisdom, one must observe.” – Marilyn vos Savant

By Tuan Nguyen

Discussion – How FIRE benefits corporations?

lightbringer Leave a comment

FIRE movement is tremendously popular these days, especially among specialist workers. The idea of retiring early with an abundance of money is attractive to everyone. The concept is excellent and is real. People have reported retiring early and have enough income for them to live their lifestyles. However, is it all good and beautiful?

Tl; dr;

  • The mainstream way of FIRE is work – buy assets – reach a certain networth – retire happily.
  • FIRE gives back money to corporations and allow them to continue growing.

What is FIRE?

Source: dollarsandsense.sg

FIRE stands for Financial Independence, Retire Early. It is the concept that first came out from the book Your Money or Your Life. This concept then blossomed and became the most popular way of achieving an independent retirement known to millenials. The FIRE movement is very simple, considering that your annual salary, you should allocate most of that earnings to buy assets like Stock and/or real estate that makes you money; living below your means until your networth is enough for you to retire and live your dream lifestyle.

Most people advise to buy ETFs as the easiest way to buy assets. At the end of the day, most fund managers cannot beat the market index. So, why try to beat the market yourself, send the money to fund managers; while you can just buy into a broad market ETF and benefits from the rise and fall of the market?

How does it benefit corporations?

Assuming you work for a big company X.

You earn $500,000 per annum post tax because you are great at doing your job and ready to work long hours for the company.

You follow FIRE movement and decide to spend 80% of your take home money to buy ETF that track the ASX200, or S&P500 depending on where you live.

Now, let us take a more general look, and assume X is the ASX200. We can see that you put back $400,000 per annum back into X and allow it to grow artificially. The growth does not come from better productivity, but from people buying blindly into the company. In a way, it is a great “scam”, where corporations take your best productive years, paying you top dollar, all that for you to give back most of the money back to them to continue the cycle. It is truly fascinating.

The best thing is that, you benefits from it too. However, I imagine that you get 1, your employer will get at least 100. But everyone is happy right?

How to FIRE the right way?

I strongly believe that beside being good at your job, you need to be fluent in at least one form of investments. It maybe learning how to pick stocks, how to invest in real estate, how to get your way around commodities, gold and silver, etc.; or even starting a company. The possibility is endless.

The question is why people do not do this? And from my experience, it seems to be because they are scared. Why learn how to invest when I am already making $200,000 per year? Why leave my job to start a business? What if I lose everything?

What most people do not experience is that the other side of fear is calmness. Before you jump out of the airplane for skydiving, fear engulfs you. But once you jump, there is a sudden calmness in your mind, and then the joy of experiencing flight.

Summary

FIRE is a great way to achieve financial independence. I am also an advocate of the movement. However, my approach to it may not be the same with other people. I will achieve Financial Independence my own way, and I will share with you the journey over time.

“Only those who go where few have gone can see what few have seen.” ― Buddha Gautama

By Tuan Nguyen

Experience – Thinking into Results – Week 2

lightbringer Leave a comment

Following up on my week 1 post, this is my experience about knowing-doing gap when I am in the middle of week 2 materials of Thinking Into Results course.

Tl; dr;

Week 2 is all about learning what I can do and what I actually do. Being aware of them helps me to close the gap between what I know and what I do.

  • Most people know a lot but not doing anywhere near their knowledge level.
  • People do things they do not want to do, hence getting results they do not want to get.
  • Only by changing paradigms, you can change your behaviour, which will change your results.

What is the knowing-doing gap?

knowing doing gap diagram
Source: bradlatzke.com

Bob Proctor introduces the idea of knowing-doing gap, which is the difference between how much a person know, i.e. his/her knowledge, and how much that person is doing. We learn a lot about different things in life, but how often do we actually do it?

For example, I know a lot about the theory of sales and marketing, but am I a good salesman? Far from it. This is my knowing-doing gap that I need to close. There are 60 trillions in US dollar per year that corporations spend on training their staff, helping people to know more. However the missing link here is that we need to help people to DO more.

Why people do what they do?

Imagine someone who needs to get in shape, they have just started dieting and exercise. Then they see their favourite cake. They know that it is not right to eat that cake, it will not help them achieving their goal of getting into a good shape. However most of the time we observe that they will eat the cake anyway.

So why do people know that doing something will harm them, but they do it anyway?

The answer lies in our subconscious mind. It is the way we are programmed to do. Imagine you have been eating excessively in the last 10 years, now suddenly you want to stop doing all that? How would your mind react to it? The subconscious mind resists change. It does not like doing new things. If the current way is safe, why doing something different?

Well, the answer here is that we need to implement a new programming into our subconscious mind, getting it to perceive another way as “safe”. Because only by changing ourselves, we can get different results.

What do I need to work on?

Firstly, I need to work on my concentration ability. I find myself easy to be distracted by mobile phones. So what do I imagine my life will be if I am able to concentrate?

  • I concentrate on the task at hand, and will keep going until it is done.
  • I only access my phone 2 times during work hour, 11am and 4pm.
  • I still have access to the phone to answer phone calls and text messages.
  • I turn off most notifications except phone calls and text messages.
  • I get more done during the day and be more productive.

Secondly, I want to work on my organizational skill. I am aware that I do not have the cleanest apartment in the world. So let’s do something about that.

  • I clean the dishes after cooking and eating.
  • I vacuum the apartment at least once a week.
  • I keep the desk organized with labeled items.
  • I throw away boxes that I no longer need.

Summary

This lesson help me figure out the knowing-doing gap: what are my undesirable results and how to address them. I can see the clarity in my actions now and will follow the new way that leads me to the result I want.

“Do everyday things in a new way to get the brain thinking in new ways.” – Jesse Itzler

By Tuan Nguyen

Experience – Thinking into Results – Week 1

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As stated in my previous blog post, I start week 1 of Thinking Into Results program on Monday (31/08/2020). And it is harder than I thought. First lesson is setting a worthy goal, which turns out to be much challenging than expected.

Tl; dr;

  • Setting a clear vision of a goal involves how I feel about the outcome.
  • Being able to clearly “see” the goal proves to be challenging.

Setting a C type goal

3 different types of goals

According to Bob Proctor, there are 3 types of goals.

  • A type goal: something that you can do. For example, you bought a new car 5 years ago. Now you have a desire to purchase another new car. For this goal you already know how to do it. Therefore there is no personal growth attached to the outcome.
  • B type goal: something that you think you can do. For example, your salary is currently $50,000 pa. You set a goal to make $60,000 pa. But this is so small that you already map out steps to be able to achieve it. Negotiating salary, working harder, making yourself noticed by the manager, etc. The point is, you already think that you can do, therefore you have no motivation to do it after a while, and often end up not achieving it.
  • C type goal: something that you want. This does not involve you knowing how to achieve. The point is to clearly see the the target and direct your actions and emotions toward that goal. The path will be laid out along the way.

Vision a goal

The goal has to be in the fantasy realm. I need to use my imagination to “see” this goal. It is easy to say “I want to make 1 million a year in income.” It is much harder to imagine how my life will be when I reach there. The workshop exercises require me to describe how I envision what I want, down to minute details.

The objective is to push my vision down to the subconscious level, which I will learn how to do in future lessons. I will need to repeat the process of finding and defining goals for the next 2 weeks.

Dr. Jordan Peterson has a great view on why do we need to set goals in our lives. And I think it aligns with what I am studying at the moment.

Summary

Starting to know what I want, and envision them in details makes me feel like I have more control. Control over my life and my circumstances, I feel more powerful and can take on responsibilities for getting what I want, no matter the circumstances.

I will continue on this path and see how it turns out.

“First comes thought; then organization of that thought, into ideas and plans; then transformation of those plans into reality. The beginning, as you will observe, is in your imagination.” – Napoleon Hill

By Tuan Nguyen