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Why all the hard work?

sharing of goods is division,

sharing of thoughts is multiplication

(Hans Albers) how to contribute value ?


Principles (=ultimate truths) came to mind.

In times of uncertainty where we all find ourselves, the three main topics of human struggle are health, relationships, and finance.

While finance is the easiest to solve obstacle out of these three main categories we did not receive proper education about this subject in school.

Let us fill the gap:

Financial Success Principles

Goal:

if you spend less than you earn

and reinvest the overhead

and when the profits of that investment capital exceed living costs (passive income)

= Then you are home free

(one simple but effective method to do so is the bucket system)

Path:

The key to success is a plan

(25% of enterprises without a business plan fail within the first two years of operations)

Counterintuitive behavior is required to succeed:

60/30/10 Principle:

Image (brand)/networking/product

(while intuitively, one would focus most on one's product quality, the 60/30/10 Principle describes the accurate percentage importance of category to focus on for a successful outcome)

Counterintuitive Principles:

Compound interest:

An investment of $10,000 at 5% per annum return is growing into $948,363 in 35 years.

Risk/reward ratio:

There are no sure bets, but if you are with a risk-reward ratio of 1:2 in a sample of 20 only seven times correct, you still come out a winner even though you were 13 times wrong.

Maximum drawdown:

A 50% loss requires a 100% gain to get back to breakeven

in a 1000 sample size, one has a statistical certainty of 13 wins or losses in a row

With those two principles combined, an investment should never exceed a risk larger than 2% of total capital to ensure a smooth equity curve.

Psychology:

Most problems stem from intuitive reactionary problem-solving versus counterintuitive anticipatory Principle-based solutions.

( Quad exit strategy, CD ladder, NLP)


Can we really afford not to do this work?


Yes there are easier ways to make money,

but there is also more needed than just money

this kind of work makes you flexible,

makes you prepared to face no matter what's next.



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