by John | Apr 30, 2017 | Investor Mindset, Investor Psychology, Personal Journey
Taking the right steps to be successful is important. The right activities, actions, and attitudes are vital to success in all areas of life. Doing the right things is important. But it is almost just as important to avoid doing the wrong things.
And in order to avoid doing the wrong things that often means saying ‘no’.
Saying ‘no’ to thoughts, investments, invitations and anything else that isn’t going to bring people closer to their goals.
Saying ‘no’ is an important skill.
Saying ‘no’ to Some Demands on your Time
There are only 24 hours in a day and there are a myriad of competing obligations and demands on one’s time and attention. It’s important to reject those things that will prevent someone from being successful.
For example saying ‘no’ to staying up late because you need some extra sleep for an upcoming week that you know will be challenging. Maybe it’s saying ‘no’ to watching TV so you can read a book or learn a new skill. It could be saying ‘no’ to going out with friends if you should be spending that time doing other things. Or perhaps it is saying ‘no’ to spending money on something new that you don’t really need.
By saying ‘no’ to things that take you further away from your goals you can say ‘yes’ to those things that will help you achieve your goals.
Saying ‘no’ to Some Investment Opportunities
It’s important to say ‘no’ to mediocre or bad investing opportunities. When I was previously trading options I wasn’t always patient in waiting for the right setups, with the right combination of high implied volatility and option pricing. I needed to say ‘no’ to more of the bad option trades so I could make more profitable option trades.
It’s worth saying ‘no’ to investment opportunities that aren’t right so that one can pounce on the right investments.
Saying ‘no’ to Negativity
Attitude isn’t everything but attitude is still vitally important.
It is amazing what a change in attitude can do to even in the most horrific situations.
Being positive is something in it’s own right, but it’s also important to say ‘no’ to negative thoughts.
I find identifying negative thoughts I’m having, and working to replace them with positive thoughts is extremely helpful. It’s not suppressing negative thoughts, it’s realizing they are there and trying to find ways to reframe or re-evaluate a situation so that the negative thoughts are replaced by more healthy, realistic and positive thoughts.
Saying ‘no’ to negative thoughts can help foster a positive attitude.
I rarely enjoy saying ‘no’, wether it’s declining an invitation from a friend because it would interfere with something more important or not watching another episode on Netflix on Saturday because it’s time for me to go exercise. But it’s important to be able to say ‘no’ sometimes so that one is free to say ‘yes’ at the right time.
by John | Mar 21, 2017 | Cryptocurrency, Currencies, Learning from Mistakes, Personal Journey
I wrote back in June of 2016 in an article Ethereum Cloud Mining is Not Profitable. Today is exactly 1 year since I purchased an Ethereum cloud mining contract at Hashflare.io. As I recapped in that article:
In order to simply break even ETH would need to trade up to around 18.7 USD.
I would also be better off if I had just bought ETH.
That article was written about 3 months after I had made the investment in Ethereum Cloud Mining.
I wish I had done the in depth analysis in that article before I made the investment in Ethereum Cloud Mining so that I would have known not to make the investment.
And that is the lesson I learned:
Perform your due diligence before making an investment!
An artist’s representation of how I envisioned Ethereum Cloud Mining would go
I attempted due diligence but I did not consider all the relevant facts. These relevant facts were available to me at the time if I had known to look for them.
Since my mining contract is up I want to recap what actually happened with the benefit of all the facts.
The main beneficiary of my bad experience is anyone who is newly considering Ethereum Cloud Mining: caveat emptor.
There might be other cloud mining services out there that are profitable but in my experience Hashflare.io was not one of them.
Ethereum Cloud Mining Recap
On 21 march 2016 I spent $561 for a cloud mining contract at Hashflare.io. Ethereum was trading at $10.81 at the time. In the one year of mining I mined 41.27 Ethereum. As of writing Ethereum is currently trading at $42.6.
Source: http://coinmarketcap.com/currencies/ethereum/
So that 41.27 Ethereum would be worth $1,758 if I had held onto all of them and then sold today.
This is a $1,197 gain which sounds nice but it really isn’t and I’ll explain why.
Why a $1,197 Gain Wasn’t Very Good
But what if the price of Ethereum had not gone up 294%?
An artist’s representation of how Ethereum Cloud Mining actually went
What if it had stayed the same price of $10.81. Those 41.27 Ether I mined would be worth just $446.
What does that mean?
It means: The gain was entirely due to the increase in the price of ETH–the mining itself was not profitable.
In fact, if I had taken $561 and just purchased Ethereum directly, I could have acquired 51.89 Ethereum, which at current prices of $42.6 would now be worth $2,210 or a gain of $1,649.
So other than sounding cool Ethereum Cloud Mining through HashFlare.io provided no value.
The Problem with my Analysis
The downfall of my analysis when initially evaluating the investment in Ethereum Cloud Mining was assuming linear growth in hashing power of the Ethereum network.
I explain this in more detail in my original article and I also provide a process for making more accurate predictions wether a cloud mining contract will be profitable or not. Using that process I predicted I would mine about 30 ETH.
This prediction was much closer to what I actually mined compared to the 120 ETH predicted using static models.
It was a tough lesson to learn but thankfully the amount at risk was relatively small at $561.
by John | Jan 1, 2017 | Investor Psychology, Personal Journey
Everyone has dreams and desires.
Maybe it is a boat or a million dollars. Perhaps the dream is to lose weight or gain muscle. The dream could be a house in the fashionable neighborhood, or a relationship with the right person, or a promotion, or spending more time with one’s children.
Dreams are great. I think most people (myself included) would benefit by dreaming MORE.
But you can’t stop there if you ever want your dreams to become reality because you need goals to accomplish your dreams.
I can’t summarize it better than Harvey MacKay.
“A dream is just a dream. A goal is a dream with a plan and a deadline.” ― Harvey MacKay
Turn Your Dreams Into Goals!
Take some time early in January to set goals based on your dreams.
If you had goals in 2016, take some time to evaluate how they went.
Goals should be SMART. The definition of a SMART goal varies but each one should be some combination of: Significant, Motivational, Achievable, Results-oriented, and Trackable.
Write down your SMART goals, and share them with someone who will check in on you and keep you accountable.
But don’t stop there. You need to spend time figuring out HOW you’re going to meet your goals.
You need to have a detailed plan and proven approach to follow in order to be successful.
Another key factor is Motivation.
Find a WHY to Motivate you
Anything worth doing requires hard work and sacrifice. Hard work and sacrifice aren’t fun or easy.
You need a WHY.
WHY are you doing what you’re doing? What drives you to accomplish your goals?
In the morning what is going to get you out of bed and pursuing your goals? When you come to obstacles, challenges, and setbacks what is going to keep you striving and working hard?
You need a WHY.
Twenty Seventeen is the Year You Do It
“Do it.” – Art Williams
Let 2017 be the year you use your dreams to set SMART goals, write them down, find an accountability partner, develop a detailed plan and schedule that you’ll use to accomplish your goals. Define your WHY and think about your WHY every day to stay motivated.
My Goals for 2017
I have goals that fall into a variety of categories such as spirituality, fitness, relationships and finance.
I’d like to share a few of the goals I intend to accomplish by the end of 2017.
By writing down a goal and sharing it with others it mitigates the temptation to give up or change the goal.
Grow my Trading Account by 8%
I lost money in my trading account in 2016. I don’t want that to happen again.
So I’m taking what I think will be a safer and more passive approach by selling covered calls on the value stocks I like.
“Many people fail in life, not for lack of ability or brains or even courage, but simply because they have never organised their energies around a goal.” – Elbert Hubbard
Stick to my Budget
I have a budget that details how much I plan on spending each month on food, rent, gasoline, etc. One of my goals each year is to stick to my budget.
I set up a revised budget in July of 2016 and I stuck to it. It helped me financially survive during my time of unemployment. I intend to keep to my budget for 2017 as well.
It doesn’t matter how much money you make or how much money you have: if you don’t live within your means you’ll go bankrupt.
Just look at Mike Tyson, who earned an estimated $400 million as a boxer, and who declared bankruptcy in 2004.
Wether you’re rich or poor you need a budget to ensure you live within your means, however modest or grand those means may be.
Make $1,000 Selling Coins
I made $1,868.66 selling numismatics in 2016. I hope to make about $1,000 in 2017 following similar techniques. This is something I’ve shared with my newsletter but I haven’t yet written any articles about it.
Grow HowIGrowMyWealth.com Audience to 500 Users per Month
Last year my goal was 1,000 users per month to this website. I didn’t hit that goal. My best month was September, in which I had 634 users. The average was 361 users per month. This year I’m setting a goal of an average of 500 users per month.
I’m going to accomplish this goal by continuing to create content on a regular basis as well as do more guest posts on other sites. I also promote my content on Facebook and Twitter.
Additionally I’m striving to increase the subscriber base to my newsletter. You can help me to do that by signing up!
My WHY
I have aspirations to marry and I want to be able to support a family.
I also want to be present to my family.
I don’t want to be reliant on a boss telling me when I can or can’t take a vacation. I want to have flexibility in when I work. I don’t want to miss out on my kid’s soccer games or ballet recital because a report is due. I don’t want to worry about paying bills or getting laid off.
I believe that if I work both hard enough AND smart enough I can achieve financial independence that will allow me to provide for a family and be there for them.
by John | Dec 4, 2016 | Capital Appreciation, Insurance, Personal Journey, Saving Money, Value Investing, Wealth Protection
“We teach about how to drive in school, but not how to manage finances.” – Andy Williams
I didn’t learn much about personal finance or how to build wealth in school.
Even though I find art history, World War II, and the Pythagorean theorem interesting and important areas of study–I can think of few topics with more day to day relevance than personal finance.
But if it weren’t for two finance electives I took in college I wouldn’t have learned anything about personal finance in school.
There are powerful wealth lessons that schools could teach but for some reason do not.
Five Powerful Wealth Lessons School Didn’t Teach
1) I must Produce more than I consume to Build Wealth
I can’t say it better than Simon Black:
The Universal Law of Prosperity is very clear– in order to build wealth you have to produce more than you consume. – Simon Black
Source: https://www.sovereignman.com/trends/this-entire-system-is-rigged-against-your-prosperity-18760/
This basic concept isn’t taught in school and as a result we get polls like: “Two-thirds of Americans would have difficulty coming up with the money to cover a $1,000 emergency.”
Source: http://apnorc.org/news-media/Pages/News+Media/Poll-Two-thirds-of-US-would-struggle-to-cover-$1,000-crisis.aspx
The United States can also boast the following numbers:
Source: https://www.nerdwallet.com/blog/credit-card-data/average-credit-card-debt-household/
If you consume more than you produce, the only option is to go into debt, which is a sure way to become poor.
In school I never learned the powerful wealth lesson: I must Produce more than I consume to Build Wealth.
2) Money Loses Value Because of Central Banks
I think most people KNOW that money loses value (or at least that things are getting more expensive each year), but for anyone who disagrees here are some facts:
- In 1950 a new house cost $8,450 in 2016 the average is over $300,000 (3,450% increase)
- In 1950 a gallon of gas was 18 cents in 2016 it is $2.40 (1,233% increase)
- In 1950 the average cost of new car was $1,510.00 in 2016 it is $33,560 (2,122% increase)
- In 1950 the average income per year was $3,210 in 2016 it is $55,000 (1,613% increase)
Source: http://fuelinsights.gasbuddy.com/content/docs/2016forecast.pdf
Source: www.thepeoplehistory.com/1950s.html
Source: www.deptofnumbers.com/income/us
Source: www.usatoday.com/story/money/cars/2015/05/04/new-car…price-3…/26690191/
Those are stats specific to the United States but I know you’d find similar statistics throughout the world.
Dollars (and other fiat currencies) are losing value. Incomes are not keeping up with the rising costs of homes and automobiles, the two major types of purchases many people will make.
Saving money in dollars is a sure way to get wiped out.
Money doesn’t lose value because of some mysterious force or greedy businesses, it loses value because of central banks. This is something I’m passionate about because it is simply robbery. Not only is price inflation robbery, but it most directly harms the poor. I’ve written about the Downfall of the US Dollar and What Causes Inflation.
In school I never learned the powerful wealth lesson: Money Loses Value Because of Central Banks.
3) I’m on my Own for Retirement
In over 18 years of education in US government schools I can’t recall ever learning about the failure of US government programs.
There are countless examples.
One is state public pensions. They are woefully underfunded. Alaska, California, and Illinois are some of the worst offenders when it comes to underfunded pensions.
However, all fifty of these United States plus the District of Columbia suffer from underfunded public pensions.
Source: http://www.zerohedge.com/news/2016-12-02/stanford-study-reveals-california-pensions-underfunded-1-trillion-or-93k-household
Two more in-progress failures are Social Security and Medicare. (To be fair, I did learn about the insolvency of these programs in FIN 232, my senior year of college.)
The Medicare Trustees’ report indicates the Medicare program is underfunded and revenue is less than expenditures.
Source: https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/ReportsTrustFunds/index.html?redirect=/reportstrustfunds/
The Social Security Trustees’ report indicates that Social Security is underfunded as well.
Source: https://www.ssa.gov/oact/tr/
This isn’t some tin-foil hat conspiracy. Below is a direct quote (from 2015) from the Social Security and Medicare Boards of Trustees:
Social Security’s Disability Insurance (DI) Trust Fund now faces an urgent threat of reserve depletion, requiring prompt corrective action by lawmakers if sudden reductions or interruptions in benefit payments are to be avoided. Beyond DI, Social Security as a whole as well as Medicare cannot sustain projected long-run program costs under currently scheduled financing.
Source: https://www.ssa.gov/oact/TRSUM/2015/index.html
I never learned about the importance of saving for retirement in school. I never learned about investing, IRAs, 401ks, pensions, or Health Savings Accounts. (Again, I did learn about these in FIN 232, my senior year of college.)
If you’re under 40 and you live in the US and you think you can count on Social Security and Medicare (or a public pension) I think you’ll be in for a rude surprise.
Social Security and Medicare are broken. Plain and simple. “But politician X will save these programs!” you might be tempted to think.
Here is another quote from the above report:
“Social Security and Medicare together accounted for 42 percent of Federal program expenditures in fiscal year 2014.”
This is the same Federal Government that is $20 trillion in debt. If the US Federal Government bails out Social Security and Medicare, who is going to bail out the Federal Government?
People need to make their own preparations!
In school I never learned the powerful wealth lesson: I’m on my Own for my Retirement.
4) College Isn’t Right for Everyone
Will this guy have to go $200,000 in debt to get a degree in British Literature?
How many times have you heard something to the effect of: “Study hard, go to college, get a good job and then retire at age 65.”?
That approach CAN work, but high school seniors need to be asking themselves, “does it make sense to go $150,000+ in debt for an art history degree?”
I took an art history class in college and I really enjoyed it. But if I knew how much I was paying for that class I would probably have done a lot better going to a museum or buying a few books.
If, for example, you can get a chemical engineering degree for $100,000 and are then able to make $70,000 per year right out of college then it starts to make more sense. But people need to start making those cost benefit and ROI calculations.
Young people need to stop assuming that college is a good idea. It depends on the cost of the education and how much that degree will allow you to earn once you graduate.
In school I never learned the powerful wealth lesson: College Isn’t Right for Everyone.
5) There is a Difference between Good Debt and Bad Debt
There is good debt and there is bad debt.
Taking out a $35,000 loan to buy a brand new car is very expensive. Maybe you’re making enough money that you can afford to treat yourself to a new car every 2-3 years and maybe leasing an automobile makes sense in that case.
But a good used car that is 5-6 years old makes a lot more financial sense particularly if you aren’t making a lot of money.
On the other hand, taking out a $200,000 loan to buy an income producing rental property could make a lot of sense.
Taking out a loan to buy new shoes or a car or other consumable items is bad debt.
Taking out a loan to buy an income producing asset is good debt.
In school I never learned the powerful wealth lesson: There is a Difference between Good Debt and Bad Debt.
I Learned a lot about Personal Finance outside of School
I learned a lot about personal finance from my parents, by reading, talking to experts, attending seminars and trial and error. In some ways it’s a good thing I didn’t learn about personal finance in school because I probably wouldn’t have learned as much and most likely would have been taught things that aren’t true that I would have had to unlearn.
The important takeaway is that financial education is critically important and that it’s up to YOU to make sure you learn what you need to know.
by John | Oct 9, 2016 | Personal Journey
I’ve been unemployed for the past 100 days.
Since July 1, for the first time since graduating from college, I’ve found myself without a job.
June 30th was my last day of employment at a good paying job with health insurance and three weeks of paid vacation.
I could have stayed with my then current employer but wanted to live closer to my wonderful girlfriend!
I moved to a Columbus, Ohio where I only knew a handful of people and had no job.
Not having a job has been scary, frustrating, educational, enjoyable, and inspiring.
So what have I been up to?
The Enjoyable
I went backpacking with my brother in Colorado, visited my parents, watched all four seasons of Prison Break and have gotten to spend a lot of time promoting and writing for this website.
I was also able to do a lot of work at my girlfriend’s condo like painting and repairs.
I’ve gotten to trade options and watch the markets throughout the day, which despite my unsuccessful September, I still enjoy!
Most importantly I get to see my girlfriend several times per week!
The Scary
I’ve had to live off my savings and whatever money I could earn with side jobs and hustles. I have not applied for and am not receiving any unemployment benefits.
It’s difficult to go from having a decent amount of cash flow from a monthly paycheck to almost none. Thoughts like “Will I ever find a job?” and “How am I going to pay for rent?” and others go through my head and it is easy to get negative or discouraged if I’m not careful!
I’ve bought health insurance and have been covered the entire time I’ve been unemployed but I worry about what would happen if something did happen to me since I have a higher deductible. The answer is I would pay the deductible out of my health savings account and other savings, but for some reason it is something I think about.
The Frustrating
I’ve applied to dozens of jobs; I talk to recruiters and most of the time I don’t hear back. I have a strong resume in the IT industry and haven’t had trouble finding jobs in the past. It’s tough when you limit your job search to one city and hiring is slow.
Little cash flow means I don’t have additional money to invest and soon I will need to start selling some of my investments to pay for basic needs, which I find frustrating since I want to be GROWING my wealth.
I’m not able to contribute as much money to the charities I support and I’ve cut back on virtually all my discretionary spending.
It’s also tough not being able to treat my girlfriend as much.
The Educational
I definitely have much more appreciation for those times when I did have steady income. I’ve had a good paying full time job for about six years and have had some type of job for most of the time before that when I was in college and high school. So while I’ve worked hard and provided a lot of value to my employers, I realize now that I’ve taken that income for granted.
I’ve gotten better at cooking. When I was working I would eat out a lot. Most of the time in fact. To save money I do a lot more grocery shopping and cooking.
I’ve also learned that I can get by with about $1,500 per month. Most of that goes towards rent and food. If I moved in with a roommate I could get by on even less. I’m still enjoying my single apartment for now!
The Inspiring
I’ve been able to spend a lot of time working on this website and I believe it is possible that with enough readership this website could provide some monthly income.
It’s great when someone signs up for one of my affiliate opportunities. A reader recently signed up for the bitcoin arbitrage fund that pays over 10% and I’ll get a nice bonus from that this month.
I’ve had a lot more time for meaningful introspection and reflection whilst unemployed. I’ve thought about what it is I want to do for a career and what my long term goals in life are.
The difficulty in finding work in my field inspired me to expanded my job search and as a result I’ve been extended an OFFER to work in the financial services industry contingent on getting the appropriate licenses in this state.
As evidenced by this website, financial services is an area that I’ve been passionate about for a long time but something was always holding me back from making the switch in my day job.
It reminds of a quote from one of my favorite movies The Hunt for Red October.
“When he reached the New World, Cortès burned his ships. As a result his men were well motivated.”
Moving to Columbus and not having a job has made me well motivated!
I’m very blessed in that I have the savings to weather this period without much hardship. Being unemployed has it’s perks but on the whole it’s tough. As I work on the licensing needed to take the job I was offered I realize that being unemployed for a time may turn out to be one of the greatest gifts in my career.
