The key to investment today is to be able to think outside the box and look at your investment in an unconventional way.
The biggest investment and retirement challenges you face today are twofold:
- How to grow the wealth you have accumulated
- How to invest and keep up the value of your assets with the fast-changing world
This is not an easy task. The word “unprecedented” is more frequently used in the financial news in the recent years.
- The “unprecedented” years of unconventional monetary policy
- The “unprecedented” all time high stock market
- The “unprecedented” Trump-nomics and emergence of China as the second superpower
- The “unprecedented” job disruption from the “Digital Revolution”
This tells us that the world we know has changed. And these changes will represent both opportunities and risks, result in winners and losers in the investment markets. If you still use the traditional textbook strategies such as buy and hold and invest for long-term, you will likely be subjected to a higher risk of failure.
Just let go and trust?
Here is an interesting story.
There was a man who was walking along a cliff. All of a sudden, he slipped and lost his balance. Just about to fall off the cliff, he grabbed on to the ledge and was hanging there for dear life.
He yelled out, “Is there anybody up there who can help me?”
There was no answer.
He kept calling and calling, “Is there anybody up there who can help me?”
Finally this big bellowing voice called back, “This is God. I can help you. Just let go and trust.”
Next thing you hear: “Is there anybody else up there who can help me?”
This story makes me think if we should challenge our beliefs. We all face difficult decisions in life. Sometimes the solution is just in front of us but it seems counterintuitive. We think we make rational decisions, but our opinions are often formed by our environments, family, education and the success or failure we experience.
If you agree that 90% of the wealth in the world is amassed by 10% of the population, it is not difficult to understand that most financial advice you received daily, given by the 90% of the people, will not lead you to the extraordinary wealth.
Rethink conventional wisdom
The conventional advice is often repeated and amplified without firsthand experiment and investigation. Are these claims sound familiar to you?
- You need at least one million dollars to retire
- Putting your savings into property will never go wrong
- Volatility is bad for stock market
- The best way to invest in stocks is to buy an ETF
- You should transfer your CPF Ordinary Account balance to Special Account for higher interest
These statements are often half-true without a context. It sounds logical but you will suffer if you follow them blindly.
In fact, you should also carefully think about some well-accepted based-on-research claims in life. Things like
- Food with less calorie is healthy
- The change of the weather is due to global warming (if it even exists)
- Electric car is more environmentally friendly
What if, all these claims are created and coined by people who have other agendas? Take global warming for example, do these governments from the western world really care about what will happen to the earth after 100 years while they are only in the office for 4 years and they’d be dead by then? Or is it an excuse to leverage more layers of taxes on the consumers?
I am not saying these claims are not true, nobody knows. But you invest your wealth based on some popular beliefs such as “this is the company represents the technology for the future” or “the digital currency is the next big thing”, you need to research further.
Like Albert Einstein said,
Insanity is doing the same thing over and over again but expecting different results.
It is hard for us to change stereotyped ideas even if we are hanging on the edge of a cliff, but you have to let go of some of your old thoughts to embrace independent thinking for your own financial success.
Unconventional Thinking is not Contrarian
The last thing I want to say is that unconventional thinking does not equal to doing the opposite from others. Even if “everyone” is mostly Wong most of the time, being the opposite doesn’t necessarily bring success.
You may be right sometimes by doing so. But when you think you are thinking differently from other people, you may be just in another herd camp. How often do you hear people, who think they are smart in investing, saying “I only buy stocks when the market crashes”? At least I heard many. In fact, who in the right mind will say “I buy stocks when the market is at the top?” Think about it.
The recent collective interest in Singapore property market is another example. The investors think they are smarter because they are buying when the market is “low”. When they think that they are the few who spot the market, they will soon realise that there are many other people just like themselves.
Being unconventional doesn’t mean you need to be a contrarian. What you need is a way of independent thinking. – Ivan Guan
Do you agree with what I say? Is there any conventional thinking that you want to challenge? Leave your comments here for more discussion.
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