David Alade

A place where I organise the chaos of my mind

Author: David Alade (Page 9 of 16)

I am a student of the world. I learn, build and share.

Do A Little Act Of Kindness

January 20, 2021 /

Some months back I was returning late from the office. By late I mean some time around 10 pm. Ahead of me as I took a walk down to my was this woman, having a baby on back, carrying loads on her hand and another on her head. From afar I could tell that the woman is tired. She walked delicately so that the load on her head won’t fall. She moved slowly so that what she was carrying on her hand won’t fall. I will later realize that what was carrying on her hand was a cake due to be used for a wedding the following day.

Where could she be coming from this late-night I wondered and why can’t she get help with the loads. You don’t need anyone to tell you that the load was too much for her. It was an obvious glare.

It’s the 1970s. A 30-something man makes his way across the Golden Gate Bridge. He’s passed by pedestrians and cyclists, and steps around tourists taking pictures of Alcatraz, Angel Island, and the channel of water below that runs between San Francisco Bay and the Pacific Ocean. He gazes up at the reddish-orange towers soaring above and then climbs over the bridge’s four-foot safety railing. He steps out onto a 32-inch wide beam known as “the chord,” pauses, takes one last long look out at the bay, and then jumps. His body plummets 220 feet and violently hits the water at 75 mph. The impact breaks his ribs, snaps his vertebrae, and pulverizes his internal organs and brain. The Coast Guard soon arrives to recover his limp, lifeless body.

When the medical examiner later located and searched the jumper’s sparse apartment, he found a note the man had written and left on his bureau. 

It read: “I’m going to walk to the bridge. If one person smiles at me on the way, I will not jump.” The story was recounted here

As I read this story today realizing the eventual passing of this man, I remember again the story of the woman ladened with all sorts of things on my way back home. As I watched her from afar I doubled up my speed to relieve her of some of the loads. Upon meeting her I greeted and offered to help. Without hesitation, she handed me the cake in her hand. You can tell her hands must have been aching but what can she do. We spent the remaining minutes of walking together discussing why she was late and how she was delayed by circumstances beyond her. She felt relieved and that gave me more joy than any act of kindness I’ve ever done. I bet she’s probably remembering the encounter now as well.

I got to her estate gate, handed over the cake and bade farewell. I don’t know what she looks like. I’m sure she doesn’t know what I look like as well but we both departed better off.

Many times what it requires to show kindness doesn’t have to take so much. Many times, it only requires giving a helping hand like I did to this woman and other times all it requires is for you to smile back at someone and that will save their life. Unfortunately, the man in my story didn’t get anyone to smile at him and that cost his life.

"Many times what it requires to show kindness doesn’t have to take so much. Many times, it only requires giving a helping hand like I did to this woman and other times all it requires is for you to smile back at someone…" Share on X

A lot of us think of changing the world in ways that we most likely would end up not being able to do. A lot of hope to end world poverty or take all homeless kids out of the street. Those are noble aspirations, no doubt. However, just a little act of kindness, a little good, a little, a little checkup on an old friend, a little thank you and a little “you matter” comment can restore a soul, save a life and bring hope again.

What little act of kindness will you do today? Or will you walk by that woman carrying that much load without offering to relieve her? Or will you look that man in the eye with a frowny face and allow him to go on and commit that suicide?

Act of kindness doesn’t have to be strangers alone. Your girlfriend, when was the last time she was happy she had you? When was the last time you called your mama or papa to thank them (not give them money) for bringing you into the world? Your friends, are they proud to have you as a friend or all you do collect and collect from them and not a single time have you said: “take this N500 airtime, I just appreciate you”.

Do a little act of kindness today.

An old hymn “Have I Done Any Good?” has this following lyrics that pricks my heart:

1. Have I helped anyone in need? 

Have I cheered up the sad and made someone feel glad? 

If not, I have failed indeed. 

Has anyone’s burden been lighter today Because I was willing to share? 

Have the sick and the weary been helped on their way? 

When they needed my help was I there? 

2. There are chances for work all around just now,

Opportunities right in our way. 

Do not let them pass by, saying, “Sometime I’ll try,”

But go and do something today.

‘Tis noble of man to work and to give; Love’s labour has merit alone. 

Only he who does something helps others to live.

To God, each good work will be known. 

(Chorus)

Then wake up and do something more

Than dream of your mansion above. 

Doing good is a pleasure, a joy beyond measure, 

A blessing of duty and love.

Have I Done Any Good?

5 Ways To Reduce Your Black Tax Payable

January 19, 2021 /

Thinking about the concept of black tax, I don’t think there would be an average family in Nigeria that won’t have that one person that pays black tax. It is so because we are all predominantly poor. Few families have escaped the cycle of dependence on their children as an insurance policy for not only old age but also the survival of the entire family.

Black tax is the financial support that a member of the family is expected to pay to the extended family once they start earning income.

My maternal grandfather used to pray like “I will eat the food my children will give me but may I never have to look up to my children before I eat”. My mother prays that as well. And that is definitely my prayer as well.

Black tax can be psychologically pleasing and draining at the same time. There are occasions when the family might have had to sacrifice a lot to see one child through school with the goal that when such is done, they will be able to take care of others. But such arrangements almost always come off as tiring, as the young professional is tasked with responsibilities often too much for them to bear. Here are 8 examples of that in varying versions.

I must say that Black tax is no evil, the condition that subjects us to it is. And the fact that those conditions made them a necessity. As I mentioned from the beginning, we are predominantly poor as a people and only a few families have crossed the chasm of compulsory black tax.

"I must say that Black tax is no evil, the condition that subjects us to it is. And the fact that those conditions made them a necessity. But you can learn how to handle it here" Share on X

Here are the 5 ways I used in reducing my black tax

Compared to the 8 stories in my referenced article, I think I am lucky. Remember my mum’s prayer. Yes, it has its influence. As much as possible no dependency on her children is what she prays for. However, just like a lot of us, I still can’t escape it but I am given the ability to determine what I am capable of. This is of course also possible because Mama still has a good business that is giving her good income.

  • No one knows how much I earn – this is probably the only insurance that is available to everyone. I said available to everyone because you can learn to keep your mouth shut and not disclose. Doing so gives you the leverage to determine how much can be spared for black tax and what can’t be allowed. 
  • I am always proactive to pay the tax – being proactive to pay the tax absorbs me from the need to pay more than I’ve volunteered to pay in the first place. Yes, demands may come but when you put forward the defence that you are doing a lot already, (hopefully) no one will pressure you to do more. And remember to do all within your power to indeed help. Family is family and they might have sacrificed their comfort as well to get you to where you are.
  • My income is always calculated as net of investment – this is an important point especially for those who can’t but have to disclose how much they earn. Only disclose how much you earn as a net of what you’ve decided to save and invest. That way, even if you have to cough out everything in your account, you will know you have created security for yourself as well. I had a colleague who gave a standing order at his place of work that they should only pay him 50% of his monthly income and all else should be kept for him. That’s it. So black or white tax, he couldn’t pay beyond what he earns and since he has to survive as well, it means he can’t give out all the 50% that he gets.
  • I am always upfront about what I’m not capable of – I don’t have a flashy lifestyle that will suggest maybe I have some millions saved somewhere that is funding my lifestyle. So when demands come, I can comfortably say this is what I am capable of and that is beyond me. You could do so as well. The problem comes when you think you don’t have a responsibility to them, you actually do, I know I do. My mama had to go through a lot to educate me. So I take that responsibility seriously and it has helped.
  • Be someone of your word – I have reserved this to the last because you only resort to this option if all others are not working. It’s simple but difficult to implement. You say no and stand by the no. Period! Thank goodness, I’ve not had to use this tactic before.

I’ve said it before and will say again that the black tax in itself is not evil. Some people sacrificed to get you to where you are in the first place and the least you can do is to recognize that. Of course, we have instances where no one was there for you, if that’s your case, it only makes the 5 solutions above easier for you to implement.

However, what you should not allow is to let the cycle of dependence on black tax for survival continue with you. You need to make up your mind that it will end with you and pray the kind of prayer that my grandpa used to pray: “I will eat the food my children will give me but may I never have to look up to my children before I eat”.

For that to happen, you must take steps from those highlighted above to protect yourself. You must ensure that you don’t eat with your 10 fingers in the name of black tax or any other thing. You owe it to your children not to have a reason to depend on them for survival. You’ve seen how uncomfortable it can be, so work as much as you need to break that cycle.

Myth – You Will Not Get Rich By Investing

January 18, 2021 /

True riches come from your income source not how you spend your income. And investing is a function of how you spend your income.

My first salary when I relocated to Lagos was 70k/month. With such an amount, no matter how much I save, before I could have a million naira saved up, it might take between 1 year (if I save everything that I made) to 11 years (if I save just 10% of that income). That’s assuming of course, that I did not get an increase in income.

Good enough for me, I got a new job that allowed me to save about a million naira within the first 1 year on the job. Can you see the point I’m getting at now?

Savings and investing is good. A habit that must be cultivated else, one will remain in perpetual poverty. However, obsessing over saving and investing the small amount one earns instead radically working to increase one’s income is an ill-informed obsession.

”My first salary was 70k/month. With such an amount, no matter how much I save, before I could have a million naira saved up, it might take between 1 year (if I save everything that I made) to 11 years (if I save just 10% of that… Share on X

I tweeted recently that I would rather have a 5% ROI on an N100m than rejoice over 200% on N10k. The reason is obvious, the former gives me a larger capital and eventual N5m ROI, while the latter despite its high percentage only leaves me with a paltry amount of N30k.

And that’s why they that look for high ROI are usually those with small capital base. When you have large capital even a 3% “guaranteed” ROI would do you much good. That’s usually so because one, you don’t want to lose that capital since you must have worked really hard to earn it and two, since it’s large enough, little percentage returns are usually big enough to take care of your moderate lifestyle.

The goal for everyone who’s looking to make wealth is to ensure that they do everything within their power to increase their capital base. And that only comes by increasing your earnings. Savings and investment is a practice along the journey to riches that ensures that you preserve what you earn and grow it. It’s not a substitute for increasing your earnings capacity and it will never be.

So when I say investing will never make you rich, I don’t mean it literally. But that obsession over-investing at the expense of increasing your income will keep you in the poverty that you aim to escape. Just imagine if I’d remain in my first employment with no salary increase and I had to take 11 solid years to save up to N1m. That’s cruel.

How to increase your income 

I have seen people take all their savings and liquidate all their investments just to use it to pay for a professional exam. To the uninitiated, it looks foolish. They will wonder why will you not have an investment, why can’t you think long term and play to the tune of compounding, why are you so short-sighted? I will tell them to shut up. Yes.

You see, the biggest investment you can possibly make is an investment in yourself. An investment in yourself will return the highest ROI. And educating your mind is how you invest in yourself.

Let me ask you a few questions. Since you know that investment is the principal thing, why didn’t you save all your school fees and invest it in someplace instead of going to school? Why did you choose to go to school first? Isn’t it because of the school that you went to that is giving you some leverage to earn an income now? So why did you all of sudden think investing instead of more education (skill) would salvage your money problems?

You see, your income problems can’t be solved by investment in assets but an investment in yourself via the acquisition of more knowledge. That could be by taking professional exams or learning a new skill, or learning how to do something differently. Basically, it has to be an investment in yourself. That’s how you increase your income.

It is you that earns the income. When you are about to be paid, you will be paid based on what you have in your head and can do with your hand. Not what you have saved up and invested. Always remember that.

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Reading Biographies Will Change Your Life

January 17, 2021 /

I have only read a handful of biographies and autobiographies in my life but their profound impact on me made me believe anyone’s life would be made better if only they acquitted themselves with more biographies.

At the beginning of 2019, I picked up “The Autobiography of Benjamin Franklin” to read. I chose it among many others simply because I’ve seen a lot of people recommend it as a great read. And hey, why not lean on the judgement of the crowd and see what’s in it?

As it will turn out, the book immediately added to the group of books that caused a pivotal change in my life, “How To Win Friends and Influence People” being the first of them. What was profound to me about Ben Franklin was how he rose from obscurity to a national icon all by the power of his pen. Simply by accumulating knowledge and making his thoughts known via the newspaper, he accomplished what should have taken 2-3 generations to accomplish. It occurred to me to ask what a great fit such a man would have accomplished if he had the distribution power that I have today through social media. That was a defining moment for me.

It was why I decided to take writing seriously and even embrace it as something to invest in when necessary. I stopped seeing it as just one of those things that I can pick up and drop but something I must be committed to getting good at. See where it has brought me thus far. Profound. If I’d not read that autobiography, maybe you won’t have this blog to read.

I also read “Long Walk To Freedom” on Nelson Mandela. The truth is that I can’t recollect much of the lessons from it again. Not because the story is not profound, I will be naive to think that. But that it takes the coming together of different variables for one to have pivotal change by some information. I didn’t get that from Nelson Mandela, maybe I should read the book all over.

I read Shoe Dog of Phil Knight, and that of Elon Musk, both were great and they showed me how seemingly inconsequential decisions or actions can be the catalyst of a great life one would later have. It reminds me of the words of Rory Sutherland “leave from surprises in your life” he said. I saw how those surprises could potentially be one’s catalyst. I have since put myself in a place where surprises are the norm.

I read “Surely You’re Joking” about Richard Feynman. Although not intended by the author to be a biography, but largely it was like one to me and a host of others. The book humbled me, it showed me that intelligence doesn’t mean seriousness all the time without fun. In fact, intelligence should be why you should have more fun. Feynman had the best of it all. So much fun and incredible work. He was one like no other.

From all these (auto)biographies, I was able to see that we are all the same as humans. The best among us have the same struggles that the least among us have. I learnt that no one is excluded from the laws of nature and that in the end, we all can architect our life by the choices that we make. It was profound to learn that those who seem to reach the echelon of human affairs didn’t start with such aim but most were just failing, rising, never stopped being curious and giving room for surprises in their lives. Most importantly, I saw that each has their path to travel. You can’t run on someone else’s clock. I had comfort, hope and optimism. That’s what you get from reading books of those nature. It’s not about motivation, and it’s not about some scientific discovery. Rather, it’s about how someone lived their life enough to warrant a biography. It’s why I believe we all should be acquainted with it. At least one in a year would go a long way of shaping us.

Currently, I’m reading the autobiography of Shimon Peres, “No Room For Small Dreams”. Reading through each page just gives me more joy. It confirms to me again that all I have to do is give room for surprises in my life, do my best at everything that I do in life and wish no harm for anyone.

Life can be fickle and it is highly unpredictable. In the words of Jim O’Shaughnessy, “we are a deterministic creature living in a probabilistic world”. We want things to be linear but the world we live in zigzag and that can be extremely terrifying. You don’t know what the next day will bring you despite all your efforts, prayers and preparation. Sometimes, we think we are alone in this. Reading biographies will show you how far away from the truth that can be. We all go through the same struggles.

You should read one to confirm all these. My life has been blessed immensely just by reading this genre of book. I’ve mentioned a couple of names, you may start with those. Importantly though, fill yourself with the thirst for knowledge. That’s the common denominator for everyone who even cares enough to have a biography.

No One Can Teach How To Be Curious

January 16, 2021 /

I woke up on Saturday morning with streams of thought about curiosity. After sending penning down (through tweets) a lot of ideas on curiosity, I reached a rather humbling conclusion: curiosity can’t be taught.

Curiosity by all standards is the bedrock of an outstanding life and all inventions. It has been for me and for all that I have read about. Curious people are not quick to dismiss a new idea, new proposition or uncommon things. They would rather reach a dead-end than dismissing immediately without experimenting. Many times, that habit gives room for serendipity in their life. That serendipity is the mother of a lot of inventions.

It, however, worries me that such a quality can’t be taught. I can’t teach your mind how to be fixated on a topic long enough until you reach the bottom. Neither can I teach you how to go to a rabbit hole until your soul is satisfied. Curiosity is so central to the kind of life we all desire yet it can’t be taught.

Here some of the thoughts I penned down for your perusal:

“Be curious.
Feed your curiosity.
And you will be unstoppable.”

“Information is abundant out there that your curiosity can feed on.
What’s stopping you?
You aren’t curious enough.
Unfortunately, curiosity is one of the things that can’t be taught”.

“You cannot possibly bring the best out of yourself if you are not curious.
How will you do it”?

“Curious people are not quick to dismiss a new idea, proposition or uncommon things.
They would rather reach a dead-end than dismiss immediately without a full test.
Many times, that habit gives room for serendipity in their life”.

“Judgment is now the highest form value.
Judgment comes in play in capital allocation, betting on the future, determining the optimal path to the future & so much more.
To improve your judgement, you need a mental latticework of knowledge. You can only get that by being curious”.

How To Get Involved In Bitcoin

January 15, 2021 /

Bitcoin is a religion. But before we discuss that, let’s talk about the religion of fiat.

When we were given birth to, we automatically entered into some contract that we cannot by design reverse. You cannot reverse which family you were part of, nor can you change your country of origin and the list goes on. Relevant to this discussion is the contract of money that you are part of.

Money is a belief system that we all agreed to from birth. A belief that you cannot speak against because it will seldom even cross your mind to do so until death. I never questioned the belief until Bitcoin and I’m sure you have most likely not considered what makes money a “money” as well.

Speaking against it is bound to immediately attract the label of fraud or delusional. In fact, speaking against any prevalent system of money without the presence of an alternative may be seen as being mad. That’s how religion operates. You are in or out, there’s no middle ground. And when you are in, you can’t say a word against it. When you are out, you are alone and you are labelled.

The reality is that any form of money is a religion. Otherwise, it won’t be money. Money has to be a religion before it can be money. Everyone has to believe it or it’s worth it. Everyone has to be a security guard of the principles, otherwise, it’s not money. Everyone has been its authenticator, otherwise, it’s not money.

That brings me to the religion of Bitcoin. It’s emerging, forming principles, making converts and building from the ground up. We have different people saying this is what it is and this is what it is not. It reminds me of Jesus’ story in Matthew chapter 16 when he was wondering what people think He is. A lot of different answers came in before the truth was revealed through Peter.

When a new religion is forming, it is only normal that different believers have different definitions of what the tents of that religion are. Ultimately, time will reveal and in the case of Bitcoin, the forces of demand and supply plus regulation will determine.

Note: this does not in any way try to equate Jesus with bitcoin. No. I am just trying to help you understand the parallel of religion and how they develop.

In the intervening period, just like Jesus had apostles and followers who served different purposes, Bitcoin will also only achieve its purpose with every believer playing their part.

So here are several ways you can be part of that religion.

  • Convert a path of your fiat to bitcoin – this is the easiest way to participate in the new religion of bitcoin. Doing so would mean you are showing how interested you are in exploring the new religion despite the old religion of fiat. Converting a part of fiat would also help expand the size of the network. Bitcoin thrives on network effect which means the utility of the network increases with every additional user. 
  • Be curious – curiosity is an underrated way to participate in the new religion. The reason why a lot of people are still taken aback in participating is that they do not understand the least about bitcoin. With your curiosity, you would get more knowledge and if you are asked the reason for your faith, you would have a basis of standing. People in the days of Jesus got Him wrong because they wouldn’t apply their heart to understanding.
  • Be an evangelist  – talk about it, write about it, make a new convert of it. As I said earlier bitcoin feeds on network effects just as all forms of money that we developed as humans. Becoming an evangelist would mean you are helping the network to achieve its aim faster.
  • Share ideas about the ramifications of bitcoin – when you imagine a utopia, it’s common for the society to dismiss you as being a dreamer. However, assuming the utopia, thinking about it and sharing it helps humanity to know what the edge is. And knowing the edge helps us determine and prepare for what may be on the side of the edge. Yet, if it’s not possible to reach the edge, then we are aware of our limitations which in itself is a good thing as well. So things like what if the world is indeed powered by Bitcoin, what would such a world look like? What monetary policy would we settle on and how are we going to innovate in a deflationary economy? Think about ramifications and share your ideas.
  • Know the history of money – fiat is new, we have not always used fiat as a medium of exchange. Study history to know where we are, where we are coming from and where the journey could lead us.
  • Work for a company democratizing access to it – if you have the opportunity and you are persuaded, why not. Take up the opportunity.
  • In short, do all things that can be seen as an activity that furthers the acceptance of the new religion.

Rise vs Bamboo: Which One Is For You?

January 14, 2021 /

I was reviewing some data when I realized a lot of people are seriously wondering and interested in the answer to the question of if they should use Rise for their investment or Bamboo and its alternatives (Trove and Chaka).

First, it gives me joy that you are thinking about that. It means you want to do what’s best for you. You want to leverage on an advantage that no generation before us had. Secondly, I should mention to you that your goal is to save your money, make more money and not lose your sleep in between. It’s not to show off on anything at all.

Difference between Bamboo and Rise

– Bamboo

Bamboo is a trading platform that allows you to buy stocks and hold until you wish to sell. 

Bamboo provides the platform where you can buy an individual stock, ETF, Inverse ETF or anything that is listed on US stocks exchanges. The responsibility of knowing what to buy and when to buy it rest on your shoulder. And so is the responsibility of knowing what to sell and when to sell.

Full control lies in your hand. Bamboo makes money from you by charging you a trading fee on every transaction. When you buy and sell you get charged for those activities.

Note: everything I have said and will say of Bamboo is the same for Trove and Chaka since they have the same business model.

– Risevest

Rise on the other hand is an investment manager that offers different investment products for you to choose from and invest in. The three products currently being offered are

  • Fixed Income – a form of investment whose return and maturity are fixed and determined from the inception of the investment. That is, once you invest, you can’t withdraw your money at any time until maturity and you are fairly certain about what the return will be upon such maturity. You may actually withdraw before maturity but you will have to pay some charges. This is considered low risk because it is a debt instrument with collateral 
  • Real Estate – this works like fixed income as well. You have to hold it until maturity which you would set from the beginning, and you can’t withdraw your money anytime before that maturity hence you will pay some charges. The difference is that you can’t tell ahead of time what the return on investment would be. However, since it is a fund that invests in properties with rental income in the US, it’s a great product as well and consider medium risk.
  • Stock – risevest selects some good companies listed in the US and just like an ETF would operate, they invest your money in that basket of good companies. If you invest $100 for example, you would be buying as many stocks as is in that basket at the time. And what’s in your basket changes as often as Risevest changes it.

It’s called Rise Equity Index and currently has 48 stocks in the basket. Rise has often said that their goal is not to beat the market but to select a couple of great companies to invest in and if that beats the market, it would be great. That is the right way of looking at things if you ask me. It’s an appropriate optimization. 2020 performance is yet to be made public but 2019 was 19% for the number of months they were in operation.

Rise currently makes money from what is called a management fee. They charge up to 2% on total assets under management on the condition that you make a minimum of 10%. Read more about that here.

Which one should you choose?

Now that you understand the difference between both, it’s only fair for you to consider which one you should choose. To start with, nothing is stopping you from using both of them if you so wish.

With that in mind, if you are the type that does not want to go through the rigour of having to search for what to buy in the stock market then Rise is the best option available for you. If you are not interested in all the euphoria that owning an individual stock brings, and you don’t want anything more complicated than you already have in your day to day life, then Rise would probably just be perfect for you.

Also, if you want to exposure to other assets like fixed income and real estate, only Rise offers that. If you don’t want to take on a lot of risks and can’t bear seeing your money occasionally give negative returns, then Rise products are your best option. It’s the simplicity that makes Rise stand out. All you have to do is deposit your money and with few clicks invest your money.

On the other hand, if you are interested in the workings of a business, you want to know how the stock market works, you are ready to pay the price of putting your money in the stock market then Bamboo and its alternatives (Trove and Chaka) is a good go. If your goal is to trade in the market, also Bamboo is the way.

By the way, trading means buying and selling of stocks within a short period of time. Investing on the hand is done with a long term view.

However, this is not a rule and nothing should stop you from using both services if you so wish. But your goal again is to save your money, make more money and not lose your sleep in between. Don’t optimize for any other thing. Don’t allow the fear of missing out to push you to do what will make you lose your money. It’s your hard-earned money and your number one responsibility to that money is not to lose it unnecessarily. That’s an important responsibility even before multiplying the money.

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My 3 Steps Growth Process

January 13, 2021 /

Contrary to what some people who are acquainted with me may think, I am not special in any way. I don’t have the highest IQ, nor am I the best among the best. I am just that one person who takes his time to grow. 

A lot of people know me because of writing than any other thing that may be attributed to me. Truth is when we see people learning and building in public, we tend to think or assume they are special or unique. More often than not, we all are just like you. We struggle daily and don’t always do what we set out to do.

So why the story?

The very writing that I am known for today is something that I’ve been doing for about 6 years. I have taken my time to grow into this. Although I’ve been hard on myself sometimes, you can tell that I’ve not been hard enough for the journey to have taken me 6 years. Well, that’s the point I want to make here. That on many skills, you can take your time and grow only on the pace to which you need the skill.

Not until 2019, I didn’t start taking writing seriously. And even then, I could barely write one article in a month. Now, I write every day.

How did I grow to this?

Thinking about the journey that got me here, 3 things emerged as a process. Start, “not stopping” and consistency.

I’ve always known that consistency is the goal for me in anything. It is what gives an unfair advantage. Doing hard things, things that others won’t do because it’s hard to do will always give you an unfair advantage. Consistency is hard and not a lot of people will do it. That’s why you have stopped writing, you have abandoned your side hustle, you have given up on that YouTube channel and given up on learning that skill. So I knew if I can only be consistent, if I can show up every day and be present, I will have an advantage that others won’t have. Without a shred of doubt, I was right.

But getting to be consistent was very hard for me as well. So I introduced a new step between starting and being consistent. I call it “not stopping”.

Start

The first step to growth is starting. Many people fail at this initial point. They take the advice of “keeping the end in mind” to the extreme and the thought of that “expected end” scares them away from starting. They can’t possibly imagine waking up every day and thinking about what to write on or how to finish a book or how to master a skill. It’s just scary. And they just abandon the whole thing. They refuse to start.

Starting is the most important thing and that’s what you should focus on when you are on to doing something new. Forget at first the process that will take you to mastery. Just start. A lot of people, just like you have refused to start, starting alone put you a step ahead. So start whatever that thing is. Like, start anyhow.

You should also read – Do

Not stopping

Once you start, the goal is to aim for consistency. Consistency is what brings mastery and maximum leverage. If you can achieve it immediately, congratulations to you, you have done what the majority of us can’t do.

However, if you are like me, and you struggle with getting consistent with something new, I have a trick for you. It’s called “not stopping”.

Not stopping is simply a layer between the journey from starting to consistency that says even if you struggle with getting consistent, even if you fail and suck at it, even if doing it is always like a herculean task, don’t stop. Every time you can do it again, pick it up again.

By implication, it means don’t beat yourself up if the last time you attempted it was 3 months ago. Now that you remember it again, carry it and do it. At this stage, the goal is “not stopping”. It’s not about mastery, it’s about the little incremental growth that happens every time you attempt it again.

In 2015, when I attempted my first writing, I thought it was good. But I didn’t write one more thing until after a year or so. Between the intervening months, I always wished I wrote more. But I didn’t. It was difficult and certainly, I couldn’t be consistent with it. The natural tendency was for me to stop and conclude that maybe writing isn’t for me. Then I used to think it’s the domain of those who studied English. I was wrong. More importantly, though, the next time I remembered I could write again, I wrote. I was never consistent at it. I do it only on the whims of “felt like”. But I never stopped.

That’s it, whatever it is, don’t stop.

Consistency

If you do the “not stopping” long enough, you will realize if indeed this thing is for you or not. If you recognize that it’s for you, I assure you that one day, you will arrive at consistency. As long as you do not stop. That’s just the way it works. Hang around a barbershop long enough, and you will also get your haircut. It’s the way of the world. It’s an order that can’t be overturned.

And as I’ve said before, consistency gives you the maximum leverage. That’s like your destination but ensure you take the journey down to that. 

I have never been a consistent writer until this year 2021 as I am trying to write every day this year. Such an ambitious goal. However, even with the “not stopping”, I’ve gotten a great dividend for my writing. The world is full of people who would rather wish their way into mastery than walk into it. So even for your little effort beyond what everyone else would do, the universe will reward you. Writing got me every job that I’ve done so far (directly and indirectly), writing gave me a name, writing is the reason why you all know me, with writing I’ve created a good network for myself, I can go on. And this is despite the fact that I’m not a master of the craft yet and neither have I been consistent until now.

"The world is full of people who would rather wish their way into mastery than walk into it." Share on X

That’s what I mean, the universe will reward your little steps above what everyone else will do.

So that skill that you abandoned, carry it up again, the one you are afraid to start because you can’t imagine being consistent, start it immediately. And even if you aren’t consistent yet, make sure you don’t stop. That’s how I’ve grown so far, I hope you find this helpful for your growth as well.

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(Dollar) Cost Averaging In Perspective

January 12, 2021 /

I, like many others, have used the word “dollar cost averaging” countless number of times. We use it when asset prices are going up and when they are going down. We treat it as the holy grail for the rational investor. But never has anyone put it in proper perspective as I am going to put it for you in this article.

The concept of (dollar) cost averaging means if you have a lump sum, $1,000 to invest, instead of investing it at once, you spread it over let’s say 10 months and buy $100 in each month. That’s usually advised because you are not sure if the asset (ETF or Stock) is at its peak by the time you want to buy it or not. As such you should avoid buying the asset with the lump sum and do a cost averaging instead. That way, you even out the effect of buying at the top and benefit from different swings that may occur during your buying period.

What that implies is that if all you do is to take $100 out of your salary every month to invest, then that’s not cost averaging. That’s just doing what is only feasible and available.

Although now, we call everything cost averaging. That’s fine. Let’s bother about the substance here and leave forms alone.

That said, what advantage can cost averaging have? Or even taking an amount daily/monthly to invest in an asset?

The perspective

One of the biggest dilemmas that we all face whenever we want to invest is what if the asset (ETF, Stock, Bitcoin etc) is currently trading at its peak price. Meaning once you buy it the asset probably stops growing or starts to decline. That’s not something that anyone wants even if they are keeping a long term view as expected.

(Dollar) cost averaging is the buying strategy that will come to the rescue here.

Example 1 – Let’s assume the date is September 2018 and you have just been introduced to stock market investing. Having gathered enough understanding, you chose to invest in Amazon stock, being a good company with strong fundamentals. Unbeknownst to you, Amazon was trading at its peak price that day as shown in the image below. And for the next 200 days, the price didn’t recover back to that peak price.

If you employ the strategy of cost averaging, during this period, you could still have made a return of about 17% on your investment.

The assumption for this particular calculation is as follows. 

  1. Your first purchase was made at the highest price and you bought one unit of Amazon shares.
  2. You bought one share every trading day of the week for 200 days until recovery. By implication, at the end of that 200 days, you own 200 shares of Amazon.
  3. At the end of the period, you would have invested a total sum of $345k and the value of that investment would be $403k. Giving you about 17% ROI even though technically, there’s been no growth for the asset over that 200 days.
  4. See this Google Sheet for the calculation.

Example 2 – the same argument and process are involved here. Your first purchase was at an all-time high after which the price started to decline. Except that here what we are buying is an ETF. Despite no growth in asset value over the 150 days, you still made an ROI of 9%.

See this Google Sheet for the calculation.

The explanation here is that buying on a scheduled interval pays off over the long term. I’ve assumed the worst scenario to say you bought at the peak then the price starts to decline. Yet, you can see how you can still make money in such a chaotic situation.

The alternative to that of course is to try and time the market. But if you have tried that before, you will agree with me that it is a skill that ranges from difficult to impossible to achieve. That’s accompanied by a lot of headaches.

That’s why this favourite article of mine is so relatable – Just Keep Buying

There’s a problem with that strategy though. It assumes that the asset price will recover and they don’t always do.

The only criteria for cost averaging to make sense

Now that you understand the perspective with a real-life scenario, I want to tell you the only criteria where the strategy makes sense.

As you’ve seen, I used an extreme example. A situation where your first purchase was at a peak and it continues to decline and didn’t fully recover until some 200 days later.

The only question you have to ask yourself then is, will this assert ever fully recover and return to growing? Once you are optimistic that it would, then you can proceed with your investment till forever.

That’s a big question though and it can be really difficult knowing which asset will recover. It’s the reason why I have a bias for board market ETFs. Because betting on them would be betting on the entire human ingenuity. And if history has taught us anything, it’s that human ingenuity will always prevail.

Also read – How To Start Investing

And in case you don’t know, not all individual stocks recover and while some may even do, they may take longer than what the human capacity can bear.

All assets don’t recover from a fall

Let me share a couple of examples of assets that never recovered or took way too long to recover.

Microsoft took 14 years 

Walt Disney took 13 years

I could go on but you get the point already.

On the other hand, if you bet on a broad market ETF for example, you can almost always be sure that they will recover and it won’t take long.

  • These are the huge falls and recovery of VGT during 2020, 2018, and 2008. All recovered and as noted above, you would have made a 9% return during the 2018 fall.
  • Same goes for SPY and VTI check them out. Learn from history.

Now you understand cost averaging what’s stopping you from leveraging it. Will you allow greed, fear, hope and or ignorance the 4 horsemen apocalypse of the stock market to hold you back?

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The Most Important Thing To Consider While Investing In ETF

January 11, 2021 /

I am a huge advocate of ETF investing vs stock picking. In how to start investing, I explained the reason for my preference. However, there are more than 1,000 ETFs listed in the US stock exchange and that may bring one back to the same dilemma they are trying to avoid, the choice paradox.

That should not happen and I will give you the criteria to narrow down on which one you should even consider at all.

The most important variable for passive ETFs

The underlying index or companies is the most important factor here. What are they tracking?

Passive ETFs are not managed, i.e. stocks are not being added or sold from them daily but on a given interval or when there is a trigger. Which means the most important factor in this type of ETF is the underlying companies. This is important because this group of companies could be part of the holdings for many years. And if they are not companies that will help you achieve your investment objectives, then you shouldn’t invest in the ETF.

SPY is an example of an ETF that has the top 500 companies listed in the US in its portfolio. By implication, buying it would mean you are buying the top 500 companies in the US notwithstanding their sector or growth stage.

VGT is another that has only the top 100 technology companies listed in the US in its portfolio. 

The list goes on. Once you check the underlying stocks are in the ETF and you are comfortable with it to hold for over a long term, your work is largely done. Just use cost averaging to invest until forever.

I would like to repeat that investment should be as simple as possible. Don’t make things complicated for yourself.

The most important variable for active ETFs

The most important variable here is management. It’s not the companies they are invested in but the management, those managing the fund.

This is because you may wake tomorrow and realize that a company is no longer part of the holdings. But you want to be sure the people deciding what should be included or not are of great competence to make such decisions.

ARKK is a favourite of mine, and I will be using it as an example again. The fund manager is Cathie Wood, and she has pulled together a team of experts in different areas to be the manager of each destructive company that they have under management. They know something more than what I know about 3D printing or Genomics for instance. Some of them were former PhD researchers in the competence where they now happen to be investing. Some have done investing for long enough to notice patterns. Looking at management composition as this gives you the confidence to determine if it is right to jump the ship with the ETF.

Beyond that, ARKK also boasts of an investment strategy called thematic investment. Thematic investing is a strategy that seeks to align asset selection with certain social, economic or corporate themes prevalent in society. All these are things that you observe and use to access the capability of the managers.

As you can see, though, it’s more “complex” than the passive in terms the most important variable to know. That’s because now more risk is involved and as such more homework is required from you to access your readiness to invest long term with the funds. I said long term because you only have to do this research once, after that, you are good to go.

Well, it’s also the case that one of the reasons why you are going for the active ETFs is because of the promise to outperform the passive alternatives. So it’s not just about taking on more risks alone, you may also get rewarded for the risk.

The result that follows such a manager is usually a testament to their expertise as well. ARKK in this scenario has done a cumulative average return of 50% per year in the past 5 years.

Hello, I need to inform you that management assessment is not enough for determining which active ETF to invest in. Sorry, it’s just important that I tell you everything.

The second important factor is the theme of the ETF. Each ETF has a theme of focus, ARKK in our example invests in disruptive innovation companies, ARKW invests in what it calls “next-generation internet” companies. These themes are important to understand what kind of companies you can expect them to invest in later in the future and what you can’t expect.

Talking about what you can’t expect, you won’t find Coca-Cola company in the holdings of ARKK no matter how good the company may be performing. And it’s fine to have all expectations aligned.

With all these in perspective, we have narrowed down on how you can easily access the ETFs and determine what to invest in. The twist is that you cannot narrow down for a single company like this at all, the way it works for individual companies is that you address them singularly on their kind of metrics. That can be a lot of work sometimes and except you enjoy it, it’s needless. 

Well, with this new understanding, please go on and make your investment of the decade and build wealth with time.

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