Time value x investment and financial management, transcript of Mr. Market's speech

foreword

Thank you Jiayu for bringing me to listen to Mr. Shi’s speech. Jiayu is a very serious and professional insurance salesman. If you want to buy insurance but don’t know where to start, you can go to IG to privately message her, but please don’t harass others !
I feel like I've been lost in my life for a long time. At first, Mr. Market talked about the "environment", which made me realize: "Yes, I don't want to do anything as long as I lie in bed. The environmental impact is very correct."
Maybe I forgot this article the next day. I hope I can review the general structure of this article more in the future. It is already Mr. Market's philosophy of life, and I will work hard to implement it.

outline

1. Wealth and Time Value
1.1 Keys to Affect Investment Outcomes
1.2 How to earn the first pot of gold
1.3 What should I do after I have the first pot of gold?
1.4 Six concepts of creating value with time

2. Basic Concepts of Financial Management
2.1 Two effects of normal spending
2.2 Necessary preparations before investment

3. Reminder of common myths —what is a reasonable return on investment?
-Can I buy a friend's card?
— How much should be invested in good opportunities?
- Can I borrow money to invest?
- No money to start investing?
—What do investors who have no money do?

1. Wealth and Time Value

1.1 Keys to Affect Investment Outcomes

Investment results = principal x (return rate/risk) x time

• Principal is controllable ➔ Increase income, accumulate principal through wealth management and savings
• Reward is uncontrollable ➔ Learn knowledge and get reasonable risk reward
• Risk and uncertainty are inevitable ➔ Know your risk tolerance
• Time is a matter of waiting ➔ The income from waiting patiently

Principal is the simplest and most controllable factor affecting investment results.

1.2 How to earn a pot of gold

Mr. Market started by relying on "work" to save his first pot of gold, not investment. Some people may think that the first pot of gold can be obtained through investment or speculation. But in the beginning, you spent so much time on this, and when converted into hourly wages, is it really high?

The first pot of gold recommends earning income from the industry and adding icing on the cake through investment.
It is not recommended to earn income by investing or speculating, or directly as a full-time trader.

1.3 What should I do after I have the first pot of gold?

2 big principles <br class="smart">Principle 1: Making money is creating value for others Principle 2: Selling your time

Principle 1: Making money is creating value for others

• Money is a unit of calculation as a store of value, and making money refers to the exchange of value.
  
• The more value you create for others, the more value you create for others, the higher the value you can exchange.
• The scarcer the value provided, the more money can be exchanged. Conversely, even if the value is high, there is little that can be exchanged.
• It’s not enough that you are very capable of creating value, you have to go out and exchange with people and find people who need them.
• The people who need you, the more valuable you are to the other party, and the people who don't need you are useless no matter how powerful you are.

Principle 2: Sell Your Time

• Level 1: Increase the unit price of your own time!
• Level 2: Sell your time, repeat many times!
• Level 3: Be a Time Merchant!
  

For the next 5 to 10 years, just focus on level 1 and lay a solid foundation.

How to increase the unit price of your time?
Think from the perspective of Principle 1: How to create greater and scarcer value for others?

1. Start with a professional competency, at least do it better than most.
2. Find where people have unmet needs and where you can provide solutions.
3. Find expertise in composite areas.
   Q: Looking for expertise in a complex field, does that mean the slash?
   A: The professional ability to create value for others and bring income to oneself can be called a slash.
   (If you can't make money, just have multiple specialties, it's not called a slash!)
   Start with a single major, and then expand into more specialized competencies based on observed needs.
   Don't be too obsessed with the word slash, the key is how much value you can create and how many problems you can solve for how many people.
   
4. Learn more about people's problems and needs, and improve capabilities to solve bigger problems and serve more people.

Start by accumulating at least one major!

1.4 Six concepts of creating value with time

• Concept 1: The way to correctly define time benefit is "productivity".

Industrial Age Productivity = Time x Experience Knowledge Age Productivity = Time x Experience x Concentration

Five Tips to Improve Your Everyday Productivity
1. Every morning make a list of the 3 most important things for the day.
2. Find your golden biological clock and keep it under control first for yourself.
3. Stay away from the 3C products around you and only do one thing at a time.
4. Write down any trivial matters and deal with them once a month on a "maintenance day".
5. How much is your hour worth? Outsource low-value, energy-intensive work as much as possible.

Productivity Principles:
1. It's not that the more things you do, the better, but how effective it is!
2. It doesn't take time to be effective. If experience and concentration are low, it will waste several times of time!
ㄧ Concentration leads to productivity

• Concept 2: When things are done with 95 points, the winner takes all, and 80 points is almost the same as 0 points.
  The big one is Evergrande, and there are many examples in life that can be found in this matter.
  
• Concept 3: You can't do everything.
  Do you think:
  - I can handle everything.
  Actually:
  1. You can only focus on the big and let go of the small, but many really important and high-value events have also been silently let go.
  2. Even if there are really important things to do, but after focusing on the big and letting go of the small, you only do 80 points, which is similar to 0 points.

Admitting that you can't do everything is the most important step.

• Concept 4: It's not that there is not enough time, it's that the sequence is wrong.

Q: After excluding factors such as concentration and energy, which is the most important thing to do first?
A: When you don't know how to choose, the top priority is "my own growth"

• Concept 5: How much is your time worth?

Q: There are many things in my growth, so how should these things be arranged in order?
A: It can be calculated in terms of how much the unit of time is worth, such as how much an hour is worth.

When a thing is far below your unit time value, you can consider outsourcing to separate things out.
Like paying someone to clean, or paying someone to organize information for you.

There must be other people willing to buy time from you in order to save time.

• Concept 6: Is time spent doing things or thinking?
  Many people in the workplace are afraid to think, because it will make others think you are idle!
  The truth is that those people who think you're idle are usually the ones who don't think about it.
  Busyness is just a form of laziness, too lazy to think and discern one's actions.
  

Always reserve more than 30% of your time to think. As you grow, the proportion must continue to increase.

2. Basic Concepts of Financial Management

2.1 Regular spending

Two effects of regular spending

• The higher the normal spending, the slower the achievement of financial freedom.
• The higher the normal spending, the higher the financial risk.
  The vast majority of spending is ongoing, but income can be interrupted for a variety of reasons.

Three common spending allocation mistakes

1. You can't control how much you spend.
2. It is impossible to distinguish between necessary expenditures, non-essential expenditures and investment expenditures.
3. Blindly saving, no quality of life or no investment expenses.

Spending Planning Recommendations

• Know how much you spend: budget, bookkeeping.
• Make spending control a habit, or automate it, instead of relying on willpower.
• The most ideal way: Use passive income to pay for expenses.

2.2 Necessary preparations before investing <br class="smart">You may want to see what you do that will make you fail?

1. Invest in something or a method that you do not understand.

Solution: Start with the easiest!
For example, if the investment tool is ETF, the recommended investment method is asset allocation.
Others themselves google, there is a lot of free information on the Internet.

2. There is no problem with the investment method, but forced to sell and interrupt the plan.

Solution: Safe Deposit (Emergency Reserve)

• Prepare a safe deposit for one year of living, and do not use this deposit unless necessary (adjustable to 6-24 months).
• Security deposits cannot be used for high-risk investments!
  1. Investing must use spare money that will not be used in the short term.
  2. Money that will be used within five years should not be used for risky investments.

Solution: Insurance

• What happens without proper insurance?
  1. The family is at risk of falling into an economic crisis.
  2. The investment plan may be interrupted.
  3. May be insecure in the heart (varies from person to person).

Insurance is a tool that helps us avoid accidental injury.
When the income is low, insurance is more needed, and the higher the income, the stronger the ability to take risks.

• Simple principles of insurance
  1. Use the principle of low premium and high protection to let insurance leverage the protection effect.
  2. The major event of "destroyed family" is guaranteed first, and the minor event that does not cause much harm can be excluded first.
  3. The initial premium should not exceed 5% or 10% of the annual income.

3. Common Myth Reminders

• What is the reasonable return on investment?
  Stocks are 8-10%, but this is the long-term rate of return. If you buy stocks this year, you should feel that stocks are deceptive.
  
• Can I buy a friend's badge?
  Not recommended.
  
• How much should a good opportunity invest?
  Diversify your investments and do not account for too much of your total capital.
  
• Can I borrow money to invest?
  Can't.
• No money to start investing?
  Divide the purpose of investing into two
  1. Learn to invest: You don't need a lot of money to get started, but not to make money.
  2. Make money by investing: You make money on your principal, but you don’t want to make a big mistake when your principal gets bigger.
  

The key to making money is capital, not high-risk small and big.

• What do investors with no money do?
  1. Want to find a way to pay more, want to earn 50% or even 100% a year.
  2. When you see what others are making, you want to follow suit.
  3. Even if you make money, you make very little.
  4. Feeling that the stable method earns too little.
  5. Ignore risks, trade frequently, and increase losses.
  

Use your ideal future self to make judgments!
Focus on long-term outcomes and change, not just the current status quo.

Finally, a paragraph to sum up

You can not invest, but you must learn to manage money.
Financial management = correct allocation and planning of money If you have no money to invest, start with financial management.

Mr. Market's website: Mr.Market - Introduction to Investment and Financial Management
Mr. Market's FB: Mr. Market Mr. Market | Facebook