Friday Finance: dollar cost averaging DEBOONKED

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This is an extract from The Poor Man’s Guide to Financial Freedom: A Realistic, 10-Step Manual to Building Liberating Wealth on a Small to Medium Budget.

Diversifying Across Time

There is one more risk to consider and it relates to time.  Not just time in the market, which we already discussed, but also the time it takes to get in and out of the market.

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Consumer inertia

I’m not the brightest spark.

I decided to bypass Amazon and buy a Terror House ebook direct from their store. I had to get instructions from Matt on how to get it onto my Kindle.

At first he thought I was joking but then, when I insisted that I was serious, he gave me the steps with palpable embarrassment.

Turns out it’s easy: download the file, send it to your Kindle email address (they all have one), perhaps fiddle with one last thing if required, and there it is.

I always bought ebooks via Amazon because that’s all I knew. Go to the Kindle store, search, press the ‘buy’ button.

In fact, I didn’t even know that you could read non-Amazon books on Kindle. I’d wondered about it but never actually tried it. You can read anything on those. If a mate sends you a manuscript as a Word doc, you can forward it to the Kindle to read there – much easier on the eyes. You can copy and paste long articles from the onlines, too.

Of course, Amazon could still reach into your device while the WiFi’s connected and delete anything they find objectionable but I’m not too worried about that at the moment and can’t physically obtain or store paper books right now anyway. I know others are building paper libraries and that’s a good idea.

Probably all this has not taught my reader anything he didn’t already know, but the anecdote may illustrate something interesting: consumer inertia.

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Your status in the New Normal

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An estate manager and serfs, Medieval Europe.

By the late Roman period, landlords had become so wealthy and powerful that they refused to allow their workers to be recruited into the legions. Instead, they sought security from barbarian warlords.

Thus the feudal period began.

In the era of the Roman Republic, many farmers were yeoman with the rights and responsibilities of free men. They were gradually replaced by slaves conquered from foreign wars and the relative power and wealth of the aristocracy increased. By the end of the Empire, ordinary peasants had become serfs. They were forced to work for their lord and were not allowed to leave the manor. The average person never ventured more than ten kilometers or so from his village. A few managed to remake themselves by escaping to a town and learning a trade but most would not improve their station until the Black Death made labour scarce and workers in high demand.

The division of labour in society has changed several times since then and right now it is changing again.

It seems likely that instead of having a large middle class as in the post-war years, we will be divided into two new classes. These nascent castes have already begun to form and my reader probably knows which one he belongs to. It’s easy to make predictions about things that are already happening.

Case Study

At Amazon, machines are often the boss—hiring, rating and firing millions of people with little or no human oversight.

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Friday Finance: pros and cons of diversified/balanced funds

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This is an extract from The Poor Man’s Guide to Financial Freedom: A Realistic, 10-Step Manual to Building Liberating Wealth on a Small to Medium Budget.

More on Diversified Funds

Remember a little while back, we were discussing how you may need a mix of bonds and shares?  Well, some of those index funds can help you to do it.  Rather than, say, putting 30% of your money into a bonds index fund and 70% into a share market index fund, you might find that there is a ‘balanced’ or ‘diversified’ fund available that already diversifies in this way for you.  Such diversified funds might also include some cash or equivalents, real estate, or other investments.

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The untold catastrophe and how to stop it

Do you know the leading cause of death in the world?

It isn’t war. It isn’t cancer. It isn’t accidents, murder or suicide.

It is heart disease.

In 2019 alone, 659,041 Americans died of heart disease.

Globally, about 18 million people die of cardiovascular disease every year.

That’s a Holocaust every four months.

In terms of sheer numbers, it is the greatest catastrophe in human history.

In the US alone, heart disease takes as many lives as 990 September 11th attacks every year, or 275 Pearl Harbours, or almost the entire American Civil War – the bloodiest in United States history.

Across the world, as many people die of heart disease every four years as died in World War II.

And yet we ignore the problem.

It is morally imperative that we take action.

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Friday Finance: DON’T invest in what you know

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Extract from The Poor Man’s Guide to Financial Freedom.

Invest in What You Know?

There is an old piece of advice that says, ‘invest in what you know’.  For example, if you happen to be a mad keen aviation enthusiast who goes to the airport to take photos of your favorite airplanes taking off, maybe you would be better placed than the average person to know which major aviation companies to invest in.

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The return of the aristocracy

If you’ve poked your head out of the cave lately, you’ll have noticed a pattern.

Our rulers want to change our lives.

They suddenly want us to eat bugs, live in pods, refrain from eating beef, enjoy our lack of privacy and own less stuff. They also want us to travel less, especially in Australia where travel for most is banned.

It’s Woke, global warming, Covid and WEF nonsense rolled into a single, unified campaign against the common man.

Why?

Who stands to benefit from us eating bugs? Who wins by stopping us from flying to Bali for a holiday?

In terms of absolute monetary benefit, no one. There’s not much money in marketing bug burgers or renting out bungalows at Bonnie Doon.

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Friday Finance: don’t over-diversify

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This is an extract from The Poor Man’s Guide to Financial Freedom: A Realistic, 10-Step Manual to Building Liberating Wealth on a Small to Medium Budget.

Reversal

There is such a thing as too much diversification due to the law of diminishing returns.  If you are picking shares, two stocks are immensely better than one.  Three is better yet, but not by as much, and this pattern continues for the fourth, fifth, sixth and so on.  Once you’ve got twenty stocks, you’ve reduced your risk by about 70%, and any more stocks over and above that do little more than take up your time and effort to keep track of.  Also, with over twenty stocks your return is so diversified that it will likely mirror the index funds – so why bother?  Buy the index fund and be done with it.  Which is what I recommended anyway.

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The masses don’t want to be free

Source: axios.com

Everyone thinks they want to be free but aside from a pet preference here and there they don’t, really.

Not in comparison to their desire for material comfort, social approval and above all else, safety.

In the West, few of us wanted our rights enough to fight for them. Others fought on our behalf. The nobles fought the King, the petty bourgeoisie fought the aristocracy, a few union rabble rousers fought the capitalists, a tiny minority of feminists fought the patriarchy. Much of the battle for racial equality was fought on behalf of others.

Most Americans in the Thirteen Colonies did not fight in the War of Independence and it is unclear what percentage of them supported it. Most women never campaigned for equal rights. Most ordinary, landless men did nothing personally to further their case to receive the vote or gain individual freedoms.

For that matter, the slaves of the British Empire and the United States did not fight to free themselves. They, to, were emancipated by others.

It was all thrust upon us unbidden.

Sure, most will vote for freedom when it’s all organized for us and there’s an option on the ballot. That’s about the extent of the average person’s dedication, though.

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