Gemfinder Q1 2019 – Olive tree thinking

I was recently listening to a podcast describing how olive trees work. You cannot take an olive pit and grow an olive tree. Even if you take it right off a live olive tree. Something will grow but it won’t be an olive-producing tree.

All the olives we’ve ever eaten come from grafts. One put on another live tree. It takes a long time before an olive tree can produce olives. Sometimes 3, 5 or even 10 years. But it will come. It always comes!

We, humans, are wired to seek out quick rewards and deal with emergencies. Short-term > Long-term. That’s how we survived thanks to our fight or flight instincts. It is just hard for us to wait for a reward and we prefer instant gratification instead. We forget about the olive tree thinking.

But patience is a virtue. A seed of investment today will be bearing fruits for life. Again and again, year after year. So as the new tax year begins, this new Gemfinder article is here to remind us that time goes on but investing principles are here to stay. Long-term thinking, investing for the long haul and the benefits of having enough income to support your lifestyle without having to work the 9-5.

As a reminder, the Gemfinder content is evergreen. This means that at any point in time you can go back and read all previous gemfinder articles without missing out on ‘recency’. 

I recently wrote one of the most detailed guides I’ve ever written on passive income investing. You can read it below:

FIRE

I wanted the unreasonable (J Collins) – 8 min read
A great story of a woman who became financially independent by living a minimalistic life with her husband. I’m not so surprised anymore by these stories but NEW people to it ARE surprised. Why I’m not surprised? Because it’s simple math. First track how much you need to spend, then multiply it by 25 (annual spend). Congratulations! Once you’ve saved/invested this much you can declare FI. The hardest part is to resist lifestyle inflation and keep investing in both good and bad times.

How to Slow Down Time and Live Longer (MMM) – 8 min read
After studying the brain, MMM suggests the best way to slow down time and live forever! That’s achieved through new experiences and trying new things. If you think about it, the brain treats routine as if you’re not learning much and therefore thinks this time is not worth remembering. Hence the time flies in middle-age but time feels more vibrant when in college. I added Incognito in the list of books to read.

Financial Freedom ep. 10 [Podcast]– 57 min audio
How to negotiate a better salary, improve your skills and budget without worrying about the morning lattes. I also want to read the Financial Freedom book at some point. Unlike the popular FI blogs which focus on savings, this one really suggests we focus on the income side which is fair.

Work Optional: Rebranding FIRE (Done by Forty) – 4 min read
A short review of Tanjia Hester’s book: Work Optional. This asks questions to yourself that must be answered before achieving FIRE. Have you considered medical plan costs? Are you aware of the loss of identity that comes when you stop working? What is your ideal life when you become financially independent?

Following a reader’s recommendation I watched the following (thanks Darryl :) ). Every seven years, designer Stefan Sagmeister closes his New York studio for a yearlong sabbatical to rejuvenate and refresh their creative outlook. He explains the often overlooked value of time off and shows the innovative projects inspired by his time in Bali. Fascinating how all clients just accept that and that he can actually pull that off!

Reentry (Indeedably) – 10 min read
The Indeedably author takes 6 months off and only works half of the year. He calls this semi-retirement. This article describes the challenges of the re-entry into the working environment and the comparison to his non-working self. I personally want to just get done with working, get my financial freedom and then work without having to. But this is another perspective to life. and A well-written piece.

If you love your spouse, you’d make them financially independent (Financial Samurai) – 7 min read
The role of money in a relationship and most importantly in a marriage. On a related note, you may want to read my piece as well: Financial Independence: How to convince your partner. I find it hard to believe there is a relationship in which, when things get more serious (ie living together, kids etc) money management happens in silos.

Investing

The Yield Illusion: How Can a High-Dividend Portfolio Exacerbate Sequence Risk? (ERN) – 13 min read
I keep hearing that if you invest in a higher dividend portfolio and don’t touch it, then you have a better chance of eliminating sequence of return risk. Sure, you will get paid out more (in dividends) but what about the principal of your portfolio? Myth busted by Big ERN (article 29 in the SWR series!)

The Price of Greed (Of Dollars and Data) – 5 min read
The price of greed is indeed high. Being greedy in a good way – i.e. wanting your business to succeed and doing everything you can for it is great! Being greedy just because you’re playing the money game though is wrong. Inherently you’ll find that obtaining social Status is the ultimate goal. Not money.

Norway’s $1 Trillion Man Talks Brexit, China and Big Tech (Bloomberg) – 23 min read
Yngve Slyngstad, CEO of the world’s biggest sovereign wealth fund, describes how it invests for his grandchildren’s grandchildren.

FoxyMonkey on YouTube – Too many white shirts? :) I was invited by Simon from the Steps To Investing to discuss share dealing platforms. What to look out for when choosing one? Scratched the surface of financial independence & early retirement too.

How the patient investor sees the world more clearly (Pragmatic Capitalist) – 3 min read
Shows the difference between an investor who checks their account quite frequently VS the investor who checks it once a year. With numbers!

The futility of market timing (Albert Bridge Capital) – 3 min read
What if you picked the best day every year to invest for 30 years? Now, what if you had picked the worst day and invest for the same 30 years? The results surprised me. Forget market timing. Invest and get back to work!

Even God couldn’t beat dollar cost averaging (Of Dollars And Data) – 6 min read
Even GOD cannot beat dollar-cost averaging. Even if you have the perfect information of what the market has done, a buy-the-dip strategy UNDERPERFORMS a dollar-cost averaging most of the time. Some amazing insights showing the power of DCA in this post.

Are you wearing your glass half full glasses today? (Plain English Finance) – 4 min read
This article reminded me how much I enjoy the absence of news in my daily life. But it goes beyond negative news. It, in fact, focuses on the bigger picture like the book Factfulness does. Yes, it’s shocking that 7,500 homeless people live in the streets and I wish no one this fate. But how does this compare to 10, 20 or 100 years ago? The fact that it’s only 0.0009% of the population and this number is the lowest number in London history is another way to look at it.

Short money rules (Collaborative Fund) – 2 min read
If you only read one post, let this be it. Golden advice from Morgan Housel. Like… John D. Rockefeller was worth the equivalent of $340 billion, but he never had penicillin, sunscreen, or Advil. For most of his adult life, he didn’t have electric lights, air conditioning, or sunglasses.
Which is to say: Everything about money is results in the context of expectations.

Casino Stocks and the Missing Sin Premium (Fortune Financial Advisors) – 2 min read
Investing in “sin stocks” such as tobacco, gambling and aerospace/defence can offer higher returns. Would you?

Why do markets go up? (Factor Investor) – 5 min read
Stock market returns = Inflation + productivity + population growth.
Many times you hear me say investing is for the long-term. But why does the long-term work, really? What makes me confident that in the long-term you will make money? This article explains that. I also registered my thoughts on the “Why do stocks go up” section of the best passive-income investments post.

Entrepreneurial

Why are people miserable at work? (A wealth of common sense) – 10 min read
What would you rather choose:
a) Your current yearly income is $50,000 while everyone else earns $25,000.
b) Your current yearly income is $100,000 while everyone else earns $200,000.
Price of goods are the same between a) and b).
Apparently, 50% of people chose option a! So they’re willing to take less money as long as they earn more than their peers. Goes to show why people live their “real” lives on social media.

What most bloggers forget — Your blog is not your business (Medium) – 3 min read
If you have a blog or want to create one, here are some really good questions to ask yourself. Basically, it reminds you to have a clear plan of action (which I don’t!) and serve your customers in the best way possible. I’m trying for the latter, as I believe readers want to keep hearing from me about investing, lifehacking and financial independence!

Leadership lessons from a dancing guy. Here’s how you create a cult! :)

Books – Podcasts

[Podcast] What does it take to be successful? (Tim Ferris) – 1h
What does it take to be successful? Habits around success from Derek Sivers, investing discussion with Tony Robbins, Ray Dalio and other icons.

[Podcast] The Long Term (Seth Godin) – 25 mins
Long term thinking. Olive trees.

[Book] A Wealth of Common Sense – Ben Carlson
Why simplicity trumps complexity in any investment plan. Excellent book I just finished.

Contracting

Credits FreeAgent

I hope you enjoyed this article.

Found any gems for the next Gemfinder? Send me an e-mail at [email protected].