During my late teens and early twenties, there were many times when I felt I didn’t know where I was going.

There were stretches of days, weeks, and months where I’d wake up, go to work, watch TV, go to bed, and mindlessly repeat being on some treadmill to nowhere.

I was lacking purpose and self-awareness.

Lately, I’ve been thinking a lot about my purpose, my life mission, and how I’m going to live these out on a daily, weekly and monthly basis.

No longer am I on a treadmill to nowhere, and now have goals and a vision.

What I realized is in order to fully realize my full potential and unlock my life mission, I would have to find and embrace my Personal Truth.

I capitalize Personal Truth because it is unique to me. You also have your own Personal Truth, as well as your brothers, sisters, parents, friends, and co-workers. Your Personal Truth is personal and unique. This is why it is special and treated with respect.

Finding my Personal Truth has been a winding path and has been a work in progress for a number of years.

It’s possible that this is your first exposure to thinking about this concept. This is totally okay and up until a few months ago, I had not been exposed to it either.

Maybe this will resonate with you, and maybe it won’t. Finding your path in this world to your goals is a personal experience and finding what works and what doesn’t work is part of the process.

Understanding my Personal Truth has helped me and that’s why I’m sharing it with you

In this post, I will be talking about what is Truth, finding your personal Truth, and how living out this Truth will lead to fulfillment.

What is Truth?

Truth is an interesting subject which has been discussed by philosophers throughout history. From my brief research and understanding of the different argument and thoughts, there are a few different varieties of truth.

(If I’m wrong, please excuse my misunderstandings as I’m still learning and forming my knowledge on this subject…)

The few different varieties of truth which I want to discuss here are absolute or universal truth, collective truth, and personal truth. Something interesting here is that FACT and TRUTH are not necessarily the same thing – whereas many people equate these two concepts.

What is Absolute Truth?

Absolute truth is defined as unaltered reality. Absolute is concrete, fixed, and invariable.

Many things in mathematics are considered absolute truth. Without diving into the details of abstract algebra, commonly, humans operate mathematically using the Ring of Real Numbers.

Under this construct (which no one thinks about but math weirdos – like me), adding 2 and 2 is 4. Multiplying 0 and 5 is 0. Dividing 12 by 3 is 4.

Another example of an absolute truth is a square cannot be a circle.

However, there are a number of things that many people believe that may or may not be absolute.

Collective truth is another variety of truth which I want to discuss here.

What is Collective Truth?

Collective truth is something that many people believe is right, and through this mutual agreement, life is made easier.

kundalini yogaAn example of a collective truth is best viewed through the perspective of religion.

Christians believe that there is one god and this god is all-powerful and all-knowing. Through this thought, Christianity is all about serving this one god, doing good deeds, and living a good life.

The difference between absolute and collective truth in this situation is evident by the fact there are many varieties of Christianity (Catholicism, Orthodox, Lutheranism, etc.), as well as many varieties of different religions which are not Christianity (Islam, Hinduism, Judaism, Buddhism, Jainism, to name a few.)

Along this line of thinking, collective truths may or may not be an actual fact, but since so many people agree, it is accepted as fact.

Collective truths help organize and push a group a people towards a common goal.

Collective truth is similar to the concept of the “Imagined Myth” – what Yuval Noah Harari discusses in his book, Sapiens.  Essentially, humans are the all powerful species because we can formalize abstractions (money, religions, nations, companies) which can steer populations strategically towards a goal – something other species cannot do.

Finally, let’s get to what I really want to talk about: personal truth.

What is Personal Truth?

Every person has a different perspective. No two people have lived the same life up until any given point.

Even twins growing up in the same household, going to the same high school, and hanging out with a similar friend group will have a different perspective on the world!

Personal truth is something you believe is true.

This could be something as simple as believing that Chipotle burritos are better than Qdoba burritos, or more convoluted as believing that a zombie apocalypse is going to happen this year and we need to prep for it.

These examples are somewhat ridiculous (on purpose) and show that again, a personal truth does not necessarily have to be fact, but if you believe it and you live it, then that is what ultimately matter to you.

I believe that everyone is unique, everyone is capable of achieving their goals, and through daily disciplines, you will get there.

You can disagree with me, and that’s fine. It’s part of my Personal Truth, and if I believe it, I need to live it out.

Personal truths are unique, and based on your perspective and life experiences.

Finding Your Personal Truth

What is your Personal Truth? Do you have one?

I capitalize Personal Truth here because each of us has the ability to possess it, and once understood, is unique.

What is my Personal Truth?

I believe I’m capable of providing amazing value, through my actions and thoughts, to help other people achieve their goals in life. This value can be manifested in many different ways: through my daily actions, through how I interact with others, and through what I put out into the world through my work.

A key point here is that it is my belief that I can affect change in the world.

Writing this blog post is part of living out my Personal Truth.

This blog post has been sent to my email list of 900+ individuals.

While this isn’t thousands or millions of people, I’m risking my opinions, thoughts, and Truth because I believe through my thoughts, I can help you and others.

If I’m right or wrong, I don’t care.

It’s my Personal Truth and it’s up to me to live it out – and through me living it out, I’ll find fulfillment and peace.

Finding your Personal Truth involves creating a quiet space for you to let your intuition guide you towards what is important to you.

Some examples of this could be… (I came up with these in 30 seconds, maybe that’s enough time, maybe you’ll need more time):

  • Your work as an *Insert Profession Here* is incredibly important to your local community.
  • Tacos are life. It’s your life mission to cook the greatest taco.
  • Your children or spouse’s happiness is the most important thing and you are a servant to them.
  • Being healthy is more important than being wealthy or working in a great career.
  • The environment is being destroyed and we must save it.

Of course, these examples might actually form part of your Truth. Also, there can be multiple dimensions to this. You can have a Truth around relationships, a Truth around health, and a Truth around work.

It’s up to you and your experience!

Once you have your Personal Truth, now, it’s time to take action.

Using Your Personal Truth to Unlock Your Life Mission

Companies and organizations typically will have some sort of mission statement which is a guide to their companies’ philosophy and corporate decision making process.

Your Personal Truth is similar to this, and can be used as a guide to leading the life you want to lead.

Let’s go back to my Personal Truth and talk about how I’m using this as a guide for my life.

My Personal Truth is “I believe I’m capable of providing amazing value, through my actions and thoughts, to help other people achieve their goals in life.”

I’ve purposely left my Personal Truth a little bit vague so that I can fit a lot underneath this umbrella.

Currently, I’m trying to live this out through writing content on The Mastermind Within blog, producing podcast episodes with my co-host on the Simple Minded Millennial podcast, and through renting out my house.

Right now, this isn’t all that impressive, but it’s dynamic and a work in progress.

My Personal Truth starts with “I’m capable of providing amazing value.” Over the next 3 to 5 years, I already have thoughts on launching a number of new projects, websites and companies to help expand how I’m leading change in the world.

There’s a potential that I’m still tapping into, and I’m incredibly excited to see what I’ll be able to accomplish.

This is my life mission and is my why.

For you, once you find your Personal Truth, the next steps are aligning your actions with this Personal Truth.

If you believe being a millionaire will make you happy, then start living below your means, start investing your savings wisely, and learn personal finance.

It’s surprisingly simple, but an incredibly powerful force to finding fulfillment.

What’s Your Personal Truth and How are You Going to Use it to Better the World?

Part of my Personal Truth is that I believe others are not reaching their full potential in a variety of areas.

It is true for me – I’m not 100% happy and fulfilled in all areas, so to think that everyone else but me is 100% happy would be a little bit short sighted.

My takeaway for you from this article is to think about what your Personal Truth is for yourself.

What is the one thing (or handful of things) that you hold near and dear to your heart which you believe is fact and true?

With this one thing, or handful of things, how does it affect your every day life?

If you believe health and outer beauty is the most important piece in life, then why are you spending money on things which do not lead to you being beautiful? Shouldn’t you be aligning your actions with what will bring you happiness? Why are you sitting on the couch bringing Netflix if this doesn’t lead to happiness?

Again, this is just an example (and maybe a little bit extreme), but hopefully illustrates the point.

One last piece here before signing off.

Your Personal Truth is dynamic and ever-changing. Maybe, you don’t know it today, and it’s still forming. That’s totally okay 🙂

I know my Personal Truth is ever-evolving. Our world is dynamic and through this lens, I have to stay flexible.

Hopefully this was an impactful article for you and your life. I’m looking to lay the foundation for helping you become more self-aware here in January of 2019, and this is the first step towards becoming who you are meant to be.

Thank you for reading!



Do you want to be average, or more than average?

It’s a simple question.

Average is the middle of the pack. It’s an okay place to be.

You aren’t the best, and also, not the worst.

Something that’s been on my mind a lot lately is how many people settle for average.

I want to be extraordinary, and I want you to be extraordinary.

Being average is great, but rarely in my life have I been happy with the outcomes associated with average.

Average performances don’t lead to gold medals, promotions, awards, or recognition. Extraordinary performance lead to medals, promotions and recognition.

Which one will you choose?

In this post, let’s take a look at what average looks like, what extraordinary looks like, and set the stage for 2019 on this blog.

What Does Average Look Like?

I’m average in many ways. You are probably average in many ways as well.

What is average?

Average can be thought of as the middle number in a distribution of outcomes. (In layman’s terms, this is fine. More precisely, we’d use median for the middle number, but this isn’t a statistics article 🙂 )

  • The average height is 5’9″ for males, and 5’4″ for females.
  • The most prevalent eye color in the world is brown eyes.
  • The average hand size is 6.77″ for females and 7.44″ for males.

These are attributes we can see and measure, and cannot be affected through natural processes. I’m 5’8″ – unless an act of God occurred, I will not be 6 foot in my life.

There are many variables and attributes which are also measurable but hidden. I want to focus on these, since these we CAN control.

Average can be achieved by living life on autopilot and not understand the ramifications of our actions.

These numbers are quite interesting and paint a picture for us of average.

But, what about extraordinary? What about above average?

Could you be extraordinary?

I started this blog because I wanted more. While physically I look average, I hate the results I get when I’m average.

Maybe it’s because of my physical appearance that I have a chip on my shoulder to do more and do better.

I want more, I want extraordinary.

This blog is named The Mastermind Within, and is all about helping your reach your FULL POTENTIAL. It’s not about reaching your average potential.

You have a mastermind within you – an all powerful brain, body and soul which can accomplish anything it wants.

What is extraordinary?

Extraordinary is being in shape and having the ability to perform different exercises without getting tired.

For personal finance, extraordinary is becoming debt free, having $10,000 in the bank for emergency purposes,and knowing where your money is going each month. Extraordinary could be earning $100,000 a year, having a successful side hustle, or achieving asymmetric returns.

Extraordinary is giving your time, knowledge or money to others in need.

Extraordinary is being careful with your waste, and understanding the impact you have on this Earth.

Being extraordinary involves having successful and healthy relationships, being active in your community, and looking to help others grow and become better.

Extraordinary is living in abundance.

There are some areas of my life where I’ve achieved above average results. Likewise, there are other areas where I’m still lacking, struggling, and trying to become better for the future.

Becoming better over time is a process. No one is an overnight success – I’ve been working towards a “better life” for the last 6 years and I’m still somewhere far from my destination.

Start with the question, “What makes you happiest?” and move on to setting actions to bring you closer to the answer.

Let’s be extraordinary in 2019.

Push to Become Extraordinary in 2019

Over the past year, I’ve met a number of amazing people through this blog.

When having some discussions, I’ve walked away sometimes frustrated with how my opinions were not received as openly as I tried to receive their opinions.

What I came to realize is everyone has a different perspective, different goals, and a different outlook on life.

For me, I want success and happiness in all areas of my life – relationships, money, spirituality, exercise, work, etc.

I’m not afraid and willing to go down rabbit holes, take risks, and shoot for the moon. I want to achieve extreme wealth at a young age, am willing to learn and work on different projects until the work is done, and am prepared to change my opinions and thoughts with new information.

What about you?

Do you want to be average, or be extraordinary?

In 2019, on this blog, I will be writing to help you become extraordinary. If this doesn’t fit your goals and wants, then that is completely fine. We all have one life and if my message doesn’t align with your goals, then no love lost.

However, if you are choosing to become extraordinary, buckle up.

The path to success is a fun journey, which requires patience, self-awareness and consistency.

You are the leader of your life and the teacher who knows you best.

So, I ask again, are you going to be average, or be extraordinary?

Thank you for reading 🙂


Do you want to be average or extraordinary?

The fourth quarter has been a historic one for the stock market. As I write this, equity markets are down nearly 20% from their highs in September.

One of the most obnoxious things I’ve seen lately is the thought, “Stocks are on sale! By buying at these prices, you are getting the same asset for 20% less than a few months ago!”

First, this comment implies that at 100% of the price, stocks had a fair price and weren’t overvalued, and second, this also comment implies the future for equities will be favorable.

What bothers me about this comment most is that CATCHING A FALLING KNIFE and BUYING THE DIP are two completely different investing and trading concepts. (If you are unfamiliar with these concepts, I’ll explain shortly)

There are a ton of absurd investing mantras out there, and in this post, I want to talk about uncertainty, psychology and investing in falling markets, central bank monetary policies, and why it might be best to relax on the recent pullback and wait to see where things go in the first quarter of 2019.

Price is what you pay. Value is what you get.

A Personal Story of Chasing Returns

I’m a fan of cryptocurrencies. I’ve talked about this a few times on this blog as an opportunity for asymmetric returns, and also as an alternative to the debt based fiat monetary scheme which is failing for many countries.

Back in the summer of 2017, I made my first purchase of Litecoin, and also bought a little bit of Bitcoin and other coins.

I got in before the madness in December, and had the opportunity to sell and cash out for a large sum.

Unfortunately, I didn’t sell and fell for what I thought was a common investing and trading pitfall.

Here’s a chart of Litecoin indicating where I purchased over the last year:

litecoin buys 2018

In January, after the price pulled back significantly, I thought I was getting it “on sale”.

The high was over $400, and the price was down to $240! That’s a 40% sale, right?


What is the fair value of Litecoin? What would I pay for 1 Litecoin, given the option to purchase any other number of securities or assets?

Many of you reading this probably think the price should be $0, so that case, I was chasing returns and letting the psychology of the markets trap me into making dumb purchases.

I thought I was buying the dip, but actually, I was catching a falling knife.

Catching a Falling Knife and Buying the Dip are the same action, but completely different results

Let’s get to some definitions here… what is catching a falling knife and what is buying the dip?

When the price of an asset falls, this might look like a good opportunity to buy.

After buying, maybe the price goes up. Great! You’ve bought the dip and made a good purchase because the price is higher than what you paid.

Maybe the price goes down. That’s not great, you’ve caught a falling knife, and now would have to sell at a loss.

What looks like a similar set-up in the price time series can lead to completely different results and emotions.

I thought I was buying the dip in Litecoin, but I was actually catching a falling knife.

Let’s move on to talking about the stock market, and actually, more generally, the global markets.

Is the Central Bank Liquidity Supernova going Black hole?

Recently, we celebrated (?) the 10 year anniversary of the start of the Global Financial Meltdown which happened in 2008.

After 2008, central banks around the world took extreme measures to keep things afloat.

Central banks’ balance sheets have exploded around the world with purchases of assets, and the money supply has likewise exploded.

This liquidity supernova saved the global economy from collapsing, but 10 years later, has distorted prices, thoughts, and actions of many individuals and institutions.

Talking about the United States central bank, the Federal Reserve (which interestingly enough is not Federal or has any reserves) pumped $4 trillion dollars into the financial markets, an increase of 4 times the existing money supply! Through quantitative easing, the markets have recovered and returned to all time highs.

However, this easy and cheap money cannot go on forever without dire consequences.

In 2015, the Federal Reserve has started to reduce the assets of their balance sheet (quantitative tightening). Currently, roughly $50 billion is being removed from the system each month.

Below is the chart of money supply vs. S&P 500 over time.

S&P 500 vs money supply

This is a personal opinion, but I believe these two time series are intimately related, and if the Federal Reserve continues to remove money from the system, many assets will experience a severe repricing to lower levels.

Fighting the General Trend of Liquidity Might Not Lead to Winning

Central banks all around the world all have massive balance sheets. The Federal Reserve is trying to reduce the size of their balance sheet, but in Europe, China and England, these central banks are still providing liquidity to the commercial banks and companies in those countries.

Looking at the change over time, you can see that globally, money is becoming tighter and actually shrinking over time due to Quantitative Tightening.

central bank balance sheet change

Investors and corporations have become addicted to cheap and abundant money over the past 10 years. With interest rates at historic lows (and even negative in some countries), personal and corporate debt loads have gone bananas, and now with money tightening globally, pain is being felt as many people are feeling tapped out.

With money supplies decreasing, it is my opinion this should have a deflationary impact on the general economy.

At the same time, our absurd debt driven economy is made possible with inflation, and if property values fall, stock portfolios fall, and lending starts to slow, there could be a lot of pain felt with bankruptcies and defaults.

I’m not a financial adviser, so please do not take this as a recommendation and please do your own research.

Are stocks on sale?  I don’t believe so. I believe stocks are still very overvalued. The charts in 2018 of the S&P 500, Nasdaq and Dow Jones all remind me of the charts of cryptocurrencies in 2017. I wouldn’t be surprised if the S&P 500 touches $2,000 (or even $1,500) before going up again.

s&p 500 chart over time

What goes up, will come down. Prices cannot go up in a straight line forever.

What scares me is the mainstream media isn’t talking about this, and a lot of people have no idea about what could come in the next few years.

It will be very interesting to watch in 2019. I’m just having a very hard time seeing growth in risky assets when the overall pie is shrinking. Catching a falling knife and buying the dip are two different results from the same action.

Be Careful with Your Money is All I Ask

One thing I will not do on this blog is make predictions or recommendations for what you do with your money.

My goal with this blog is to inspire ORIGINAL thought by providing you with high level thoughts, potential opportunities to go down different rabbit holes, and give frameworks for making decisions which make sense for you and the people around you.

A person who cannot think for themselves is worse off than someone with no skills but can think for themselves.

Group think, confirmation bias, and not challenging traditional thoughts will get you run over in a dynamic world.

Again, I’m not recommending you buy or sell anything. I’m not making a prediction that the market will crash or the market will go up 100’s of points over the next few years.

I want you to be successful in your life, and that involves a monetary component, as money is a tool to do what you want.

The best case scenario is that you, your friends, and your family can all be wealthy! I want this for you and all of the other readers of this blog!

I’m a very positive person, but also am scared of the absurd monetary policies which have been implemented all over the world.

To blindly accept traditional thoughts and not challenge the current environment would be doing a disservice to me, my family, and my principles.

All I ask is to for you to think critically, do your due diligence and research, and understand that there might be bigger factors playing into the markets than we previously thought.

Thank you for reading,


Related Reading:

Don't make these mistakes when buying stocks

becoming financially literate

I’m seriously considering a 401(k) loan.

For the past few years, I’ve been contributing to my retirement accounts, and this year, in 2018, I will max out my 401(k) at work for the first time.

Currently, I have just over $40,000 in this account, and recently, I’ve been having many thoughts on why I have this much money stored in such an illiquid asset.

In this post, I want to touch on a number of things regarding 401(k) loans, the current state of the economy and markets (in my eyes), and talk about why I’m considering a 401(k) loan.

Disclaimer: I’m not a financial adviser or financial professional. Please do you due diligence and research before buying or selling financial securities and assets.

How do 401(k) Loans Work?

First, let’s lay the ground work with some definitions and examples of what a 401(k) loan actually is.

While many financial advisers say “never touch your retirement accounts”, I think a 401(k) and Roth IRA could be great sources of cash (if tapped in a smart way).

One thing to point out here: a 401(k) loan and withdrawing from your 401(k) are two DIFFERENT actions. Withdrawing from your 401(k) potentially comes with fees, penalties, and taxes.

Taking a 401(k) loan is different.

With a 401(k) loan, you are taking a loan funded by your past contributions. You end up liquidating a piece of your account, and get it tax-free.

This piece of your account cannot be more than 50% of your account balance, and cannot exceed $50,000. For example, if I have an account totaling $30,000, then I cannot loan myself more than $15,000.

Most 401(k) loans have some sort of upfront fee, and then you pay the loan back for yourself at a certain interest rate (typically, Prime Rate+ 1%, or 6.25% as of today).

Paying back your loan happens over 12 to 60 months (depending on what you choose). The payments come out of your paycheck.

There is a risk here. If you don’t pay back your loan, it’s considered a withdrawal and you will possibly be hit with fees, penalties, and taxes.

Also, if you leave, or are fired from, your job, you’ll have to pay back your loan in full, or the remaining amount will be considered a withdrawal.

There are a number of benefits and negatives to taking a loan out of your 401(k), but it should not be a definite no when considering ways to access YOUR money.

Now that we have established what a 401(k) loan is, let’s get into the meat of the article.

Related… a challenge here… what’s the difference between taking a 401(k) loan and not contributing at all?

A Dangerous Misallocation of Capital to Non-Productive Industries

Over the last few months, I’ve been embracing a number of alternative thoughts and thinking critically about the world around us.

I want to talk about something not many people are discussing: in the 21st century, capital has been misallocated in a very dangerous way, and now, is having huge effects on society.

Social, political, and environmental problems at their core are a result of wonky monetary and fiscal policy and incentives gone wild.

Think critically for a second: historically, what drives productivity and wealth?

Companies and customers, working in a synergistic relationship, drive productivity and wealth. Markets, political systems, and the environment will govern what this looks like in reality, but at a high level, it is companies, employees, customers, and consumers who drive the economy.

Currently, this relationship is out of wack. It should not surprise you for me to state that fact. The distribution of wealth and income is at levels not seen for 50-75 years!

1 vs 99 percent

The last time these lines were close to each other was the 1930’s (when the Great Depression happened).

The 1920’s were a roaring time, but what is commonly left out of storytelling is how the financial markets was a huge, debt-driven bubble. This bubble ultimately burst and laid waste to companies, housing, families, and the government. Without extreme measures in 1933 (FDR’s Gold Confiscation), the economy would have collapsed completely.

Now, we are at a time where there is a similar wealth and income distribution between the rich and the non-rich.

Financialization and the Misallocation of Capital in the 20th and 21st Century

How have we came to this point?

Starting in the 1970’s, a number of things have happened which has lead to growing inequality and a misallocation of resources: unsound money, decreasing interest rates, globalization, and financialization.

During the 1980’s, there was some amazing innovation and opportunities in many areas of the economy. One of them, which I’ll highlight here, was the explosion of Wall Street. Why try to find the next big invention when you could just trade the companies’ shares? If we can finance the deal and get a handsome fee, why take any risk?

It started a cycle: more talent went to banking and finance because of the higher salaries, and as the salaries kept rising, more attention was placed there.

The Great Recession (2007-2009) was caused by the financial industry, and yet they came away unscathed.

Another development I want to highlight is globalization. Instead of investing in employees in the United States, profits were prioritized, and wages have stagnated, statistically, on a national scale.

Historically low interest rates, government subsided loan programs, and corruption I’ll also throw in here. These things have lead us to a massive bubble, instability in our social and political systems, and inequality of wealth today.

Now, you have companies Facebook and Apple who are “leading” the way with digital products. Does everyone need a $1,000 iPhone? How is this productive (in the grand scheme of things)? Why isn’t there more focus on sustainable energy, housing and health?

This is what I mean by MISALLOCATION of resources. 50%+ of the population is struggling in debt up to their eyeballs, and yet, because companies and investors can get “returns” from selling them a handheld piece of crap, it’s worth it to pour millions and billions of dollars to squeak out more money.

I’m being over the top here with the example of Apple, but I’m trying to drive home a point that we live in a crazy time. For some reason though, it feels normal because it’s been going on for so long.

Why I’m Considering a 401(k) Loan

Let’s get to the real purpose of this article. I have a number of investing and economics posts on this blog, but this article is about why I’m considering a 401(k) loan.

First, I’m struggling with my alternative thoughts on how markets revert to means over time. I don’t want to play into the misallocation of funds anymore.

I want to provide VALUE to the world. There are a few other reasons why a 401(k) might make sense here.

At a high level, these reasons are:

  • If I want to become VERY wealthy in the near future, I need to take on a significant amount of RISK.
  • Many backwards looking calculations show an average rate of return for stocks of 7% over time. I believe I can do better with my entrepreneurial efforts and investing.
  • There are numerous stock market headwinds (valuations, increasing interest rates, massive debt, and an aging population) which are not favorable to for returns in the next few years.

Gotta Risk it for the Biscuit

If you’ve poked around on this blog before, I’ve tried to make it clear that I’m trying to build extreme wealth at a young age.

I have a goal to become a millionaire by the age of 30.

The equation to building wealth is simple. It is simply:

Future Wealth = Current Wealth * Return * Time + (Income – Expenses) * Return * Time

Take your current wealth and multiply by some return and time. Take your income, subtract out expenses, and multiply this difference by some return and time. Add these two numbers together and you’ll get a projection for your future wealth.

I’m ignoring a ton of variables here (YES, the return will be different depending on situation and asset class), but at a high level, this is the wealth equation.

Filling in the numbers here, I’m currently at just under $200,000 in net worth. My income minus expenses is about $50,000 a year.

By staying on track with my savings, I’ll be at a net worth of roughly $400,000 at the age of 30 (a great achievement, but well short of my goal).

The one variable I haven’t touched here is return. To seriously increase wealth, I need to take a lot of risk to increase my wealth through investment returns and/or increasing my income. There is no such thing as a free lunch.

Look, the stocks and bonds in my 401(k) are not going to get me to my goal. 7% (???) over the next 4 years on my investments is not going to move the needle. I need 50%, 100%, 200% gains on my money through my various entrepreneurial endeavors, asymmetric bets, and strategically allocating money to improve the value of my work and assets.

Strong Inner Belief

I can already hear the haters.

“You can’t time the market!”

“Don’t touch your 401(k) – you are losing out on compounding!”

“You are stealing from yourself!”

Throughout my life, I’ve spent various times with massive chips on my shoulder. Each time, I’ve pushed to become better and the outcomes have been great.

I’m the owner of my life, and I can do AMAZING THINGS. 

I can do achieve anything I put my mind to.

I’m the owner of my actions and choices, and have an incredibly strong belief I can accomplish my goals.

This strong inner belief applies to my money and wealth building habits and strategies. I can and will be disciplined with my earnings, hustles and investments to build wealth over time.

I cannot let the “markets” do their dance and play me like a fiddle.

I’m in control here.

Headwinds to Traditional Investments

Besides all of the stupid motivational crap I just wrote in the last section, the outlook for future returns do not look great in the financial markets.

Short term bonds are yielding about 2.25%. Long term bonds are yielding about 3.25%. Stocks and companies have huge headwinds from debt and valuations being higher than they have ever been.

What could have been an incredibly bullish use of funds at the beginning of 2018 (tax cuts) turned into a dud. Corporate buybacks is the biggest waste of capital in the world today.

This alone makes me feel negatively towards stocks, among the countless other factors I’ve talked about here and on the blog before (government debt, student loans, corporate debt, high valuations, an aging population, a depreciating dollar, and instability socially and politically).

A quantitative blog I’ve really enjoyed reading lately is Fat Tailed and Happy, by a PhD Economist. I appreciate how he takes into consideration many assumptions and variables when doing an analysis (and doesn’t cherry pick or ignore key assumptions to make things look good).

One of his best posts looks at the yield curve and valuations of stocks. What the author argues and shows is the yield curve is an important predictor of equity performance in the intermediate term.

Based on the author’s analysis, the 5 year annualized returns based on where valuations are in 2018 are negative. Looking out 10 years, the 10 year annualized returns are near 0%.

estimated ten year returns
source: https://fattailedandhappy.com/equity-returns-recessions-and-the-yield-curve-the-most-insightful-thing-ever/

At a 6.25% interest rate, the 401(k) loan statistically speaking seems to be a decent bet against bonds and equities.

Taking a 401(k) Loan Has Downsides as Well

As I mentioned above, there are a number of risks and downsides to taking a 401(k) loan. There are other financing options available to me, and I can always just hustle a little harder to save up money for a splash in another investment or opportunity.

I’m just nervous and weary of how I’ve over-allocated my personal portfolio for a time over 30 years from now (is there any guarantee I’ll even be able to access it then???).

I believe in myself and believe I can do amazing things.

Maybe I’ll be right and achieve my goals. Maybe I’ll be horribly wrong and end up broke.

At the end of the day though, I do NOT care if I’m right or wrong about what I’ve written above.

A quote that stuck with me from a book I read the other week:

To get a woman, you need to be willing to lose her.

While the book was about dating and relationships, this quote applies to this situation and goals.

If I want to become wealthy, I need to be willing to lose my wealth. No, that doesn’t mean I should be careless and stupid with my money.

No, it means I should take smart risks with my money and look to strategically grow it (but also not be afraid of this potential growth).

I could also become a millionaire at 30 through strategic action taking. Buy low and sell high, take continuous action and work towards becoming better every day – this is my plan.

At the same time, the financial markets might continue to go bananas. The government might be able to get out of their fiscal mess. The dollar might reign supreme forever. My businesses could fail. I could get sick. I could get laid off from work.

If I’m wrong, I’ll accept the consequences and life will go on. It will be a learning and growing experience.

If I’m right and take the actions necessary for success, I’ll be very wealthy at a young age. I will be an overnight success (4 years from now).

I’m not sure if I want to do the 401(k) loan yet, but my rationale for why has been documented. What would I do with the cash? Invest in myself. Invest in my businesses. Invest in undervalued assets. Now, I just need to figure out what’s best for me.

Thank you for reading,


Should I take money out of my 401k. Should I be investing in my 401k. Investing tips.
Should I take money out of my 401k. Should I be investing in my 401k. Investing tips.
Should I take money out of my 401k. Should I be investing in my 401k. Investing tips. Money. Person finance.
Should I take money out of my 401k. Should I be investing in my 401k. Investing tips. Money. Personal finance.
Should I take money out of my 401k. Should I be investing in my 401k. Investing tips. Money. Person finance.
Should I take money out of my 401k. Should I be investing in my 401k. Investing tips. Money. Personal finance.


Why I'm Considering a 401K Loan

yoga and body weight exercises

Deep breath in… hold it… lengthen the spine… lift the heart… roll the shoulders back… and exhale.

2 weeks ago, I joined the yoga studio 2 blocks from my house and have attended 4 classes since starting.

In November, I’m getting back to prioritizing my health and wellness. One of the goals I set this year was to lift weights 3 times a week, but this has been quite the failure.

In May, I dropped my gym membership, started biking to work a little bit over the summer, and started pursuing other ways to stay fit and healthy.

Now that I’m seriously prioritizing my exercise schedule, I’ve decided to choose body weight exercises and yoga over weight lifting.

In this post, I want to discuss my plans for my exercise, talk about the balance between mind and body, and touch on some other things health-wise which I’ve found to be true for myself in the past few years.

Personal Exercise is Personal

Just like personal finance, personal exercise is personal and depends on your goals, wants and dreams.

If you don’t want to become the next famous body builder, that’s okay.

Maybe you want to be able to walk and run around doing errands without getting tired on the weekends.

It’s possible you want to look good for dates when you go out on the town.

What ever the reason you want to become healthy, it starts with asking thoughtful questions on what you want your dream life to look like.

I want to become more healthy because I’m a weirdo who is on the pursuit of an overall life mastery.

One of my wildest dreams is to push my body to the limits in some sort of high performance training system (which would cost a ton of money, but could be fun and interesting).

But, in my life today, I want to become more fit and healthy because if I’m healthy, then I will be able to push myself mentally in my hustles and not get tired. I’m also looking to find a future wife, and in theory, I should have more options if I become more attractive.

My Experiences with Exercise

Growing up, I played organized baseball and basketball, and would always be open to playing pick up football, soccer, hockey, or really any sport or physical activity.

I love being outside and am pretty competitive, so playing sports was a natural outlet for my energy.

Playing baseball for my high school, I lifted weights during the winter and spent a lot of time training to become faster and stronger.

Going into college, I joined a few intramural teams (volleyball and softball), and lifted weights 2-3 times a week.

Around the time I was 20, I started experimenting with a bunch of different exercises and diets, trying to figure out what would work for me.

As I started down the path of eating 3,000+ calories a day and working out 4-5 times a week, I was making great gains but something was still missing.

Also, at the time, I weighed about 170 pounds, and was lifting weights well above 200 pounds – which may or may not have been great for my joints.

After college, I definitely relaxed on the heavy lifting, but joined a gym near my house and stayed fit with pick up basketball and lifting weights 2-3 times a week.

I described above to you what I’ve been doing in the last year, and that brings us to today.

The Powerful Connection between Body and Mind

Something so commonly ignored when thinking about fitness is the powerful connection between body and mind.

As someone who is constantly trying to learn and push mentally, I’ve only just started to recognize and adjust my habits to try to tap into this powerful connection.

What is this connection?

The body and mind connection is the connection between our thoughts, feelings, beliefs, attitudes and our biological functioning.

This means that we can positively (or negatively) influence these thoughts through what we eat or do with our bodies (and vice versa, we can positive (or negatively) influence our body with our thoughts and feelings).

Everything is connected inside of us through a similar chemical language and the nervous system.

If we ignore what we put in ourselves, then we might not have the optimal mind state. Garbage in, garbage out.

Likewise, if we perform negative self-talk, then our body will feel a little worse.

At the same time, with activities like positive affirmations, we can feel better and perform better.

Why I’m Choosing Yoga and Body Weight Exercises over Weight Lifting

kundalini yogaNow that I’ve decided to take my exercise and health more seriously, I had to make a choice. Would I go back to my old habits and do weight lifting? Or, would I try to tap into something more powerful and discard some of the thoughts I had around having strength?

I’ve decided to go with the latter, and have chosen yoga and body weight exercises over weight lifting. Specifically, I’ve been doing Kundalini Yoga, a yoga focused on mediating to release a spiritual energy located at the base of the spine.

The goal is to become more self aware through different exercises and meditations, and to help remove blockages which are restricting me from being my best self.

I feel this yoga ties in amazingly with my purpose and goal with The Mastermind Within. I’m looking to tap into my full potential, also, I want to help you become the best person you can be.

With this yoga, it is surprisingly quite physically demanding, and has pushed me to become more flexible, work on my breathing and lung capacity, have better posture and work on muscles I haven’t focused on before.

In addition to this new practice, I’m doing push-ups, squats, rows, and planks to become stronger in the more traditional sense, but all without needing a gym membership. These body weight exercises I’m doing every other day, but maybe start to ratchet up the heat as I get more comfortable doing them.

For now, I’m going to look to do yoga 2-3 times a week, and do the body weight exercises every other day to get my physical goals.

Getting to Your Dream Self through Fitness, Diet and Exercise

Personal exercise is personal. I’ve figured out a plan for myself to get in to great shape and I’m excited to pursue this path.

Something I didn’t mention here is clean eating and how what you put into your body is so critical for success physically.

Drinking water and staying hydrated (8 glasses of water a day works for me) has made a HUGE difference for my mental state and how I feel on a daily basis.

For me, mixing in fruit and greens with most meals has proved beneficial, as well as having a diet high in protein and fat.

All of this has worked for me, and may not work for you – you have to figure out what’s best for you (except the water recommendation, that’s a must try).

I’m excited to continue down this path of pushing my body, both physically and mentally, and will share with you the results over time if this interests you.

Thank you for reading!



optimal practice frequency

This past Friday night, I went to a brewery for a friend’s birthday. After grabbing a brew, I got to asking him a few questions about his past year, and what he wants to achieve in the future.

His answer to what he wanted to achieve in the future was interesting: he said, “I really want to start a podcast. We should start one together.”

With my high school friends, I haven’t told them about my hustles because they have never really shown an interest in doing things outside of work for money. While they are certainly not lazy people, they love to relax after a long day at work.

I responded, “That’s awesome! I actually have a podcast myself.”

He was a little shocked. “What?? You have a podcast? I need to listen. What is it?”

I told him and we kept chatting. I asked him what he would want to talk about, why he wanted to do one, and what was holding him back. There were other people at the brewery who he wanted to talk with, so we didn’t get too far, but I told him I’d help him out if he wanted.

There were a few other people I chatted with that night about podcasting.

Many of them love listening to podcasts, but have hesitations on starting one themselves. There were many reasons for why they can’t start a podcast, but not many for why they should.

Ideas are worthless without action – instead of asking why, I want to discuss here why we should ask, why not?

Millennials are Ruining Everything

According to many news outlets, Millennials are the source of all evil in the world. Millennials are ruining everything; we are ruining cruises, napkins, dinner dates, the 9 to 5 workday, golf, marriage, etc. (the list goes on and on)

What Millennials don’t get credit for, though, is the ability to question and take action based on that questioning.

Instead of saying, “why should I change?”, we say, “is there a better way to do this?”

Instead of saying why, Millennials say, why not?

At this point, I should pause and be a little careful with my praise.

Throughout history, there have been many individuals who dared to think differently and be different.

When studying history, we look at how a bunch of revolutionary thinkers and doers created the United States. We look at scientists and philosophers from back in the times before the 1500s and remark on their brilliance.

These people didn’t say, why should I change. They said, why should I not change? Is there a better methodology to follow? Can we create something better?

What is interesting here is that throughout my childhood, while I was inspired by these amazing people, I was always told though I needed to act a certain way, don’t question authority, and to essentially “fall in line”.

It took me a while to break out of this.

Now, I’m not calling for blatant disrespect of authority or chaos. Instead, let’s think rationally about what we do on a daily basis and how we have the power to change things for the better.

Asking Why Not, Instead of Why

Let’s go back to Friday night at the brewery.

When talking to some of the other people at the brewery about podcasting, I told them the barrier to entry for starting a podcast was VERY LOW.

For $12/hr, I host my podcast through Blubrry. There are other options which are in the $10-20 a month range (Libsyn and Simplecast for example).

I edit with Audacity, a free software.

This is no joke: for less than $20, you can get a podcast started today. I never edited audio before, but now am able to produce pretty decent audio through learning a handful of simple techniques.

When I told them this, they were a little bit shocked.

They thought they didn’t have enough money, time, skills, or drive to start a podcast. Asking why should they start a podcast was a non-starter. Maybe all the reasons above were reasons they should start one. It was an interesting thought to think about for them – something they hadn’t considered.

I’m not sure if we will hear them on the radio waves, but was happy to plant a seed.

As much as we hate change, the world is DYNAMIC and ever-changing

I love routines – waking up at the same time each morning, going about my daily business and doing what I want is a great way to live life.

Unfortunately, the world is ever-changing.

Living in Minnesota, we get 4 seasons. Right now, the leaves are changing, and the temperature is turning south. Soon, I’ll have to worry about snow and shoveling.

Asking why not instead of why is a direct challenge to being trapped by confirmation bias.

Here’s the thing: there are a ton of things changing right now in the world which we have to be aware of in all areas: at a high level, social, political, economic, and physical.

Going a little bit deeper, each of these areas are related: we live in an environment which provides us food, water and energy. With this energy, we can power our houses and businesses. With these businesses, productivity allows communities to flourish and grow. Political and social systems depend on all of these things, as without some sort of structure, things can become wild.

I challenge you today to think about the following question: why are things happening in the world today like they are? 

I’m not going to refine that question any more because I want you to think for yourself. You can take it anyway you want.

Thinking critically is what this blog is all about. This is why I write for you – I want to inspire you to TAKE ACTION and THINK CRITICALLY about how to navigate the world and become better.

Thanks for reading,


how I make $85 an hour statistical consulting

About 18 months ago, I received a text from an old co-worker and he asked if I was free to grab a beer and catch-up. I believe networking is extremely important given the field I am in (banking), and I also enjoy getting a drink and chatting with other like-minded and successful individuals.

What I didn’t realize at the time was that this discussion would lead to more than $7,500 in income during this time.

Sometimes the best side hustles are the ones you don’t plan or expect to happen.

In this post, I will be sharing how I make $85 an hour doing statistical consulting for dog doctors, how I came into this side hustle, and share with you why networking and providing value is the key to side hustle success.

“Luck is what happens when Preparation meets Opportunity – Seneca

My Statistical Consulting Side Hustle

Let’s go back to the bar that February night.

When I go there with my old co-worker, we exchanged pleasantries and made small talk for a few minutes.

He told me that he had been doing some side consulting work for the past 10 years and is looking to bring on some more help so he can take it a little easier. Starting off, he would give me a few hours a week and if that was manageable, I could take on a few more hours.

He said, “Are you interested?”

Without hesitation I said, “Yes, I’m always interested in work outside of my day job. I’m looking to build wealth, learn, and grow.” He was elated to have me on board and believes this will be a fantastic time for me to learn and help out his side hustle.

Why was he interested in seeking my help?

The explanation is pretty simple. At my day job, I was a valuable asset to the team and people took notice.

For $85 an hour, I would be helping my old co-worker perform statistical analysis for dog doctors doing research.

I’d only taken 1 biology class and 2 statistics classes in college, but after a year of working as a statistician and quantitative analyst, I’d shown that I could provide value in the field of bio-statistics.

The situation isn’t too complicated. I provided value, showed I could communicate and was willing to go the extra step, and someone had an opportunity for me.

What do I actually do for $85 an hour?

Okay, so at this point you are probably thinking, “Erik, this is great in all but what do you ACTUALLY DO??”

I’ll explain what I do here. 🙂

Every few weeks, I receive a new project. Some doctor has performed a study and needs statistical help.

After an introductory phone call laying out the goals and gaining an understanding of the study, I get to work.

We receive the data in Excel, but use something more high powered for our analysis. Using the statistical software SAS, I write out code to analyze the data.

After running the required pieces of code, I put the results back into Excel and send it back to the doctor.

To give you a little more information, many of the studies I’ve done in the past 18 months have been related to some sort of throat disease. I get a list of 50+ dogs with 100+ attributes and am asked to see if there are any associations between certain attributes and the disease.

Speaking statistically, first, I perform some descriptive analysis by finding the descriptive statistics of continuous variables (min, max, mean, median, range) and frequencies of categorical variables.

Then, depending on the questions and study at hand, I will be looking at Chi-Square analyses, ANOVA, or survival analyses (Cox for continuous variables or Kaplan Meier for categorical variables).

All of this is pretty standard statistics, but certainly took some learning to get used to the terminology and methods.

As I mentioned, it was a great opportunity that just happened to fall into my lap. I kept my options open, looked to provide value, and was willing to take a chance. Would you do the same?

Networking and Providing Value is the Key to Side Hustle Success

Back at the beginning of 2018, I outlined how I made $107,000 in 2017 as a 25 year old. At the end of the post, I recommended to reach that level of income, it’s so critical to provide value to those around you. That is a vague statement, so let me expand on it like I did in that post.

There are many people we interact with on a daily, weekly, monthly, etc. basis. With each person we interact with, there is an opportunity to either add to that person’s life, subtract from that person’s life, or leave that person’s life be.

Think about this for a second: how would you feel if you could add to every single person’s life you came across. Wouldn’t that be wonderful? If everyone walked away from interactions with you saying, “hm, I really like that guy/gal.”

It’s not going to be easy – and I can assure you, I struggle with getting in to this mindset with all I have going on.

At the end of the day though, you are a strong and smart individual. You are capable of so much and can get started today on your goals.

Networking, sales, talking to people, whatever you want to call it will help you meet the right people. After that, it’s up to you to provide the value and get paid your worth.

I’ve found a side hustle that pays me $85 an hour. Will you find a side hustle like this?

Never burn bridges. Always stay hungry and be open to new opportunities. Look to provide value and make other people’s lives better.

Readers: do you have a lucrative side hustle? Do you like trading your time for money, or do you prefer to build something that can scale?


How I Make $85 dollars an hour doing statistical consulting

get out of debt

In August 2018, I’m going to write all about side hustles. To start us off, we have a guest post by Millionaire Mob, a blog focused on ways to better your financial future. They have helped thousands of people with bettering their financial future through passive income, dividend investing and travel hacking.

The quest for financial freedom motivates different people to pursue different things. One sure way I’ve found which is speeding up the time to achieve financial freedom for me is to engage in a variety of side hustles.

What is a side hustle you ask?

A side hustle is an extra business that you run beside your full-time job to generate additional income. While your full-time job is your primary source of income, a side hustle is a secondary source of income. In order to achieve wealth, you must be able to increase your income over time. I love doing this with my day job income, my investments and my side hustles.

Creation of side hustles is rapidly gaining grip as a budding number of Americans discover the massive benefits of starting one. According to a recent Bankrate study, it’s estimated that around 37% of U.S. adults have a side hustle, but what’s even more outstanding is what those side hustles are paying. On average, a person earns approximately $686 per month from their side hustles. This proves that a side hustle is a key to achieving financial freedom.

I have pursued different types of side hustles to build financial stability. If you pick the right side hustle, invest sufficient time to it, you can generate huge profits from it.

To discover suitable sides hustle to pursue, you first need to find a niche that gets you excited. Then do a thorough research to find out what other people in such a niche are doing to earn additional income. Choose your target customers and provide solutions to different needs of people in that niche. For greater results, choose an activity that complements your full-time job.

The Benefits of Side Hustling to Achieve Financial Freedom

There are a number of incredible benefits I get from side hustling:

  • Creation of an additional source of income
  • Ability to pursue purpose and meaning
  • Diversification
  • Self and professional development

Let’s go through them in more detail.

Creates an Additional Source of Income

Benefit number 1 of side hustling is without a doubt that side hustle creates an extra source of income. Financial freedom may mean different thing to different people, but one common thing is it gets you to a level where you never have worry about money.

A side hustle puts extra coins into your pocket that can help you meet some of your financial obligations like bills, emergencies, and debts. If you have a debt, you can use your side hustle income to pay them off. You can also use a side hustle income to save or to cater for emergencies. Side hustle income can also help you increase your retirement savings.

The beauty of creating a side hustle is that the money you make often isn’t the cash you use to pay your basic bills. Rather, it is bonus money that comes from that extra effort you put in your side job. Thus, as long as you’re able to use and save enough from your primary income, your side hustle revenues could allow you to enjoy the luxuries you may have previously forgone or could not afford. You are able to enjoy your life and live free.

A side hustle can also help you accumulate wealth. If you use your extra income to make investments like when you purchase stocks, currencies, real estates and other alternative investments, you will obtain financial freedom faster. A side hustle can, therefore, help create a positive impact on your personal financial ratios.

I like to establish a habitual savings and budgeting methods with my ordinary day job income. After I have conquered a pattern of habitual savings and budgeting, I layer on an additional side hustle income that enables me to accelerate my savings and investing. This can be very powerful.

Ability to Pursue Purpose and Meaning

Another subtle meaning of financial freedom is the flexibility to pursue what you really want in life and to be who you really are. While a side hustle helps put extra bucks into your pocket, it also offers a higher flexibility because it gives you more money options and helps you pursue your other personal interests.

A secondary gig also helps you to pursue and fulfill your meaning and purpose in life. If you are able to turn your hobby into an income generating activity, you derive a lot of purpose from it. Even better, you can discover new interests and passion that you can pursue to boost your business and yourself.


Benefit number 3 is side hustles help you to diversify your financial situation. It is not wise to put all your eggs in one basket. Do not count on a single business or opportunity if you really want to become financially free. Rather, try to focus on numerous opportunities to avoid getting into financial crisis if one stream of income hit a snag.

A side hustle is an ideal way to hedge yourself against the risk of losing your primary source of income. It can also help you maintain your lifestyle even if you unexpectedly lose your full-time job.

A majority of people find themselves financially stressed when they lose their primary source of income especially during that period between getting laid off and finding new work. But having a side hustle might allow you to relax a bit and take your time before you find a new job as opposed to accepting any offer that comes your way because you are in a financial emergency.

A side hustle becomes the ideal employment insurance in the event you face a layoff.

A side hustle also boosts your confidence. It gives you the motivation to go beyond your comfort zone. A famous quote on financial freedom and side hustle creation goes, “If you are not willing to risk the usual, you will have to settle for the ordinary”. Jim Rohn. To fulfill your dreams, you need to hustle and invest a lot. An investment with low risk most of the time result in low returns. A general rule of the thumb in financial investments is, “the higher the risk, the lower the returns.” To get high returns, you have to be a risk taker.

Achieving meaningful goals in life requires sacrifice and risk-taking. James W. Frick once said, “Don’t tell me where your priorities are. Show me where you spend your money and I’ll tell you what they are”.  Make your side hustle a priority and avoid spending money on things that you don’t need if you want to attain financial freedom. You certainly become financially free when you become money “grown up”.

Self and Professional development

Benefit number 4 of side hustling is if your side job involves an activity that complements your full-time job, it will certainly help you add value to it. A side hustle creates an outlet that allows you to further yourself personally and professionally. You can get much more than just an additional income from your side hustle when you create a job that develops your skills. For example, you can start a freelancing gig where you write or train about financial matters if you are employed in a bank or any other financial institution.

A survey by Bankrate shows that 44% of younger workers with side jobs state that the side hustles made them more valuable employees at their primary jobs. 45% said that it helped them become more organized. A side hustle gives you a chance to develop key skills and evolve career-wise and personally which results in lifelong impact.

Because you have the full-time job that helps you to settle your bills, you can use the extra income to advance your education, gain new experiences and search for the right opportunities. A side hustle can help you build relevant skills if you want to make a career change or transition into a new field or into entrepreneurship.

If you aren’t spending at least 5 hours per week learning, you are being irresponsible. What are you doing to learn something new today?

Why you should start earning side hustle income

Side hustle help you to not only earn extra income but also gives you a long-term business strategy if you want to transition from full-time employment by helping you find purpose as well as develop your professional and personal interests.

I hope this article has given you some valuable insights. Are you going to start earning a second source of income? Let us know in the comments below. We’d love to hear from you.

Author Bio: Millionaire Mob is where people come together to find the best travel deals and financial advice. We specialize in dividend growth investing, passive income and travel hacking. Our advice has helped thousands of people travel the world and achieve financial freedom.  Millionaire Mob will provide you the best advice to help you learn and grow along the way. Follow us on Instagram, Twitter and/or Facebook for all the latest updates.

How To Make More Money With Side Hustles

Bookkeeping, Finance, and Tax for Your Business

Investing in the stock market can be both exhilarating and intimidating for beginners. While stocks offer the potential for significant returns and wealth accumulation, navigating the complexities of the market requires knowledge, discipline, and strategic planning.

From understanding the basics of stock investing to implementing effective strategies and managing risks, novice investors face a myriad of challenges on their journey to financial success.

In this comprehensive guide, we will explore the fundamentals of stock investing, covering everything from analyzing stock performance and evaluating different types of stocks to developing sound investment strategies and avoiding common mistakes.

Whether you’re a newcomer to the world of investing or looking to refine your skills, this article aims to provide valuable insights and practical tips to help you make informed decisions and achieve your investment goals.

What is a Stock?

Stocks, also known as shares or equity, represent ownership in a corporation.

When an individual purchases a stock, they are essentially buying a portion of that company. This ownership entitles the stockholder to a claim on the company’s assets and earnings proportional to the number of shares they own.

Stocks are typically issued by publicly traded companies, allowing them to raise capital by selling ownership stakes to investors.

Suppose Company XYZ decides to go public by offering shares of its stock to the public. An investor purchases 100 shares of Company XYZ’s stock at $10 per share. This investor now owns a fraction of Company XYZ and is entitled to receive dividends, if any, and participate in shareholder voting.

Types of Stocks

Stocks represent ownership in a company, but not all stocks are created equal. There are distinct types of stocks, each offering unique characteristics and benefits to investors. The two primary types of stocks are common stock and preferred stock, distinguished by their rights and privileges.

Common Stock:

Common stock is the most prevalent type of stock issued by companies. When individuals think of investing in stocks, they often envision common stock. Here are some key features of common stock:

  • Voting Rights: Common stockholders typically have voting rights in shareholder meetings. This allows them to participate in crucial decisions affecting the company, such as the election of the board of directors and approval of major corporate actions.
  • Dividend Payments: While common stockholders may receive dividends, these payments are not guaranteed. The company’s board of directors decides whether to distribute dividends and at what rate. Dividends are usually paid out of the company’s profits after preferred shareholders have been compensated.
  • Risk and Reward: Common stock is considered riskier than preferred stock but offers greater potential for capital appreciation. Common stockholders are last in line to receive assets in the event of liquidation, making them more susceptible to losses if the company faces financial difficulties.

Preferred Stock:

Preferred stock represents a hybrid security that combines features of both stocks and bonds. Preferred stockholders enjoy certain advantages over common stockholders, including:

  • Priority Dividends: Preferred stockholders have priority over common stockholders when it comes to dividend payments. In the event of a dividend distribution, preferred shareholders must be paid their dividends before common stockholders can receive any payments.
  • Fixed Dividends: Unlike common stock, preferred stock often pays fixed dividends at predetermined intervals. These dividends are typically set at a fixed rate or calculated based on a specified formula. This predictability makes preferred stock similar to bonds, appealing to investors seeking steady income.
  • Limited Voting Rights or None: Preferred stockholders usually do not have voting rights or have limited voting rights compared to common stockholders. This means they have less influence over corporate decisions but may prioritize stable income over governance participation.

For example, consider Company XYZ. Company XYZ issues both common and preferred stock. Common stockholders have the right to vote on company matters and may receive dividends if the company declares them. However, their dividend payments are subject to the discretion of the board of directors and are typically paid after preferred dividends.

On the other hand, preferred stockholders of Company XYZ have priority over common stockholders in receiving dividends. They enjoy fixed dividend payments, providing a predictable income stream. Although they do not have voting rights, preferred stockholders prioritize consistent income over governance involvement. In the event of liquidation, preferred stockholders would be paid before common stockholders from the company’s remaining assets.

What are Dividends?

Dividends are a form of distribution of profits made by a corporation to its shareholders. They represent a portion of the company’s earnings that are returned to investors as a reward for their investment in the company’s stock.

Dividends can take various forms, including cash payments, additional shares of stock (stock dividends), or other assets.

  • Cash Dividends:

    Cash dividends are the most common type of dividend payment. When a company declares a cash dividend, it distributes a specified amount of money per share to its shareholders. These payments are typically made on a regular basis, such as quarterly or annually, and are often expressed as a fixed amount per share (e.g., $0.50 per share). Cash dividends provide shareholders with a direct source of income from their investments.

  • Stock Dividends:

    Stock dividends involve the distribution of additional shares of stock to existing shareholders instead of cash. When a company issues a stock dividend, it effectively splits its existing shares into multiple shares, distributing them to shareholders in proportion to their existing holdings. While stock dividends do not provide immediate cash flow to shareholders, they increase the number of shares held, potentially enhancing the overall value of the investment. Stock dividends are often used by companies to conserve cash while still rewarding shareholders.

  • Dividend Reinvestment Plans (DRIPs):

    Dividend reinvestment plans (DRIPs) allow shareholders to automatically reinvest their cash dividends into additional shares of the company’s stock. Instead of receiving cash payments, shareholders who participate in DRIPs accumulate additional shares over time, effectively compounding their investment. DRIPs are popular among long-term investors seeking to reinvest dividends to accelerate the growth of their portfolios. They provide shareholders with a convenient way to reinvest dividends without incurring transaction fees.

  • Special Dividends:

    In addition to regular dividends, companies may also issue special dividends on an ad-hoc basis. Special dividends are one-time payments made to shareholders, often resulting from exceptional profits, asset sales, or other extraordinary events. While not part of the company’s regular dividend policy, special dividends are typically announced when the company has excess cash that it wishes to distribute to shareholders. Special dividends are welcomed by investors as they represent unexpected windfalls and can have a positive impact on stock prices.

Dividends are subject to taxation, although the tax treatment varies depending on the type of dividend and the shareholder’s individual tax situation. In the United States, dividends are classified as either qualified or non-qualified, with qualified dividends typically taxed at a lower rate than ordinary income.

Shareholders should consult with a tax advisor to understand the tax implications of receiving dividends and to optimize their tax strategy.

Overall, dividends play a crucial role in attracting investors to stocks, providing them with a source of income and incentivizing long-term investment in profitable companies.

By understanding dividends and their implications, investors can make informed decisions about their investment portfolios and financial goals.

Factors Influencing Stock Prices

Stock prices are influenced by a multitude of factors, both internal and external to the company. Understanding these factors is crucial for investors in making informed decisions.

  • Company Performance: The financial performance of a company, including its revenue growth, profitability, and earnings per share, directly impacts its stock price. Positive earnings reports and strong financial metrics often lead to an increase in stock prices.
  • Market Sentiment: Investor sentiment and market psychology play a significant role in stock price movements. Positive news, such as product launches or expansion plans, can drive stock prices higher, while negative news or economic uncertainty may lead to declines.
  • Industry Trends: Stock prices are influenced by broader industry trends and market conditions. For example, technology stocks may rally during periods of innovation and growth in the tech sector, while healthcare stocks may be impacted by regulatory changes or breakthroughs in medical research.
  • Macroeconomic Factors: Economic indicators, such as interest rates, inflation, and unemployment, can affect investor confidence and overall market sentiment, thus influencing stock prices.
  • Market Supply and Demand: Stock prices are determined by the interaction of supply and demand in the market. If there is high demand for a stock and limited supply, its price is likely to increase, and vice versa.

The stock price of Company XYZ rises sharply after it announces better-than-expected quarterly earnings, indicating strong financial performance.

However, the stock price of Company ABC declines following reports of a data breach, reflecting negative sentiment and concerns about the company’s cybersecurity measures.

Additionally, a broader market rally driven by positive economic indicators may lead to overall increases in stock prices across various sectors.

Analyzing Stock Performance

Analyzing stock performance involves evaluating various metrics and indicators to assess how well a stock has performed over a specific period and to make informed decisions about its future potential.

Here are key factors to consider when analyzing stock performance:

  • Price Performance:
    • Price Movement: Assess how the stock’s price has changed over time. Look at historical price data, including daily, weekly, monthly, and yearly price movements, to identify trends and patterns.
    • Relative Performance: Compare the stock’s performance to relevant benchmarks, such as market indices or industry peers, to gauge its relative strength or weakness.
  • Financial Metrics:
    • Earnings Per Share (EPS): Examine the company’s earnings per share to understand its profitability and growth potential. Increasing EPS over time is generally considered a positive sign.
    • Revenue Growth: Analyze the company’s revenue growth rate to assess its ability to generate sales and expand its business operations.
    • Profit Margins: Evaluate the company’s profit margins, including gross margin, operating margin, and net margin, to measure its efficiency and profitability.
  • Fundamental Analysis:
    • Balance Sheet Analysis: Review the company’s balance sheet to assess its financial health, including assets, liabilities, and equity. Look for signs of financial stability and liquidity.
    • Income Statement Analysis: Examine the company’s income statement to understand its revenue, expenses, and profitability. Pay attention to key metrics such as net income and operating income.
    • Cash Flow Analysis: Analyze the company’s cash flow statement to assess its ability to generate cash from operating activities, invest in growth opportunities, and meet financial obligations.
  • Technical Analysis:
    • Chart Patterns: Identify common chart patterns, such as trendlines, support and resistance levels, and moving averages, to make predictions about future price movements.
    • Indicators: Use technical indicators, such as relative strength index (RSI), moving average convergence divergence (MACD), and stochastic oscillator, to analyze price momentum and trend strength.
  • Market Sentiment:
    • News and Events: Monitor news headlines, corporate announcements, and macroeconomic events that may impact the stock’s performance. Evaluate market sentiment and investor reactions to news developments.
    • Analyst Recommendations: Consider analyst ratings, price targets, and earnings estimates to gauge market sentiment and consensus expectations.

By conducting thorough analysis of stock performance, investors can gain insights into the underlying factors driving a stock’s price movements and make well-informed investment decisions.

Strategies for Successful Stock Investing

Successful stock investing requires a combination of knowledge, discipline, and strategic planning. Here are some proven strategies to help investors achieve their investment goals:

  • Diversification:
    • Asset Allocation: Spread investment capital across different asset classes, including stocks, bonds, and alternative investments, to reduce risk and enhance portfolio stability.
    • Sector Diversification: Invest in stocks from various sectors and industries to mitigate sector-specific risks and capitalize on opportunities across different sectors of the economy.
  • Long-term Investing:
    • Buy and Hold: Adopt a long-term investment approach focused on buying quality stocks and holding them for the long term. Avoid frequent trading and market timing strategies, which can lead to higher transaction costs and reduced returns.
    • Compound Growth: Harness the power of compound interest by reinvesting dividends and allowing investment gains to accumulate over time. Compounding can significantly boost investment returns over the long term.
  • Value Investing:
    • Fundamental Analysis: Identify undervalued stocks by conducting thorough fundamental analysis of company financials, including earnings, assets, and growth prospects. Look for stocks trading below their intrinsic value with strong long-term growth potential.
    • Margin of Safety: Seek stocks with a margin of safety, where the current market price is significantly lower than the estimated intrinsic value. This provides a buffer against downside risk and enhances the potential for capital appreciation.
  • Income Investing:
    • Dividend Stocks: Invest in dividend-paying stocks that offer a regular stream of income. Focus on companies with a history of consistent dividend payments and sustainable dividend yields.
    • Dividend Reinvestment: Reinvest dividends to purchase additional shares of stock, effectively compounding investment returns over time and accelerating portfolio growth.
  • Risk Management:
    • Stop-loss Orders: Implement stop-loss orders to limit potential losses and protect investment capital during periods of market volatility. Set predefined exit points based on risk tolerance and investment objectives.
    • Portfolio Monitoring: Regularly review and rebalance investment portfolios to ensure alignment with long-term financial goals and risk tolerance. Monitor individual stock positions and sector exposures to maintain diversification and manage risk effectively.

By incorporating these strategies into their investment approach, investors can enhance their chances of success in the stock market and achieve their financial objectives over time.

Risks Associated with Stock Investing

Investing in stocks offers the potential for significant returns, but it also involves various risks that investors should be aware of. Understanding these risks is essential for making informed investment decisions.

Here are some common risks associated with stock investing:

  1. Market Risk:
    • Volatility: Stock prices can fluctuate widely in response to market dynamics, economic conditions, and investor sentiment. Market volatility can lead to sudden and substantial changes in the value of stocks, affecting investment returns.
  2. Company-specific Risk:
    • Business Risk: Individual companies face risks related to their operations, industry trends, competitive pressures, and management decisions. Poor financial performance, regulatory issues, or corporate scandals can adversely impact stock prices.
    • Financial Risk: Companies with high levels of debt or financial leverage may be more susceptible to financial distress during economic downturns or periods of rising interest rates.
  3. Liquidity Risk:
    • Market Liquidity: Some stocks may have limited liquidity, meaning there may be fewer buyers or sellers in the market. Illiquid stocks can be difficult to buy or sell at desired prices, potentially leading to higher transaction costs or price discrepancies.
  4. Systemic Risk:
    • Macro-economic Factors: External factors such as interest rate changes, inflation, geopolitical events, and global economic downturns can impact stock prices across the entire market. Systemic risks affect all stocks, regardless of their individual characteristics.
  5. Psychological Bias:
    • Emotional Investing: Investor behavior driven by fear, greed, or overconfidence can lead to irrational decision-making and impulsive trading. Emotional biases may result in buying high and selling low, undermining long-term investment performance.
  6. Regulatory and Political Risk:
    • Policy Changes: Changes in government regulations, tax policies, trade agreements, or political instability can affect specific industries or sectors, impacting stock prices and investor confidence.
  7. Currency Risk (for International Stocks):
    • Exchange Rate Fluctuations: Investing in foreign stocks exposes investors to currency risk, where changes in exchange rates between currencies can impact the value of investments denominated in foreign currencies.

By recognizing and understanding these risks, investors can develop strategies to manage and mitigate potential downsides while maximizing opportunities for long-term investment success.

Tips for Beginners and Common Mistakes to Avoid When Investing in Stocks

Investing in stocks can be a rewarding endeavor, but it’s essential for beginners to approach the market with caution and diligence. Here are some tips for novice investors and common mistakes to avoid:

  • Educate Yourself: Take the time to understand fundamental concepts of investing, including stock market terminology, investment strategies, and risk management principles. Utilize resources such as books, online courses, and reputable financial websites to enhance your knowledge.
  • Set Clear Goals: Determine your investment objectives, risk tolerance, and time horizon before entering the market. Establish clear goals, such as wealth accumulation, retirement planning, or funding major expenses, to guide your investment decisions.
  • Diversify Your Portfolio: Avoid putting all your eggs in one basket by diversifying your investment portfolio across different asset classes, industries, and geographic regions. Diversification helps reduce overall risk and enhances the potential for consistent returns.
  • Start Small and Grow Gradually: Begin with a small amount of capital and gradually increase your investment exposure as you gain experience and confidence in your abilities. Avoid the temptation to invest large sums of money hastily without thorough research and planning.
  • Focus on Long-term Investing: Resist the urge to engage in short-term trading or speculation based on market trends or rumors. Instead, adopt a long-term investment approach focused on buying quality stocks and holding them for extended periods to capture growth potential.
  • Perform Due Diligence: Conduct thorough research on companies before investing in their stocks. Evaluate factors such as financial performance, industry trends, competitive positioning, and management quality to make informed investment decisions.
  • Seek Professional Advice When Needed: Consider seeking guidance from financial advisors or investment professionals, especially when making significant investment decisions or navigating complex financial markets. A qualified advisor can provide personalized advice tailored to your individual circumstances and goals.

Some common mistakes to avoid include:

  • Overlooking Risk: Failing to understand and manage investment risks can lead to significant losses. Avoid investing in stocks without considering potential risks or implementing risk mitigation strategies.
  • Chasing Hot Tips: Relying on tips from friends, family, or unverified sources without conducting proper research can result in poor investment decisions and losses. Avoid chasing hot stocks based on speculative recommendations or rumors.
  • Timing the Market: Trying to predict short-term market movements or timing the market based on emotional reactions can be detrimental to investment returns. Avoid market timing strategies and focus on long-term investing principles.
  • Ignoring Fees and Expenses: Neglecting to consider investment fees, commissions, and taxes can erode investment returns over time. Be mindful of costs associated with buying, selling, and holding stocks, and seek low-cost investment options when possible.
  • Lack of Diversification: Concentrating investments in a few stocks or sectors without diversifying across different asset classes can expose investors to unnecessary risks. Avoid lack of diversification by spreading investments across various asset classes, industries, and geographic regions.
  • Panic Selling: Succumbing to fear during market downturns and selling stocks at depressed prices can lock in losses and impair long-term investment performance. Avoid panic selling by maintaining a disciplined investment approach and focusing on fundamentals.

By following these tips and avoiding common pitfalls, beginners can build a solid foundation for successful stock investing and achieve their financial goals over time.

Final Thoughts

Investing in stocks is not without its risks, but with proper education, diligent research, and disciplined execution, individuals can harness the power of the stock market to build wealth and achieve financial freedom.

By understanding the intricacies of stock investing, diversifying portfolios, and staying focused on long-term objectives, investors can navigate market volatility, capitalize on opportunities, and weather economic uncertainties.

Remember, successful investing is a journey, not a destination. Stay informed, stay patient, and stay committed to your financial goals, and you’ll be well-positioned to thrive in the dynamic world of stock investing.

personal finance is personal

This month, July 2018, I’ve decided to embrace my recent non-traditional and alternative thoughts on the personal finance space and talk about a number of things that I’ve been battling with internally about money, the markets and investing. This is the second post in this series. Please go back and read the first post on Energy and The Earth is a Closed System before reading this one.

What is money?

This is a simple question, with a seemingly simple answer.

But, really, what is money?

Also, what is debt? Are they the same thing?

Thinking about our first post of this series, how does energy play into these definitions?

At the end of the day, I want to let you know I’m pursuing TRUTH. I’m not an expert, but will not stop short of understanding the true nature of our world and financial system. In this series, I’m just looking to dive into a number of topics regarding the markets, the economy, and see what they actually represent and man.

In this post, we will explore the simple question of what is money and hopefully look to uncover some truths along the way. All I ask is you have an open mind while reading this post.

What is Money?

calculating net worthWhat is money?

I typed “what is money?” into Google and got a ton of hits – all from financial and information websites (Investopedia, the IMF, Wikipedia, and Economics and Liberty)

Most of what I looked at had similar definitions of “what money is”.

Money, simply put, is a medium of exchange. 

Societies throughout history have used money to make it easier to exchange and trade goods.

Very early on in history, humans used bartering as the main way to exchange and trade goods. “I’ll give you 2 pounds of grain for 1 gallon of milk” was probably close to a common trade back in the day.

Unfortunately, milk and grain go bad after a certain point, and humans looked to other things they could use to facilitate these activities.

Silver, gold and other precious metals were used, and over time, paper and digital forms of money have been introduced to facilitate the exchange of goods, services, and capital.

The type of money (silver, goods, cash, etc.) is determined socially, be it by a governing body or by the people in a given market.

At this point, I could go into the functions of money, what are some of the properties of “good” money, and talk about “why fiat currency is the best form of money and why cryptocurrencies have no intrinsic value” (or is it the other way around?), but these are just distractions from the question we are trying to answer of “what is money?”

What I don’t like about the simple definition above is that is ignores the fundamental constraint of the world: energy.

Money is a Number for True Capital and a Claim on Energy

Let’s go back to the first post of this series and consider the conclusion from it: energy and the environment drives the economy and the world we live in.

With this in mind, our definition of money from above needs tweaking.

Here’s what I believe the true definition of money is: money is a claim on a certain amount of energy.  

Think about it, with $25, you could pay someone to cut your lawn for you (which requires energy), or you could spend an hour of your valuable time and keep your $25 (but in this case, you personally have expended energy).

The more money you have, the more things you can do because you can afford to use a certain amount of energy.

Speaking a little more in general, the cost of buying something (monetarily), should be roughly equal to the amount of energy (be that actual energy, joules) put into producing that something.

Over time, as processes become more efficient, the cost of goods should decrease, because efficiency leads to lower uses of energy during production.

If money is energy, what are the results?

After establishing a definition, it’s good to look at some of the results and logical statements we can conclude from it.

First, if money is claim on a certain amount of energy, then we can say the following:

  • Money in a closed system should be finite, as energy in a closed system is finite. (First law of thermodynamics)
  • Having more money is good, as it allows you more options. (obvious)
  • If money is a claim on a certain amount of energy, then debt is a future claim on a certain amount of energy.

Money, Debt and Energy

For the last point, I haven’t mentioned debt in this post or series yet, and plan to do a deeper dive later in the series. Right now though, since we are talking about money and energy, there are a few things that make sense to say here.

As stated above, debt is a future claim on a certain amount of energy (or resources). Debt is kicking the can down the road, so to speak, and if done appropriately and in a reasonable way, can be sustainable.

As time goes on, productivity and the costs of doing business should increase, and the entity should be able to pay back their debts responsibly.

That being said, if debt is added in an irresponsible manner, then because energy is finite, at some point, there will not be enough resources to continue at a large scale. Scarce energy will result in higher prices and the cost of doing business will increase. Businesses and governments fail in this situation and then look to build back up in a sustainable manner.

This is the economic cycle, and a digression from this post’s topic… but necessary to put here.

Searching for the Truth and Thinking Critically is All We Can Do

This is the second post of this month’s search for the truth in finance, economics, and understanding the world.

What is money? Money is a claim on a certain amount of energy.

This month, all I’m looking to do is provide food for thought. I’m not an expert, but one of my goals in life is to have an open mind, understand that as a human being, I’m biased but can overcome that bias, and at the end of the day, I can improve my worldview with new facts.

In the next post, I will be looking at banking: the traditional function of banks, how banks actually work, and how banks actually make money.

While I won’t be mentioning this explicitly in my upcoming posts, I want to keep in mind the fundamental concepts of money, debt and energy with regards to the economy and economic growth.

Thanks for reading,