Re-Examining Our Wealth Potential: You Could Have Been Richer#
Many of us spend our entire lives struggling with money, working tirelessly for monthly bills, children’s tuition, and meager retirement savings, like a hamster trapped in a cage, running hard but never escaping. Have you ever considered that you could have been richer? Have you ever thought that the sense of security you seek actually binds you, causing you to miss out on greater wealth?
Yes, everyone has an innate talent for wealth, a right we are born with, as natural as breathing, as natural as birds flying and fish swimming. Unfortunately, this right, this talent, has been forgotten, or even buried by our own hands through the “education” of reality and the “discipline” of society. From a young age, we are told: study hard, find a good job, work hard to earn money to support the family. No one tells us: you can be very rich, you have the right to be very rich, you don’t even have to work so hard to have it all!
The value of this lecture is far more than teaching you one or two investment techniques; its true value lies in awakening you from that “hamster dilemma,” making you realize your dormant wealth potential, and showing you a path to financial freedom. This path does not require you to have Einstein’s brain, nor does it require you to have Buffett’s luck, it only requires you to change your mindset, and then, to move forward steadfastly.
Vision Determines Wealth: How Far into the Future Do You See?#
The extent of your vision dictates the height of your wealth. This isn’t just some motivational slogan; it’s a conclusion derived from rigorous logic and data analysis. Don’t believe it? Let’s crunch some numbers.
Many people find investing for something decades into the future to be too distant and unrealistic. But what if we look 60 years into the future? If you have 1 million now, through sensible investments and factoring in the power of compounding, you could have assets worth hundreds of millions or even billions of dollars in a few decades. This is entirely possible; it’s actually a conservative estimate.
Why don’t ordinary people realize they can have so much wealth? The reason is simple: our concept of money is too narrow, we have insufficient understanding of our potential, and we lack a deep understanding of compounding, the “eighth wonder of the world!” Our understanding of money is still at the kindergarten level, while financial giants have a Ph.D.-level understanding of money, at least.
The “Rat Race” Dilemma: Who Stole Your Wealth Dreams?#
Why is it so hard for most salaried workers to escape the “rat race” dilemma? Because they are trapped in a carefully designed cycle: you work hard for a month, and before the paycheck even warms up, it has to go to capitalists, the government, and the bank. For that meager salary, you have to work like a rat running tirelessly in a cage, never escaping that vicious circle.
What’s worse is that society constantly brainwashes you with “consumerism,” telling you that buying big houses, luxury cars, and branded bags is the standard for successful people. So, you’re burdened with heavy loans, barely able to breathe under the weight of monthly interest payments. You don’t dare to quit your job easily, and you don’t dare to challenge your boss. You become a complete slave to capital.
Do you think this is your own choice? Do you think it’s because you’re not working hard enough? No! This is a structure intentionally or unintentionally maintained by the entire society and education system. What do schools cultivate? Compliant cogs in a machine, not independent-thinking creators. Financial institutions design complex financial products, ostensibly to help you manage your money, but in reality? They earn high fees and interest, while you can’t even outpace inflation.
This “controlled environment” prevents you from realizing your potential for wealth, let alone changing your situation. You are like that hamster in the fable, the faster you run, the further you get from freedom.
Re-Examining Poverty and Wealth: Breaking Down Class Barriers#
Poverty is not your fault; it is the result of social structures that create class inequality. This structural inequality is like a thick curtain that obscures your innate talent for wealth, making you believe that you can only live a poor or middle-class life.
The statement “wealth is a talent” is not just a platitude, but a declaration, a solemn proclamation of your right! It tells you: you have the right to pursue a life of abundance, you have the right to enjoy beautiful things, you don’t have to sacrifice your health, your happiness, or your dreams for money!
Recognizing this is the first step, and the most important step, to achieving financial freedom.
The Essence of Money: Not an End, but a Bridge to Freedom#
What is money? Money is a kind of energy, a tool. In a capitalist society, money can be used to exchange for various resources and services, including time, happiness, health, and even freedom. Money can also be used for investment, growing more money like seeds.
But remember, money itself is not the goal, but a means to achieve our life goals. We make money not to become slaves to it, but to live better, to realize our own dreams and those of our families, to have the ability to help those in need, and to better serve society.
Only by truly understanding the essence of money can we view it and use it correctly, rather than being enslaved by it.
How Can Ordinary People Achieve Financial Freedom? It’s Actually Very Simple!#
Can ordinary people really achieve financial freedom? The answer is: of course they can! Moreover, achieving financial freedom is much simpler than you imagine.
The key to financial freedom is not about having a high IQ, or mastering complex techniques, but rather whether you have the correct investment mindset and whether you can persevere in executing it.
The path to financial freedom for ordinary people is actually very simple: choose the right investment vehicle, hold it for the long term, and let the power of compounding increase your wealth like a snowball. Specifically, it’s recommended to invest in the U.S. Nasdaq 100 index fund, a relatively low-risk investment choice with excellent long-term performance. In the long run, its annualized return is considerable.
Many people might say, investing in index funds, isn’t that something even an idiot can do? Yes, it’s that simple! But the problem is, how many people can truly hold on for the long term?
Financial freedom is not achieved overnight; it requires patience and perseverance. In the course of investing, you will encounter all sorts of challenges and temptations, but as long as you believe in your choice and continue steadfastly, you will surely reach the other shore.
Shedding the “Poor Mindset”: From “Impossible” to “I Can Do It”#
The biggest characteristic of the “poor mindset” is self-limitation. They habitually limit themselves with “impossible,” “can’t do it,” and “too difficult.” They don’t see their potential or the hope for the future.
The key to shedding the “poor mindset” lies in changing your mindset and recognizing your wealth potential and rights. You have to believe that poverty is not your destiny, and that you have the ability to change your fate.
Specifically, you need to learn the right investment knowledge, rather than being led by so-called financial experts or the media. You need to understand that true wealth comes from long-term investment, not short-term speculation or blind consumption. You need to learn to delay gratification, using the money you save for investment, rather than for buying things that are non-essential.
More importantly, you need to cultivate the ability to think independently, not to be swayed by others or blindly follow trends. You need to develop an investment plan suitable for your own circumstances, and then steadfastly execute it.
Finally, you must remember that financial freedom is not something that happens overnight; it requires patience and perseverance, believing in the power of compounding, and adhering to long-term investment.
Why Invest? Make Money Work for You, Not You for Money!#
Why invest? The answer is simple: to make money work for us, not us for money.
Through investing, we can make our money grow continuously in the capital markets, thus realizing an increase in wealth. This increase can help us withstand inflation, ensure our future quality of life, and ultimately achieve financial freedom, so we no longer have to toil for a living.
Investing is also a way to plan for and secure the future. Through investment, we can accumulate funds for retirement, prepare for our children’s education, and create conditions for realizing our dreams. Imagine, when you retire, you don’t have to worry about whether your pension is enough, you can travel the world freely, do things you love, what a wonderful life that would be!
In addition, investing is also a way to participate in economic development. By investing in excellent companies, we can share the dividends of their growth, and also create value for society, promoting social progress.
Why is it Better to Invest Early? Compounding: The Magic of Time#
Why is it better to start investing early? The answer lies in the word “compounding.” Compounding, which Einstein called the “eighth wonder of the world,” is more powerful than you think.
For example, if we calculate with a 12% annual rate of return (a figure that can be achieved over the long term), a 30-year-old who invests $283 per month can accumulate approximately $1 million by the age of 60. But if they started investing at the age of 20, they would only need to invest $85 per month to reach the same goal!
See that? That is the power of compounding! The earlier you start investing, the less principal you need, and the shorter the time it takes to achieve your wealth goals. Because the effect of compounding causes your wealth to grow like a snowball, the longer the time, the faster the growth rate, and the greater the power.
Therefore, even if you don’t have much capital right now, as long as you start investing early and stick with it over the long term, you can accumulate a considerable amount of wealth. Time is the best friend of investment.
The Misunderstood Bonds and Real Estate: Don’t Let Them Steal Your Future#
Many people think bonds are a stable investment, and some even say they’re safer than stocks. Is this really the case?
In the long term, bonds can actually be riskier than stocks. Don’t believe it? Let’s look at the data. How have different asset classes performed over the past 200 years, from the early 19th century to the early 21st century? The results show that the long-term returns of stocks are far higher than those of bonds, and bonds have sometimes even lost money over periods of 20 or even 30 years!
Why is this the case? Because the yield on bonds is usually low, making it difficult to withstand the erosion of inflation. Moreover, bond prices are affected by interest rate fluctuations and carry some risk. In contrast, although stocks fluctuate more in the short term, they have higher growth potential in the long term.
Let’s talk about real estate. Many people believe that buying a house is the most value-preserving investment, and some even consider their house their most important asset. However, have you ever considered whether real estate is really a good investment?
From an investment perspective, the main problems with real estate are its poor liquidity, high maintenance costs, and unremarkable long-term returns. Imagine if someone spent 10 million Taiwan dollars to build a villa 35 years ago, could that villa be worth 30 million Taiwan dollars 35 years later? It’s unlikely. However, if they had invested that 10 million Taiwan dollars in the stock market, based on historical average returns, the current value would have increased by two orders of magnitude, possibly becoming 1 billion Taiwan dollars!
More importantly, real estate also involves complex factors such as location and market fluctuations, all of which can affect its investment returns, and ordinary people find it difficult to control them.
And what if you treat your home as a place to live? Then you’ll be burdened with decades of loan payments, and monthly mortgage repayments will weigh you down. For this house, you have to work hard, not dare to quit easily, and not dare to pursue your dreams, you become a complete “house slave.” Isn’t that putting the cart before the horse?
Remember, a home to live in is essentially a consumption, not an investment.
Investing in the Future of Humanity is Investing in Technological Progress#
Investing in the future of humanity is actually investing in technological progress and social development. Look at our history, from the agricultural age to the industrial age, and then to the information age, each significant social advancement has been accompanied by a leap in technology. This progress has led to tremendous improvements in productivity and an explosive growth in wealth.
Data shows that over the past 200 years, the long-term returns of the stock market have been far higher than those of bonds and gold. This reflects the continuous progress of human technology and productivity.
In the future, human society will continue to move forward, technology will continue to advance, which will bring more investment opportunities and space for wealth growth. By investing in excellent companies that represent the future and the direction of technological development, we can share in the enormous dividends that this growth will bring.
Why the U.S.? Because That’s Where Innovation Flourishes#
Why should we look to the United States? Because it is a fertile ground for innovation, an environment where great companies are born.
The United States is home to the world’s best companies and top scientific talent. These companies are like perpetual motion machines, continuously driving technological progress, creating new products and services, and leading global economic development.
Moreover, the U.S. is highly innovative, and the government usually supports the development of businesses. Furthermore, the U.S. capital markets are relatively mature and transparent, with well-established regulatory mechanisms that protect the rights of investors. This provides a relatively fair and safe investment environment for investors.
Why the Nasdaq 100 Index Fund? Share the Dividends of Technology Giant Growth#
For ordinary people, investing in individual stocks requires specialized knowledge and a lot of effort, and the risks are also relatively high. Is there a simpler, more effective way for us to share in the dividends of U.S. technological development?
The answer is: the Nasdaq 100 index fund.
The Nasdaq 100 index fund includes the 100 largest and most representative non-financial companies listed on the Nasdaq, which include many well-known tech giants such as Apple, Microsoft, and Amazon.
These companies represent the future development direction, the future of technology, with strong innovation capabilities and huge growth potential. By investing in the Nasdaq 100 index fund, we are investing in these excellent tech companies at the same time, sharing in the generous returns from their growth.
Moreover, investing in index funds is very simple, transparent, and relatively low-cost, making it particularly suitable for ordinary investors to hold for the long term. Compared to actively managed funds that require a lot of time and effort for research, index funds often outperform in the long run.
The Nasdaq 100 index fund is more focused on the tech sector compared to other broad market indices, which means it has higher growth potential. If you believe that technology is the core driving force behind future development, then the Nasdaq 100 index fund is an investment choice you cannot afford to miss.
A Simple but Not Easy Investment Path: Why, When We Understand the Logic, Do We Still Not Do Well?#
The method of investing in index funds is really simple: choose a good index fund, such as the Nasdaq 100 index fund, and then buy in regularly, holding it for the long term. It’s that simple. You don’t need a background in finance, nor do you need to monitor the market every day. You can even leave it untouched for years.
But why is it that so few people are actually able to do this simple thing?
First, it requires you to have a long-term perspective and firm conviction. During market fluctuations, especially when the market is down, many people feel panic and anxiety, and even doubt their choice, eventually giving in and selling, and as a result? They often sell at the lowest point, missing out on the rebound that follows.
Second, it requires you to overcome your human weaknesses. In the course of investing, you’ll encounter all sorts of temptations: today, this stock has hit its limit up, tomorrow, that concept is hot, the day after tomorrow, experts predict the market will plummet… this noise will interfere with your judgment, leading you to deviate from your original investment plan.
Many people, even those who have learned this simple investment method, still cannot do it well. Some investors are impatient to sell as soon as the market rises slightly, missing out on the big gains that come later; some investors, although they have set a fixed investment plan, are always unable to stick to it, going at it haphazardly; and other investors, because they hold other types of stocks or investments, are unable to make up their minds to switch to index funds.
What does all of this show? It shows that the success of investing depends not only on the method, but also on your mindset, whether you can overcome your human weaknesses, and whether you can steadfastly execute your investment plan.
Investing in index funds requires “patience” and “waiting,” the determination to “stay the course”, which is what most people lack.
“Pits” on the Investment Path: Don’t Let These Traps Swallow Your Wealth#
The path of investment is full of all sorts of “pits,” and one wrong step can lead to total ruin.
- The “Financial Expert” Scam: Many so-called “financial experts” are actually just salespeople for financial products. In order to earn commissions, they will recommend various complex financial products to you, such as insurance, bonds, annuities, etc. These products often come with high fees and less-than-ideal long-term returns. Annuity products in particular, are not only low-yielding and high-risk, but also severely impact your asset allocation and tax planning. Remember, truly good investments are often simple, and those complicated products are often traps.
- Noise from the Media and “Experts”: Many media outlets and so-called “investment experts,” in order to grab attention, publish all sorts of sensational market predictions. One minute they’re saying a bull market is coming, the next a bear market is coming, and the next, that a certain industry is about to explode… This noise severely interferes with your judgment, making you unable to focus on long-term investment. Remember, what really matters is the long-term trend, not the short-term fluctuations.
- The Temptation of Short-Term Trading: Many people dream of getting rich overnight, so they like to buy and sell frequently, trying to capture every market fluctuation. However, short-term trading not only requires you to have superb skills and keen market intuition, but also to bear enormous risks. For ordinary investors, short-term trading is often not worth the effort, and can even lead to serious losses. Frequent trading is like a gambler in a casino, often eventually losing it all.
- The Risks of High Leverage: Some investors, in order to pursue higher returns, use excessive leverage, such as margin accounts. However, leverage is a double-edged sword, it can amplify your returns, but also amplify your losses. If used improperly, it can easily lead to total ruin, and even bankruptcy. Remember, the first priority of investment is to control risk, not to pursue high returns. Never put your fate in the hands of luck, especially not with leveraged fate.
- The Risk of Not Learning: Many people know nothing about investment. They don’t understand the essence of investment, nor their own risk tolerance, nor the characteristics of the products they are investing in. Such blind investment is like crossing the road with your eyes closed, full of risks.
The Wisdom of “Buy When You Have Money”: Simple, Crude but Effective#
“Buy when you have money.” These four words sound very simple, even a bit “silly,” right? But they are based on a deep understanding and insight into the long-term trends of the market.
We all know that the long-term trend of the market is upwards, driven by economic development and technological progress, and it’s an unstoppable historical trend. Although the market will fluctuate in the short term and even fall sharply, these are all temporary. In the long run, the market will always return to the upward trend and continue to reach new highs.
Many people always want to buy at the lowest point and sell at the highest point. But ask yourself, do you really have the ability to do this? Not to mention ordinary investors, how many professional fund managers can actually do it?
Trying to choose the best time to buy is often futile, even foolish, because no one can accurately predict market bottoms and tops. Instead of wasting a lot of time and energy researching market trends, it’s better to adopt a “buy when you have money” strategy, and use that time and energy to work and live life, enjoying life to the fullest.
The Determination to “Never Sell”: The Secret to Enduring Market Cycles#
“Never sell,” these four words, don’t they sound a bit extreme? But they are the secret to enduring market cycles, the essence of long-term investing.
The essence of investing is to share in the growth dividends of excellent companies, not to gamble, in a casino, diving in and out. The logic behind “never sell” is actually very simple: as long as you are investing in excellent companies, and as long as you believe that these companies can continue to grow, then you should hold them for the long term, sharing in the dividends that their growth brings.
Frequent buying and selling will not only increase your transaction costs, but will also cause you to miss out on the compounding effect of long-term holding. More importantly, it will expose you to human weaknesses.
When the market is falling, you will feel panicked and will want to sell; when the market rises, you will become greedy and will want to chase after the price increases. As a result? You are often buying high and selling low, and are constantly harvested by the market.
The “never sell” strategy can help you overcome fear and greed, and allow you to always stay in the market, sharing in the dividends of economic growth.
Market Downturns: Be Greedy When Others are Fearful#
Market downturns, for many people, are a nightmare, a disaster. But for true investors, they are a once-in-a-lifetime opportunity.
Why is that? Because when the market is down, the stock prices of many high-quality companies will be severely undervalued, like a discounted sale, and buying at this time is like picking up a bargain.
Warren Buffett once famously said, “Be fearful when others are greedy, and be greedy when others are fearful.” This quote is about this very principle.
Market downturns are temporary, while the market’s long-term trend is upward. As long as you can overcome your fear and stick to your long-term investment strategy, you will be able to seize opportunities during market downturns, buy undervalued high-quality assets, and lay a solid foundation for future wealth growth.
“Stock Pledges”: Make Your Assets More Flexible#
The strategy of “living off stock pledges” can help you address your daily capital needs without selling your stock. This is a smarter way to manage finances.
Many people might ask, what is a stock pledge? Simply put, it is using your stock as collateral to borrow money from a financial institution. In this way, you can gain access to liquidity without selling your stock, and you can continue to enjoy the long-term appreciation of your stock.
Through stock pledges, you can avoid being forced to sell stocks with long-term growth potential due to temporary funding shortages. Furthermore, in many countries and regions, the capital gains tax rate is usually higher than the borrowing interest rate. Through stock pledges, you can also reasonably reduce your tax burden.
Of course, stock pledges also carry some risks. If the stock price drops sharply, you may need to provide additional collateral or face the risk of forced liquidation. Therefore, when using stock pledges, you must control your leverage ratio, and it is generally recommended that the pledge ratio not exceed 20% of your total assets.
Independent Thinking: Stay Clear-Headed in the Noisy Market#
In this age of information overload, we are bombarded daily with all sorts of information, especially in the field of investment. The opinions of various “experts,” various media reports, and various rumors, are difficult to distinguish between true and false, making people dizzy.
If you don’t have the ability to think independently, you can easily be swayed by this information and make wrong investment decisions.
Independent thinking is key to investment success. It means having your own judgment, not blindly following trends, not blindly believing in authority, and not being swayed by market sentiment.
The basis for independent thinking is learning and research. You need to continuously learn investment knowledge, study market laws, and understand the investment target. Only in this way can you form your own investment system and make correct decisions in the complex market environment.
Always remember that investment is your own business, and no one can make decisions for you.