00500 The Balance Between Asset Appreciation and Spending: Spending Should Reflect Your Asset's Capacity

I. Current Topic

#

This episode primarily shares the power of compound interest in long-term investing and discusses whether the 80/20 asset allocation strategy for retirees can be used for collateralization. James uses specific examples and data analysis to emphasize the importance of compound interest in long-term investing and the key issues to consider when using the 80/20 asset allocation for collateralization. For example, while it’s possible for retirees to use the 80/20 allocation for collateral, there are many restrictions. For safety, retirees should stick to the 433 allocation for collateralization.

II. Briefing Content

#

1. Program Suspension Notice and Disclaimer

#

• Suspension Notice: Next Thursday (February 1, 2025) is the fourth day of the Chinese New Year. Considering that everyone may still be celebrating, there will be no program. The program will resume as usual on February 8, 2025.
• Disclaimer: All content shared on the CLEC channel is solely based on James’s personal experience. James is not a professional investment advisor and does not provide professional tax advice. Investing involves extremely high risk, so please be cautious. It’s important to note that the possibility of your assets being halved (i.e., a 50% drop) can happen at any time.

2. Learning Materials and Viewing Recommendations

#

• Learning Materials: Newcomers are advised to watch video 00451 first. We have also compiled a playlist of short videos. The subtitles for the “One Hundred Million Yuan Investment Lecture” series have been re-proofread, including English and various global language versions, making the translation more accurate.
• Viewing Recommendations: James advises everyone to watch the entire video, as the amount of information is large. Asking questions based on watching only parts of the video makes it difficult to get complete and comprehensive answers.
• About Groups: CLEC does not have any groups. The existing groups are organized by enthusiastic students, like the “00662” group. These groups mainly help new friends answer basic investment questions. However, it’s important to note that these groups are not affiliated with CLEC, and James does not participate in any groups.

3. Investment Strategies and Precautions

#

• Investment Target: CLEC focuses solely on investing in the Nasdaq 100 Index Fund. There are many instruments worldwide that allow direct investment in the Nasdaq 100 Index Fund, with relevant links provided in CLEC-related videos. For example, the ticker symbol for the Canadian 2x Leveraged Fund has changed. James will explain the specific changes in later videos.
• CLEC Video Quantity: Since 2018, CLEC has accumulated almost 1000 videos, covering content from investment basics to advanced levels.
• Investment Philosophy: Always maintain extreme optimism in investing and believe that the market will always go up.
• Prohibited Behaviors: We have a one-voice policy here. Activities unrelated to investing in the Nasdaq 100 Index Fund are not allowed. For example, recommending insurance, real estate, etc., is prohibited.

4. Supplementary Remarks on Chen Feng’s Sharing

#

• About Chen Feng: Chen Feng is a senior and enthusiastic student who has voluntarily started a group and manages it with Nai Xin and others.
• Chen Feng’s Content: Recently, Chen Feng shared a three-hour condensed course on YouTube. James provided supplementary remarks on some of the issues:
  • About Long-Term Annualized Returns: The long-term annualized returns mentioned by Chen Feng are the actual returns after deducting inflation.
  • About Excel Demonstrations: In his sharing, Chen Feng used Excel spreadsheets to demonstrate the returns of different asset ratios. Students can check his Excel spreadsheets for more accurate data results. Chen Feng may also add supplements and corrections in the notes of his YouTube video.
• James’s Supplementary Explanation: Chen Feng’s sharing was for his group’s internal use. While these senior students have understood 99% of James’s content, there may still be some non-mainstream or less precise points. Therefore, James made a few supplementary explanations regarding his sharing.

5. Collateralized Borrowing and Spending Adjustment Strategies

#

• Usable Funds Ratio for Collateralized Borrowing: The annual available funds for collateralized borrowing are 2% of retirement reserves (assuming your retirement reserves are 50 times your annual expenses). If your retirement reserves are NT$30 million, the annual available funds are NT$600,000 (NT$30 million * 2% = NT$600,000). This NT$600,000 is fixed. Even if the NT$30 million becomes NT$20 million due to market fluctuations, you can still use NT$600,000. You don’t have to worry about a decrease in available funds because of market drop.
• Spending Strategy During Market Downturns: You do not need to reduce spending during a market downturn. You can increase spending during a market upswing. In other words, our annual spending will only increase, not decrease.
• Spending Adjustment Strategies:
  • Upswing Scenario: For example, with a retirement reserve of NT$30 million, after 5 years, assets increase from NT$30 million to NT$50 million, and the net assets (after deducting debt, including 5 years of expenses, and annual interest, totaling NT$3.22 million) are NT$46.78 million (NT$50 million - NT$3.22 million = NT$46.78 million). At this point, annual available funds can be adjusted to NT$930,000 (NT$46.78 million * 2% = NT$930,000). However, this NT$930,000 includes interest expenses. Assuming the previous loan of NT$3.22 million and a 3% interest rate, the annual interest expense is about NT$100,000, and the actual available funds are NT$830,000 (NT$930,000 - NT$100,000 = NT$830,000).
  • Downturn Scenario: There is no need to reduce spending during a market downturn. You can still maintain the peak spending level (e.g., if the peak spending was NT$900,000, you can still maintain NT$900,000 per year even if assets drop to NT$30 million). This allocation strategy is based on a model that assumes a 10-year decline from the peak, which can be fully sustained even under the extreme scenario of a 10-year decline.
  • Core Principle for Spending Adjustments: Only increase spending, not decrease it, and it’s recommended to adjust it every 5 years to avoid frequent adjustments.

6. Retirement Asset Allocation and Collateralization Strategies

#

• Retirees who do not utilize collateralization can use an 80/20 asset allocation, i.e., 80% invested in QQQ and 20% in cash.
• An 80/20 asset allocation, without collateralization, allows for simple rebalancing yearly without risk of bankruptcy.
• If you must utilize the 80/20 asset allocation for collateralization, please be aware:
  • Absolutely do not use cash to rebalance in the market, cash must only increase, not decrease.
  • Market downturns may last up to 10 years. If you borrow 2% annually, you will borrow more than 20% in 10 years. If you then invest cash, your total assets may be less than 20%. Therefore, using an 80/20 asset allocation for collateralization is high risk.
  • A safer approach is still a 433 allocation.
  • If you must use the 80/20 allocation for collateralization, rebalancing intelligently only during upswing years, that is, can only transfer cash from the prototype fund (QQQ), it is not allowed to transfer cash into QQQ during downswing years, can transfer cash into QQQ during upswing years.
  • This approach is complex and requires simulation to ensure feasibility.

7. Core Principles for Asset Allocation

#

• Whenever making an asset allocation or adjustment, assume that it’s the market’s highest point.
• Spending does not need to be reduced during a 10-year decline, as the allocation strategy has been verified through simulations as feasible.
• When assets have risen to a new high (e.g., from NT$30 million to NT$45 million), you can reset the spending amount. Even if the market declines again afterwards, you don’t need to reduce spending because it is already close to the bottom, and risk is reduced.

8. Yuanta Securities Finance Information

#

• Yuanta Securities Finance is an institution that specializes in lending money out. Its interest rates are low (below 3%), and it doesn’t experience liquidity shortages like other brokerages or institutions. Its website operation and fund transfers are also convenient.

9. Risks of Real Estate Investment

#

• Real estate is not a good asset and carries extremely high risks.
• Natural disasters like fires and earthquakes can cause the value of real estate to drop to zero. In some countries or regions, you still have to repay the loan even if the house is destroyed.
• Real estate involves putting all your eggs in one basket, and the risk is too concentrated. Moreover, real estate depreciates and loses value.
• Investments should be diversified. Avoid putting all your assets into real estate.
• You should only buy a house if you could afford to buy another one if the first one was destroyed.

10. Information on German Stock Pledge

#

• See page 30 of the handout. This is information provided by students on German stock pledges. James did not provide a detailed interpretation.

11. Tax Issues of American Retirement Accounts (Traditional IRA & Roth IRA)

#

• When the Traditional IRA becomes an inheritance, the heir must withdraw all the funds within 10 years. The principal and appreciation are both taxed, and there are almost no inheritance tax exemptions.
• When the Roth IRA becomes an inheritance, the heir has 10 years to withdraw the funds, and neither the principal nor the appreciation is taxed.
• Converting Traditional IRA to Roth IRA as soon as possible can effectively reduce the tax burden when RMD (Required Minimum Distribution) occurs.
• Many financial planners or accountants do not advise converting all your Traditional IRA to Roth IRA at once because they want to minimize your current year’s taxes, rather than focusing on long-term tax planning.

12. The Value of Life and the Meaning of Wealth

#

• The value of life lies in learning, thinking, serving others, and growing, not just working and making money.
• Money is a tool to help us achieve our life’s purpose, enhancing our spiritual energy and fulfilling our dreams.
• The ideal state is to have 10 billion dollars in assets but owe the bank 10.1 billion dollars.

III. Q&A Session

#

Angel

#

• Sharing: Angel is a young man currently studying in the United States. He turns 21 the next day. His parents are very supportive and hardworking, allowing Angel to study in the U.S. without worry. Angel’s parents hope he can live a wealthy life, so they advised him to learn investment and financial management with James and promised to give him funds to invest.
• Question 1: If James were 21 again, with his current knowledge and parental support, how would he invest?
  • James’s Response: If James were 21 again with his current knowledge and parental support, he would use a 442 allocation to buy in all at once. Additionally, the teacher shared two investment mistakes he made when he was young: investing in real estate, which he bought for 8 million and sold for only 6 million after 10 years, resulting in a significant loss; and selling company stock to buy a car. These two poor decisions resulted in his assets being reduced by half. The teacher used his own example to emphasize: $100,000 for a young person, with time, compounded at 14% annually, will be $25 million in 60 years; $10,000 for a young person is $2.6 million in the future, so young people should learn to save and invest first and then learn to spend money when the time is right.
• Question 2: Besides human nature, why is it not advisable for someone of my age to put all my money into QQQ, but rather 433 or 442?
  • James’s Response: Human nature is the most important factor that must be considered in investment. You cannot exclude the factor of “human nature”. If you don’t consider human nature, then don’t invest. For example, investors often overestimate their risk tolerance. Investment should avoid getting yourself into a state of extreme panic. Allocating all your assets to QQQ or half in QQQ and half in cash overestimates your risk tolerance. Although the market will eventually go up in the long term, your assets may fall to extremely low values during a market downswing, for example: from 100 to 80, 70, 60, then finally falling down to 5, 1. During this process, you might have already gone bankrupt and exited, even if you survive until market rise, it no longer has anything to do with you. It’s like playing Russian roulette: a revolver with 6 chambers, and 1 bullet. If the person firing doesn’t die, they will get 10 million; if they do die, they die. You should not participate because of the high reward. You could die. So young people’s beta should not exceed 1.2.

Lisa

#

• Sharing 1: Has retired and currently uses a power account as a reserve for daily living. The account balance is usually 0. Money is only used when a large expense happens or an emergency occurs. This practice brings her peace of mind. She doesn’t need to keep a lot of cash in her daily account so that she could effectively use cash for investment purposes.
• Question 1: After retiring, I do not want to use leveraged funds (like QLD), but I am worried about a stock market crash. Is it feasible to use the 80/20 (80% in QQQ and 20% in cash) asset allocation strategy?
  • James’s Response: Yes, it is feasible. An 80/20 asset allocation, if you don’t do collateralization, can do simple rebalancing yearly. Because she is retired, and the funds in her collateralization account have not been used, which is equivalent to her not using collateralization, she can use the 80/20 asset allocation strategy under that circumstance.
• Sharing 2: Has started Roth IRA conversion and plans to complete all the conversion within the next few years when the tax rate is lower.
• Question 2: Some people suggested using up the 32% tax rate, but I cannot mentally accept it, as it may mean paying higher taxes. Is it okay to just use up the 24% tax rate and deal with the rest during RMD time?
  • James’s Response: You can complete all the conversions before the RMD age, as long as you finish before RMD, as money cannot be transferred into a Roth IRA after RMD age. Money can only be transferred into a brokerage account, which is not beneficial to inheritance. It is recommended to transfer the funds from the retirement account to a Roth IRA as much as possible, as the Roth IRA’s heir does not need to pay taxes within 10 years, while the Traditional IRA’s heir needs to pay taxes. Converting early can avoid higher taxes in the future. If you still do the conversion when the market drops, it means your conversion decision is correct. Although you may have to pay as high as 30% tax now during conversion, you can avoid higher taxes in the future in the long run (because your assets will grow significantly over time, so you will have to pay more taxes later).

YJ

#

• Sharing 1: YJ would first like to thank James and the “00662” group, especially for Chen Feng’s sharing and James’s supplementation, which make everyone’s investment concepts clearer.
• Sharing 2: The Chinese concept of “having land is having wealth” needs to be updated. In the current era, this “land” should not be real estate but rather “stocks”. The old concept of “having land is having wealth” refers to farmland that can be cultivated and has output, which is similar concept to current day investing in stocks.
• Suggestion: There are no more lectures on the 100 Million Investment topic this year. The 9 situations in the 00005 topic have been simplified into 2 situations. Can there be a “00006” topic, specifically on the “collateralization” part, with a simpler presentation?
  • James’s Response: “Having land is having wealth” did not refer to houses in the past, as houses were not valuable in those eras and this term referred to farmlands. Today’s “having land is having wealth” should be changed to “having stocks is having wealth”, stocks are the true assets. Regarding your suggestion of topic 00006, James believes the existing sharing is already simplified enough. Users using collateralization should use the 433 allocation and make “smart rebalancing” using 2% of their assets yearly, and there is no need for a more complicated topical presentation.
• Question 1: Previously, I sent a message on YouTube mentioning the video 00303 in March 2022, and you suggested to not use TQ (TQQQ) back then. However, two months ago (around November), you replied that a 6TQQ+2U+2Cash strategy can be used with a 6:2:2 allocation. Does this strategy and comparison with the 442 strategy feasible?
  • James’s Response: TQQ can be used. The suggestion in previous videos was based on the understanding at the time, so single-asset investment in TQQ was not recommended. However, now, if you have an asset allocation (like 6:2:2, which is 60% in TQQ, 20% in U, and 20% in Cash) and do “smart rebalancing”, this strategy is viable. Investment strategies and concepts are constantly evolving and improving. Ideas considered impossible in the past may now be proven to be feasible.

Bill

#

• Question: I previously learned about BOXX as an investment target that is not correlated to the stock market. However, I learned that it’s related to blockchain, so there are concerns about its safety, and whether its risk is too high?
  • James’s Response: BOXX’s operating mechanism is similar to 00864B. As long as its return is trending similarly to the US Federal Funds Rate, its risk is controllable. You should pay serious attention when the return is much higher or lower than the US Federal Funds Rate, as it may indicate some irregular financial operations. BOXX’s primary function is to reasonably avoid investment income tax, and it can be used as a short-term investment target.

Henry

#

• Question: Henry runs his own business and used to have a company 401K. He has stopped it now, and he is not sure whether he should continue contributing into it or put the money designated for company contributions into his investment account.
  • James’s Response: The main purpose of a 401K is to save on taxes. If you can do a Roth Solo 401k, you should prioritize it. You can consult your tax consultant or search the web and consult ChatGPT to confirm if you can do a Roth Solo 401k.

Yuqiao

#

• Question: I am retired and have benefited from this investment method. I want to recommend this investment method to my younger sister in China (who is 50 years old, runs a small business, has a tight budget, and has almost no knowledge of investment). Should I give her investment advice?
• James’s Response: Yes, you should. You can be her benefactor. However, she may not accept advice directly. Furthermore, opening an account and the follow-up operations are complex. So, if you really want to help her, you can open an account for her first and invest a small amount of money (such as $1,000 USD for about ¥7,000 to ¥8,000 RMB), tell her that if there are losses, you will bear it, if there are profits, it’s hers. You can also co-invest with her proportionally, for example, if she invests ¥100, you can invest ¥100 for her. Once she sees a return, she will then invest automatically.

IAM

#

• Sharing 1: IAM has recently met a doctor in his 70s. When he was young in his 30s, he trusted brokers and made careless investments. After several failed investments, he not only had real estate and stocks but was also in debt at 40 years old. He had to work to repay his debts even in his 70s. IAM is very grateful he found CLEC in 2022 and avoided going down the same path as the doctor.
• Question 1: James often says “slow is fast,” and investment should not be rushed. However, everyone’s understanding of “fast” and “slow” is different. Can you please explain how to measure “fast” and “slow” in investing and how to view the concept of “40 years is too long”?
  • James’s Response: Everything has its own rules and timings, like pregnancy and childbirth, which takes ten months and cannot be shortened. The same applies to investing. Wealth growth takes time. You cannot expect to harvest tomorrow what you planted today. It takes 10 years of investment to feel wealthy, 20 years to retire, 30 years to be prosperous, and 40 years to become rich. This requires time, one cannot be hasty. Warren Buffett did not become the world’s richest man at 30 or 40, but after 55 years old. Investing requires understanding the essence and rules of time. Do not be impatient. Every thing operates following its rules and timings. It’s a rule of nature and cannot be rushed.
• Question 2: Why do people haggle over small amounts of money, but at the same time act recklessly like gamblers when it comes to investing?
  • James’s Response: This all stems from humanity’s “loss aversion” mentality. People do not like to lose, so they haggle over prices when shopping, but they tend to focus only on the gains and ignore the risks when investing. During investment, people often forget past losses and only think about making more money in the future. This is the gambler’s mentality. When shopping, people compare prices since they can lose less and, by nature, they will haggle. In investing, people think that the more they invest, the more they will earn; while ignoring the possibility of losses, hence they will not haggle. It’s like if you go to buy a cake, and the owner says the cake is 100, you might haggle and say can it be 90? But if the owner says you buy my cake and tomorrow I’ll return 300, you won’t haggle anymore, you’d think the more expensive, the better.

Mike

#

• Sharing 1: Shared a story about a CNBC interview with Buffett and Bill Gates: If Buffett and Bill Gates went to McDonald’s and they see 1 cent on the ground, what would they do? Buffett would pick it up without hesitation and check if there are any other coins around; and Bill Gates would also pick up that cent. This story illustrates the principles of “every little bit counts” and “compound interest.” Even the wealthy do not overlook the importance of “saving” because when Mike was on a business trip to Microsoft in 1992, Microsoft was already a listed company, and Bill Gates was already very wealthy at that time. One of the employees criticized Bill Gates for using coupons when shopping for groceries. Later, one time, Bill Gates was looking for his coupon when checking out. The person behind him said, don’t worry, I will pay, you earn more than this in one minute. However, Bill Gates did not ignore the person behind him, he continued to search for his coupon.
• Sharing 2: Opinions regarding Deep Seek: Recently, AI technology is developing rapidly, with various new technologies and applications emerging, including Deep Seek, which will have a significant impact on QQQ’s future. Currently, American technology giants seem to have a “big brother” mentality, believing that they can win the AI race as long as they invest enough resources. However, historical experience shows that technological leadership does not necessarily win the market, the business model is also important.
• James’s Response:
• Deep Seek, like many other AI technologies, is still in the early stages, and there will be many uncertainties in the future. But what is certain is that AI will have a profound impact on human society and bring huge opportunities for investors.
• Regarding the competition between the US and China in the field of AI, it is still difficult to judge who will ultimately win. The US has advantages in technology and funds, but China also has its own advantages, such as large amounts of data and government support.
• AI is not only large language models (LLM), there are many other applications, for example: Tesla’s autonomous driving. Tesla’s autonomous driving model is already very mature, it can automatically drive out from the parking lot and the driving experience is very smooth, just like a professional driver is driving for you.
• AI will not completely replace human jobs but increase our work efficiency. For example, even for translators, you can use AI to improve the efficiency and quality of translation. Therefore, humans need to learn how to utilize AI, not reject it.
• Currently, the biggest problem is that many large companies want to introduce AI, but they do not have a clear idea, they do not know whether it needs to be from top down or from bottom-up. James thinks it needs to be from bottom-up, the employees should use them first, so they are accustomed before moving up. But this requires time and because everyone is changing the thinking process of using AI.
• AI will cause QQQ’s annual returns to be much higher than 14%, or even 20% or 30%. James is very optimistic about this.

Eric

#

• Sharing: Based in Canada, 35 years old, plans to sell his house and invest the proceeds from the sale. Both he and his wife are currently working.
• Question 1: A plan to invest 20% in cash, 40% in QLD, 40% in QQ for long term investment and do smart rebalancing, is this investment plan correct?
  • James’s Response: The plan is correct. Young people who are still working can use a 442 asset allocation, which is 40% in QQQ, 40% in QLD, and 20% in cash, and then do smart rebalancing.
• Question 2: Canada has high taxes, and capital gains tax is heavy. What are your suggestions for long-term planning?
  • James’s Response: People’s destiny is controlled by three factors: the first is fate (DNA); the second is destiny (place of birth); and the third is luck. The place of birth determines one’s destiny. Canada, Europe, and Australia are not as good as the US. If financially possible, consider immigrating to the US, not just for yourself but also for your descendants.

Hao Qing

#

• Sharing 1:
  • Event 1: Shared two experiences of encountering potential “scams”. One time was meeting someone on a highway who claimed to be from Dubai, needing help. This person was dressed neatly, drove a BMW, and claimed to have run out of gas and had no money or was robbed. This person wore gold and asked Hao Qing for help, claiming that he could give his gold to Hao Qing. Hao Qing gave him 40 yuan, but he wanted more. Hao Qing felt that something was wrong, and so did not give any more. The second time, he encountered the same person on the road again, so he called the police.
  • Event 2: A colleague’s relative, an 80-year-old, was scammed for 600,000 yuan. This old person did not believe what nearby people said about it being a scam, and believed that since he raised his children for so many years, it was not unfilial to ask them for money to invest and everyone was stopping him. When going to the bank, the bank employees also told him that it was a scam. The police also came to give him risk warnings that the money could not be transferred, but this old person still did not believe it and was scammed for 600,000 yuan.
  • Personal Views: Hao Qing thinks that he is a kind-hearted person. When he sees someone in trouble, he will help to the best of his ability. However, he will be more careful when it comes to money. Also, there are now many scams and the success rate for solving them is extremely low. He is not sure if it’s the government’s problem or individual’s problem.
• Sharing 2: While discussing “US-China trade” with colleagues, his colleagues think that China may devalue the renminbi to deal with the US tariffs. He does not agree with this point of view but does not know how to explain it.
• Questions: How should we view the three problems of “scams”, “Taiwan policy”, and “RMB devaluation”?
  • James’s Response:
    • About Scams: The US does not care because the US thinks that if you are scammed, it means you are stupid. Furthermore, the person that Hao Qing encountered is technically not breaking a legal law, even if you report, it is useless. All the police can do is to chase him away. Why are there scams? It’s because of “poverty”. When it’s difficult to earn money through normal ways, “scamming” becomes a way to get rich quickly. So, you still need to start from the systems, and education aspect.
  • About Taiwan policies: The US has completely free capitalism where the market determines prices. When prices increase, wages increase, which will then increase interest rates and suppress inflation, ultimately creating a positive economic cycle. Taiwan’s policies, to a certain degree, hinders this positive economic cycle.
  • Regarding the RMB devaluation expectations: This problem is complex and interlinked. It cannot be simply solved via devaluation.

Martin

#

• Sharing: Previously talked with James about the DPC open-source model, and he is also involved in the implementation of his company’s AI project. Therefore, he would like to share and communicate with everyone.
• James’s Response: Okay, you can come and share it with us next time.

IV. Key Insights

#

When investing, you need to see results. You want to see results like Buffett’s. Of course, everyone’s level is different. When you feel you are living a prosperous life, you will also need 40 years. You cannot be hasty. – James

This point explains the importance of “time” and the power of “compound interest” in long-term investing.

The value of life lies in learning, thinking, serving others, and growing, not just working and making money. – James

This point emphasizes that the meaning of life lies in continuous learning, growth, and serving society, not just the pursuit of material wealth.

You also need an appropriate amount of time to grow wealth to a certain extent. Therefore, you need to recognize that time exists first. – James

This emphasizes that wealth accumulation requires time and patience, and one should not take any shortcuts.

What do you do when everything is destroyed? You need a way out. – James

Whether you’re investing or doing anything else, you have to consider if this thing fails, and whether you have a way out. Or whether you can bear the losses caused by that failure.

Today if you buy a Tesla car but you’re afraid of it getting scratched, you’re afraid of washing it. After washing it, you’re afraid to drive it. Every time you drive it out, you’re afraid of people wanting to borrow it, or when your daughter wants to borrow it, you’d always say no and no. You’re a slave to wealth. It’s okay to drive. I have insurance. If it is crashed I can buy a new one. This is wealth. Therefore, don’t be a slave to your assets, never be. It’s better not to buy it, instead of buying it and then using up your mental energy over it. We should not spend any mental energy on material things. This is very important. This is the key to happiness. – James

We should not be slaves to “wealth,” and should not be controlled by “material things.” If something affects your mood, do not buy it because you cannot afford it.

People’s destiny is controlled by three factors: The first is fate (DNA); the second is destiny (place of birth); and the third is luck. – James

The place of birth determines destiny. If you are born in the United States, you have the American destiny; if you are born in Taiwan, you have the Taiwan destiny; if you are born in Australia, you have the Australian destiny.

I am still going to tell everyone that we are going to be very wealthy, so when you want to immigrate you have to think twice. If it’s me, I’d rather spend 800,000 USD to immigrate to the US instead of using less money to immigrate to Canada, Europe, or the NSW. Because the destinies are different. Look at the world’s top ten companies, and nine are from the US. Only one is TSMC from China, but TSMC is also cultivated in the US. To say it bluntly, all the world’s top ten companies were founded by Americans, this is fate. – James

When considering immigration, one should think not only for themselves but also the fate of future generations.

An 80/20 allocation without collateralization can do simple rebalancing yearly without risk of bankruptcy. – James

Retirees that do not do collateralization may utilize an 80/20 asset allocation where 80% is invested in QQQ and 20% is kept in cash, and can do simple rebalancing without risk of bankruptcy.

The US does not care about scams, they don’t even care about the 0-dollar purchase scams, so why would they care about scams? Therefore, there is a cost accounting issue. If a country wants to be strong, it needs strong cost accounting. What do you want? Right and wrong is about competing, and everyone needs to know that prosperity is a key, and poverty is a disease. Being poor for an emerging country is a disease, if one is poor it’s a disease. – James

The United States is strong due to its sound system and market economy.

Always maintain extreme optimism in investing and believe that the market will always go up. – James

Maintain an optimistic attitude throughout the investment process.

AI may not necessarily solely rely on computing power. It can also rely on the human brain. – James

This point explains that in the development of AI, in addition to computing power, the human brain can also play an important role.

V. Summary

#

This episode mainly focused on discussions surrounding compound interest, asset allocation, and various social phenomena. James emphasized the power of “compound interest” and the importance of “time” in long-term investing. He also provided detailed answers and specific operational suggestions regarding asset allocation strategies for retirees, particularly addressing the question of whether an 80/20 allocation is suitable for collateralization. Furthermore, he incorporated current events to share his perspectives on social phenomena such as US-China trade, AI development, and scams, pointing out that “wealth” is a key factor in a nation’s strength. Overall, this episode was packed with information, offering specific guidance on investment strategies along with profound reflections on life, wealth, and social issues, making it worthy of repeated study.