I. Current Theme#
This episode mainly discusses the following core themes:
- Investing in Humanity for the Long Term: Emphasizing that the essence of investment is investing in the development of the entire human society, rather than short-term market fluctuations or individual company financial reports.
- Overcoming Human Weaknesses: Investors need to overcome human weaknesses such as fear and greed, and maintain extreme optimism and a long-term perspective.
- Importance of Asset Allocation: Recommend different asset allocation strategies for different age groups and financial situations, such as the 442, 433, or 80/20 principles.
- Avoiding Financial Scams: Exposing financial scams and insurance traps under the capitalist system, reminding investors to be vigilant.
- Cancel Insurance Early: Strongly recommend canceling all insurance policies, unless it is term life insurance for the family’s primary income earner with minor children.
- Sell Property Early: Suggest selling property and investing the funds in index funds for higher returns.
- Asset Pledging: Discussing how to obtain funds through asset pledging and use them for investment to improve overall returns.
- Attitude Towards Evangelists: Like Christian missionaries, convey investment ideas without forcing others to accept them.
- Importance of Cash: Asset allocation should include at least 20% cash.
II. Briefing Content#
1. Investment Philosophy#
- Investing in Humanity’s Financial Reports: Instead of looking at individual company financial reports and short-term economic situations, focus on the development trend of the entire human race over thousands of years. Invest in indexes, looking at the performance of all of humanity.
- Investors Are Always Extremely Optimistic: Investment requires long-term optimism, believing that the market will eventually rise.
- Overcoming Human Nature, Looking at the Market with a Cold Eye: Investors must overcome human weaknesses and not be affected by short-term market fluctuations. Need to practice remaining calm in the face of a tiger, believing there is glass in front of you, believing there is a safety net, no matter how the market falls.
- Understanding the Demons and Monsters of Capitalism: Recognize financial scams, insurance traps, and the government’s wrong policies under the capitalist system, and avoid being exploited. Capitalism is efficient, but has side effects, coupled with financial industry scams, deception, and government collusion or wrong policies.
- Wealth is a Talent, and It Can Come True: The capitalist system allows everyone to have the opportunity to get rich, but requires correct knowledge and strategies. The education system is cultivating slave labor, while the financial industry is exploiting human weaknesses to sell fear. You can listen to Li Lu’s speech to understand the difference between investment and speculation.
2. Asset Allocation#
- Young People: Young people who are still working should directly invest in the Nasdaq 100 index fund (QQQ) and consider using leveraged funds to increase returns. Young people must increase returns, there is no other choice, try to buy leveraged funds.
- Retirees:
- Insufficient Assets: Take other strategies.
- Sufficient Assets: Choose different asset allocation strategies depending on whether there is stock pledging and whether there are other income sources.
- No Pledging, Need to Withdraw Money from Assets: 80/20 principle (80% index funds, 20% cash).
- With Pledging, No Need to Withdraw Money from Stock Assets: 442 principle (40% index funds, 40% leveraged funds, 20% cash).
- No Pledging, No Other Income: 433 principle. If there is no other income, and you need to withdraw money from assets, only 80/20. Have stock pledging, do not need to withdraw money from assets to use 442.
- Emergency Fund: Use 00864B as an emergency fund to cope with unexpected situations.
- About Loans:
- All loans must be able to be repaid from salary or stable cash flow.
- Try to pay off loans before retirement.
- If there is a mortgage that has not been paid off after retirement, part of the funds can be invested in high-dividend ETFs (such as 0056), and the dividends used to pay the mortgage interest, with the remaining funds used for investment. For example, borrow NT$10 million, with an interest rate of 2.78%, and no repayment is required for 20 years. The annual interest is NT$278,000, requiring NT$4.5 million to be placed in 0056, because 0056 has a 6% dividend yield, and the remaining NT$5.5 million is added to the 433 or 442 allocation. If there is also rental income, you can use 442.
3. Insurance#
- Strongly Recommend Canceling All Insurance: Most insurance policies are scams, exploiting human weaknesses to sell fear.
- Term Life Insurance: If you are the family’s primary income earner and have minor children, you can purchase term life insurance to protect the family’s financial security in the event of an accident. Only buy term life insurance that is purchased once a year, which is cheaper. If your assets reach 20-30 million, you don’t need to insure anymore.
- Funds from Redeeming Insurance: Invest in index funds to obtain higher returns.
4. Property#
- Not Recommended to Purchase Property: Houses are fixed assets, lack liquidity, and have high risks. Taichung Shin Kong Mitsukoshi will close down, and real estate will too. If you buy a house to live in for 60 years, and are forced to live in the same house for 60 years, that’s strange.
- Sell Property: Suggest selling property and investing the funds in index funds to obtain higher returns.
- Rich People Buy Houses: Only after becoming rich can you buy houses as casually as buying slippers.
5. Other#
- Convert Roth IRA: Don’t wait for the market to fall before converting to a Roth IRA, do what needs to be done as soon as possible. January 1st and 2nd may be the lowest points of this year.
- Overcoming Human Nature: In the face of market fluctuations, stay optimistic, eat well, sleep well, and have no worries.
- AI and Tech Development: The development of AI may promote exponential growth in U.S. stocks, with long-term returns expected.
- Longevity Risk: Need to consider the financial risks brought about by longevity and plan ahead. Need to plan to live to 120 years old.
- Children’s Education: The focus should be on letting children learn happily and explore life goals, not just to make money.
III. Q&A Session#
Xiaoxia#
- Question 1: The family income is divided between husband and wife. Is the 433 or 442 asset allocation based on the husband or the family income?
- James’s Response: It depends on each family’s situation. If it is centrally managed or centrally thought out, you can think in the thinking mode of the whole family, depending on whether you understand the financial situation of the whole family. If the husband is more conservative and mostly in cash, the wife can be more aggressive and buy leveraged funds to balance it.
- Question 2: My son is studying abroad, and the monthly expenses are NT$40,000. How should I include this in the expenses?
- James’s Response: Treat this expense as a fixed deposit asset, deduct it directly from 00864B, and separate it from investment assets. This part will be spent this year and cannot be regarded as an investment asset. Transfer it directly to 00864B so that it will not be affected by market fluctuations for at least one year.
Feida#
- Question: Currently holding 00662 and 00670L, allocated in an 80/20 ratio, and not withdrawing money from stock assets, do I need to adjust to 442?
- James’s Response: If you need money, you can consider using credit, and then use the extra money you borrowed to allocate to 442. Borrow money, buy stocks with NT$1 million borrowed, and put NT$1 million in cash. Switching to 442 immediately will increase your return through two-tenths of the cash. Ask how much you can borrow. If the bank dares to lend, don’t be afraid.
- Question: If gradually adjusting to 442, how to arrange the buying order?
- James’s Response: Sell 00662 and convert to 00670L, as long as the total asset beta value is 1.2, the rate of return will remain unchanged. If you can take out a loan, take out the loan as soon as possible and adjust to 442 immediately. Hurry up and borrow, change it immediately.
Grace#
- Question: Trump may carry out tax reform. Should I suspend converting to a Roth IRA?
- James’s Response: Do what needs to be done first, don’t wait. Trump’s policies will not have a big impact in the short term, and you can change your strategy after he signs it. Trump has a lot of things to do, and the tax exemption for Social Security isn’t signed yet.
Sara#
- Question 1: How did you come to the conclusion that you may live to 120 years old in the future?
- James’s Response: Now technology is developing rapidly, many diseases can be treated, and parents’ genes also have an impact, so living to 120 years old is expected.
- Question 2: How do you view the possibility of exponential growth in U.S. stocks after the AI breakout?
- James’s Response: U.S. stocks have always had exponential growth, and now because of AI, the annualized return may be higher in the future. It used to be 6%, then it jumped to 8% when the steam engine and electricity appeared, then it jumped to 12-14% when the Internet appeared, and now it may jump to 25% because of AI.
Summer#
- Question: I bought an investment property in the Bay Area. Should I sell it now?
- James’s Response: Sell it immediately. The later you wait, the greater the loss. Non-Americans who buy American houses pay very high taxes, and the estate tax is also very high, which is not cost-effective. If your child plans to study in the United States in the future, then wait until you need it. If you buy it, you will earn money in the future, and your taxes will be very high, and 1/3 will be taken away first. The asset estate tax is 40%, and the tax exemption is only 60,000.
Jia#
- Question 1: Is it possible to borrow Japanese yen through Interactive Brokers to spend?
- James’s Response: It’s better to borrow Japanese yen to invest in U.S. stocks, just like Buffett, so there is no exchange rate risk. Just spend the money you can afford to spend now.
- Question 2: Is it worth it for a 15-year-old child to work at McDonald’s to open a Roth IRA?
- James’s Response: A 15-year-old child should study hard and live a happy life. Making money is not what they should be doing now. They should be taught how to manage money.
Jenny#
- Question 1: If the bank wants to liquidate debts after asset pledging, will the stocks be sold?
- James’s Response: The bank will not ask you to repay the money. The debt can be divided. The heirs inherit the assets and inherit the debts at the same time. Putting the account in a trust can also avoid a certification. After putting it in the trust, you can save on probate, just follow the trust. Trust just avoids probation.
- Question 2: Recent retirees have property and savings. Do they need to open a Rollover IRA?
- James’s Response: If they refuse to sell the property, there is no way to help them with financial planning. Sell the property, put it in a brokerage account, and live on 80/20 borrowing is fine.
- Question 3: Children’s company stocks are doing well. Should they be sold to buy QQQ?
- James’s Response: If you sell employee stocks now and earn 50,000 tax-free, you can slowly transfer them; otherwise, exchange for QQQ when you have income.
- Question 4: How can I get the kids to take the money they earn to buy QQQ?
- James’s Response: This guy is already addicted to drugs, it’s very difficult to quit. Encourage him to invest more money, match as much as you can in the brokerage account, and see if they are willing to do what you say. You can encourage children to invest more money into the brokerage account.
Max#
- Question: How to prevent elders in the countryside from being tempted by insurance agents and keep holding stocks?
- James’s Response: Keep in touch, accompany him, and cheer him up. Join the group, and everyone can help him analyze and answer his questions. You can transfer the stocks to a Yuanta Securities pledging account, but don’t pledge them, so you can’t buy or sell them, and there is an emergency available amount. Tell him that it has been pledged and there is no cash.
Christina#
- Question 1: How to open a Roth IRA account for a child who works part-time in high school?
- James’s Response: Find Lisa to open an account, either online or in the office, and open an account in the child’s name. If you want to see the account online, you need to sign for power of attorney.
- Question 2: How to join Chen Feng and Naixin’s group?
- James’s Response: There is a link on the message board. You can only join with a LINE registered with a Taiwanese mobile phone number. You can also add Peter’s and the doctor’s WeChat.
Shufen (Sharing)#
- Sharing: Because insurance was cancelled and entered QQQ (525), I wasn’t too worried even after the price dropped.
- James’s Response: Thumbs up
Grace (Sharing)#
- Sharing: After listening to James, I bought QQQ and have a large sum of money now. Now I’ve started asking my son to buy QQQ, and a masseuse who heard her sharing also wants to learn about investing.
- James’s Comment: Very happy to have helped more people.
Chen Feng (Sharing)#
- Sharing: Relatives and friends have become interested in investing due to continuous persuasion. Investment itself is psychology, and if the 80/20 allocation doesn’t work, the mental account doesn’t work.
- James’s Response: The 20% cash in asset allocation is very important, to preach, whether or not someone understands is their business.
IV. Wonderful Views#
Investors can only be extremely optimistic, there is no other way. Investors always influence the sunshine, the market will eventually rise, investment requires patience, and wealth is worth waiting for. – James
Background: This is a summary of investor mentality, emphasizing the confidence and patience of long-term investment.
The world is unfair. I always say that one day, two lives, three lucks, heaven is your DNA, this is impossible, life is which country you were born in, this is life. – James
Background: When discussing his feelings about traveling to Egypt, he expressed his feelings about the unfairness of the world, and that fate is different when you are born in different places.
Correct you immediately if you are wrong, the later you wait, the greater your loss. – James
Background: Emphasized that in investment decisions, if you find an error, correct it in time, do not hesitate, and cause greater losses.
Young people who are still working should directly invest in the Nasdaq 100 index fund, there is no other choice, because you must increase your returns, right? – James
Background: Aiming at young investors, it is recommended to invest heavily in the Nasdaq 100 index fund to obtain higher returns.
Now in the United States, the leader is the Joint Group will speak a possible place where it is possible to have to expand all the full amount to buy a house, because you can’t buy insurance, the United States if you can’t buy insurance that can only buy a full amount of housing. – James
Background: Shared the potential risks of the US real estate market. In some areas, houses may be difficult to sell due to insurance issues.
Capitalism itself is a fair, just, and open system, but everyone is using this system to say things that are seemingly true. – James
Background: Pointed out the problems of the capitalist system, which is that it is used by some people for financial scams and transfer of benefits.
Financial management is a scam to me, and insurance is also a scam. – James
Background: He bluntly expressed his views on financial management products and insurance, believing that many of them use human weaknesses to commit fraud.
If you are tormented by the market for a long time, then you need to think about whether your position is too heavy? Or are you not suitable for investing at all? – James
Background: Reminded investors that if they are affected by market fluctuations for a long time, they should reflect on whether their positions are too heavy, or whether they are suitable for investing.
Redeem all insurance, and then unless your children are very small, buy term life insurance, which is to buy it once a year, buy one every year. – James
Background: Re-emphasized the choice of insurance, and that term life insurance is only needed in special circumstances.
V. Summary#
In this episode, James emphasized the importance of long-term investment, overcoming human weaknesses, avoiding financial scams and unnecessary risks, and adopting appropriate asset allocation strategies to achieve wealth growth. At the same time, he reminded everyone that investment is a process that requires continuous learning and companionship.
Disclaimer: This article is only a personal study note and does not constitute any investment advice.