00537 Wealth Management Mortgage + Antifragile Retirement: A 15-Year Cash Safety Cushion, Get Rich by Borrowing Smartly

I. Theme of the Session

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The core of this session is to build an “antifragile” investment system. Teacher James points out that true financial freedom comes not from predicting the market, but from establishing a robust structure that can withstand and even benefit from market changes. This includes cultivating a long-term mindset that “the market has no top, it will only go higher,” and understanding that the permanent loss of missing out on gains is far greater than the risk of temporary downturns. Through specific examples and calculations, the teacher demonstrates the immense impact of using leverage wisely (such as credit loans, stock pledges) versus spending down principal on long-term wealth. He also provides clear guidance on cash reserves and asset allocation for different life stages, especially for those approaching retirement, aiming to help everyone evolve their investment cognition and achieve true financial security and freedom.

II. Briefing Content

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Market Views and Long-Term Investment Mentality

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• Fearlessness Towards Market Volatility: Market shocks and international situations are irrelevant to long-term investors. The market has no peak; it will continuously set new highs. The biggest risk for an investor is not a short-term decline, but missing out on long-term growth due to hesitation, the latter being a permanent loss.
• The “Snowball Effect” of Investing: The essence of Warren Buffett’s “long runway and thick snow” is persistence. The initial years of investing (the first 4-5 years) may not show significant results, which is the most difficult stage. But once the asset “snowball” grows larger, the subsequent growth is astonishing. The key is to adhere to the principle of “buy whenever you have money, and never sell,” regardless of market conditions.
• Beware of Scams: The teacher once again called out a scam account with the ID “Pan,” which impersonates him to contact students privately and has very few subscribers (35). The teacher emphasized that he would never initiate private contact with anyone, and any unsolicited contact offering managed account services is a scam.

The Concept of “Antifragility” in Investing

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• Definition of “Antifragility”: Antifragility refers to a system’s ability not only to withstand risks but also to benefit from drastic environmental changes and disasters.
• The Fragility of Professions: Many seemingly stable, high-paying professions, such as engineers and doctors, are actually fragile. The more specialized a profession, the harder it is to transition. Once a disruptive change occurs in the industry (like the emergence of AI), they may face the risk of unemployment.
• Investing is the Ultimate Antifragility: In contrast, capital is antifragile. It works 24/7 and cannot be fired. Therefore, everyone should evolve through investing to possess the ability to withstand unknown risks. The biggest risk in investing is “the risk of not knowing that risk exists.”

The Huge Difference Between Borrowing for Consumption vs. Spending Principal

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• A Thought Experiment: Assume you have a principal of $5 million with an 18% annualized return over 40 years.
  1. Borrowing for Consumption Model: Borrow $100,000 annually for living expenses at a 6% interest rate. After 40 years, the $5 million principal will grow to $375 million, while the total debt will be approximately $16 million. The final net worth would be a staggering $359 million.
  2. Spending Principal Model: Spend $100,000 from the principal each year. After 40 years, the assets will only grow to $189 million.
• Conclusion: In the long run, those who borrow to spend have nearly double the assets of those who spend their principal. The longer the time frame, the larger the gap. This reflects the hierarchical difference between being “tycoon-level rich” and merely “wealthy.” For young people, using credit to invest (like “Han Xin gathering his troops”) could add an extra hundred million to their future assets.

Cash is King: The Key to Retirement Planning

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• Prepare Sufficient Cash for Retirement: Friends who are near or already in retirement should prepare at least 10-15 years, or even more than 20 years, of living expenses as a cash reserve.
• Cash is the Cornerstone of Antifragility: An ample cash reserve means you won’t be forced to sell assets during a market crash and can weather the crisis safely—this is antifragility.
• Dynamically Replenish Cash: In years when the market goes up, you should convert part of your investment profits into cash to continuously fortify your cash reserve. Survival is everything; don’t chase high returns while neglecting safety.

Analysis of Two Real Cases

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1. Case One: The Trap of a NT$300 Million Land Plot
   • Background: Land inherited from an elder appreciated to NT$300 million, but the family had no cash flow. A bank stepped in and designed a complex financial plan: mortgage the land for a NT$170 million loan, use part of the funds to buy high-risk bonds from an Arabian oil company, then pledge the bonds, set up a trust, have the brothers take out another NT$30 million loan, etc., in a layered structure.
   • Consequences: The entire family was trapped by the bank’s scheme, burdened with huge debts, yet still generated no cash flow. Their assets faced a massive risk of being hollowed out by the bank.
   • Teacher James’s Advice: Immediately terminate the cooperation with the bank and redeem everything. The simplest and most direct method is for the elder to sell the land to a developer and get NT$300 million in cash. After taxes, there would still be about NT$200 million in liquid assets. This money could be allocated as 70% stocks and 30% cash. This would not only generate cash flow but also allow for easy handling of inheritance tax in the future through “in-kind payment,” avoiding being exploited by the bank layer by layer.
2. Case Two: Financial Planning for a Near-Retiree
   • Background: A 62-year-old friend with a mortgage-free house, NT$40 million in cash (later clarified to have total assets of NT$60 million), and annual expenses of NT$1 million, was considering a “Wealth Management Mortgage” (Home Equity Loan) for investment.
   • Teacher James’s Advice:
     • Strongly Opposed: For those near or in retirement, borrowing with a short-term wealth management mortgage (e.g., renewed every 2-5 years) is extremely risky. If the bank refuses to renew the loan and demands repayment during a market downturn, it would lead to catastrophic consequences.
     • The Only Exception: If you must take out a loan, it must be a long-term one with a contract period of at least 15 years (for example, some banks like DBS offer loans until age 75). This is because a 15-year cycle is long enough for the market to recover from any low point.
     • Conclusion for This Case: The friend has NT$60 million in assets and annual expenses of NT$1 million, resulting in a withdrawal rate of only 1.67%. This is entirely sufficient for living; there is absolutely no need to take the risk of borrowing. If you have enough money, don’t borrow. If you don’t have enough, you shouldn’t borrow either. Older individuals should prioritize being conservative.

III. Q&A Session

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Mao Mao

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• Sharing:
  1. As a 30-year-old, she shared her journey from having no concept of financial management to a complete mindset shift after reading and watching the teacher’s videos. A project suspension last year gave her a lot of free time, during which she began exploring personal and spiritual growth and was introduced to basic financial knowledge.
  2. She believes the biggest change was a “shift in thought.” Teacher James’s philosophy, “Wealth is a birthright, happiness is a human right,” first requires establishing a new belief system. Many people don’t believe ordinary individuals can achieve financial freedom because their old beliefs limit them.
  3. She observed that the mentality of seeking quick results through short-term trading is rooted in the same “sense of scarcity” as the anxiety of rushing to find a job and being unable to tolerate career gaps. Stepping back and slowing down, however, can lead to more valuable methods.
  4. After accepting the mindset that “I am already a millionaire,” she found her words and actions became more composed, and she no longer felt a sense of material lack. She believes that before learning the specific operational details, it is crucial to first mentally accept that one can be “both wealthy and free.”
  • Teacher James’s Comment: He thoroughly enjoyed Mao Mao’s sharing, finding her to have great spiritual energy and wisdom. People who are drawn to this channel are usually on the same frequency, with high energy. Her sharing was excellent and hit all the key points.

Li

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• Sharing:
  1. He started following the teacher’s lessons around 2019-2020. At the time, he believed in the philosophy but didn’t have much capital. He owned three rental properties in the US, which had low cash flow and soaring maintenance costs after the pandemic.
  2. Inspired by the teacher’s idea of “selling the houses,” he made a firm decision and sold all three properties within 22 months. Although he paid a substantial amount in capital gains tax, he viewed tax as a cost and felt a sense of relief after selling.
  3. He invested the proceeds into a brokerage account, not getting bogged down in precise calculations but following the principle of being “vaguely right.” Last December, while traveling, he casually checked his account and was astonished to find his assets had reached 50 times his annual expenses. He decided to officially retire this year.
  4. His takeaways are: be patient, as the market is generous; dare to sell rental properties; and continue learning, because the teacher’s instruction is also constantly evolving.
  • Teacher James’s Comment: The market is very generous. For someone like Li with a solid foundation, five years of serious investing can be enough to retire. For young people starting from scratch, they can be well-off in ten years, wealthy in twenty, and tycoons in thirty. Real estate is like being a “slave in a shell”; it’s a shackle that shouldn’t be carried.

Yao

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• Sharing: He was recently inspired by philosophy lectures from Professor Fu Peirong of National Taiwan University. He believes that philosophy and religion help us solve spiritual problems, just as the teacher helps us with issues of money and life. When a person transcends the ego and embraces a greater love, their mentality towards many things changes, and they can feel a different kind of strength.
  • Teacher James’s Comment: Thanked Yao for his sharing and also for his help in creating the English version of the channel.

Peng

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• Question: He shared backtesting data on an “elastic rebalancing” strategy. The strategy involves, when cash reserves are less than 15 years, not using cash in a down year but instead converting a portion of a standard ETF (like QQQ) into a leveraged ETF. In an up year, a portion of the leveraged ETF is converted back to cash. His conclusion was that the backtest didn’t reveal a single optimal parameter. The most stable strategy remains, at the start of retirement for a given Beta value, to allocate the highest possible percentage to cash.
  • Teacher James’s Reply: The conclusion is correct. For the same Beta value, always choose the allocation with the higher cash percentage. Rebalancing should be “vaguely right,” not overly precise. When the market is doing well, move more profits into cash to “build your fortress walls higher” to defend against future risks.

TBOS

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• Sharing:
  1. She discovered the teacher’s channel in 2022 and took to heart the lesson, “Don’t stay in a broken elevator.”
  2. At the time, her husband was day-trading in his retirement account, resulting in a $200,000 loss. He refused to sell, believing “it’s not a real loss until you sell.”
  3. She eventually took matters into her own hands, sold all the stocks that were down 80%, and invested the entire amount into QQQ and TQQQ. In just one year, she not only recovered the $200,000 loss but also made an additional $80,000.
  4. She is about to practice what the teacher says about “borrowing money” for the first time, planning to take a loan from her Pledge Account to pay for her daughter’s college tuition.
  • Teacher James’s Comment: He remembers TBOS well. He encouraged her to be brave and borrow, as this will elevate her from the “wealthy” level to the “tycoon” level. The next level is “borrowing without ever paying it back and never paying taxes.”

Chris

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• Sharing:
  1. He learned the power of long-term holding from his daughter’s account. He made a lump-sum purchase of 0050 for her at a market high in 2020 and then forgot about it. Years later, he found its performance was much better than his own actively managed account.
  2. He has been practicing “Han Xin gathering his troops” by investing with credit loans and is currently approaching the credit limit in Taiwan.
  3. Since he doesn’t own a home, he is trying to convince his elders to use their house as collateral for a larger loan to invest in the market, promising to give them a larger allowance in return.
  • Teacher James’s Comment: Chris’s example proves again that one shouldn’t be afraid of buying at a high point because the market has no top; it only goes higher. What is 600 today could be 6000 in the future. Everyone should believe in the long-term trend and ignore the noise from outsiders who don’t understand our investment philosophy.

L (Locke)

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• Question: His mother is expected to have about NT$10 million after selling her house. Her annual expenses are not high, but the amount isn’t sufficient to support living off a pledged loan. How should this money be allocated for his mother’s living expenses? Is it feasible to invest it all in a high-dividend ETF like 0056?
  • Teacher James’s Reply: I recommend keeping NT$1 million as an emergency fund and investing the remaining NT$9 million entirely into 0056. Assuming a 6% dividend yield, that’s NT$540,000 a year, or NT$45,000 a month, which is much higher than rental income. This way, the elder has money to spend, feels secure, and will be happier and live longer. Moreover, converting real estate into liquid assets will make handling inheritance much simpler in the future.

Ann

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• Sharing:
  1. She provided a deep interpretation of the “Han Xin gathering his troops” allusion, pointing out its essence lies in creatively utilizing all available resources (credit, property, connections, etc.) to expand one’s “troop supply” (capital).
  2. Shared her personal practice: she refinanced her house with a 30-year loan when interest rates were low and opened a HELOC as a temporary emergency cash reserve. She also once rented out a spare room to an international student to increase cash flow.
  3. She emphasized the importance of the seventh level of wealth: “living a long life,” which requires not only physical health but also spiritual abundance.
  • Teacher James’s Comment: Dr. Ann is a long-time student who has followed from the beginning. He is right; once people have money, they discover that health and spiritual fulfillment are far more important than money itself.

Demo

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• Sharing: As a US resident whose immigration status is not yet fully finalized, he has come to deeply understand that “cash is king” through his interactions with the teacher. Whether for his own retirement or for planning for the next generation, liquid cash assets are far easier to manage and pass on than fixed assets like real estate, especially when dealing with cross-border tax issues, where the advantage of cash is even more pronounced.
  • Teacher James’s Reply: Absolutely correct. Liquid assets are simple and direct. You can’t wire-transfer a toilet to your son. One home to live in is enough; more properties only become heavy shackles.

Fu You Shi Tian Fu

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• Sharing:
  1. Reflections from Hualien Earthquake Relief: He volunteered in Hualien and witnessed a meatball-bun shop owner crying after the disaster: “My house is destroyed, but I still have to pay the mortgage!” This made him realize that a house is an extremely high-risk asset; a natural disaster can wipe out decades of hard work in an instant.
  2. The Parallels Between Investing and Zen Meditation: The picture of the little monk in the teacher’s presentation with the caption “It has nothing to do with me” reminded him of the “Silent Illumination Chan” he practiced in college. He believes investing also requires “silence” (not reacting to market noise) and “illumination” (clearly perceiving the fundamental truth of long-term growth). He summarized a mantra: “Don’t get attached to the good, don’t get averse to the bad,” and treat market fluctuations with equanimity.
  • Teacher James’s Comment: Investing is like life; it’s like “eating sugarcane from the wrong end”—it gets better and better over time. He shared a line from the Diamond Sutra for everyone to contemplate: “Let the mind arise without abiding anywhere.”

Fu43 (from chat)

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• Question: A 60-year-old friend has NT$7.5 million in cash and NT$18 million in high-dividend ETFs (yielding NT$1.6 million annually). Annual living expenses are NT$2 million. They are considering a 70/30 or 433 allocation and using a NT$7 million line of credit from a wealth management mortgage.
  • Teacher James’s Reply: Absolutely not. First, your assets are insufficient to support NT$2 million in annual spending. At a 6% dividend yield, you would need a NT$33 million principal to generate NT$2 million in cash flow; your total assets are only NT$25.5 million. Second, you are already 60 years old; you absolutely must not use a wealth management mortgage, the risk is too high. Your only option is to keep about NT$1.5 million in cash and invest the remaining NT$24 million entirely into a high-dividend ETF like 0056. Live off the dividends, and spend only what you have.

Jason

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• Question: He finds leveraged fund rebalancing strategies a bit complex and worries if he can execute them strictly in his old age, or if he can teach them clearly to the next generation. Furthermore, when he does rebalance, he feels internal conflict, thinking, “What if the market keeps going up?”
  • Teacher James’s Reply: This method is not complex at all; what’s complex is your mind. You struggle because “your mind abides in something” (心有所住), clinging to potential outcomes, which “gives rise to inner demons” (心生魔障). The solution is spiritual practice, to achieve a state where you can “let the mind arise without abiding anywhere.” This is just simple arithmetic; do what needs to be done.

IV. Key Quotes

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“Downturns are always temporary; only uptrends are forever. So your loss might be momentary… but if you miss out on the gains, that’s a permanent loss.” – Teacher James

This view emphasizes that in long-term investing, the opportunity cost (missing the upside) is far more detrimental than the paper losses from short-term market corrections.

“The more specialized your profession, the more fragile you are… The only thing that is antifragile is investing.” – Teacher James

This view explains the concept of “antifragility,” pointing out that highly specialized careers are very risky in the face of industry disruption, whereas capital investment has the inherent ability to continuously adapt to change.

“The unfolding of our lives is actually based on our own mindset. Whatever you believe the world to be, that is what it will become for you.” – Mao Mao

This insight shares the importance of personal mindset transformation, suggesting that believing you can be wealthy is the first step toward achieving financial freedom.

“Don’t stay in a broken elevator. We need to find a good one.” – TBOS (quoting Teacher James)

This metaphor illustrates that in investing, one should decisively abandon underperforming individual stocks (the broken elevator) and move to index funds with long-term upward trends (the good elevator).

“Tax is not the point. The point is that the assets should be able to appreciate, and the elders should be able to spend the money.” – Teacher James

This point, made when discussing how to handle elders’ assets, suggests that the core goals should be increasing asset value and improving the elders’ quality of life, rather than being overly fixated on potential future inheritance taxes.

“Because your mind abides in something, your mind is attached, and thus demons will arise.” – Teacher James

This view responds to a student’s concern about strategy complexity from a philosophical perspective, pointing out that fear and indecision in investing stem from internal attachments, not from the strategy itself.

“The house collapses, but the mortgage payments continue.” – Fu You Shi Tian Fu & Teacher James

This statement, drawn from a real disaster case, reveals the immense risk of real estate as an asset. Not only can its value drop to zero, but the associated debt does not disappear with it.

“Usually, people who say they don’t keep cash are the poor ones… Cash is air.” – Teacher James

This vivid analogy emphasizes the critical importance of cash reserves for investment survival, especially in retirement planning, where it serves as a lifeline against risk.

V. Summary

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This gathering provided a deep dive into the core elements of building an “antifragile” investment system. From macro-level mindset to specific operational tactics, Teacher James once again stressed the belief and discipline required for long-term investing. By comparing the case of borrowing for consumption versus spending principal, he clearly illustrated the vast difference in wealth growth paths. For investors at different stages, especially near-retirees, the teacher offered prudent advice on cash reserves and loan risks, using two vivid family financial cases to expose the traps and enlightened paths in the financial market. The students’ sharings were also exceptionally insightful, ranging from transformations in personal journeys and the practical application of selling property to invest, to the integration of Zen meditation with investment philosophy, fully demonstrating the community members’ shared growth in both wealth and spirit. The entire discussion was not just a lesson in investment strategy but a profound exchange on life planning and spiritual cultivation.