00542 A 2.5% retirement withdrawal rate is key; QQQ is not about tech, it's about the strongest companies! The investment focus isn't on industry classification, but on the correct logic for long-term wealth building

I. Main Topic of the Session

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The core of this class revolved around two key points: first, introducing the proper use of the high-dividend ETF QQQI for retirees and investors needing cash flow, emphasizing its role as a supplementary cash flow tool rather than a substitute for cash itself; second, through in-depth analysis, clarifying the common misconception about QQQ (Nasdaq 100 Index), pointing out that its investment logic is to “invest in the strongest companies of the moment,” not limited to the “high-tech” sector. Teacher James used examples and a historical perspective to explain the dynamic adaptability of the index and reiterated the core investment philosophy of holding for the long term and ignoring market fluctuations.

II. Briefing Content

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Reminder: Beware of Scams

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• Teacher James once again reminded everyone that scam groups are continuously using his name and profile picture to impersonate him.
• The teacher emphasized that he has over 4,000 followers, while the scammers only have a few dozen, making them easy to distinguish.
• Initially, scammers may imitate the teacher’s tone, even using AI tools to answer questions, but their ultimate goal is to defraud people of money or request to manage their accounts. Please be vigilant and do not engage in private chats or send money to any “James Chan” who actively contacts you offering investment advice.

Investment Philosophy: Simple, Firm, No Forecasting

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• Market Irrelevance: Market volatility, international situations, economic data, and company earnings reports are all irrelevant to our investment decisions.
• Core Strategy: The only correct strategy is to “buy whenever you have money, hold for the long term, and never sell.”
• Investment Target: Do not invest in individual stocks; focus on broad-market index funds to avoid the risks associated with individual company earnings and operations.
• Risk Awareness: The market can drop by 50% or even 80% at any time. Investors must manage their own risk and ensure that the funds invested are for the long term and will not be needed.

QQQI: A Cash Flow Tool for Retirees

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• Target Audience: QQQI is suitable for those who are retired or need a stable cash flow, especially when your annual expenses exceed 2.5% of your total assets.
• Functional Positioning: QQQI is a tool to generate cash flow, but it cannot be equated with cash. Your emergency fund should still be kept in highly liquid assets like money market funds (e.g., 00865B).
• Allocation Scenario: If your retirement assets are less than 40 times your annual expenses (i.e., your withdrawal rate is higher than 2.5%), you can pair it with a portion of QQQI to increase overall cash flow yield to meet living expenses. Young people or investors still in the accumulation phase should continue to invest in growth-oriented index funds like QQQ, 00662, etc.
• Practical Application:
  • In the United States, QQQI can be held in both retirement and individual accounts.
  • In Taiwan, you can purchase QQQI through a sub-brokerage (such as Yuanta, Fubon, Cathay). Most of the dividends distributed can be reclaimed through tax refunds.
• Case Study: A friend of the teacher followed his advice early on, sold his house, and went all-in on QQQ (00662). His assets grew by 1.5 times in five to six years, achieving financial freedom. He now enjoys a high-quality retired life. This stands in stark contrast to those who work their entire lives for a house, a car, and an insurance company.

Analyzing QQQ: Investing in the Strongest Companies, Not a Pure Tech Fund

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• Dispelling the Misconception: Many believe that investing in QQQ is investing in “American high-tech.” This is not entirely accurate. Truly pure technology sector funds are like XLK or VGT, but we do not recommend investing in any sector-specific funds.
• The Essence of QQQ: QQQ invests in the 100 strongest companies listed on the Nasdaq Stock Exchange. It is an index without a “personality”; its only criterion is “strength.”
• Dynamic Adaptability:
  • In the current era, the strongest companies happen to be mostly high-tech firms.
  • However, if we went back 40 years, the strongest companies might have been those making radios, televisions, or trains, and they would have been included in the index. The definition of “high-tech” changes with the times.
  • The index also includes companies like Costco and Starbucks, which are not high-tech but are extremely powerful.
• Core Viewpoint: We invest in QQQ because we believe that human progress is driven by these strongest companies. We are investing in a mechanism that dynamically selects the strongest players, not betting on a specific industry. Obsessing over whether it is a “high-tech fund” is pointless; what matters is its excellent long-term performance.

III. Q&A Session

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Momo

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• Sharing: Discussed the process of stock pledging at HSBC in Hong Kong. She found HSBC’s loan-to-value ratios to be relatively conservative (70% for underlying stocks, 90% for cash, leveraged ETFs cannot be pledged), which is lower than in the US or Taiwan.
• Question 1: She designed a low-risk allocation of 50% Nasdaq and 50% cash (Beta=0.5), with annual expenses accounting for about 3% of total assets. She wanted to confirm if this approach is safe and whether using the cash portion would create risk. Additionally, she heard that HSBC uses the entire account as collateral, rather than differentiating by asset type, and wanted to verify this.
  • James’s Reply: The pledging rules at HSBC Hong Kong are identical to those in the US. It’s normal for leveraged funds to have no pledge value. She has two options: 1. If taxes are not a concern, she can build a 4-3-3 portfolio within HSBC, buying Hong Kong-listed leveraged ETFs and rebalancing. 2. To avoid domestic capital gains tax, she could, like other students, buy and sell leveraged ETFs through an overseas broker like IBKR, but she must be mindful of potential future US estate tax issues. The teacher emphasized that when you need money, you should “borrow” from your credit line, not “sell assets.” A single withdrawal should preferably not exceed 10% of total assets, and always ensure your cash position is greater than your total liabilities; this is very safe.
• Question 2: She is helping her mother with financial management and, to give her mother a sense of involvement, is debating whether to open a Joint Account or manage it herself and provide regular updates.
  • James’s Reply: There are several options, depending on her mother’s preference. They could open a joint account; she could open an account in her mother’s name, and her mother could sign a Power of Attorney for her to operate it; or she could open it in her name and just share the login details so her mother can view it anytime. The simplest way is to show her the monthly statement and discuss the account’s status together.

Zhihua Wang

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• Question: Is the dividend yield of QQYI fixed? He observed it changed from 12% last week to 13.64% this week.
  • James’s Reply: The dividend yield is related to market volatility, so the amount paid out each month will vary slightly, but the annual total is generally stable between 10%-13%. It is not fixed. The teacher also demonstrated live how to use ChatGPT to calculate asset allocation ratios: by inputting the expected returns of different portfolios (e.g., 2.5% for a 4-3-3 portfolio, 11% for QQQI), the AI can help you calculate the capital proportions needed to achieve a target return rate (e.g., 4% or 6%).

Jet

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• Question: Does the teacher have any recommended retirement locations in the US? The requirements are safety, good climate, and few natural disasters.
  • James’s Reply: (Jokingly) You’re welcome to be my neighbor in Cupertino, California. It’s next to Apple’s headquarters, very safe, our area has no wildfire issues, and there are many excellent hospitals.

Tianluzhixia

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• Question: He is currently in South Korea and learned that the stock pledging interest rate is around 4.5%, which feels higher than in the US and Taiwan. Is it still worth doing?
  • James’s Reply: 4.5% is very cheap! The rates in the US are now up to 6%, so 4.5% is a very good rate and completely worth doing. South Korea has a well-developed financial system, and being able to buy 2x leveraged ETFs is also great.

Wendy

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• Question: She is a citizen of mainland China but has accounts and funds in mainland China, Hong Kong (Standard Chartered Bank), and IBKR (opened previously in Canada). She feels her asset allocation is chaotic and doesn’t know how to distribute it.
  • James’s Reply: First, as a Chinese tax resident, it is not advisable to keep large assets in IBKR due to the risk of US estate tax; the funds should be consolidated into a Hong Kong account as soon as possible. Second, it’s important to distinguish between “margin financing” at mainland brokers (borrowing money to buy stocks, cash cannot be withdrawn) and “stock pledging” at Hong Kong banks (collateralizing stocks to borrow cash for spending). He advised her to keep about 1 year of living expenses in China, 2-3 years of cash in Hong Kong, and invest the majority of the remaining funds in the Nasdaq 100 index. She could allocate a small portion (e.g., 10%) to a 2x leveraged ETF since she is still young and not yet retired.

Liang

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• Question 1: An internal staff member from a free tax filing software platform she uses in Canada contacted her, pointing out that her mutual fund fees were high and promoting investment advice to her. She felt this was a violation of her privacy.
  • James’s Reply: This is most likely because she agreed to the user agreement upon registration, which included a clause allowing the platform to use her data for internal marketing. This kind of investment advice is a “scam”; just ignore it. He re-emphasized the first rule of investing: stay away from any advice from financial advisors and banks.
• Question 2: She shared a news story from Canada where a couple passed away in the same year, leaving their children with a massive tax bill on their RRSP (Registered Retirement Savings Plan) and vacation home. This made her feel that estate planning in Canada is very difficult.
  • James’s Reply: The teacher expressed sympathy for Canada’s high-tax environment and noted this is one reason he does not recommend immigrating there. This sparked a lively discussion about Canadian taxes (such as the deemed disposition at death, capital gains tax, gift tax, etc.), highlighting the complex realities of wealth planning in different countries.

Vicky

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• Question: She made an operational error during a trade. She intended to buy 12 shares of 00865B but ended up buying 12 lots (12,000 shares), forcing her to use her stock pledge loan to cover the funds, which raised her debt ratio to 14%. She asked if she should hold these extra bonds and pay back the money later.
  • James’s Reply: Absolutely not! In investing, once you make an operational mistake, you must correct it immediately and get back on your original planned track. You cannot let a mistake stand. This was an unplanned, passive borrowing act, which is wrong. She should sell the extra bonds as soon as possible and pay off the pledged loan.

Meihao Weilai

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• Question: She observed that during recent market volatility, her leveraged ETF portion deviated from its target allocation. She had an impulse to rebalance but resisted because it wasn’t her scheduled annual rebalancing time (December/January). Now that the market has rebounded, she is wondering if she made a mistake. She wants to confirm if she should strictly adhere to the once-a-year discipline.
  • James’s Reply: Yes, you must adhere strictly. You absolutely cannot act based on short-term market fluctuations, or you will become a short-term trader. The discipline is to operate only once a year, pick a time (like December or January), get it done, and then you are finished until the next year. The practice of investing is to reach a state where you don’t look at your account and are unaffected by market sentiment.

Jenny

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• Question 1: She plans to open an account at HSBC Hong Kong for pledging, using a 4-3-3 allocation. She wanted to confirm if she still needs to follow the principle that the “total pledged loan amount should be less than the cash portion (30%)”?
  • James’s Reply: Yes, for absolute safety, you should follow this principle.
• Question 2: She currently has an IBKR account in Canada. After opening an HSBC account, should she keep both accounts and operate them in parallel?
  • James’s Reply: Not recommended. She should consolidate all assets into the HSBC Hong Kong account. Keeping the IBKR account will always expose her to the risk of US estate tax. This “leg” is a “lame leg” that will need to be “amputated” sooner or later, so it’s better to deal with it now. He suggested selling the assets directly in IBKR and transferring the cash, rather than attempting a complicated asset transfer.

Doris

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• Sharing: No particular questions, just came on to wish the teacher and classmates a Happy Thanksgiving.
  • James’s Reply: Thank you, glad you came on.

Liuxiaojuan

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• Sharing: Accidentally pressed the button to come on stage and said hello to the teacher.
  • James’s Reply: Hello.

Rosemary

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• Sharing: Also pressed by accident, wished the teacher a Happy Thanksgiving.
  • James’s Reply: Okay, thank you.

Qing

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• Sharing: He observed some investment bloggers on YouTube and found that they privately admit their most profitable business is actually “teaching” and “memberships,” not their own investment operations. He used this to comment on Teacher James’s “Buddha-like heart” for teaching for free.
  • James’s Reply: Thanks for sharing.

Evelyn

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• Question: She has made up her mind to sell her primary residence to invest but is facing a huge psychological barrier. She calculated that the future rent would be about the same as her current mortgage payment, but her living space would shrink to one-third of its original size. This makes her feel like “life is going backward,” as if she is “sacrificing today’s quality of life for an imaginary tomorrow.”
  • James’s Reply: This is a matter of changing your perspective. By selling the house, you gain a large sum of cash to invest, which means your assets start working for you. A smaller living space means a simpler life, less cleaning, and you can spend your time and money on improving experiences. More importantly, this is a short-term “sacrifice.” Five or ten years from now, when your invested assets have doubled or grown, you can use the returns to rent a much larger and more luxurious place than the one you sold. This isn’t “enduring hardship”; it’s “taking nourishment” for the sake of exponential future freedom.

Suwei

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• Question: He saw an AI video on YouTube imitating Charlie Munger, claiming that QQQ and SPY are overvalued because too many people are buying them, and their prices have detached from the actual value of their constituent stocks, with future returns unlikely to exceed 10%. He is confused by this.
  • James’s Reply: This is typical nonsense. First, the source of the video is questionable; it’s likely AI-generated. Second, the “price is too high” argument has been made every year for the past decade, yet the market keeps hitting new highs. In the long run, QQQ’s annualized return will reach 15% or even higher. Investors need to have critical thinking skills. If you can’t distinguish the authenticity of information, the safest approach is not to listen or watch, but to simply execute your established investment strategy.

Cherry

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• Sharing: She is currently traveling in Barcelona, Spain, and shared her observations of the relaxed, enjoy-the-moment attitude she saw in Europe. She believes that Chinese culture often makes people too tense, only knowing how to work hard without relaxing. She encouraged everyone that money is a tool for improving quality of life and experiencing the world, not just for accumulating numbers. The brand new, high-quality hotel she stayed in locally cost only about $100 USD per night, proving that without being tied down by property, one can live very well all over the world.
  • James’s Reply: A very good sharing.

Unnamed Student (Singapore)

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• Question 1: She works in China and lives in Singapore and wanted to confirm her investment strategy. Should she adopt a leveraged strategy of 60% QQQ + 20% pledge + 20% cash, or since she still has an income, should she go all-in on QQQ and invest a fixed amount monthly?
  • James’s Reply: For an investor who is new to this concept and unfamiliar with stock pledging, it is recommended to use a simpler method: keep one to two years of living expenses as cash, and with the rest of the money, “buy whenever you have money” in QQQ. Do not engage in pledging.
• Question 2: Her child is 6 years old, and in Singapore’s highly competitive environment, she feels very anxious. On one hand, she wants her child to become elite, but on the other, she feels that in the age of AI, children should be allowed to grow up happily.
  • James’s Reply: A 6-year-old child doesn’t need to learn anything; their only job is to play. Don’t worry about “losing at the starting line”; in both investing and life, you need to “win at the finish line.” Forcing a child to learn will not lead to success. You should take your child to experience the world (travel, museums, libraries) and let him discover his own interests. With hundreds of millions in assets, are you worried your child won’t have food to eat? Letting him develop naturally is the best way.

Unnamed Student (House)

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• Question: He once again raised concerns about selling his house. He calculated his situation and believes that after selling the house, the principal invested in QQQ would need five to six years of “hardship” to double, by which time he might not even be able to buy back his current house.
  • James’s Reply: This is classic short-sightedness. The teacher did a 30-year calculation for him on the spot: assume he sells his house now and gets back 180,000 in principal, with the house valued at 300,000. In 30 years, at a 6% annualized growth rate, the house will be worth 1.7 million. But the 180,000 principal invested in QQQ, at a 15% annualized return, will become 12 million in 30 years. 1.7 million versus 12 million, which one do you choose? The so-called “hardship” is your own imagination. Renting can offer more freedom; you can rent a luxury apartment with a swimming pool and gym, and your quality of life might even be higher.

Unnamed Student (Property)

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• Sharing: She discovered that flipping “pre-construction properties” in Singapore offers very high returns. With a 25% down payment, the profit from the property’s appreciation in three to four years can exceed the principal, making the short-term return rate seem higher than QQQ’s.
  • James’s Reply: If you don’t believe it, you can go and try. But buying and selling property has transaction costs (6%) and taxes. Many people have already suffered this loss; buying a house will keep you poor for a lifetime. If you want to verify it for yourself, then go ahead.

Meng

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• Question (from the comment section): My assets are less than 10 million, my monthly income is 120,000, and my expenses are 100,000, leaving me with a monthly cash flow of 20,000. Can I, as soon as I receive my 120,000 income each month, immediately buy 100,000 of 00865B and 20,000 of 00662, and then immediately pledge them to borrow 100,000?
  • James’s Reply: No! Absolutely do not do this. You can’t possibly invest 100,000 and expect to borrow 100,000 back; the risk is extremely high. Moreover, your allocation is 80% bonds, which has a very low Beta and poor returns. It’s not worth borrowing money for at all.

IV. Key Quotes

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Selling your house isn’t enduring hardship, it’s taking nourishment! You’ll understand in the future. – James Chan Context: In response to student Evelyn’s psychological struggle about her living space shrinking and feeling a decline in quality of life after selling her house, Teacher James used this vivid metaphor to clarify that this is a short-term adjustment for massive future wealth growth, an act that nurtures the future.

We don’t need to win at the starting line; we just need to win at the finish line. – James Chan Context: When answering a student’s question about how to educate her 6-year-old child in Singapore’s fiercely competitive environment, the teacher emphasized the importance of letting children grow up happily and discover their interests, opposing premature, “involution”-style education.

When you have money in the bank, the bank cares a lot about me. … I also owe the bank money, I owe them a lot. … (But) I’m spending my equity. – James Chan Context: When discussing the relationship between property and banks with a student, the teacher clarified the correct relationship the wealthy have with banks: not as debtors passively repaying loans, but as asset owners actively using their assets (through pledging) to generate cash flow.

In investing, once you make an operational mistake, you must correct it immediately and get back on your original planned track. You cannot let a mistake stand. – James Chan Context: When instructing student Vicky on how to handle the mistake of buying too many bonds, the teacher stated unequivocally the only correct principle for dealing with errors.

You should listen to his philosophy, not his stock prices. If they ever talk about stock prices, that’s nonsense. – James Chan Context: When commenting on the AI-generated “Charlie Munger” video circulating online, the teacher taught everyone how to selectively absorb information, focusing on learning the mindset and life wisdom of investment masters, rather than getting entangled in their (possibly fabricated) predictions of specific stock prices.

Teaching is the most profitable. – Qing Context: Student Qing shared his observation of some investment bloggers, noting that they themselves admit their most profitable business is running courses and memberships, not their own investing, which highlighted the selflessness of Teacher James’s free sharing.

Your money allows you to stay in high-quality hotels all over the world. … You really have to slowly learn to adjust your energy, to truly treasure yourself a bit more, to love yourself a bit more. – Cherry Context: Student Cherry shared her insights while traveling in Europe, encouraging everyone to use their wealth to experience the world and improve their quality of life, rather than being shackled by material possessions (like a house).

V. Summary

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This session was rich in content and highly practical. Teacher James not only clearly defined the applicable scope of the tool QQQI, helping those planning for retirement to better construct their cash flow, but also once again clarified the fundamental investment logic of QQQ, strengthening everyone’s confidence in long-term holding. The Q&A interaction was particularly brilliant, ranging from specific cross-border account management to profound analyses of investment psychology. The repeated debates on “selling a house to invest” were especially notable, where the teacher, through firm logic and highly persuasive metaphors, helped students overcome the fear and doubt associated with transitioning from traditional concepts to a modern investment mindset. The entire discussion emphasized the critical role of discipline, critical thinking, and a long-term perspective for investment success.