THE FORMULA OF SUCCESS

A lot would think that success is all about hard work and expertise. However, these only contribute to 20% of success. The majority of the work, 80%, is psychology. It is because,

A stock market trader would tell you that their most significant challenge in trading is not in the hours spent studying assets, and analyzing charts but in mastering their fears and greed.

Do you think successful people would be at the point where they are now if they told themselves they couldn’t do it? Obviously, it’s the contrary.

It is only our mind that limits our capabilities. When we say it is difficult, then it is. But when one says it can be done, then, it can be done.

Henry Ford once said,

Hence, when you tell yourself

I AM NOT RICH
I AM NOT CAPABLE TO DO IT
I AM NOT A CHAMPION
I AM NOT STRONG
I AM NOT POWERFUL
I AM NOT AMAZING

They become your reality.

This is why the first part of my coaching session deals with money psychology because I believe that no matter how effective a financial strategy is, it is bound to fail if one has a limiting mindset. 

So be aware of the power of your thoughts, and the words you invoke upon yourself since these can either limit or empower you. Choose your thoughts wisely because you will become what you think you are. 

or in the Christian perspective, 

“On earth as it is in heaven.”

It was at that point that I realized that trading itself is a spiritual journey. Then I asked myself, 

“If it is indeed a spiritual quest, how would you know that you are on track?”
“What are the milestones?” 

I had to look not only into my trading experience but also into successful traders’ journeys. With that, I was able to come up with The 7 Stages on Trading as a Spiritual Journey, which follows:

Stage 1. The Birth

This is the stage wherein you start hearing from people about the stock market (or forex, crypto, etc). You learn that they are earning a huge amount of money, but unbeknownst to you, a lot are also losing huge sums of funds.

Stage 2. The Exploration

With your curiosity, you start researching. You join groups, you attend workshops. You read books. You experiment with different assets, trading strategies, you begin to learn. You explore.

Stage 3. The Emergence of Ego

As you hone your trading abilities, you become confident, and you begin telling people how profitable you are in your trading and with your skills. You talk about it with pride, and of course, there’s nothing wrong with it until you cross the line – when it starts feeding your ego. 

For some, they get addicted to the praise and the compliments (and the Facebook likes), but for most, overconfidence creeps in. And when the market owns them, they are crushed. When that happens, others will simply give up. But for some, they would not accept defeat. They will continue to perfect their ways, they will explore new strategies again (and perhaps other assets). There’s nothing wrong with experimenting and practicing, for that is how we sharpen the blades, but unfortunately, the ego will fail them once more. They will be trapped between the cycle of exploration and the fall due to ego. A cycle much like Samsara. 

The egoic self will continue to grow as it thrives on fear and greed. 

“I cannot fail.”
“I cannot miss out.”
“I have to win.”

Stage 4. Awakening & Awareness

In the never-ending cycle between Exploration and Ego, you start realizing that the market humbles the best of us. We can never control the market. The market will decide on its own no matter how complex your trading setup is. As the famous American billionaire investor and hedge fund manager, once said, 

As you slowly discern that you are not in control of the market, that you have been feeding your ego all along, you begin to be conscious of its presence in you. With that awareness, you have been awakened. 

Stage 5. Acceptance & Renunciation

You can never eliminate what you think you don’t have. Hence, as you humbly accept the presence of your egoic self (which is the “false you” that you created in your mind) you begin to renounce it. And every time you feel (by virtue of awareness or mindfulness) that your thoughts or actions are feeding it again, you immediately abandon those thoughts or actions.

Stage 6. Consistent Practice

As you continue in your trading journey, it takes constant practice and discipline not only to improve one’s trading skills but to also keep the ego in check. As the saying goes,

For some, a solitary journey might work but you don’t have to be alone in this undertaking. It is also best that you have accountability partners or groups to help you stay on track.

Stage 7. Legacy & Contribution

For those who have already transcended beyond mastery, earning a hundred thousand or millions no longer matter to them. What they value most now is how to aid in the expansion of humanity’s consciousness. 

With the wealth they have amassed, they create projects which unite people, not divide. They continue to contribute to the world and leave a legacy with the hope that humanity will no longer promote war but peace and love.

I believe we all go through these stages, with no shortcuts. The 7 Stages, for me, illustrate how important intangibles are. Most of the time, a lot of us focus more on the technicalities of trading that we forgot about the emotions and psychology involved – which I believe have the greatest impact on the results. I have known people with very simple trade setups, just a few lines, but are now in the “Legacy & Contribution” stage. Their journey was not overnight. It took them years and they lost a lot too, even millions. But the important thing is, they were able to master themselves and now helping people all over the planet. 

Sometimes I ask myself at what stage am I in. To be honest, I really don’t know because I don’t actively trade anymore. I am more of a long-term investor, and I use platforms like this. Nonetheless, I believe that the 7 Stages are not only relevant to trading, or in our financial freedom journey. It is equally applicable in all facets of our life as we live each day towards a greater purpose: To leave a legacy of love and contribution. 

PS: If you are more of a science person, you can check Dunning-Kruger Effect.

2. IT MAKES SURE WE ARE THE ONES CHOOSING THE DIRECTION OF OUR LIFE — NOT OTHERS, NOT FATE, NOT THE MEDIA, ETC.

It is often easy to let others set our direction for us. We take a job because family or friends point us in that direction and then we follow the dictates of our bosses. We move in other directions because popular culture or the media tells us to do so. The simple truth is that if we do not set our own goals then we will find it too easy to follow a path set by others. This can lead to stress and unhappiness. We have a greater chance of happiness and fulfillment following our own path and pursuing our own goals.

3. GOAL SETTING MOTIVATES

While goals certainly give our lives direction, they also provide the motivation to get us through difficult times and choices. Perhaps going to college at night while working full-time may be stressful and difficult in the short term, but in the long run, being able to pursue the professional goals we desire will make it worthwhile.

4. IT MAKES SURE WE GET WHAT WE WANT IN LIFE

Goals also serve as the destination for what we really want out of life. For some people, goals are measured in money or material goods, while for others goals are measured in time or freedom. If we do not have goals outlined that suit our unique perspective on life it is easy to become sidetracked by life and others.

6. GOAL SETTING REDUCES STRESS

Just as goals save time they also reduce stress because using your goals to focus your life and choices makes it easier to make those choices. Should you take that new position at work? How does it match your goals?

7. IT GIVES A SENSE OF ACCOMPLISHMENT

Finally, goals give you a measurable sense of accomplishment (learn more about SMART goals here). Every goal you achieve, in fact, every step you take towards that goal, can give you a boost of energy and momentum to keep going. Each success powers you toward the next level of success.

Now go out and set your goals. To know more about Financial Freedom Coaching, book a free discovery call by clicking this link. 

A BOOK IS WAY CHEAPER THAN PAYING A COACH. BUT…

If we crunch the numbers in, at first glance we can always agree that books are way cheaper, and that coaching is expensive. Tony Robbins’ Mastery University cost me around half a million pesos ($10K), which excludes travel costs and accommodation since his events are conducted in the US or Europe. If you are going to buy his book, it will probably just cost you less than $30 USD – and that is just 0.3% of the Mastery University’s price tag.

I am not saying you should not be buying books. I am a fan of books, especially personal development ones. In fact, most of my shipment when I moved to Ireland was “my Dubai library”.

With books (and the internet), we can immediately find an answer. Whether that information is correct or not, we still have to do some digging though. However, getting the answer is just part of a bigger puzzle. If that piece fits in the larger picture, then it might be useful, otherwise, we must find the other pieces scattered everywhere. Where to find, how to find, and what to find are three big questions. Because more often than not, most of us try to look for pieces of information all over without even knowing what the bigger picture is. How can we piece them altogether if we do not even know what the whole thing looks like? Most of the time we are being tactical than strategic.

This is where coaching comes in.

TRIAL AND ERROR EQUALS WASTED RESOURCES

I realized that, for several years, I have been doing what we call in our Cebuano dialect, “tira pasagad” which can be translated as “striking haphazardly”.

This is, in itself, trial and error. The process is awfully expensive. It is a waste of money, time, effort, and other resources. And if you are going to add up all the costs, it will end up way more expensive than getting a coach.

Yes, there is joy and a sense of excitement in venturing into the unknown but why reinvent the wheel when there is already a proven, tested, and effective method to do things?

To put it in perspective, let’s say you got in front of you a sack of flour, a gallon of water, a cup of yeast, and a bag of salt. If you don’t have a recipe, imagine how many iterations you have to make for you to bake flavorful bread? Perhaps, 50 times? How much of the ingredients (plus time and effort) you think will go to waste? A LOT! Except, if you have a recipe to follow, maybe in less than an hour, you are already done with the best homemade bread you have ever tasted.

NO ONE-SIZE-FITS-ALL SOLUTION

A recipe, however, is a ready-made instruction for a specific goal: bread, cake, meals, etc. If the result is of your liking, that remains to be tested (or tasted). So, this means, that even having a recipe does not necessarily mean that it is what you are looking for or if it fits your purpose.

If a book or the internet tells you to save up 20% of your income and use 80% for your living expenses, do you think that 20% savings allocation is (more than) enough? How did you decide with 20%, is it because a book says so? Why not use 13% or 29%?

You see, the information we get from books, the internet, videos, etc. are general recommendations. These are not one-size-fits-all solutions. You cannot use an Olympic runner’s training plan if you are aiming to bulk up. You cannot just copy your neighbor’s hypertension prescription or blindly follow your friend’s investment strategy without really consulting an expert in the respective field.

Everyone, including you, has unique needs, goals, and circumstances. You cannot force someone to save up 20% of his income when one has too many liabilities to pay. Or have them invest in equities when one’s risk appetite is conservative. That is why it is important to have a coach because your “recipe” is customized to your needs and aims.

HOW A COACH CAN HELP YOU

Whether it is about personal finance, career, health, or relationships, our individual circumstances are unique, and that you should have a “recipe” specifically made for you to achieve whatever aims you have in life. Not just a copy-pasted template that may not be applicable for you and your situation.

A coach is not only a mentor but also serves as your mirror since he provides feedback especially on things that you fail to see on your own. Your coach is also your accountability partner. How many times have we set a goal but failed to follow through since no one is constantly checking on our progress? Perhaps, a lot of times.

It was only when I started coaching our fellow Filipinos that I realize how important having a reliable coach is. You will not only achieve your goals faster but since you are no longer “striking haphazardly”, you save time, effort, and resources thereby making trial and error way more expensive than hiring a coach.

Learn more about how to get your Financial Freedom “Recipe” by scheduling a free discovery call through this link.

I hope the above 10 questions on Life Insurance can provide some clarity. (Also, check out my other blog on  Things You Should Know Before Approaching An Insurance Agent)

Sometimes, we forgot to ask these questions because we don’t know what to ask in the first place. It is supposedly the insurance agent’s fiduciary obligation to inform us about the pros and cons of life insurance and lay everything out in front. However, they too have their own biases. There are some who are truly sincere about your well-being but there are also some who are just driven by the sales income. I do hope that you can find someone who you can truly rely on. 

With your ₱3,000 total contribution, you were able to purchase 90 shares of the stock. If you are going to sell all your shares on the sixth month at the current price of ₱50 per share, you will get ₱4,500 with a net profit of ₱1,500 even if the share price went down from ₱100 to ₱50! 

You were earning when the price went down; so how about when the price goes up? Will you still be earning? Here’s the scenario.

Assuming in the first month, the price per share is ₱10, your ₱500 monthly allocation can buy 50 shares. If the price goes up by ₱2 every month, up to the sixth month, you can buy a total number of 211.4 shares with your ₱3,000. If the shares are sold at the current price of ₱20, you will have ₱4,228 total value with a net earning of ₱1,228.

Similarly, with other scenarios.

WEAKNESS OF PESO-COST AVERAGING

No matter how the market fluctuates, you will still be earning along the way. The keyword here is fluctuation. The weakness of peso-cost averaging is when the share price never goes up but goes all the way down, as illustrated below. In this scenario, you would end up losing your money.

This is the reason why peso-cost averaging works best on a longer time horizon, at least 10 years or more. Though I have used a 6-month time frame as an example, in a real market sense, an equity’s price may only have a minimal change every month but considerable differences can be observed on an annual basis. Besides, the price may go straight down for months, but will most likely recover in the following years. Therefore, peso-cost averaging will not likely give you an advantage in a shorter investment horizon.

Also, when doing the unit-cost averaging strategy, make sure that you have chosen a fundamentally sound fund and/or company to invest in to lower the risk of bankruptcy or fund closure.

Now, the next question is this,

To answer this, let me quote from this study conducted by Vanguard about Dollar-Cost Averaging (DCA),

“We conclude that if an investor expects such trends to continue, is satisfied with his or her target asset allocation, and is comfortable with the risk/return characteristics of each strategy, the prudent action is investing the lump sum immediately to gain exposure to the markets as soon as possible. But if the investor is primarily concerned with minimizing downside risk and potential feelings of regret (resulting fromlump-sum investing immediately before a market downturn), then DCA may be of use. Of course, any emotionally based concerns should be weighed carefully against both (1) the lower expected long-run returns of cash compared with stocks and bonds, and (2) the fact that delaying investment is itself a form of market-timing, something few investors succeed at.”

Based on Vanguard’s study, if an individual has a lump-sum money readily available, then the person will benefit from investing it immediately. However, for those who don’t have such amount but are saving on a regular basis, then the peso-cost averaging will surely help.

Note: The content of this blog is taken from my book, This Way To Freedom. A Realistic Road Map In Achieving Your Financial Independence. You can purchase the book from Amazon. or get the PDF copy from this link. 

1. What is your biggest problem now when it comes to money? And why?
2. Why do you need to solve this money problem and how will it change your life as well as your loved ones?

RESULTS

There were only 60 respondents in this survey. I am not sure if this is a good representative sample considering that there are around half-a-million Filipinos in the UAE [GMI]. Nevertheless, hopefully, it will provide you some insights. Here is the summary.

PERCENTAGE OF RESPONDENTS SAYING THAT THEIR MAIN MONEY CHALLENGE IS HAVING OR LACK OF THE FOLLOWING:

INCOME & EXPENSES

47% of the respondents stated that they are struggling with their income due to the pandemic. Some of them lost their jobs while some incurred salary cuts. Others are also struggling with budget and spending more than what is allocated.

SAVINGS & INVESTMENTS

32% of the respondents answered that they do have savings but they just don’t know how to allocate it or where to invest their funds. The majority wants their savings to grow.

DEBTS

19% of the respondents are struggling to pay off credit card debts and/or personal loans. This is also aggravated by the loss of jobs with some of the respondents. A few also expressed regrets about taking the loan.

FINANCIAL EDUCATION

2% of the respondents said that they have invested money which ended up being a scam. 

PERCENTAGE OF RESPONDENTS HAVING THE FOLLOWING AS THEIR GOALS AFTER SOLVING MONEY WOES.

FINANCIAL SECURITY AND PEACE OF MIND

44% of the respondents are aiming for a worry-free living, peace of mind, and better financial security.

FAMILY WELFARE

32% of the respondents are focused on the well-being of one’s family. Children’s education, and being reunited with families is a common theme. Also, being able to provide for the family’s needs has been mentioned.

DREAMS & ASPIRATIONS

24% of the respondents mentioned several goals in life including early retirement, investments, businesses, properties, and be able to sustain a healthy lifestyle.

INTERPRETATION & SOLUTIONS

On the current financial challenges survey result, my initial thought before the survey is that one of the biggest challenges would be debt.  However, as shown, only 19% mentioned it but the reality is that majority is struggling with their lesser (or loss of) income and with too many expenses.

The immediate solution that I can think of to address this is to revisit the budget and lower the expenses as much as possible. One way is to cut non-essential expenses (e.g. subscriptions, unused gym memberships, post-paid to pre-paid phones). Decreasing or eliminating expenses will increase one’s net income. Having extra cash on hand contributes then in having that peace of mind as well as the immediate feeling of financial security.

For savings and investments, it is common that a lot of people are not able to decide where to invest their savings which end up not able to plan out properly for their financial security. The most likely reason for this is lack of knowledge. This can be mitigated by financial education. However, it is also best one is guided by a subject matter expert who qualifies to provide correct information related to a particular savings or investment strategy. For example, if you would like to know more about insurance, then approach an insurance consultant. They will be able to provide more insights and reliable information compared to peers who are not in the industry.

Debts can really be stressful especially if one’s income is not enough or stable. If one has been delayed in payments, call your bank to help you restructure it. They might help you lower the interest rate and/or decrease the amount of monthly payment. The latter though will most likely extend your loan term but might still help you manage and stretch your finances. There are other methods in eliminating debts, checkout my Biyahe ni Bai video through this link. You can also check out this other blog on how I freed myself from any credit card.

CONCLUSION

These challenges are really common and unfortunately what makes them difficult to overcome is the lack of knowledge, guidance, and support.

We can always take action, but the question is, are we taking the right action? I truly believe that trial and error is very expensive. It is not only a waste of money but time, effort, and resources. This is the main reason why I serve Filipinos in providing Financial Freedom Coaching. I provide a realistic blueprint and actionable strategies on how to achieve the financial security that everyone deserves without wasting so much time, effort, resources, and money. Whether your biggest challenge now is having lesser income or too many debts, or not knowing where to let your money grow, that is all covered in the coaching session. If you would like to know more about it, feel free to schedule a Free Discovery Call by clicking on this link.