Out of WACC

Investing: Time Is Power

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Yesterday, I wrote an article about how investing is the easiest side hustle ever. Now, let’s crunch some basic numbers for illustration purposes.

It’s all magic. Anyone can become a millionaire without special anything. All you need is money, and … abracadabra … magic works itself. That magic is compounding, like a snowball rolling down the hill.

Albert Einstein – Compound Interest quote (not proven he actually said it)

As Einstein once said, “the most powerful force in the universe is compound interest.” Well actually, nobody can confirm the quote’s true author. It’s just credit to Einstein himself to give the quote more weight. More weight as in the snowball rolling down the hill. More weight as in your investment account balance increasing.

Past S&P 500 Returns

Over the past 40 years (1978 to 2017), S&P 500 has had an inflation-adjusted annualized return rate of 8.11%, after having dividends reinvested.

After dividends and compound interest, $1,000 investment in 1978 would be $22,661*.
Over the past 30 years (1988 to 2017), $1,000 investment would be $9,595*.
Over the past 20 years (1998 to 2017), $1,000 investment would be $2,623*.
Over the past 10 years (2008 to 2017), $1,000 investment would be $2,054*.

* Note the investment values above are before any brokerage fees and taxes.

That just includes the initial investment. It doesn’t include periodic investments. Let’s include periodic investments as an example.

Time Is Power

Below you will see two people, Jacob and Kelly, making a periodic investment until they retire at age 65. The only difference is that Jacob starts investing at age 20. Kelly starts out late, at age 30.

Their investment will yield inflation-adjusted 5% annual return, and 2% dividend yield which automatically gets reinvested.

Jacob started out earlier and invested $20,000 more than Kelly. However, he came out way ahead of her by a whopping $499,659. Time is money. The power of time and compound is real. Very real!

Start investing as soon as you can. The earlier, the better.

Start investing as much as you can. The bigger, the better.

Before you close this article, one more thing. You notice how a male (Jacob) made way more money than a female (Kelly)? Highlighting income inequality.

Oh, wait! One more thing. You notice how a female started out so late than a male? Highlighting other gender gaps across four thematic dimensions: Economic Participation and Opportunity, Educational Attainment, Political Empowerment, and Health and Survival.

Anyway, thank you for listening today. I mean reading. Have a nice day.

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Investing: Easiest Side Hustle Ever

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There are two ways to make money: humans and invested money. Humans work to make money. That money either gets spent or invested. We need both!

Lack of Financial Literacy

The problem is that almost half of Americans don’t own stocks. From 2009 to 2017, the average percentage of Americans who owned stocks was 54%, down from an average of 62% eight years before. The figure includes individual stocks, 401(k) plans, shares in an equity mutual fund or an IRA account. Understandably, income is highly correlated to U.S. stock ownership rates.

The problem lies in the lack of financial literacy. It’s in human nature to spend money to fulfill our present needs and wants. The emotional desire to spend more now throws out the need to think long-term. (For example, don’t shop while you’re hungry). Investing is savings since you didn’t spend the money on a $3 coffee or $1 bottled water.

Invest = Save

With that being said, side hustles are needed. The point of side hustles is to make extra income and diversify your cash flow. Most side hustles takes your time. Most side hustles hire you. The only side hustle that doesn’t require time and you are the boss is investing.

By investing, I don’t mean in penny stocks and individual stocks. By investing, I mean index funds or ETFs. By investing in index funds/ETFs, you cannot be fired, nor do you need to take time out of your schedule to work on it.

By investing in the market, there is no income tomorrow. By investing in the market, it increases your probability of financial stability (and happiness?) in 5-45 years. If investing now, you’re not spending. By not spending, you may not feel happier in the present. But most of the times, we buy things we don’t need. Investing increases the probability of better future consumption in which life circumstances might be worse than it is now.

Fun/Sad Fact: There’s a couple in NYC making $500,000 a year and only has $7,300 left to save. That’s still a lot, but only 1.46% of their gross income. They could have more savings if they were disciplined. (I don’t know them personally, so they still could be disciplined).

Stay Disciplined

Building wealth is so easy, except it is hard to do it consistently. There are two types of people in the world; disciplined investors and non-disciplined investors.

In order to be disciplined, it’s important to think long-term by having assets allocation in sync with your current life situation, and by doing that you’re likely to maintain the portfolio in market volatility. After all, the market always goes up in the long-run. After all, the Dow Jones index will hit a million (current: 26,500.00) in 99 years.

Historical logarithmic graph of the DJIA from 1896 to 2018.
Source: Wikipedia

Another way to stay disciplined? Let the technology invest for you. Most investment accounts allow automatic investments. Even little as $20 a week can add up in the long-term. Apps like a micro-investing Acorns app is helping an average-Joe invest more than he usually would, without the emotional attachment since he doesn’t really notice the money leaving his checking account.

Sure, investing has its risks. But, stick to long-term. Non-invested money loses its value due to inflation. Take the risk and that risk will reap your rewards.

When the stock market increases, the rich get richer, so do you. (maybe you’re already rich so you belong in the rich category. Well “rich” is a subjective term to everyone). Your wages may not grow, at least your investments are growing.

Just wait and you’ll get your reward. While you wait, do other things such as other side hustles that require your time. Or go hiking. Or learn to play guitar. Whatever interests you.

I didn’t even mention saving in an employer-sponsored retirement account. I mean, 3/4 of U.S. employers offer 401(k) match. That match is FREE MONEY! Freeeee, something Bernie Sanders would love.

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Anheuser-Busch InBev: Love The Beer Giant (Seeking Alpha Article)

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Summary

There’s a possibility of higher synergies from AB InBev’s acquisition of the world’s second larger brewer SABMiller.
AB InBev has a massive presence across the world, that continues to grow with 59% of revenue coming from emerging markets.
AB InBev is diversified in terms of price and taste, with its High End unit leading the way with both revenue and EBITDA growth.
AB InBev is financially much stronger than its peers, with operating margin double of its peers and EBITDA margin highest of major consumer goods companies.
Massive debt load is not a concern.

To keep reading more, click here for the SA article. Or copy/paste: https://seekingalpha.com/article/4199719-anheuser-busch-inbev-love-beer-giant

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How Do You Define Success?

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It’s been a while since I posted. I am back! Did you miss me?

Due to a current internship at a financial institution, I won’t post any security related ideas. However, I wanted to talk to you all about something.

How. Do. You. Define. Success?

It is a question I have asked over 50 people in the past five weeks. The respondents’ age range from 17 to about 50, and is in or pursing profession in financial services to journalism sector. The answers are very different, and there seems to be a pattern.

Low range spectrum aged (17-24) people’s responses are generally “money money money.”
Midrange spectrum aged (25-33) people’s responses are generally “being fulfilled.”
Upper range spectrum aged (34-50) people’s responses are generally “being able to care of my family.”

See a pattern? I bet you do. Wait for a second, I said their “responses are generally.”

Some people in all three spectrums of age said “being happy.” Common answers to be happy include family, friends, and career (power and/or money).

How do you define success? I believe there are two different categories of success: Professional success and personal success.

Professional Success

I have achieved a professional success when I enjoy my work and people are able to criticize without being afraid of retaliation.

Past criticisms and experiences from trading to internships are the main reasons my professional success is higher than before. Turning their critical feedback into a compliment has allowed me to feel good and improve.

But then, there’s another question. How do you achieve that professional success? That’s where your goals come in. Ask yourself, “Will achieving my goals help me realize my definition of professional success?”

Personal Success

I have achieved a personal success when my quality of relationships is high.

Past criticisms and life experiences from in-depth conversations to heartbreaks are the main reasons my personal success is higher than before.

Once again, there’s another question. How do you achieve that personal success? That’s where your goals come in. Ask yourself, “Will achieving my goals help me realize my definition of personal success?”

PaP Success

Does professional and personal success intersect? Yes. If one is missing, you might not feel “fulfilled.”

Which one is more important?
Does your professional success depend on your personal life?
Does your personal success depend on your professional life?

The answers are different for everyone. It is up to you to determine for yourself. I cannot define them for you because it comes from own experiences. It is possible for my answers to the questions to change anytime.

Goals Success

No one is perfect, but everyone is perfect in their own way.

Know Yourself!

Love Yourself!

Seek experiences and criticisms!

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Altria: 5 Reasons To Buy (Seeking Alpha Article)

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Forgive me, Father, for I have sinned. I invested in a sin company, specifically the Big Tobacco.

Over the path month, I have been researching consumer goods companies. Initially, I believed I was going to invest in a recession-proof company like Procter & Gamble (PG) or Clorox (CLX). Not even close. I’m going to be a bad boy, set aside the social responsibility consequences, and invest in a sin stock. As Gordon Gekko said in the famous “Wall Street” movie, “greed is good.”

To keep reading more, click here for the SA article. Or copy/paste: https://seekingalpha.com/article/4139099-altria-5-reasons-buy

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