Lesson 14: Mitigate Bad luck as investor: Diversify with enough low-risk assets(e.g. bonds), Withdraw less during bear markets. Increase your income sources.

Bad Luck and investor

Lesson 7: Convert your human capital into financial capital, Work physically to earn and save earned money to invest & convert into assets.

Human capital

Lesson 9: REIT’s is also a good option to own real estate without having to manage the property personally., it gives average compounded annual return of (10%-12%)

REIT's the least know real estate

Lesson 2: Another thing that i learned from this book is that we should differentiate our investments based on the goals and requirement of money, for example- if you want money within 3 years, you should invest it in cash equivalents and cash, if you want the money in next 5 years then you should invest or save in bonds, and you should only invest the money in stocks when you dont need the money for longterm

Goal based investing approach

Lesson 4: Crossover point- When our monthly investment income exceeds our monthly expenses we can retire.

The cross point

Lesson 16: Use “Buy & hold” strategy, Never try to avoid “drawdowns”.

Hold on

Lesson 3: The 4% Rule states that, we can retire when our annual spending is equal to 4% of our total savings. To retire, we should have at least 25 times of our annual spendings as our total saving….

The 4% Rule

Lesson 6: Inflation: it is a silent killer, inflation rate of 5% annually, cuts purchasing power in half in 14 years.

The Silent killer

Lesson 12: average in strategy always underperform the buy now strategy.Lesson 13: Just keep buying instead of averaging and waiting for dips.

Dollar cost Averaging

Lesson 10: Small business- expected returns on small business is 20% to 25% highest compared to all other assets class.

Returns on small business

Lesson 8: Bonds and other assets should make upto 20% of your portfolio. they will help with portfolio rebalancing. Investment property such as plot, house and apartment should be bought on debt.

Bonds and other investments

Lesson 17: a 33% drawdown in market takes 50% gain to get back to even, Formula: Expected annual return= (1+% Gain needed to Recover)^(1/Number of years to recover)-1 , by using this formula if the market recovers in 1 year we can gain 50% rise on portfolio, in 2 years 22% gain, in 3 years-14%, in 4 years- 11%, In 5 years- 8%.

Drawdown and gains

Lesson 1: The 2x rule to spend money guilt free, this rule states that whenever you want to make a big purchase make sure you invest the equivalent amount in an appreciating asset. pankaj pawarJan 16 (edited)

The 2X Rule

Lesson 5: formula to calculate Monthly “ROI” = (1+annual return)^(1/12) - 1

Return on Investment

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Bad Luck and investor

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