Thethree risksthat we should be thinking very hard when are investing over decades in the stock market:
1. Risk Of Large losses
Once we have locked in large negative losses it is very difficult to recover as most of us may have limited saving to keep adding bullets into our war chest to continue with the Game. So we must think very hard why Mr. Market is wrong and we are RIGHT before we keep averaging down on losses.
2. Risk Of Liquidity Needs We must think hard and think years ahead on how to meet our future liquidity needs over 5 - 7 years of market cycles; but can be unexpectedly longer.
We must avoid having to sell our assets at market low to meet our large liquidity needs and locked in large negative losses as in Point 1.
By selling our valuable assets at market low and locking in large negative losses at the same time; we can say bye bye to our investing goals.
Think way ahead how to meet your liquidity needs; especially the larger ones.
"Do or Do not. There is no try"
3. Risk Of Inflation over decades when inflation outlives our life FIRE - The new word in personal finance and investment dictionary.
Financial Independence, Retire Early
When your passive income exceeds your living expenses is FIRE!
Now you can voluntarily fire your job and your boss when you have enough FU$ or No Thanks$ to walk away from those "nonsenses" from you bosses. Enough is enough!
Sure or not when you are in your late 30s or early 40s?
You have decades of inflation ahead of your life.
When your passive income exceeds your living expenses is FIRE.
Last updated : 14 Sep 2020
I am 64 yrs old uncle living in HDB heartland who has achieved financial independence @ 56 and finally retired @ 60 from full-time job as employee on 1 Oct 2016.
Single household income since 1995 with three children.
Currently, two sons and one daughter are working.
I have been doing 21 years of long-term investing and short-term trading in Singapore stock market only since Jan 2000 so I am that so-called Panda or Koala in the investment world.
I am currently executing my Three Taps solution model to maintain sustainable retirement income for life till 2041 @ 85 yrs old.
Disclaimer: Stock trading involves significant risks. Create Wealth trader is not a licensed Investment Adviser and will not be responsible for any losses which you incurred. You are advised to always do your own homework before making any trading decision.