Recently, the big A has been performing well. Although I haven't gone back to play, I have been paying attention to it to some extent.
While flipping through my old research notes today, I suddenly came across an article by Li Jie (Crystal Fly Swatter). I wonder if anyone in the crypto world knows him. I had previously read his published book (The Path to Advanced Stock Market: A Retail Investor's Self-Cultivation).
This note mainly discusses investment plans at different stages of life. I think it is quite suitable for our crypto world. When entering the market or when the principal is not much, it is worth taking a serious look, as it may provide a clear positioning and planning for the future.
"I have always believed that investment is actually a holistic planning matter. It is far more than just picking stocks and watching the market, especially from a long-term perspective. Different stages of life will have some distinctions in personal financial planning and investment focus."
(Text begins👇, parts marked with 👀 are not original text)
First, the stage of wealth preparation.
"Mainly for young friends who have just started working. The most urgent thing at this stage is to quickly have a certain amount of principal and to begin to engage with and learn about investment."
Blindly falling into the securities market is very unwise. First, the principal is too small to grow at all. Second, life experience is too shallow to have any profound understanding. Third, there are many possibilities for development at a young age; neglecting one's main career and cutting off one's own path is also very unwise.
The key word at this stage is "learning, accumulating, exploring". The best outcome is to let one's abilities match the principal, so that when one has money in the future, they at least have the ability and understanding to invest.
👀 I believe this is also suitable for the crypto world. Newcomers in the crypto space do not have a high trading foundation; their trading skills and project research abilities are limited. Rather than diving headfirst into trading, it is better to focus on accumulating principal while trading with a small position, experimenting, and gaining experience.
Second, the stage of qualitative change in wealth.
"Mainly for people who have been in the workforce for around 10 years. For those with some savings (ranging from 200,000 to 500,000), the most important thing at this stage is to find investment varieties that are willing to take heavy positions where long-term opportunities far exceed risks, and the growth elasticity is very good. At this point, diversifying investments means saying goodbye to one's own wealth accumulation. However, at the same time, it is essential to balance the development of one's main career; one must never cut off their back path."
This stage is the key stage of qualitative change and is also the hardest stage of life because one must balance investment and business. One must grit their teeth and persist.
Persisting through this will lead to a completely different sky. If one cannot persist, this life will be like this. The most important thing at this stage is not to play small games every day following the stock god, making a few small profits from trading stocks, or profiting from a few limit-up stocks. What is the point? The most important thing is to establish a mindset to take a heavy position and seize an opportunity for an 8-10 times increase.
The earlier one realizes this, the more proactive they will be. The longer the delay, the larger the gap. Therefore, the key word at this stage is "elasticity": a certain base * sufficient elasticity = qualitative change of wealth. Undoubtedly, the stock market possesses this elasticity.
But let's return to the question: how do you dare to invest hundreds of thousands into a particular investment? If we push this logic backwards, it means one must have a thorough understanding of its operational rules, driving factors, and a clear and profound understanding of its risks and opportunities.
I still say that the stock market is most likely to possess such a reversal opportunity in the next 5-10 years.
However, the rule is that this opportunity is only left for the diligent. There may be people to guide you, but there is absolutely no one who can walk the path for you. How much one can grasp this opportunity depends solely on each person's cultivation.
In fact, the vast majority of people may stop at this wealth stage, which is caused by various reasons. For example, not realizing the importance of investment for a long time, taking the wrong path in investment, or not mastering the necessary investment methods for some reason, etc.
👀 In the crypto world, stories of overnight wealth and young success are not uncommon and may be much more prevalent than in the stock market. However, we cannot rule out that this is a survivor's bias and an information cocoon. We only see those who get rich but not those who fail. Or we simply cannot remember the stories of failure.
This stage is the most thrilling stage, testing the accumulation of earlier abilities. Of course, luck is also a part of strength.
Third, the stage of work freedom.
"If the second stage is completed well, then the asset base will rise to above 2,000,000 to 3,000,000. I call this the "work freedom" stage (the annual return of family liquid assets reaching 10% can support normal living expenses for over two years). This marks the initial entry into the stage of wealth generating wealth on a larger scale."
The key word at this stage is "stability". Do not compare "relative returns" with newcomers, but rather steadily pursue "absolute returns". The most important thing is to resist temptation.
For example, with 3,000,000 in funds, a 25% compound interest over five years is roughly the first 10,000,000 of one's life.
If you compare speed, then you have fallen into a trap, putting an invisible "risk trap" on the wealth you have worked hard to acquire.
At this stage, it is actually more of a battle with oneself. As long as one does not make big mistakes, advancing smoothly to the next stage is merely a matter of time.
👀 I can't even remember when this article was published; perhaps the standards for wealth division have already become outdated, but the underlying logic is absolutely unchanging.
I can only say that I have not yet reached this stage; let the older brothers of A8\A9 take a look.
Fourth, the stage of financial freedom.
"The third stage of participants has basically entered the scale of over ten million in liquid assets. At this point, the necessity for wealth to grow rapidly is not that great anymore. What is more important is to avoid risks, rather than chasing opportunities."
When the scale is 100,000, there is a strong urgency to reach 1,000,000; when it is 1,000,000, there is a need but it is not as urgent to reach 10,000,000; and when it is 10,000,000, the urgency and need to reach 50,000,000 are not that great anymore.
So, for investors at this level, maintaining their wealth is a regular state. However, historical patterns show that there is at least one good wealth appreciation opportunity every five years. With an annual return rate of 10%, having over 1,000,000, there is no need to rush.
The key word at this stage is "safety". Assets should be diversified, and while enjoying life, one should maintain sensitivity to investment opportunities.
Most of the time, achieve returns of about 8-10% with low-risk fixed income, waiting for the wealth pulse growth opportunity that occurs once every five years.
Once a big opportunity arises, even if you only put out 30% of the funds, after a few years it could be another 10,000,000. Although the relative return rate is not high, the absolute return amount makes up for everything.
Of course, the need to make money and the ability to make money are two completely different issues.
This discussion is merely about the emphasis that may need to be considered in financial and investment aspects at different stages.
In terms of the essence of investment, 100,000 and 10,000,000 are fundamentally no different in core concepts. The applicability of value investing fully includes all of the stages mentioned above.
However, on the other hand, it is undeniable that although the same value investment method is used, there will be significant differences in investment tendencies under different asset and age conditions. This is merely a dialectical and unified issue.
👀 No need to say much, just strive to reach this stage.