Five Cents Ten Cents

Decoupling the Mind from the Market: Inception towards Financial Freedom

I caught the film “Inception” recently and was really intrigued by the concepts and themes explored in the film. You can read more about the film “Inception” here  in Wikipedia. The films talks about many things about how in the future, we will be able to share dreams and to use them to extract information (and secrets) as well as to plant idea into others.

Besides being an entertainment and thought-provoking film, “Inception” also planted some idea seeds within me that sprouted into this article on my journey towards financial freedom.

The Role of Dreams in Financial Freedom

Financial freedom to me is a dream. It is a state I desire to be in and it is a target I set for myself. But even so, I recognise the challenges facing me in being able to reach this dream. Dreaming is a powerful force to unleash our inner most desires from our minds into reality. But in order for the dream to crystallise into reality, we need to implement in our lives the day to day actions that make our dreams into reality.

This blog will increasingly be devoted to the day to day actions that I try to take in order to advance myself closer to my dream of being financially free where my passive income exceeds my lifestyle needs while leaving me time, health and energy to pursue the activities that generate the most meaning in my life.

It is important to realise that dreams are powerful drivers. I remember Napolean Hill’s famous quote that, “Whatever the mind can conceive and believe, it can achieve!” Thus, all human endeavour both successful and unsuccessful start with an idea or a dream.

Wasn’t it Martin Luther King who declared that “I have a dream” and not just an idea?  And how it helped in the process of the civil rights movement to advance opportunities for black Americans and minorities in the US to have greater opportunities regardless of race, language or religion?

Dreams can be very powerful if they inspire one to work hard to make the dreams into reality.

Living Your Dream

The journey towards finacial freedom requires us to take small actionable steps every day to move closer to our goal. In order for us to live the dream, we must ACT. The starting point is our mind and our ideas. I focus on financial freedom by remembering the core principles. Live within my means, to save and invest, to grow and to protect my means. Living within my means makes me think about what I am doing with my money and to track my lifestyle expenses so I know within a 99% accuracy whether I am living within my means.

Saving and investing also sees me rely on my expenditure tracking worksheet to see if I save money at the end of every month. If due to big ticket items I exceed my income for the month, I consciously try to make up by saving more in other months. This way, annually, I make sure I save more than the 10-20% of my income as recommended by most personal finance writers.

Growing my means currently relies a lot of my output and outcomes at work. As an employee, most of my income is earned income from salary and bonuses. Thus, I am conscious to work hard and work smart in my career to maximise the earned income I can generate in my productive years and I fully intend to work up to the prevailing retirement age and beyond so long as I am able to.

I realise that my investments and speculative punts in the stock market has taught me a lot about growing wealth using the stock market. My own sense is that the stock market helps to generate some passive income but the increasing volatility due to global financial markets mean that I need to cap the amount of my net worth in equities at any point in time simply because I do not know when I may need to cash out due to life’s exigencies.

Thus, I am comfortable with around 33% of my net worth in equities for the time being. There is no need to be link my state of mind with the upward and downward movements of stock indices. Thus, I decouple my emotions from the market and grow more dispassionate about stock market fluctuations as less of my personal net worth is riding on it.

Avoiding Nightmares

What I learnt from the Asian financial crisis in 97-98, dot-com crash in 2001-02, SARS 2003 and global financial crisis 2008-2009 is that unpredictability and black swans are here to stay. Thus, avoiding nightmares is as important as dreaming of achieving financial freedom. But you need to survive the journey there and having too much net worth tied up in the stock market messes too much with one’s well being and my emotional and mental health may not survive the gyrations over time.

The idea that has caught on in me since I started managing my own money is to realise that there are no shortcuts. Many who become millionnaires and billionnaires were partly due to “luck” or “fortune” in that they were in the right business at the right time. Increasingly, I believe that randomness in life happens more than we think. Take one’s health for instance, besides the lottery of being born with genes that may or may not be susceptible to lifestyle diseases. One’s health can be controlled by our own lifestyle choices but also by our environment.

Thus, I will focus on the controllable factors but also live a little each day to avoid regrets if *touch wood* God decides to take me from the earth before my time is up.

The film “Inception” really makes me think more about dreams and how they are our subconscious’ method of communicating to us what deep down we desire or wish for.

What are your own dreams in financial freedom?

Share with Panzer in the comments section.

Be well and prosper.