Exercising The Mind

meditation

Almost six years ago I took the initiative to learn Mandarin by signing up for online one-on-one video conference courses. For about $120/month, Each week I had anywhere between four to five sessions of class, each lasting one hour. At the time I didn’t know if what I was doing had any practical application. My Mandarin was only improving enough to speak as a foreigner. It would take a long time to learn enough to use it in business or at work, but even then I wasn’t making any plans to change my career. I started learning Mandarin out of pure interest and enjoyment.

An ex-girlfriend of mine, one that was fluent in Mandarin, bluntly said to me if I didn’t have a practical use for learning Mandarin, such as for work, I was wasting my time. She also said it in a condescending tone. I didn’t really care, but her reaction was typical of most. It’s common to only take action and learn certain things because we have a clear use for it in the future. We learn math because it’s a life long needed skill. We learn our local language so that we can communicate effectively with others and enter the work force. We learn about history so that we don’t make mistakes from the past. We learn science so that we understand why our environment is the way it is. But sometimes, it’s just because we need to pass this class to move onto another class. Either way, there is usually a clear reason as to why we learn something, regardless of whether we agree with it or not.

I continued studying Mandarin after work despite the comments, positive or negative from my peers, for about another two years. Flash forward six years later, as I am driving back to my parents, this past memory surfaced again (hence I am writing this blog post) – and it hit me. It’s clear and simple: mental exercise. Irregardless of surface reasons, the reason for any kind of learning, is to exercise our mind so that it doesn’t become stagnant and dull. A stagnant and dull mind leads to one dreadful result: complacency.

Our mind works just like our body. Getting started with physical exercise is the challenge. Many of us have trouble starting. When you get home, it’s much easier to turn on the TV, open a bag of potato chips, and vegetate on the sofa for several hours before taking a shower and getting ready for bed. But when you do get started, i.e., arrive at the gym or suit up and go outside, its not so difficult to continue and finish the workout. Likewise, our mind works the same way. Thinking about doing homework, or learning something brand new, seems like such a mountain to climb. Wouldn’t it just be easier to turn on the high definition TV and PlayStation 3?  Opening up a book to learn about financial derivatives seems like such a daunting task.

But here lies the problem. Just like exercising, the longer we put off learning (the equivalent of exercising the mind), the harder it is later to start, and the easier it is to use the same or similar excuse to justify why it’s OK to start next next time. When we stop physical exercise, our body starts to slow down. Our heart beat changes. Our legs get tired faster. We start preferring the elevator instead of the stairs. We end up wanting to drive instead of walk even though the destination is only a few blocks away. When we stop learning, we start thinking slower. We prefer old methods out of habit instead of doing things better. Reading becomes harder to comprehend. Our conversations are no longer as sharp. Our writing starts lacking real depth. And for older folks, our skills become outdated and we are less relevant in the work force.

What we learn is not as important as the process of learning. But don’t get me wrong, I’m not saying learn something that you find intolerable. What I am saying is, fundamentally speaking, the action of learning is what keeps our mind sharp. Physical exercise works in a similar manner. We don’t have to do the same exercise as our friends, just as long as you do exercise. Some prefer jogging instead of biking and vice versa. Either way, both will help you burn calories. So with learning, learn what you want to learn, but always remember that the process of learning is the key idea. What you choose to learn is entirely up to you.

This hit me hard, because during all of 2011 and more than half of 2012, I had essentially stopped learning in my job. I even stopped enriching my investment skills – I was only re-using methodologies I learned in previous years that worked, but given the current economic situation, my methods could be outdated. I noticed I wasn’t as effective in planning for projects. I couldn’t analyze problems as quickly as I used to. My solutions were not nearly as clever as they once were. My decisions started to lack real conviction.

But I had quit my job last year, found a new one, and realized how far behind at I had fell. However, because the new job pushed me to work smarter, now I realize how quickly I am picking myself up again. I worked and worked to get myself up to speed. That’s when this memory of Mandarin crept up in my mind. During the years in which I was learning Mandarin, I had done many other things. Some were unexpected, and some were planned. But I recall that when I was exercising my mind the most, that was when my life felt very fulfilling and confident. I wasn’t scared. I was brave in doing new things even if I risked falling flat on my face. In other words, I felt invincible and saw failure as only a small bump on the road.

So my major resolution for this year is to keep learning. That means reading books. Writing more blogs and carefully proofreading each one. Change my routine tasks by finding new ways to do the same thing. Fix things around the house myself instead of hiring someone (when reasonable). Continue practicing Vipassana. Plus much more. You get the idea 🙂

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How I View My Investments

Investors are not evil. I know sometimes we get a bad rep on the media for being hungry vultures feeding on the less fortunate. For instance, it’s natural for a person to get mad at an investor that makes a low ball offer on a house they bought during a boom. I don’t blame them. If I bought a house for $500,000, but then could only get $250,000 from an investor, I’d be just as frustrated as anyone else.

But there’s another side that gives a better picture. As an investor, if I buy a house and rent it out, in the long run it does much more good than bad. The way I see it, our economy functions based on the flow of cash from one hand to multiple hands. If money doesn’t move, we’re in trouble, and that’s exactly what happened when Americans were strapped for cash starting in 2008.

When I buy a house and before it is rented out, multiple people get paid before I make any cash:

  • Broker on the selling and buying side
  • Bank or seller that can get rid of the troubling asset if it is a foreclosure or short sale
  • Escrow company
  • Title company
  • Mortgage company and/or broker
  • Home Warranty company
  • General contractor
  • Cleaning crew
  • Painters
  • Property Inspector
  • County
  • Insurance
  • plus a few more I might have forgotten

Behind each of these bullet points is a person or multiple people. Some may have a family or kids. When I pay them money, they can in turn spend money or pay their employees, thus shifting the cash from their hands to another hand, and so forth and so on with the next person.

By the time it is rented out, these people get paid on a regular basis when I collect the rent check:

  • Property Manager
  • Any sort of maintenance person (when needed)
  • County
  • Bank
  • Homeowner Association (when applicable)
  • Home Warranty
  • Insurance

When you look at it this way, quite a bit happens just on one property purchase. Money moves from one hand to multiple hands on the initial purchase and at an on-going basis afterwards. If the investment purchase doesn’t happen, none of the bullet points above will happen.

When we have more people that think this way about their investments, my feeling is we can do a lot for the country to bring our economy back to prosperity. Keep it simple – it doesn’t take much except for a bit of courage and conviction to make a difference and also grow our assets. Granted not all investors are like this, but I am. I strongly believe that my actions, combined with others with the same mindset, will contribute to making our economy more competitive in this global environment.

Stories and thoughts from the past

Being 30 is the new 20. Who the hell came up with that? I don’t know. What the hell does it mean? It can mean different things, but there’s no right answer and finding that single right answer isn’t the way to go about it. The way to do it is to know what this means to you.

Yes, I am turning 30 this year. As my birthday approaches, I’ve been spending a lot of time evaluating what I’ve done the last 10 years, starting from my last years in college, to the career path I have chosen, the relationships I have formed, the places I’ve traveled, and the stories I have heard and remember today.

One particular thing I am especially grateful for is the opportunity I had to travel around the world in my early twenties. I traveled a bit for school, a lot for fun, and some more for work.

My travels allowed me to hear stories from people of different backgrounds and experiences outside of America. Lately, I have been trying to figure out some difficult decisions I need to make in my life around my career. Throughout this process, a story I remember hearing from the past sprouted up. The actual details are simplified, but the essence of the story is still here.

My friend told me of a story about his uncle when he lived in Vietnam. The uncle was poor and had very little cash to try and start any kind of reasonable business. His lack of capital made it hard to improve his family’s economic situation. One day, he found a rice factory that sold bags of rice on consignment for 30 days. Each bag sold for $30, but in the retail market the rice could only sell for $25 max because of stiff competition (the consignment option may have had something to do with this), but nonetheless it is easy to sell because rice is a common staple among the Vietnamese. He decides to pick up 100 bags, which gives him a debt of $3000.

As expected, he sold all 100 bags in one week at $25 a bag. He now has $2500 in cash but $3000 in debt. However, he decides to buy dry fish that sells for $10 a piece from the distributor, but can retail for $15. This distributor does not offer a consignment option. Dry fish is a popular item to eat with rice as well as for a snack. He takes all $2500 and buys fish at $10/piece. Within two weeks he sells all the fish for $15/piece. Now he has  $3750 in cash, and still one week to spare before he has to pay back the debt on the rice he bought at the beginning of the consignment period. He pays back the $3000 and now has $750 in cash, debt-free. He now takes that $750 to buy other wholesale items that he knows will retail for more on the market.

This story is simple, but yet very powerful. There are many themes to take from this story. The beauty of it is that this story has many key elements that serve as good lessons in life. Some elements that stood out to me are:

  1. The power of knowledge
  2. The power of time
  3. The power of cash flow management

Now, for me, the elements most useful are #2 and #3 (although all three work together hand in hand). These two elements are helping me solve a problem that I am currently struggling with in my life. But as I took these elements into careful consideration, the answer started to jump out at me. The reason is because this story made me change the way I think. I remember school taught me to stay conservative and not take big risks like the uncle did in this story. But what one must think of is, what does a person stand to lose if he or she doesn’t take the same kind of action that this uncle did with the rice?

It’s something to think about and really spend time pondering. Remember, these types of stories don’t need to make sense now – in some shape or form it will make much more sense in the future.

Being 30 is the 20 – to me, this means that life is still and always will be an adventure. It doesn’t end when we finish college and start our career. Life can still have much meaning and satisfaction if we make decisions that gravitate towards that.

Reflection

It’s been a while since I’ve written, and I do wonder if anyone ever reads what I write. But regardless I find that WordPress can be very theuraputic for me, especially when I need to get something off my chest.

Over the past few months, during my quiet times my mind has naturally been pondering about what makes me happy. Not to say that I didn’t care to think about it before, but it never quite occured to me to put much thought into it. My only conlusion was that I was indeed happy before, but something is missing now that is preventing me from finding my own happiness.

Like others, I first thought it had to do with not making enough money. Despite hearing the ever popular phrase, “money doesn’t make you happy,” my mind still drifted towards this direction. Year after year I made more money, sometimes little, sometimes much more. At first it seemed like I was happy, but only after it was all said and done, I realized it was more of the initial thrill. This was the case with my investment properties. The first one was great, but each subsequent one, even though the return was much better, were not giving me the same sense of satisfaction.

Then I thought maybe I needed a life partner or at least a committed relationship. Now I have a girlfriend, and she does bring great joy to my life. However, something is still missing. She cannot be the source of my happiness – she has to be the person I want to share my happiness with. However, I don’t have that happiness at the moment to share with her.

My next guess is almost certain – I’m not finding the same satisfaction in my career as I once did. I remember 6 years back when I started my job, it felt like one of the most happiest times of my life. I had less money then, didn’t have any investments, and nor did I have a girlfriend. But I did find satisfaction in what I did each day in the office. I came in and my job was to make things better – that plain and simple. It did hit me today: now I am being asked simply to make things work (even if we’re worse off), instead of making things work better. I won’t get into the details, but like most large companies it boils down to corporate politics.

I certainly know now that a change in my career is needed – whether it be from my own actions or not, continuing down the same path won’t get better. And what’s so different now is the change must come from me. From grade school to college, change was the norm and unavoidable. We constantly changed classes, met new classmates, and found new internships. Things were always fresh and always new – but we take it for granted because it came to us and was something we HAD to do. It’s different now because for most of us, we go in everyday to the same desk and coworkers, and while there are changes, it’s minimal compared to what we experienced during our younger years.

I have some plans in place, and I’ll update more as I move along.

Acting from Within

In the past few years, I’ve made good progress in acquiring assets to ensure retirement for my parents and pay for foreseen upcoming bills. On the surface it seems I am doing this for someone else and not for me – it’s as if I’m sacrificing my needs and wants to take care of someone else. I’ve been asked, “Brian, when will you do something for yourself?”

When that question is first asked, there is an underlying assumption that I don’t want to do it, or at least forcing myself to do something that normally wouldn’t happen. This simply means the question is posed from the perspective of the other person, and not my perspective. And it understandably looks that way. I am putting in my own money to fund the investment, but I am not really reaping any of the monetary benefits on the ROI. However, there is more to it than just the monetary ROI. When I first embarked on this journey a few years back, I thought this journey came from a need, but it didn’t take long to realize it was just as much a need as it is my own desire.

There’s a saying that joy is actually found in the journey and not the destination itself. Initially I never thought of this journey as being fun or exciting, but I was certain I would reap a sense of satisfaction in the process. This has especially been true, and more so recently as I am closely approaching a major milestone of my plan. But the journey quickly became fun and exciting because in the process I’ve learned more about myself. Likewise, I am slowly starting to acquire a peace of mind with my parents’ retirement. So now looking back in hindsight, I have in fact taken this journey for myself. It’s obvious now because I’ve realized I have followed my heart, and did not simply do what I thought I was supposed to do. In essence, this journey never felt like a chore. I acted on my own inner desire to walk this path.

I also know that this is only the beginning of more exciting things to come, because in the process of doing this, I’ve:

  1. Strengthen my investment skills
  2. Brought more joy and optimism to my loved ones
  3. Become more humble by starting from scratch again
  4. Gained new perspective and question myself on where to go next – this in essence means I am actively participating in life and not simply following a blueprint set forth by someone else

There’s many more, but I think you get the idea.

Executing the Plan

I clearly understand now why people make plans. Because one thing is for sure – executing and succeeding on the plan is a feeling like none other. I can remember it like yesterday when I made trips out to Starbucks at night to put together my real estate business plan. At the time, I was hopeful but yet doubtful at the same time. I didn’t know how to judge if the plan was even realistic. Who was I to call myself a self-proclaimed investor? All that was certain at the time was I had a Lenovo laptop in front of me, and a Starbucks tall-size plain coffee on the same table to sip on. That’s how I started and it was up to me to make it happen.

I recall spending my time and money roaming through different cities on weekends to get a feel for what was going on. I checked out party cities, hick towns, the boonies, beach cities, and many others. It was never clear what was the right decision. In school, if you didn’t make the right decision on a test, you’d be penalized. But in life…it doesn’t work that way – the penalty comes from not making a decision. When you don’t decide, you’re stuck. When you’re stuck, you no longer move forward.

When I finally made a decision to pick the cities to invest in, I no longer thought of it as whether or not I chose the correct cities. I saw it this way: I made a choice, and it’s up to me to make it the correct choice. Making the choice is a big step, but far from the last. Throughout the last two years this was so evident because although I picked a city I felt was correct, 80% of the homes I saw were incorrect. So a decision isn’t considered right or wrong persay, it’s really a matter of whether you choose to make it suit your needs. It makes sense why it’s common to hear that the cards dealt to you in life is mostly insignificant – it’s how you play with the cards dealt to you.

When I chose the cities, the cards were dealt to me. But if I didn’t play those cards right, the decision could easily have been the worst one. If anything, the only thing I see as being correct is choosing to trust in yourself to make your life is fulfilling as possible.

Leap of Faith

Whenever someone asks me for advice on investing, I can usually come up with a few pointers and encouragement to help them get started. Usually we talk about reasons, goals, and methods for investing. When I explain it, it seems so simple and easy, but when the conversation ends, they are still too scared to act. What I can never promise is a guarantee. There is no guarantee that they can make money, nor is there a guarantee that the investment will not go sour. I end up telling them that despite any amount research done prior to taking action, it boils down to believing in yourself and taking a leap of faith. It’s this last part that scares people away.

I can imagine why this would happen. I cannot recall a class during my days in high school and college that had this question as a problem:

If you were given $10, how would you turn it into $20? (for a return of 100%)

It’s a simple question, but not a single class ever posed this question during class, in homework, or a test. But yet you are told to do some of the hardest things – find a complicated derivative or integral, solve for differential equations, read a book with an absurdly confusing writing style, and my favorite: transform a time domain equation to a frequency domain equation. Seriously, what the heck does this even mean?

What it means is not important. What’s important is that you figured out how to do these things, otherwise you would not have satisfied your requirements to pass the class and ultimately obtain a college degree.

Here’s another way to look at it: In college, on your first day of class, there was no guarantee that you would pass the class. You didn’t have any prior knowledge of what was taught in the class other than the course title you read when registering for it. You even paid for the class knowing very well that you could fail. If you failed, you’d have to take it again next semester, which meant you had to pay AGAIN for that class. Regardless of whether you wanted to do it or felt you had to do it, you paid for a class knowing you didn’t have a guaranteed chance of passing. But either way, you had believed in yourself because you told yourself you had to pass this class in order to get your college degree. That was enough to push yourself. This means there was a point where you believed you could succeed at something and you had taken that leap of faith to make it happen.

When you look at it this way, how is it different from taking a chance with investing? You could try your first investment, and if it fails, you’ll learn why you failed. It only makes sense to try again because the second time around you’ll be smarter than you were to begin with. Just like if you failed a class the first time, you’d probably pass it the second time around because you would be aware of where you made your mistakes during the first time around. You understood the pain of failing so you made sure it didn’t happen again. But would this drive and motivation have come if didn’t understand what it was like to fail?

Investments are virtually no different from take a college course for the first time. In fact, I would argue to say that investing is likely easier to learn provided that you are willing to see where you made your mistake and learn from it. Investing has an advantage in the sense that tons of research material readily available before you take the leap. A class is worse…you probably never did a Google search on your course first – you simply took it because you had to. Once you got started, you were determined to pass. Action was taken and you told yourself you had to succeed.

Bottom line: there’s no reason that investments cannot be approached in the same manner as taking a new college course.