Money | How to get rich
Stop chasing Bitcoin and start maximizing joy.
I always feel FOMO when my friends talk about their investments. If only I would’ve bought bitcoin early, invested in NVIDIA early, bought a house when they were cheap, etc. But that’s because my friends never talk about that moment when they bought bitcoin at its peak, their NFT, or when their house turned out to be a dud. In investing, there are no rewards without risk, so how to balance the two?
Also, just to be clear, this is not financial advice, this is some guys sharing tips they heard from some other guys and gals and AIs.
The 80/20 of investing
Maximize happiness, not wealth
Default investment advice is to maximize your wealth. At Euzia, we want to maximize your happiness, not your wealth. That means you want to get your spending up early to a level you can sustain long, instead of spending little early to then spend a lot later.
Careful with FIRE: You might be a bit happier when you retire early in 20 years. But for sure you are less happy now grinding and saving. Instead, invest so much that you can retire late at your current lifestyle. If you start early, that’s about 15%.
Automate and forget: One failure mode for investing is all the anxiety that can come with it, continually tracking your stocks, etc. Set it up in a different bank, don’t have an app, have an automated plan and only look at it once a year.
Don’t gamble: No prediction markets, poker, stock picking. In all those cases you are not playing against the average but against the smartest player in the room. Unless you have good reason to believe you are that person, don’t play.
The boring and proven tactics
This is a reminder of best practices. We stay somewhat vague here because the specifics will depend on your situation. Do your own research, treat this as a reminder.
Buy ETFs: The stock market on average has high returns but average is the key here. Even though single stocks outperform, you probably won’t be able to beat the market consistently. The ETF you pick depends on your situation: Global for biggest diversification, local for biggest link to local consumption prices.
Hedge against stocks: ETFs diversify your stock portfolio but what if the whole stock market tanks? You want an asset that are uncorrelated to stocks. Historically those are gold, real estate, or bonds.
Local incentives & taxes: All countries are different. Spend time to really understand them. How can you get the most out of your retirement subsidies (eg 401k), housing subsidies (eg mortgage benefits), tax cuts?
In the UK you can currently invest up to £20,000 a year into an ISA, where your gains are generally tax free. Other countries may offer similar benefits through retirement accounts, first time buyer schemes, government bonuses, or long term savings incentives.
A good first step is to search: “best tax advantaged investment accounts in [your country]” or ask AI to explain the options. Then verify with an official source or qualified adviser. It’s not the most exciting part of investing, but it can be one of the easiest ways to avoid leaving free money on the table
Cameron
Place bets only if you can afford it
If you have an average salary in an average country, investing in ETFs and some bonds is not going to get you rich. That’s ok because being rich won’t make you happy anyway. In the off-chance that you still want to try, start looking in these directions:
Take high-risk bets: This could be anything from starting or investing in a business, picking stock, or marrying a promising person. It’s high risk because you’ll likely lose the money or time. Only gamble what you can afford to lose.
Leverage: Placing bets with your own time and money only has limited upsides. Leverage other’s capital as well: Investors to your business, managing other’s money, getting cuts for transactions. Most self-made millionaires are either entrepreneurs or work in finance.
Have Access: Your bets are more likely to work if the number of people betting is small. This could be access to knowledge, deals, jobs, people, ideas, etc. The best jobs, dates, ideas aren’t in the public, they are in niche communities. Find those.
Right now I’m taking a high-risk bet: Investing my time and money into starting a startup (https://donethat.ai, Euzoia is just for fun).
Initially I was very wary of taking investment, it felt like losing control, but now that I thought about leverage for a while I actually think that was the wrong call.
Both this opportunity, and my previous one, emerged from unique access: Access to a startup incubation program through the EA community, and access to the previous startup job through a friend.
Christoph
Do this now
Use AI to project your current investment rate and age. If you would “die with zero” at age 100, how much would you live off per month, in today-dollars?
Use AI to understand all the tax incentives and regulations in your state/country. Are you using all of them?
Do you have access to something the majority doesn’t have access to? Can you afford placing a bet on it?
Bet money (the kind you can afford to lose) on doing these actions
Missing something? Add a comment and we’ll add it to next year’s version