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2. Lesson: Never Lose Money

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One of the most critical factors for gaining wealth and reach financial freedom is to never lose money. It is far easier to lose money than to gain money. Whether you are an investor, a 9-5 employee, an entrepreneur or freelancer, you have either lost money on investments or spent money on useless products. You have to protect your money far better than you are currently doing. You might think that you are already protecting it, but my guess is that you can do an even better job.

As Warren Buffet says:

“Rule No. 1: Never Lose Money. Rule No. 2: Never Forget Rule No. 1.”

I have risked a lot of money to gain more rapidly. That worked initially, AS I GOT LUCKY, but luck runs out. And let’s face it, unless you have extensive and unique knowledge of a certain market, you are bound to luck to outperform the market. Since I made some large sums of money with lucky investments, I got far too confident in my own skills. And I continued with investing in different stocks and commodities, I even used CFD (Contracts for Difference) to speed up the process.

With CFD you can trade and “bet” on different stocks, indexes and commodities with far more money than you hold on your account. That’s called margin trading. You can earn far more money, but you can also lose more money than you currently have. The risk is dramatically increased. I highly recommend you to not trade on margins unless you know exactly what you do and have a clear stop-loss strategy.

In 2016 I lost a substantial amount of the money I earned the previous years on trading. I should have been more careful and taken Warren Buffet’s advice. However, I’ve learned the hard way and now I’m more careful with my bankroll. That is why the advice is so important to remember and to accept. Never lose money.

What does this mean?

If you are looking to invest your money in stocks or commodities, you have to be sure that you won’t lose your money. This is nearly impossible to know, but there are some steps you can take. If you look at the historical trends, the one investment strategy that never have failed is to invest in index funds. Indexes follow the market, and even with some major financial crashes like the one in 2008, you would still have earned more than you invested pre 2008 if you had invested the same amount on a yearly basis. There are some exceptions like the Japanese index Nikkei 225:

As you can see from the graph above, if you started investing in Nikkei 225 from 1989 with the same amount on a yearly basis, you would have suffered a quite substantial loss. But still, the Nikkei Index is currently above all other periods before 1985, and my guess is that we will see Nikkei 225 above 40 000 within the next 20 years unless the entire economy goes under (which is an unlikely but possible scenario).

Investing smart is not the only solution

The entire idea is to never lose money. If you are not currently investing because you have too little money to play with (yes I say play), then you still have a lot of options to secure your money. My golden rules are the following:

  1. Cut your monthly expenditure
    • Do not use credit cards, if you have a credit card debt: pay it as fast as possible.
    • If you are able to; pay e.g. 20% more on your mortgage where the end goal is to become debt free as fast as possible.
    • Buy fewer products. I’m sure you can cut down your consumption with at least 25% per month. I urge you to set up a spreadsheet with all your monthly costs and go through everything you spend money on. If you go clubbing every weekend, could you reduce it to twice a month? If you smoke 6 packages a week, could you reduce it to 3 packages? I’m not saying that you should stop smoking or stop clubbing, as that might be too hard to do, but I’m sure you are able to reduce your consumption quite drastically.
  2. Focus on the money
    • I am not a greedy bastard, but I’m aware of what I’m spending my money on. The money you spend is money you won’t see again. You should not be obsessed with money, but you should still focus on it if you want to become financially independent.
  3. Don’t risk your money
    • If you are looking to invest your money, I would say in 9 out of 10 cases, never invest in anything other than index funds or assets that have shown a steady rising trend over the past 50 years. If you invest in a specific stock, or cryptocurrency, you are actually betting against the market. You then believe you can outperform the market, which in 50% of the cases, you really can’t.
  4. Ensure cashflow
    • If you have a cashflow, either from a job or your own business, focus on that and make sure that you won’t lose it. The best way to increase your wealth is to earn more money. If you got a 9-5 job, you are stuck to your monthly salary but you can still find other ways of increasing your monthly cashflow. What if you can do a side gig? What if you can offer your services on your spare time and try to build a small client base after your normal working hours? Maybe that can help you, in the end, quit your job and run your own business?

What are your thoughts? Leave a comment below and let me known.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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5 Comments

5 Comments

  1. Fishytackle

    June 16, 2017 at 5:55 pm

    Hi, I wouldn’t say not to use credit cards. If you manage them correctly they can be great. They are giving you 60 days money credit for nothing. ALWAYS pay back in full. If you can’t do this don’t touch them. Just my opinion.

  2. NoHomeJerome

    August 15, 2017 at 11:30 am

    Theory question about index funds:

    Let’s take S&P 500 as an example. Suppose you are able to identify some of the worst performing companies in the fund. Let’s say even a small number like 10 companies. Wouldn’t you then be left with an index fund of 490 stocks (instead of 500) and shouldn’t this fund of 490 companies outperform the other?

    Or do you suggest it is virtually impossible to identify some “bad” companies at all?

  3. nsmith

    August 23, 2017 at 8:32 am

    Credit cards can build credit score if have lousy credit which is the vast majority of Americans. I learned to be be cheapskate never buying anything at market value. But I disagree that hard baselines is indices and crypto is betting against.. Crypto is betting against fractional lending which is a way elites rob valentine from all fist based currency. Anything listed in USD has to fight fractional reserve, modern asset forfeiture.

  4. nsmith

    August 23, 2017 at 8:38 am

    Terrible typo. Elites rob from all fiat by constantly devaluation.. The rates just vary. It’s like entropy.. Everyone is predicting sovereign debt crisis very soon.. Like years.. The only way I see Btc going to a million real fast is every time USD, YUAN, EURO start to tank. A country like Greece can devalue and entirely euro denominated economy right?

  5. Acewriter

    September 11, 2017 at 11:24 am

    I have a question. Back in 2008 when everything crashed, cash was king. Margin calls, plummeting housing prices, falling stock prices…suddenly everyone needed cash. People were forced to sell good assets along with the bad to pay their margin calls, mortgages, buy food, etc. Even my much-loved physical gold went down, for about six months, before starting a three-year uptrend that culminated in $1,910 gold.
    And finally, my question — do you see a high probability for a similar reaction by BTC/alt coins in the next crash? This might make a good subject for a full article.

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Altcoins

Lite.IM Surpasses Facebook In Race To Support Cryptocurrency Compatible Messenger

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Since the early part of 2018, crypto traders have been bombarded with bad news.  Hacks, broken promises, and overall lack of enthusiasm have resulted in huge losses.  But more than that, some promising cryptocurrencies just haven’t survived.  As traders look to the future, they should begin looking at projects that have the potential to disrupt industries and take them to the next level.  One company that has the potential to accomplish that is Zulu Republic (ZTX).

Zulu Republic is an ecosystem of blockchain tools and platforms, designed as a place where people, businesses, and organizations can thrive on their own terms.  The company’s stated mission is to advance the development of decentralized technologies, to promote human rights and empowerment around the globe, and to reduce the global digital divide.

Well the company is off to a great start with the development of Lite.IM.

What is Lite.IM? 

Lite.IM is a project aimed at expanding global cryptocurrency adoption.  With Lite.IM, users can send, receive, and manage Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), and the company’s native currency (ZTX), on Facebook Messenger, Telegram, and SMS (in the USA and Canada).  To get started managing these cryptocurrencies on the aforementioned platforms, users simply need to send a text-based command to the Lite.IM bot.  The commands are as follows:

Telegram:  @LiteIM_bot

Facebook Messenger:  @lite.im

SMS (USA and Canada only):  760-LITEIM-0

Competition with Facebook

On December 21st, 2018, Facebook announced that it was developing its own stable cryptocurrency that users would be allowed to exchange through its popular chat service, WhatsApp.  But while Facebook’s initial approach will target users based in India, Lite.IM is open to everyone in the world.  Further, Zulu Republic has previously mentioned that they expect to announce support for WhatsApp in the next few weeks.  It certainly appears as though Lite.IM has the upper hand here.  And that is before even addressing Facebook’s obvious privacy concerns.

When it comes to cryptocurrency, privacy and security have always been two issues at the forefront.  Given the rough year that Facebook has had in that regard, users must certainly be forgiven if they have trouble trusting the social media giant.  In September, 2018, Facebook announced that an attack on its computer network had exposed the personal information of nearly 50 million users.  Apparently, the hackers were able to exploit a feature in Facebook’s code to gain access to user accounts.  Even prior to this announcement, Facebook was already under Congressional scrutiny over revelations that a British analytics firm obtained access to private information from nearly 87 million Facebook users.  Not to mention Facebook’s rumored involvement with Russian election meddling.  Suffice it to say, it has been a tumultuous year for Facebook.

And while users may have concerns trusting Facebook’s ability to handle cryptocurrency data, they shouldn’t have those same concerns with Lite.IM.  Private keys are RSA encrypted with the user’s password.  Lite.IM will never ask for that information nor will it be stored.  Because of this, no third party will ever have access to that valuable information.

Conclusion

The truth of the matter is that Facebook is an absolute giant and has grown at an extraordinary rate since its initial public offering.  Facebook has hired some incredible talent, from executive positions to marketing to development.  And while one should never count them out, I simply wouldn’t be able to trust them with all of the recent issues.  Perhaps in time, after regaining the public’s trust, users could once again look to Facebook as a leader.

Fortunately, users have another strong and dependable option.  Lite.IM will allow users all over the world to manage popular cryptocurrencies via their favorite messenger platform.  Users should continue to stay tuned for future developments.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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Altcoins

Product Owner Interview – GShare Has Potential To Increase Adoption Of MobileGo (MGO) Tokens

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In early December, I wrote an article on why investors should be paying attention to MobileGo (MGO).  Exploding popularity of the gaming industry and an impressive partnership agreement with Xsolla led to a surge in MGO’s token price.  In addition, the team of MobileGo created an application, called GShare, that has the potential to significantly increase MGO token adoption.

What is GShare?

GShare essentially allows users to rent the power of their computers to earn virtual coins.  These coins can then be redeemed later for several gaming options including tournament entry fees.  Through this platform, a user can control the amount of computer resources that are used throughout the process.

Although GShare is currently only at the public beta testing stage, virtual coins can still be earned by making purchases for Xsolla products.  But, according to Igor (the product owner of the GShare app), the goals are much more global than just Xsolla.  Fortunately, I was able to land an interview with Igor and asked him about the goals, benefits and upcoming upgrades of the project.

Interview

What is the mission and vision of the project?

Igor:  Ok, the mission and vision are basically to enable anyone, with the focus group being gamers, to easily obtain free stuff.  For example, for simply sharing their time and computing power, users can come away with games, in-game items, and eSports tournament tickets for free.

What is the advantage of this application as compared to other earning tools in the gaming industry?

Igor:  The main advantage is simplicity.  Thanks to the partnership with Xsolla, another important advantage is being able to use the virtual currency to buy games and make in-game purchases.  In the future, I expect that users will be able to earn items directly within the application.  While there are other programs available in the market that allow users to earn virtual currencies, typically users must spend a long time, sometimes up to a year, to earn enough virtual currency to purchase a basic product like a keyboard.

The general idea of GN Gold (GShare currency) is that we will eventually have an entire ecosystem that will support it.  In the future, we fully expect there to be a deep integration between game publishers and being able to use GShare directly to get different items – this is the first step to earing free items outside of the games.   We hope to separate ourselves from competitors by forming more direct integration with the games themselves.

What is the actual development status?  As far I know it’s still in beta test mode.

Igor:  Yes, we can say it is a public beta test.  But it is available.  Anyone who registers in GShare can download and use it.  The test mode is available for the first 500-1000 users of the platform.  This will help our team to identify and fix the bugs.  At present, our internal version is 0.9.17.

If I remember correctly, there was a recent upgrade.  Is that accurate?

Igor:  Yes, it actually happened a few days ago.  Next week, we plan to upgrade the version by adding additional languages including English, Russian, Chinese and Korean.  After that, the plan is to add Spanish and Japanese in the near future.

Are there any other upgrades you are expecting soon, perhaps in the next couple of months?

Igor:  I think that the first noticeable change will be some type of boosting feature.  After performing certain actions or tasks, users will see an increase in their GShare Gold earning rate.  An example of a boost might include increased earning power for two hours.  We expect to begin working on this feature on Monday although I don’t expect it to be completed until February at the earliest.

How is GShare currently interconnected with other products?  Are there any upcoming changes in this respect?

Igor:  Right now, there are no direct connections except that a user can spend GShare Gold on the competitive platform.  A user’s GShare Gold is used as a participation fee.  If a gamer wins a tournament, they will have the option to receive their prize in either MGO tokens or GShare Gold currency.

As far as I know, both products (the earning app and competitive platform), use the same username and password.  Is that true?

Igor:  Yes, they do.  All products of the ecosystem will be easily accessed via a single user profile.  So, we will focus mostly on integrating with games and allowing game-publishers to integrate with us.  In this way, users can directly spend GShare Gold within the games or use the currency to get items directly.

Okay, are there any technical requirements before someone can run the GShare App?

Igor:  I wouldn’t say there are any specific requirements.  Since gaming already requires significant computing power, it’s fair to say that most gamers will already have the necessary hardware to run the app.

I just want to clarify one thing.  As I understood it, the eSports platform is now used mainly for casual games?

Igor:  Yes.  The eSports platform now targets casual gamers while GShare is targeting more of a core gamer audience.

What are the limitations and how can someone know whether they should use GShare?

Igor:  At the moment, that’s a very difficult question to answer given that we’ve only just launched the beta.  During this test period, we hope to learn more about whether an average gaming machine with an average GPU will be enough to earn users some profit.  Although I can say that even laptops with just CPU are able to earn something right now.  It’s also important to remember that the boosting feature, in which development will begin shortly, will play a pivotal role here.

What are the future goals for GShare?

Igor:  For me, the goals are like most other technology businesses – stability and scalability of the application.  Certainly, we hope to make the experience as pleasurable for the users as possible.  Avoiding bad experiences, like application crashes, are of paramount importance.

Some of the team will be working constantly on improving the algorithms, stability and scalability, fixing bugs, and making small fixes in the background.  In the near term, the priority is certainly to finish earning item features, testing it, and getting as many game publishers as possible.  The boosting feature is also very important.

Does GShare have the potential to change the gaming industry in the long-term?

Igor:  Well, the company’s long-term goal is to do good things.  We hope that all these products and GShare will be able to support the community and create strong social values.  Users can choose to interact within the framework of a thematic platform.  An example of that would focus on how a gamer’s view is changing.  This is not just about gaming but allowing people to use their computer for many things while not having to make any effort to go outside.

…. and what’s the scope of the project?

Igor:  Well, for me personally, the scope is to provide as much profit for users as possible.  It would be great if people could run the application overnight while earning a few dollars.  That would really be something.

What are you doing to increase awareness of the GShare Application?

Igor:  Our team is working on that right now.  In January, we expect to begin introducing the app to the Chinese and Korean markets.  In addition, we are negotiating with partners.  Word of mouth among gamers will also play a big role.  That, of course, will depend on the quality and success of the beta.

This will be my final question.  What role do you play in this project?

Igor:  Well, when I came to the company, they wanted me to lead the core.  Prior to joining, I was a product manager for the core team in my previous role.  The previous role afforded me a lot of experience but, for me, it had become a bit tiresome and uninteresting.  It was really about the things that the ordinary user doesn’t see, and I was dealing with all the back-end.

This project is different.  It sounds like “Oh, we haven’t go these” – now you do!  Right now, I’m trying to figure out ways to give the end users as many benefits as possible.  I spend a lot of my time ensuring a good user experience.

Chris:  Igor, thanks so much for taking the time to give me an interview.

Igor:  You’re welcome.  Feel free to contact me anytime if you have more questions.

Although GShare is still in the initial stage of development, the potential is certainly there for a bright and meaningful relationship between gamers and publishers.  As awareness increases, there is a strong possibility that adoption of MobileGo (MGO) tokens will also increase.

Disclosure:  Chris is long MGO tokens.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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Altcoins

Waves Continues Surge During Bear Market

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Although the overall crypto market continues to be extremely bearish, there have been a few reasons for traders to smile.  The main reason for encouragement is the recent spike in Bitcoin’s (BTC) value.  Bitcoin has increased roughly 28% since December 17th.  Given that Bitcoin was recently in danger of dropping below the much feared 3,000 level, traders will gladly take the early Christmas present of 4,000+.  It’s still unclear if the bulls have returned or if this is simply a dead cat bounce.  Either way, it’s an encouraging sign for the overall crypto market.

New Mobile App Announcement

While altcoins generally haven’t participated in the recent Bitcoin rally, one coin that continues to defy expectations is WAVES.  WAVES is a decentralized blockchain platform focusing on custom blockchain token operations.  National currencies transfer is maintained on the Waves blockchain trough compliant gateway operators.

Waves has had an incredible month driven primarily by extremely positive developments on the technology front.  In early December, Waves announced a comprehensive, all-in-one app for mobile devices.  This app includes a one-of-a-kind feature set that includes a crypto wallet, the Waves DEX, and a FIAT gateway.  This development certainly sets Waves apart from its closest competitors.

One of the biggest issues among all crypto users is privacy.  Privacy is so important that it has spurred the growth of several privacy focused coins such as Monero (XMR) and Zcash (ZEC).  This new mobile app has addressed privacy concerns by encrypting all traffic.  This means that the keys never leave one’s smartphone, are never exposed to the web, and are stored locally.  The app also does a nice job of supporting additional security measures such as Face ID, Touch ID and Fingerprint scanning.  Taken all-together, mobile app users can rest easy knowing their data is secure.

Waves is also known for having one of, if not the fastest, decentralized digital asset exchange in the world.  The primary advantages of DEX include the following:

  • Decentralized and anonymous
  • Unlimited crypto withdrawals
  • Thousands of pair trading options
  • Transaction settlements completed within seconds
  • Available on any device
  • Fees less than $0.01
  • Average 24h volume of more than $6.3 million

Given the popularity of DEX, it makes complete sense for mobile users to now have access to it.  This includes all the same tools and charts that desktop users have access to.  Any way you slice it, this is a huge development for the Waves platform.

December Price Surge

Although most coins are having a December to forget, Waves is having a December to remember.  Waves was trading at $1.24 to start the month but has more than tripled in price since.  The coin is now trading at $3.88 as of this writing.

While that kind of return was common in 2017, it’s the kind of return that gives hope to many crypto traders that the good old days can return once again.

The chart clearly shows that the coin surged immediately after the announcement.  While a price rise isn’t terribly uncommon after a press release, the follow through is.  Waves has continued its surge through the entire month of December.

Christmas certainly came early for Waves hodlers.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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