You are fresh grad out of college, raring to go after your dream career, earning your very first corporate paycheck and now you want to YOLO away at some Lalaland, spending the money on the many things you’ve dreamed about since you’re a kid.
Sports car, romantic dinner, a beautiful partner, around the world travel and the list goes on.
I was in the very same shoes as these people, always thinking about YOLO-ing and living my life to the fullest every single day without planning for tomorrow.
While to a certain extent that is applaudable, synchronizing YOLO activities and planning for your life would be a step better that would ensure you have fun not only today but for tomorrow and beyond. This is what I called YWLF = You Will Live Forever.
As someone who have been through such experience previously, I can understand how difficult it is to get started. I hope by sharing my top 3 YOLO Dilemmas this could change your life too for the better:
YOLO Dilemma 1: Delay Gratification
The issue is whether or not to delay gratification (Click Here) of things you desire in life – now or later. So a classic example is if you only have $500 today and you really want a new Iphone, you can either buy the phone and satisfy your desire or invest the money, let it grow and compound for the next couple of years.
I have also previously written a post on the importance of saving from young and how compounding will make you rich over time. Some people may argue that today is what you should be focusing at and what comes tomorrow will be dealt tomorrow. The key here is to balance between the needs and wants. In my opinion, it is best not to spend a lot of your money on wants, especially on the earlier days of your life, since you would be required to play a higher catch-up in the later part of your life.
For my own situation, I saved aggressively for couple of years when I was younger and managed to reach my first milestone of $250K when I hit 28 years old. Contrary to the belief, I still had many fun, travel and laughter in my life while doing so.
Below is an example of how 3 fellow classmates have performed by investing at different intervals of their lives.
The key here is to save as early as possible as you can see how Susan outpaces Bill at age 65 even though she puts in lesser money than Bill. This is where the magic of compounding is taking effect.
YOLO Dilemma 2: How much should I have in my savings?
The more you have in your piggy bank the better it is for you.
Nah, I’m just kidding. Depending on your individual situation, it is best that you gauge how much are you capable to save based on your income and family environment.
I have previously written a post about how much capital should one have at different checkpoints of their lives and the answer is it really depends (Click Here). So, if you are not sure how much to aim, always aim as high as possible.
For your easy reference, here’s a rough guide below that you can use.
For example, if you are currently closer to 35 years old and are earning $100,000/annum, you should at least have $100,000 x 1.5 = $150,000 in your savings. This is not a fixed and hard rule to how much you need to save, but it’s a guide you can refer to.
YOLO Dilemma 3 – Timing the market
“The best time to start investing was 20 years ago. The second best time to start investing is now”
I remember when I started my investing journey, I was hyped to trying to beat the system by timing in and out of the market.
Fellow investors who have done the same would attest to how difficult it can be to do so.
This is a dilemma that many people will encounter at some point of their lives.
Studies have shown that a person who is fully invested in the market most of the times beat those who repeatedly time the market. It makes sense as these group of people might miss the recession but also subsequently miss the run up when it happens.
It appears that the solution to this is much easier to solve than we imagined: Be invested at all times and focus on the business.
Based on the historical data from S&P from 1993 to 2013, at any point in time you have missed more than 30 of the best days and your return would have been negative. So maybe you could pulled it off one time by being lucky, but consistently you are better off being invested fully in the market.
What about you? Are there other YOLO Dilemma that you have encountered as an investor?