The more I live, the older I get, and the more the world changes around us, the more I see that our minds are not designed well for the current complexity of life in modern civilizations. 

Our minds are built for very slow-moving and almost static environments where the people you know, the tools you use, and the dynamics around you change at a very glacial pace. The pace used to be so slow, that it would take generations for things to change. A ancient person could move back and forward in time 500 years and they'd likely be in a world that's mostly the same - same farming tools, same modes of transport, same deeply-local and family-based existence.

Imagine you went forward 500 in time. You're certain -- as I am -- that whatever world we arrive at 500 years from now, it'll be vastly different from the world today. We'd feel genuine anxiety traveling 500 years into the future because of how unpredictable we know it could be. We know at a deep subconscious level that the world is changing quickly.

This cosmopolitan, global, hyper-dynamic, tech-filled, and complex world we live in today requires that we embrace technology and use it in productive and effective ways. By using tech to offload memory, for example, we'll be making a prudent decision - remembering a few things in ancient times is different than having to remember hundreds of things with each thing in its own category (eg. home, work, car, finances, etc.). Another example might be using finance software or MS Excel to manage your money - living in a world with no money at all and mostly living in a quasi-communist family-oriented society is quite different than having to manage multiple account and making transactions with other humans and organizations on a daily basis. 

It's fun and easy to focus on macro stuff - we read or watch the news and see what's happening in DC and around the world. The media loves to write about such things because it gets readers/clicks and it's something everyone is going to find relevant (as opposed to micro stuff like your local real estate market, which is not important to 99.99% of the world). 

In reality, however, the micro stuff is more important most of the time. Not all the time, of course - sometimes macro events can have such large (usually negative) impacts that they outweigh anything that is happening at the micro level. In these cases, you hopefully have built a strong and resilient existence to weather any storms that may have come your way. 

The micro things are your day-to-day habits and your ways of living in this world - they may include things like

• your savings rate
• how intensely you focus on your career
• whether you're continuing to learn new things about the world every day
• whether your take your mental and physical fitness seriously enough to develop them
• whether you're too risk-averse to invest your money 
• whether you can get out of your own head to make prudent decisions
• whether you can drop your biases long enough to see the world clearly

One would be well-served by focusing on the micro stuff while ensuring they are well-protected from significantly adverse macro events. 

I've been investing since my late teens and I was just a young up-and-commer in investing during the Great Recession. I studied the markets since I was about 12 years old - I read a book my father had (but never actually read and applied in his own life) on investing (One up on Wall Street by Peter Lynch). The book fascinated me for some reason.

I've seen a fair bit, but I've studied the markets far more since then and what I've studied is a lot more than what I've seen. One has to study the markets well to be a good investor. History is important in investing. 

The present situation with this over decade's long bull market is unprecedented, however. It's a record market - the longest ever. So, studying history won't help too much. In this case, good Risk Management is especially key!

The stock market is not some all-knowing being or entity that magically predicts how much publicly-traded businesses are worth. That’s an illusion and a story told in business schools and finance programs around the world.

The way things really work is very messy – you’ve got a ton of market participants buying securities, selling securities, and disseminating opinions (some good, some bad, and a small portion outright malevolent in intent). The price of a particular stock or security moves up and down based on these participants’ actions.

There is no single magical price, not even for a minute. There is no all-knowing entity that transforms the market into an accurate predictor of business value. The market as a whole is not a thinking being in and of itself – the market is a conglomeration of all market participants (including you, your neighbor, an Excel-based trading algo designed by a kid in a college finance program, and a sophisticated AI strategically positioned within a close radius to Wall St. computers for faster trade execution). 

A lot of people in finance and the investing world love to talk about politics and the geopolitical environment. They say how important it is for there to be a stable geopolitical environment for economies to perform well. This is true, but it leaves out too many vital details - a more useful understanding can easily be obtained. 

Geopolitical certainty is less a beneficial item for investing and economic success - it's more of a prerequisite for a stable economy and an attractive environment for business. Geopolitical certainty is more of a necessary condition for good things to happen, NOT a sufficient condition. This means you need political certainty and a healthy geopolitical environment for business and the economy to be strong, BUT having a great political climate won't really help your portfolio. 

The reason for this uneven distribution of benefits is because stocks aren't valued based on the geopolitical landscape - they are valued based on anticipated future cash flows, discounted at appropriate discount rates. Politics can influence this a bit, but far more so in the negative direction than in the positive one. 

So, don't overdo it on how much you focus on politics, the global political landscape, and how this might impact your portfolio. A better approach is to monitor for signs of a terrible geopolitical situation on the horizon while prudently picking excellent investments to put your money in. 

The first step is always getting to our down payment goal - if you don't know how much you're going to need to save, you'll have a tough time getting there. 

A lot of people start right away before doing a minimal amount of planning/prep work that's needed to articulate a goal properly. This occurs both in finance and in other aspects of life. It's not good to start things without goals - make sure to take the time to set an appropriate goal before you begin on any complex or challenging journey. 

So, how do you figure out how much of a down payment you'll need? It's pretty easy with some basic math:

1. Estimate your purchase price: The down payment will vary in a linear way with purchase price because the down payment is a percentage of the purchase price. The very first step is to get an idea of how much house you're going to want to buy. This should be done prudently, with a focus on your income and how much you'll want to spend every month on your mortgage. Make sure to include property taxes, HOA dues, and anticipated maintenance expenses into your calculus here. 
2. Decide on the down payment you'll put up: Down payment requirements range depending on the type of loan you're getting. Some loans allow for a 3.5% down payment and some that are even less. Other loans offer 5% and up options, with most lenders wanting 10% to 20% down. You can speak with a few mortgage people to get an understanding of what sort of down payment would be required for you based on your income, credit score, and other factors. 
3. Use the estimated purchase price, and the assumed down payment level to calculate the absolute down payment number: This is simple multiplication - if you're planning to buy a $100,000 house with a 10% down payment, for example, you'd simply multiply $100,000 by 0.1 to get $10,000. 

Once you have the estimated/projected down payment number from Step 1, simply determine when you'd like to buy your house and calculate how much money you'll need to save each month from reaching that goal. 
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For example, let's us the $10,000 down payment from Step 1. If you want to buy your house in 2 years, you'd simply divide $10,000 by 24 months to get $416.67 per month. This is obviously a relatively small down payment goal - yours will probably be bigger, but simple round numbers are good for examples. 

The final planning step following Steps 1 and 2 is to determine where you'll keep your money. For the vast majority of cases, your money should be kept safe and sound in a savings account or some sort of liquid money market account. This is because most people will be looking to buy a house within a few years - at this time horizon, investing in stocks, bonds, commodities, crypto, or almost any other alternative asset is too risky.

If your home purchase goal is farther out, more options might be on the table. Say you want to buy a home in 5 years. In this case, you could expose your savings to some risk - you might be able to put it into a very safe and low-risk ETF or mutual fund that holds a large portion of the fund in low-risk securities or cash. 

Another critical consideration is to store the money separately from other accounts. You'll want your down payment account to be separate and only for the down payment, nothing else. Don't mix it with your emergency fund, your kids' college funds, or your general wealth-building portfolio. By keeping it separate, you'll help to mitigate the risk of pulling that money out for other things (but not entirely). 

Once you've 

• estimated how much of a down payment you'll need (Step 1),
• calculated how much you'll need to save per month to reach that down payment goal within your time horizon (Step 2), and
• decided where you'll store that money (Step 3)

it's time to get the heart of the matter: saving!

To save more money, you'll need to do two key things:

1. Spend less: You'll need to cut your spending so that you're able to put more of your income away
2. Make more: You'll also want to make more money, even if it's just for a short period of time - this will help you accelerate your savings plan and really kick things into gear

Saving money is hard - most people are terrible at it, and it doesn't seem to be something most human minds are good at. However, it's possible to save a lot and enjoy doing so. The key is to find areas in your budget that can be cut out (e.g., restaurants and expensive memberships) while maintaining the discipline to actually put the saved money into saving (instead of spending it elsewhere). 

To earn more money, there are many options in modern economics. Today the world has many side hustle opportunities available, most right from your smartphone. It'll take some energy and force you to spend some time away from friends and family, but if you do it for a short period of time, it can be well worth it. Six months to a year of intense side work can change your financial picture - it's not well paid, and it's not easy, but if you can muster the energy and the time, there's room to make some decent extra cash. 

Extra cash is very beneficial to your down payment goals. Relying only on your current income might be enough, but getting some extra money every month can skyrocket your savings goals. For example, if you're able to save $1000 a month but also are able to side hustle and make another $1000 per month, you'll have cut your time to house purchase in half!

​Buying a house is a critical step in most adults' lives in the western capitalist world. Still, we've seen a lot of changes related to homeownership and when homeownership happens over the last century. The way things are now from a home-buying perspective is not how they've always been. In fact, the way things are today is very different than they've ever been in human history. 

​Before the Industrial Revolution, the world was very different than it is no. People lived in small communities, traveled very little, and interacted with less than a few hundred people over the course of their entire lives. A man leaving his home go out on his own would rarely have seemed like a prudent decision - how would he and his family survive without kin? A woman leaving her home alone to go out and make something of herself in the world? This was a non-starter in a non-capitalist and agricultural world when kinship and ancient communal ties kept you safe, fed, and busy. 

Over the last century, as the western world (especially the US) modernized, it became typical for young men and women to leave their parents' home when they turned 18 - this usually coincided with the start of a college education. Not everyone had the opportunity or the desire to leave home in this way, but many did, and this phenomenon increased over time. 

In the early 21st century, further shifts and refinements to this novel paradigm occurred. A combination of factors, including the following

• housing becoming more expensive
• school-age children being increasingly protected and coddled in modern civilization
• automation removing the need for a lot of unskilled labor
• global macroeconomic shifts that took a lot of menial and unskilled labor (the kind of things young people would typically start out doing) oversees
• less governmental influence on the US's capitalist system, allowing for less income to flow to lower-skilled and lower-wage workers
• increased competition in the labor force causing a need for more education to be able to compete effectively (e.g., the phenomenon that you can't really expect to be in the middle class with just a high school education any longer; the fact that the person who makes your coffee might have a bachelors degree)

has caused some significant shifts to most western economies, including the US. Today, it's not so easy leaving your home at 18 and never coming back. Today, a bit of a different approach seems to have become the norm. 

In today's world, students leave at 18 for college, but typically either return home or need some extra support from their families even after they graduate. The idea of being able to leave home at 18 and have an economy that is able to provide enough income for you to do that in a separate housing unit is a bit wild - only economies that are growing substantially can support that sort of lifestyle. A more reasonable lifestyle is staying within the parental unit, at least in part, until you develop enough skills, income, and savings to be able to go out on your own and be a productive part of the global economy. 

A lot of people, however, never develop the needed skills or the required savings and income to go out on their own. This is something that has been increasing. You can now easily find people in their late 20s living at home and even people well into their 30s. In 1950, if a 35-year-old man was living at home without a family of his own (and he came from a typical middle-class family), it would be a pretty big negative for him.

Too often, people fail to take prudent steps to prep for recessions, market corrections, or economic downturns - they think they'll see the signs close to it and will be able to make the needed financial adjustments. This is incredibly hard to do, however, and most people fail at it. 
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The main reason it's hard to do is that, unlike economic recoveries and expansions, recessions come quickly and don't tend to give warning signs until after things are already bad (so, they're not really warning signs in this case).

There is too much to be done to prep for a recession, and there might not be enough time to do it if you wait for some sort of warning sign to begin. These things may include the following:

• job security: this is hard and not in your control if you work for a living (small business owners seem to have a lot more control in this space)
• liquidity: you'll need to prep to make sure you have a large enough cash cushion should bad things happen; these bad things include losing your job and other financial and non-financial emergencies that always seem to arise at the wrong times
• de-risk your portfolio: you'll want to lower the overall level of risk in your portfolio by selling off particularly risky assets and de-leveraging (which is rarely advisable for most retail investors); if you're too late to do this, you may be forced to sell your assets at discounts that could be very significant
• de-leverage your financial world: you'll want to decrease the overall level of leverage in your financial life by paying down debt in a prudent way (don't deplete your emergency fund or core cash cushion to do this); things like paying off credit cards and other consumer debt should probably be a big priority here
• prepare for buying opportunities: once the recession or correction is in full blast, the prices of assets such as stocks and real estate should drop a ton; a prudent investor will prepare in advance and have a short list of great firms they might want to buy during a recession (at a severe discount)

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The above items are essential if you want to both protect your financial and non-financial worlds during a recession. It's also important if you're going to thrive post-recession because of recessions, market corrections, and economic downturns bring asset prices down. The smartest investors are those who are eagerly awaiting a recession with a list of quality firms and other assets to buy up at low prices. 

Generally, quality firms are those who have healthy balance sheets, strong and growing earnings, proper management, and are engaged in businesses that are not readily open to competitive entrants. This is an entire field of study, however, and there isn't enough room in a single article to even begin to delve into this topic. ​

Sometimes luck gets in the way of us achieving our financial goals. Other times, we get in our own way. Don't make these classic financial mistakes - they have significant long-term consequences to your financial life.

1. Buy into the financial markets during market euphoria and sell out during the middle of an economic downturn: Far too often, people buy high and sell low instead of the often-stated "buy low, sell high" mantra. This has a lot to do with behavioral psychology and cognitive biases. A surefire way to take substantial steps backward in your financial life is to buy stocks (or any other asset) during a boom only to sell during a recession - this will result in capital losses, which are devastating to your financial portfolio. 

2. Keep no cash cushion for the unexpected: Without a cash cushion (often called an emergency or rainy day fund), you'll need to sell less-liquid assets during harsh times for you and your family. Harsh times almost always do come, so neglecting to have a proper emergency fund in place will likely mean you'll end up selling assets at non-ideal times. Non-ideal is a good scenario. In fact, you could end up having to sell during a market correction or a full-blow recession (where asset prices can quickly drop by 50%). You can't afford to sustain such capital losses - having a cushion of money set aside as an emergency fund will protect you from this. 

3. Fail to invest your savings: The first step to building wealth is saving - if you can't put money aside, you're going to have a hard time building real wealth in a sustainable and lasting way. Some people can save well, but they are afraid of investing. These people are often diligent and reasonably hard-working adults who don't like to take perceived risks. What they don't realize, however, is that for the most part, saving alone is not enough - you must invest your money at reasonable rates of return so that it may grow. Without growth, your wealth will only depend on your ability to earn income, and every year your wealth will slowly be eaten away by inflation. 

Whenever people who typically aren't involved in the financial markets get invovled because prices keep rising for a particular asset class or a specific asset, it usually means a correction looms. This has been true about stocks, and it's true about pretty much any asset, including gold, silver, bonds, other commodities, real estate, etc. 

Crypto is no different - whenever people pour into the crypto asset class en masse (especially those who traditionally aren't involved in finance, investing, or the financial markets),  it usually means we're reaching a local peak, and a correction might be in order. 

Of course, a correction doesn't mean things are through. Corrections can be healthy, and after corrections, we often see assets rise again above their pre-dip peaks.

Take a look at Google searches for Bitcoin below - one can see peaks and dips corresponding to rises and dips in the price of Bitcoin (and crypto generally). Interestingly, the spike in late 2007/early 2018 overshadows a lot of other data around it. As of this writing (October 2019), this pre-crypto correction peak is the highest point so far. However, any prudent investor who has studied market history would know that this might not be the case for long. 

What is important to understand here is that whenever there's massive euphoria surrounding any financial asset, things aren't generally going to be good in the short-run and medium-run. If there's a ton of euphoria, media coverage, and both your Uber/Lyft driver and grandma want to get in on the action, it might mean the market is saturated with demand. If this is the case, prices for the particular asset might be inflated, and a correction might be in order. This isn't always the case, but it's the case most of the time. 

Luckily, it's not hard to know when mass euphoria takes hold. If you're an aware person, you'll likely hear about the new asset craze at the office, at the bar, on the news, or online. Everyone knew about the Bitcoin craze in late 2017. If you want to take things a step further, however, a lot of data is available online that can provide useful proxy information - the Google Trends graph below is a basic example of this. 

From time to time and quite often, we find ourselves in need of extra money. Maybe we're paying down some credit card debt or maybe we need a few extra grand in order for us to take that vacation or maybe we need $10,000 more to be able to afford the down payment on the house we want.

Whatever it is that we need, we are lucky enough that living in a capitalist society allows for ample opportunities to earn side money. This isn't easy to do and your success will depend on many factors, including your skills, your grit level, your energy level, and the amount of time you have to devote your side hustle. But, if you're lucky enough to be able to take advantage of some opportunities that currently exist to earn side money, you could very quickly change your and your family's financial picture in as little as six months. 

1. Drive for Uber/Lyft or another good ride-sharing service: Not a great job -- more of a gig in today's parlance -- but an excellent way to make extra cash for a short time if you've got the energy and the drive for it. You could put in a ton of hours and, over the course of six months, take major leaps forward in terms of your financial life. You'll need to have a reasonably new car and be able to pass a background/driving record check. 

2. Charge scooters: Mobile electrics scooters like Bird, Jump, and Lime are taking over city centers and downtowns all over the US and the world. These scooters need to be charged and most companies have set up Uber-like/gig-like approaches where people can charge them overnight for a fee. The pay is not going to be great here - you'll earn a bit of money on each scooter. You'll also need cheap transportation, the ability to stay up for hours at night, and cheap electricity to make this worthwhile. But, if you fit the mold for this, you can earn some extra side cash. This is not a sustainable long-term solution to your money problems - the pay is too little, it requires a lot of energy, and the price of electricity makes it prohibitive for some people. 

3. Start a blog, and do it well: You could always start a blog or a website on some niche topic, write amazing SEO-optimized content, and make money from ads. This is incredibly popular, especially in the US. There are a ton of resources available all over the internet on how to do this. This is a path that will take a while and where your patience will be tested - you'll be spending a lot of time, energy, and some money upfront to build out a good online presence. The key is not to get your hopes up too high about what's achievable.

4. Participate in focus groups or other research groups: A great way to make extra money is by participating in focus groups, research groups, or other such types of surveys. The best of these are in-person. You can search online to find some consumer research-type firms in your area and sign-up - most usually have an easy way to sign-up to receive updates. You'll periodically get updates with requirements (eg. age, type of car you drive, gender, preferences, consumer choices, etc.) and you can sign-up for them. The pay can be pretty solid - you can make a few hundred USD in just a couple of hours (sometimes more and sometimes less). 

5. Tutor: If you're intelligent and have some solid knowledge about a particularly challenging topic (eg. organic chemistry, introductory Calculus, or Russian), you can tutor people and possibly build a sustainable side business that has the potential to generate extra money for you and your family. This is something that will take time to build and develop - starting a tutoring business is, in fact, starting a business, but it's not a business that requires much upfront cost. There are tons of websites online that facilitate student-tutor matching, but you can go the old fashioned route and post fliers up at local colleges, community colleges, high schools, churches, your local library, and other community centers

The above aren't the only ways to make extra money with a side gig. There are plenty of opportunities available to earn extra cash on the side for people who are smart, hard-working, and willing to put themselves out there a bit. Of course, the more skills and education you possess, the easier things will be (eg. charging scooters vs. tutoring differential Calculus), but there's no stopping you from taking a few steps forward in your financial life if you're gritty and willing to put in the work.

Too many people read lists like the one above, but never take a single step - a lot of us seem to just feel good enough searching on Google and reading the list; we too often get complacent and self-satisfied too quickly and don't actually pursue any of the above money-making opportunities. Others are eager to make extra money and change their financial picture, but are too timid to pursue anything out of their comfort zone. Avoid these pitfalls and mental traps - keep moving forward, both financially and non-financially, one step at a time.

Widely propagated on personal finance blogs, YouTube videos, magazine article, and on personal finance-related TV shows is the idea that anyone can get out of debt, save money, and build real wealth as long as they just try hard (both in educating themselves about money and in actually doing what's needed). This idea about personal finance and wealth building is a fiction, however. Not everyone can achieve financial success because financial success and lasting wealth depend, in part, on luck. 
 
In modern Western Civ, people tend not to like to chalk up success (both of the financial and non-financial variety) and well being to luck. But, in many cultures around the world and in many periods throughout history, chance was understood better, and people didn't have as much resistance to accepting how much of a role luck plays in their lives. In finance, as in everything else, luck plays a huge role.
 
Whether or not you have a job that can provide you with enough income depends on so many factors, including whether or not you have skills that will provide value to other humans. To have such skills, you'd have to have gone to school or have developed them through some sort of apprenticeship (an apprenticeship could range from very formal to very informal). Whether or not you had the opportunity to develop skills, then, is at least in part determined by luck. What if you were born in a harsher place, to a more discordant community, or a less well-off family? Would you still be where you are today with a decent/good/great job? Maybe not. Likely not. 
 
Beyond just the skills you possess, your disposition is dependent deeply on genetics and on how the first few years of your life went. Even the desires to save, to read personal finance blogs, to become better, or to move forward with your life may not be entirely yours – you might be lucky to have them, owing them in part to your parents (genetics) or your first few years of life.
 
Can a homeless man build wealth? Can a single-mom work three jobs while dealing with depression and build wealth? Can a crippled veteran who was deeply abused build wealth? Can a devastated black man who has only been taught that the world is dark and harsh build wealth? Can a family from the former Soviet Union whose members (especially the family's leaders) have deeply dysfunctional and ingrained problems understanding how to function in a capitalist society build wealth? Maybe, but it's not that easy. 

A latte-sipping college-educated person with a relatively healthy mind, decent health, a neutral disposition, and without deep financial/family/psychological burdens stands a far better chance than the people described above. When the financial and personal finance media propagates lies about what's possible and what's not possible, they are abdicating their real moral duty in favor of clicks, views, likes, or short-term gain.

When thinking about risk and probabilistic outcomes, potential gains and potential losses aren't the same things. Only hyper-academic people who aren't actually engaging with the real world or putting something at risk (eg. money, health, life, friends, family, reputation, dignity, etc.) would argue that downside potential should be regarded in the same way as upside potential. 

Only entities that

1. plan on existing for very long periods of time (or perpetually) and 
2. have an unlimited (or close) capacity for loss 

can think about things in a purely probabilistic fashion without taking special account for downside losses. 

Let's say you're a casino or a major corporation and have a ton of time and a ton of money – in that case, a binary 49% vs. 51% loss-gain distribution (49% chance of total loss; 51% of 2x gain) might make sense because you've got a 2% edge. In the long run, this edge will play itself out so that you come out ahead, assuming you stay around for the long run. 

Most retail investors, small or medium-sized businesses, or other smaller orgs won't be around, however, especially if they keep sustaining losses. They should definitely consider the 49% vs. 51% probabilities, but  they should also consider another key item: whether or not they think they'll survive for long if they keep engaging in these types of bets . Because, even if the odds are in their favor, a small entity has to be around in order to see those odds actually play out. If you're not around, it doesn't matter how good the odds are – to win the game, you've got to survive long enough first. 

​Thinking about risk, therefore, isn't a binary operation where you can simply compare probabilities – it's a far more complex exercise that has to take things such as the following into account:

• time horizon
• ability to withstand losses
• how often each "round" occurs
• the level of uncertainty you have about the probabilities