Money grows on trees – Bitcoin Market Journal

0

Summary: How to program your brain — and your bank account — for long-term financial success, like planting a “money tree.” Subscribe here and follow me to get more mental tips and tricks.


I spent this week planting trees.

Last weekend was Tax-Free Weekend™ in Massachusetts, which is designed to stimulate the economy, so my wife and I stimulated it by buying trees.

We went to our local nursery, where we were pleased to see they had a markdown section, as we are nearing the end of the growing season. (You know how I love bargains.)

It wasn’t a Home Depot, houses: it was a posh joint, with specimen trees that had been 75% marked. They were still healthy and beautiful, so we picked up these saplings and sowed them in the ground.

Planting a tree – planting anything, really – is hugely satisfying. It’s work, of course: you have to dig the hole, mix your fertilizer, soak the root ball with water, fill it, then water, water, water.

But you feel like you’re doing something positive and lasting. You start (or continue) a natural process that will last. And when you plant trees, they’ll probably outlast you.

This is the mental attitude that we must have as investors: we are to plant trees.

But you feel like you're doing something positive and lasting.  You start (or continue) a natural process that will last.  And when you plant trees, they'll probably outlast you.  This is the mental attitude that we must have as investors: we plant trees.

How to grow money trees

Growing up, my parents always told me that money doesn’t grow on trees. (That would be the case if we used leaves as currency, but then we would have severe inflation every spring.)

But money, in a way, Is grow on trees: you must carefully plant your investments – whether it is an investment in yourself, such as education, or a monthly investment in bitcoin – then water, water, water. (There’s a reason we call it drip investing.)

This is not how most investors get into crypto: they are looking for the Magic Internet Money that will give them short-term enjoyment and status: the Lambo, the yacht, the $12 million Bored Ape.

It’s hard to get our brains to care about the long term, because they are short-term pleasure machines.

Our brain evolved about 200,000 years ago, and it hasn’t changed much. Back then, life was brutal and short: your main tasks were to “eat and mate”. Feeding and caring: these are short-term goals, and they trained our short-term brains.

The good news is that we can retrain our brains.

In “Short Term Thinking is a Long Term Problem”, Stelian Nenkov shows how short term thinking is counterproductive to long term investing. He uses an example from Nassim Nicholas Taleb’s book Fooled by Randomness, showing that even a very successful investment will look worse and worse the more often you check it.

Crypto investors are surely familiar with this phenomenon: the endless refresh of bitcoin’s price stream quickly becomes a sea of ​​noise, as our brains cannot make sense of short-term price movements. Only in hindsight can we see how we did.

The article goes on to quote legendary investors like Warren Buffett, Jamie Dimon, and BlackRock’s Larry Fink, all of whom have suggested ways to get investors out of short-term short-sightedness. (Read Buffett and Dimon’s opinion piece in the the wall street journal.)

If these financial titans are locked in for the long haul, let’s follow their lead.



Think long term: Warren Buffett didn’t become incredibly rich until late in life.

That’s why our approach is to create ready-to-use investments. You plant once, and they are watered automatically, with a monthly contribution from your bank account.

Most short-term get-rich-quick schemes fail. (Even if they pass, you think, “Hey, that’s easy,” and you fail the next time.)

Most long-term investment approaches, on the other hand, are successful. It’s like trees: with the right selection and care, most trees take root, grow and thrive. They are quite robust. Check out this bad boy:

tree growing from a rock
Think long term: Warren Buffett didn’t become incredibly rich until late in life.

That’s why our approach is to create ready-to-use investments. You plant once, and they are watered automatically, with a monthly contribution from your bank account.

Most short-term get-rich-quick schemes fail. (Even if they pass, you think, “Hey, that’s easy,” and you fail the next time.)

Most long-term investment approaches, on the other hand, are successful. It’s like trees: with the right selection and care, most trees take root, grow and thrive. They are quite robust. Check out this bad boy:

Types of Money Trees

Invest in yourself. The best investment you can make is in yourself: going back to school, getting professional certifications, even watching YouTube to learn new skills. These add to your market value, which adds to your earning potential.

Retirement plans. If your employer offers a 401k plan, use it. If they match your contributions, take it. (Free money.) If you’re self-employed or a gig worker, get a self-employed 401k. No excuses.

Education savings plans. If you have children, start a 529 plan, which allows you to set up tax-deferred monthly contributions. (As parents of college-aged kids, we’re glad we started saving when they were born.) Bonus: You’ll be more likely to send them to college.

start a business. It’s not for everyone, but your own business – even a side hustle – can be a tree that produces long-term financial fruit. Before you take the leap, make sure you have enough savings to get you through the tough times. (Your chances will be improved by going to trade school first.)

Blockchain Believers Wallet. Of course, you can also use our method of crypto investing to build long-term wealth. It is a diversified approach that, unlike other crypto “plans”, balances risk and reward.

Plant on two levels

Planting your financial trees is important. But planting your mind trees is even more important.

The reason I spend so much time writing on the mental level is because you can’t build long-term wealth without it. Like lottery winners or young sports stars who explode their winnings in a year, you need to have the right mindset.

The mindset of planting trees.

We’ve covered a number of specific techniques for developing the right mindset:

  • Repeat useful thought loops. See last week’s newsletter on the Émile Coué claim that mesmerized the Western world.
  • Write who you want to become. Check out our column on Ruby Payne’s wealth spreadsheet to skip social classes.
  • Read about other great investors or entrepreneurs. Our Read and Grow Rich playlist is a great place to start.
  • Take a financial planning or investment course. A good course, taught by a reputable financial advisor, can change the way you think…and your life.
  • Stay subscribed to our newsletter. Note that each newsletter has a new “seed thought” to grow your mind.

This week, plant trees and keep them well watered. And whenever you need inspiration, think of this guy.



Share.

About Author

Comments are closed.