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Wealth Hacks

4 Ways To Increase Wealth Using Charles Darwin’s Theory Of Evolution

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Charles Darwin and his theory of evolution revolutionized the scientific understanding of nature and biology. But because evolution is among the most counter-intuitive ideas in science, its public acceptance has been limited.

There are many intelligent and educated people who still do not fully understand or believe it. And more who may accept it as a scientific truth but have not adopted evolution into their mental toolkit, and do not apply it to their perception of reality each and every day.

Here are 4 ways Darwinian thinking can help you understand money, finance and markets, and help you build and protect your wealth:

1. Consider the stock market a biosphere of public corporations that live, evolve and die like plants and animals

The national financial folk wisdom of 1955 was, “As General Motors goes, so goes the nation.” Bankruptcy for GM was not only unimaginable, it would assuredly bring the nation down with it.

Yet as we all know GM did indeed go bankrupt in 2009, wiping out common shareholders. And the nation not only survived, our GDP has since nearly septupled, soaring from $2.8 trillion in 1955 to $18 trillion last year.

The DJIA is up from 488 to 26,000 this year.

Folk wisdom and common sense can be myopic, and perceive only the present-day reality projected upon the future. Why else should we be shocked by aging celebrities? Or when venerable corporations cease to outperform, and upstarts such as the FANG gang (Facebook, Amazon, Netflix, Google) take center stage.

“If current trends continue” always sounds prescient. But current trends never continue indefinitely in organic systems where birth, growth, death and evolution rule. The “widows’ and orphans’ stocks” of the 1950s, the stocks that would always be there, cannot always be there.

Corporations, like people, routinely grow, age and die. So how do you deal with it? Like evolution, you adapt. To a Darwinian thinker the true widows’ and orphans’ “stock” is a diversified index fund that will endure and grow, even as its components ripen, wither, fade, merge, are replaced and even die.

2. View every living thing, every financial entity, as primarily interested in its own survival, prosperity, expansion or reproduction

Long before Darwin, Adam Smith wisely wrote, “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.” Here’s the short version, courtesy of Warren Buffett: “Never ask the barber if you need a haircut.”

When buying stocks, insurance, or any other service, financial or otherwise, always remember the self-interest of the broker and the seller. A surgeon performs surgery. A lawyer bills every hour. A stockbroker lives on commissions.

A commissioned stockbroker who is reluctant to execute your order to buy shares of Berkshire Hathaway (full disclosure, I buy them, own them and have never sold them) knows you are statistically less likely to sell Berkshire than most other holdings; the money that purchases shares of Berkshire may likely never yield commissions or fees for any broker ever again.

3. Understand that deception and fraud are key survival tactics in biology and finance

A cat deceptively raises its hackles to inflate its size and intimidate enemies and predators. Other animals use mimicry, camouflage, surprise, and even feign injury or death to survive or devour prey.

Consider the Bible, which introduces the power of deception in human life: the serpent deceives Eve, Cain kills Abel and seems to deceive God. Believe it as literal truth or accept it as parable, Bible stories bespeak an essential truth about the centrality of deception in the biosphere.

So why should we expect to escape deception in the high stakes world of finance? While financial professionals provide customers with needed services, self-interest — conscious or not — may lead them to recommend managed mutual funds, closed-end funds, annuities, or complex insurance policies which provide large fees and commissions but may not serve the best interests of the client.

A broker recommending purchases to a client is not held to the fiduciary standard — to act solely in the interests of the client — but only a “suitability” standard, which leaves plenty of room to aggressively sell financial products that are lucrative for the seller, but not the buyer.

4. Realize that our instinct to trust our fellow creatures represents an eternal vulnerability in financial transactions

Humans are social animals, and humanity is a team sport. We are congenial and credulous by nature, which was necessary for the tribal life we evolved from, and is necessary still for sustaining the communal and national life in which we now live, work and prosper.

The counter-trend, so evident in wartime but also present in our workaday world — in media, markets, finance, government and even, courtship and family life — is manipulation and betrayed trust. Think of “fake news.” Think of the indicted politician, the con artist, the criminal, the sociopath.

But the Machiavellian betrayal of trust can be adaptive even in successful professionals, entrepreneurs, sales, courtship, marriage and family. A small child caught misbehaving by his father has a stock answer: “Mommy said I could.”

So how can we protect ourselves from our own congenital credulousness when approaching financial markets? Read, study and listen to credible sources that have a long track record of honesty and integrity.

If there were a Mt. Rushmore of investing I would nominate these three wise men: John C. (Jack) Bogle, Warren E. Buffett and Charles T. (Charlie) Munger. They have each long honored their investors as partners and friends and have grown their wealth alongside them.

My current book, Anyone Can Be Rich!: A Psychiatrist Provides the Mental Tools to Build Your Wealth, is dedicated to all of them — and was commended by Mr. Buffett himself.

This article originally appeared on ValueWalk. Follow ValueWalk on Twitter, Instagram and Facebook.

Personal Finance

VIDEO: 5 Money Rules You Can Totally Ignore!

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Unlike the baby boomers, young adults today are straddling massive financial pressure – be it heavy student loans or home prices reaching unaffordable highs. While all of this welcomes plenty of financial advice, most of them are wrong. Here are five pieces of money rules you can afford to ignore.

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Personal Finance

3 Simple Ways To Save Money Faster

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Would you be interested if we told you that there are efficient tricks to saving money? Well, it’s true; there are a few tricks that can be used to save money, even when it doesn’t feel like you have any money to save.

The present state of the economy is a loud wake-up call for you to tighten your belts, cut back on unnecessary expenses, and save more.

Though there’s nothing wrong with only spending when you can afford it, don’t backslide and disregard your long-term financial goals.

1. Automating Your Savings

Think about what it would feel like if:

  • You woke up everyday knowing that your money is automatically going where it was supposed to.
  • You spend less time managing your finances but still dominating it.
  • You can easily pay your bills/debt and watch your savings/interest grow.

We could go on and on, but the trick here is that automating your finances helps to remove all irrational human behavior that can get in the way of accomplishing your savings goal.

2. Move Any Unspent Money To Your Savings

The whole point of budgeting is to avoid living from salary to salary.

You need to have an understanding of how much you can survive on, monthly or weekly, try to cut your expenses, stick to it and hopefully have something extra at the end.

Any extra income you have before your payday should be moved to your savings account. Then, you start another cycle of budgeting.

It might sound boring but this trick not only shows how better you are at budgeting (having extra unspent income before payday) but it better motivates you to keep the numbers increasing and cutting your expenses.

Remember: Whether you choose to budget or not, at least find out how much you’re gaining or losing every month — Save the gain.

3. Zero Your Money Out Every Evening

This might sound really elementary but it works and it’s pretty easy. You have to make a decision to zero out your unspent money every evening.

So let’s assume after a days’ work, you end your account balance with:

₦51, 600 available on your bank account.

What you should do:

Deduct the last three or four digits from each number to get a zero at the end.

For example:

N51,600 — N1,600 = 50,000 — → N1600 goes to your savings account!

As simple as this trick might be, it helps you to actually control your spending and save. Give it a try.

What are the tricks that make saving easy for you?

Let’s know your answers in the comment section below.

Have a great week!

This article originally appeared on Piggybank.ng. Follow them on Facebook , Twitter , and Instagram

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Wealth Hacks

WEALTH HACK: 5 Apps That Give You Free Stuff (Even Money)

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Whoever said there’s no such thing as a free lunch was probably wrong. There are plenty of apps that will give you free stuff – everything from food (ironically beating the old saying), to money. Here are five apps that you can check out to bag some freebies.

1. Fish For Money

This fun app lets you bag a $15 gift card or get PayPal payments, if you can successfully catch a million pounds of fish.

2. Movie Money

Here’s an app that pays you to watch movies. What could be better? For every 1,200 points you earn watching movies,  you get $5 – either as Amazon gift cards or cashed out through PayPal.

Related: Shopping For Deals: 3 Things To Look Out For (And No, It’s Not Price)

3. Claim It!

If you’re residing in and around New York City, this app lets you bags LOTS of free stuff. This includes anything from movie tickets and video games, to handbags and gift cards.

4. AppBounty

If you’re someone who loves to spend time testing new apps, this app comes packed with perks. You bag anything from 500-1200 points for every app you download and test, which can later be converted to XBox Live Points or gift cards at iTunes and Amazon.

5. Cosign

This app rewards you every time you share information about the products you find. Once you tag the products and hit share, you’ll snag a 30% commission whenever a visitor clicks the link you shared. Better yet, you’ll be paid a higher commission once you’ve collected a required number of points.

 

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