In my years of investing, I have never withdrawn a single dime of my money from my brokerage account. For a simple reason that I wanted my money to work hard for me and I didn't need that money yet anyways.
So every single month, as my portfolio generates cash flow from selling options - I always reinvest it back into the stock market. After all, compounding is the secret to growing your wealth, and keeping cash in the bank is silly (unless you really need the money in the short term).
However, there came a time where I did my first withdrawal for my brokerage account and it was for one simple reason - I was planning through my goals.
My Initial Goal
When I first started investing back in 2017, I was inspired by this book called Rich Dad Poor Dad by Robert Kiyosaki. For those who have not read it yet, you should definitely check out his books. What I really enjoy about his books is that it is simple to read. Many other books tend to use very unnecessary complex words to make the authors sound more sophisticated - which ended up confusing their readers, than convincing them of a point they were trying to make. Or perhaps, I was simply too simple-minded to understand their sophisticated English.
In any case, Robert Kiyosaki exposed me to a key concept of passive income. Passive income tend to receive many definitions by many people. Some says that passive income does not truly exists - and it is a myth.
Well, I kinda agree with that - because the word "passive" seems to suggest "easy" or "effortless". But the truth is that building up your passive income streams takes a ton of hard work - kinda contradicting, isn't it?
To me, passive income simply means setting up systems up front, so that you can get paid over and over again in the future. And setting up these systems take a hell lot of effort, that most people underestimated and ended up giving up on this journey.
In the context of investing, the process of investing is actually pretty easy. But what is hard, is mastering the skill set of investing. It is after all, a huge learning curve. When I say learning curve - I don't mean the investing strategies or tactics. But rather, the learning to master your emotions. Many people are designed for instant gratification. They want to get results fast, and they are not willing to be patient - which is why it is hard for them to make consistent money in the stock market.
In the short term, the stock market is a betting machine. In the long term, it becomes a weighing machine.
So, when I first started investing - it was also hard to grasp this concept. This is something that you can never learn from reading books, watching YouTube videos or webinars. It is something that you have to experience it yourself first hand - the emotional roller coaster of riding the stock market for the long term. And I am glad that I got to experience this early on in my life.
This led to me to the goal I had - to build a portfolio that will replace my job's income by the age of 32. When I set this goal, it is because I hated my job (okay, maybe just sometimes) - but rather, I wanted to make my job a "choice" and not a "necessity". I wanted to do things because I wanted to, and not because I needed the money. That is the greatest blessing anyone could have. After all, we have seen many whom always complain about their jobs but could never get to leave them since we needed that source of income to pay the bills.
At the age of 26, I knew that I was already on track to achieve this goal. I knew it because I did the calculations myself. So knowing that I will achieve this goal, I had to start to think way ahead, and to answer the question, "What should I do after the age of 32?"
To be clear, I wouldn't want to leave my job earlier, because I wanted a stable salary to continue contributing to my portfolio. And also, banks are more willing to lend me money if I had a stable salary so that I could buy more properties.
You Need To Think THROUGH Your Goals
Many people have goals, but they always forget to think through their goals.
For example, when I was in university, I have saw many other students who aimed to get First Class Honors for their degrees, but when you ask them what they want to do after graduating - some of them shrugged their shoulders and said they had no clue. Even worse, some of them didn't even know why they were studying for their degree in the first place. In short, they had never planned ahead - so when they reached the goals, they immediately became a lost sheep with no direction.
That is why it is so important to plan THROUGH your goals and think about what we are going to do, once our goals are achieved. That's right, it is always one goal after another, so that there is never a moment where you start asking yourself, "Okay, so what do I do now?" In other words, we are always progressing in our lives.
So this leads me to answer the question - why did I withdraw from my brokerage account?
Well, it is always the same reason - to grow my equity. I withdraw $5,000 as seed capital to start an Amazon Business. Why do I need to start this business, when I can just continue investing in the stock market?
Many reasons.
Firstly, starting a business is hard - much harder than investing in the stock market. There are so many uncertainties, failures and quite frankly, a single wrong move and I could kiss my $5,000 goodbye.
Why do I still do this? It is not because I love taking the risks. It is because I know that starting a business is the best personal development program you will ever have. You will learn things that schools or your employers will ever teach you. This is why I respect successful business people so much - because behind the success they have, it was actually built upon multiple failures that most people don't get to see.
The reason why I am always so motivated and never give up is because I tend to learn from many entrepreneurs. They helped me shift my perspectives. In schools, we are always taught failures are bad - and somehow we get punished for our mistakes. Needless to say, mistakes are also not tolerated in most companies. However, in the world of business - failures are the best place to develop yourself and learn from them. In fact, one great lesson I learned was this:
Robert Kiyosaki was asked, "What is your biggest failure?"
His reply was priceless.
"The next one."
He is always looking forward to his next big failure - because when you fail, it means that you are operating outside your comfort zone - and that is where you actually learned the most. No amount of time spent in schools and formal workplace will give you this experience.
Secondly, when I leave my job at 32, I will lose the stability of an income. Now, I am not worried about the source of income, since remember that my first goal was to build a portfolio that replace my income. But losing the stability of the income meant that banks are less willing to lend me money to buy properties. And banks typically don't recognise stock market returns since they are deemed to be less secure. But with a business, which I hopefully build over time, I could try to use the company's balance sheet to borrow money for my property purchase. Of course, this is just a concept I have - I might even fail in the business 🙂
For those who might be familiar with property investing, you will understand why I will always borrow money to invest in properties. If you understand the math behind it, it makes a lot of sense, especially if you read the Rich Dad Poor Dad book by Robert Kiyosaki.
The Bottom Line
If we truly want to achieve success, we need to abandon the mindset that traditional schools have instill in us. We shouldn't feel discouraged when we make a mistake but instead embrace them, as these are amazing opportunities for us to learn and grow.
The more important note is to not "waste" a mistake. If you made a mistake, make sure that you always reflect on it so that you don't make that same mistake again.
Finally, always plan ahead of what you want to do. Never be a lost sheep without a sense of direction. Life can be very exciting when you always have big goals ahead of you 🙂