I was inspired recently by a few Youtubers' interpretation of Dao De Ching, the quintessial text of Taoism. As a result, I headed to the community library, hoping to find enlightenment among the Religion section.
I picked up a book titled, "The Stoic Art of Living - Inner Resilience and Outer Results" written by Philosophy Professor Tom Morris.
Stoicism is a philosophy centered around living an ethical life and the practice of virtue. It appealed to me because I am a staunch believer of self effort. What happens within, shows its result without.
There was a particular segment in the book which described knowing oneself and one's capabilities. It cited the words of Stoic philosopher Seneca, that we should have a crystal clear knowledge of our abilities:
The Roman statesman also warned against biting off more than we can chew:
In short, we should set realistic targets and practical goals, as the one-time imperial advisor elaborates:
Now, what has all these got to do with portfolio building?
In my quest for financial freedom, I had laid down an audacious goal of generating a passive income of $10,000 per month. Using a conservative estimate of 4 percent dividend yield, this works out to a minimum portfolio value of $3 million.
Given my limited income and a desire for early retirement, this portfolio value is so far-fetched and impossible to attain, it is laughable to even think about it.
If I slash the target by half to $5,000 per month, that still works out to a portfolio value of $1.5 million. And I'm not close to one-third of that at the present moment.
In other words, I am setting myself up for failure and sadness. Seneca would have rolled in his grave if he knew of my foolish financial ambition.
But a tiny part in me refuses to give up so easily. Maybe, just maybe, there is the sliver of a chance I may hit this target?
To accomplish this, I need to inject at least $100,000 of new funds into my portfolio every year. I also need an active approach to recycle portfolio capital (i.e. buy low, sell high instead of just buy-and-hold). Lastly, I need to catch the correct tailwind of the market momentum to ride my way up.
A flicker of hope appears. However, this still entails immense effort, careful timing and a miracle for good effect. I might have better probability winning the Toto Draw.
At the end of the day (or my life in general), I hope I would have found meaning and enjoyment while working towards this goal, however futile it may seem.
"Shoot for the moon," they say. "At least you will land among the stars." Perhaps then, this would not have been a wasted endeavour after all.
I picked up a book titled, "The Stoic Art of Living - Inner Resilience and Outer Results" written by Philosophy Professor Tom Morris.
Stoicism is a philosophy centered around living an ethical life and the practice of virtue. It appealed to me because I am a staunch believer of self effort. What happens within, shows its result without.
There was a particular segment in the book which described knowing oneself and one's capabilities. It cited the words of Stoic philosopher Seneca, that we should have a crystal clear knowledge of our abilities:
Above all, it's necessary for anyone to judge himself accurately. We often think we can do more than we are able.
Seneca, Moral Essays II (translated by J.W. Basore), 235
The Roman statesman also warned against biting off more than we can chew:
Next, we should weigh carefully what we are undertaking, and compare our strength with the things we are about to attempt. The doer should always be stronger than what he intends to do. Burdens too heavy for their bearer will certainly crush him.
Seneca, Moral Essays II (translated by J.W. Basore), 235
In short, we should set realistic targets and practical goals, as the one-time imperial advisor elaborates:
Our next concern should be never to work either for useless goals, or impossible ones. First, we shouldn't even desire what we're completely unable to accomplish. And we ought not to seek anything that, if attained, will show us too late and after much shame the emptiness of our desires. In other words, our efforts should never be hopeless, and we shouldn't set goals unworthy of our work. Sadness will often follow a failure, and also the shame of an empty success.
Seneca, Moral Essays II (translated by J.W. Basore), 263
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| Lucius Annaeus Seneca |
Now, what has all these got to do with portfolio building?
In my quest for financial freedom, I had laid down an audacious goal of generating a passive income of $10,000 per month. Using a conservative estimate of 4 percent dividend yield, this works out to a minimum portfolio value of $3 million.
Given my limited income and a desire for early retirement, this portfolio value is so far-fetched and impossible to attain, it is laughable to even think about it.
If I slash the target by half to $5,000 per month, that still works out to a portfolio value of $1.5 million. And I'm not close to one-third of that at the present moment.
In other words, I am setting myself up for failure and sadness. Seneca would have rolled in his grave if he knew of my foolish financial ambition.
But a tiny part in me refuses to give up so easily. Maybe, just maybe, there is the sliver of a chance I may hit this target?
To accomplish this, I need to inject at least $100,000 of new funds into my portfolio every year. I also need an active approach to recycle portfolio capital (i.e. buy low, sell high instead of just buy-and-hold). Lastly, I need to catch the correct tailwind of the market momentum to ride my way up.
A flicker of hope appears. However, this still entails immense effort, careful timing and a miracle for good effect. I might have better probability winning the Toto Draw.
At the end of the day (or my life in general), I hope I would have found meaning and enjoyment while working towards this goal, however futile it may seem.
"Shoot for the moon," they say. "At least you will land among the stars." Perhaps then, this would not have been a wasted endeavour after all.
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