Save Money so You Don’t Need to Think About Money

In the podcast Don’t Brag About Money, I speak about why it’s not a good idea to talk to others about how much money you have or make. The main reason is because it is dangerous. If someone knows you have considerable wealth, you have a target on your back. You will be under the microscope, and any mistake can lead to a frivolous lawsuit. In this podcast, I recommended that you be ignorant of your wealth. Choose an investment whose risk level you are comfortable with and simply stick to it. Focus on your savings rate, e.g. save up 80% of your salary, and then don’t think about it. This strategic ignorance means that others cannot figure out how much you have simply because you don’t know yourself.

The market is not something you can control. You cannot control the global economy. However, you can control how much you save, so focus on that, and let the global economy be.

Another reason why I think it is important to not think about your wealth or earnings from investments is because it can be stressful. Reading finance news all the time, talking about money, etc can fill you with anxiety and stress. Talking about money with friends and family is also stressful and can lead to envy and probing and unwanted questions.

If anyone talks to you about money, my opinion is to simply shrug and say you don’t know. You don’t keep track of anything. Your accountant handles everything.

Technocapitalism, Human Evil, and Sedation Through Technologically Induced Dopamine Spikes

I am a misanthrope because I hate people. It is not one particular factor that makes me disgusted with humanity but various factors. At work yesterday a colleague spoke to me about how he loves to go to the gym to build muscle so he can attract women. He is so superficial and status conscious that it disgusts me, and he is not the only one who behaves like this. This is normal behavior. If you are not working to make yourself appealing in the eyes of others, you are abnormal. You are not trying hard enough to get a promotion, get a wife, and have a family. Society and its cultural norms promotes conformity, superficiality, and a culture of appeasement and slavery.

Something I have been trying to do more of recently is to be more anti-social. I have a habit of catching up with people. I have lunch or dinner with various colleagues and friends, but often these catch ups are nothing more than bragging sessions for others to go on and on about how great they are. Many complain about narcissism on Facebook, but social media merely accentuates what happens in real life, and at least most social media apps such as Facebook allow you to effortlessly block or unfollow someone whereas blocking or unfollowing someone in real life is far more awkward. Nevertheless, I have tried to reject many offers to catch up with people. Sometimes I will just tell people directly that I don’t like something e.g. someone invited me over to a wedding, but I told her that I don’t like weddings. Sometimes I will just make up some excuse not go.

I hate being around people, but I cannot simply walk away from humanity because I need a job in order to build dividend income so that I can shield myself from humanity, so it is a gradual process. I need to learn how to be more assertive so I can be more anti-social so that I can isolate myself more, but at the same time I need to work in order to earn money, and I need to learn how to cope with being constantly exposed to the corruption of humanity yet not being affected by it by being fake and by numbing or sedating myself with technology.

I commute via train, and something that first shocked me about commuters was how fixated they were to their smartphones, but I realized that they are probably like me. Being around people takes its toll. You need to be fake, conform, and be a witness to the superficiality and vulgarity of humanity. When you walk away from work, you have a choice: dwell on it and hurt yourself more, or crowd out these thoughts by consuming something else from your smartphone.

Human history is marked by war and conflict. There is innate in humans greed and ego, and these emotions lead to conflict, violence, and oppression, which result in suffering and pain.

When you’ve spent your life trying to appease others and then when you stop because you realize that the opinions of others do not matter, then you feel an emptiness. You felt that life was all about impressing others, e.g. impress your manager to get a promotion or impress a girl to get married. But when you realize this is all a sham designed to enslave you, there is no point in your life anymore, and you must build for yourself a new reason for living. For me it is about escaping, being free, and being autonomous.

I need to learn how to clear my mind. I have heard that meditation is healthy because it allows you to focus and clear out distractions. I am mostly distracted either because I dwell on the evil of humanity or I am engrossed in stimuli that I have consumed in order to distract myself from the evil of humanity. I need to eliminate my exposure to humanity and then if thoughts of humanity emerge in my mind, I need to expel so I can focus on more important things rather than try to displace it with stimuli. The problem is that the evil of humanity is a potent stimulus, so to overcome it you need a stimulus more potent, e.g. pornography, and this is why I believe pornography is so popular. However, if you consume potent stimulus like pornography, you can become addicted to it. It distracts you from the evil of humanity yet it also distracts you from important tasks you need to do.


The Problem with HVST (Betashares Australian Dividend Harvester Fund)

For probably two years now I have been buying up the Betashares Australian Dividend Harvester Fund (HVST), which is a exchange traded managed fund listed on the ASX. The appeal of this fund is that it pays a very high dividend yield (about 10% to 14%) and pays this dividend monthly. The monthly dividend payment normally gets paid into my bank account in the middle of the month, and every payment is roughly the same. Hence HVST makes living off dividends very easy. This is why I have accumulated over $100k worth of HVST.

However, it is becoming increasingly clear that there are many flaws with this fund, the main one being that it has not performed well in the last few year compared to the ASX 200.

HVST vs ASX 200 from 2014 to 2017
HVST has significantly underperformed the ASX 200 over the last few years (chart from CommSec).

That being said, I am not criticizing the fund or Betashares. I was well aware that the dividend harvesting technique employed by the firm would result in less upside when markets were going up. This is a result of the fund manager buying high dividend paying stock just before dividends are paid and then selling the stock after the dividend is paid. As stock prices normally go down after dividend payment (as the company’s value goes down in line with its reduction in cash) then naturally a dividend harvesting technique would result in lower capital gains.

Something else surprising is that during downturns in the ASX 200, HVST also went down considerably as well, which makes me question the firm’s risk management overlay employed. According to the article Managing risk: the toxic combination of market downturns and withdrawals in retirement on the Betashares Blog:

One way to help manage sequencing risk is to apply a dynamic risk exposure strategy, which seeks to reduce downside market risk…. BetaShares combined its expertise with Milliman to launch the BetaShares Australian Dividend Harvester Fund (managed fund) last November. The fund invests in large-cap Australian shares with the objective of delivering franked income that is at least double the yield of the Australian broad sharemarket while reducing volatility and managing downside risk.

Based on this description, I was hoping that the fund’s risk management overlay would reduce downside movements, but the chart of the performance of HVST against XJO shows that when XJO turns downwards, HVST goes down by as much. When XJO goes up, HVST tends not to go up much if at all, which results in HVST falling by about 20% over the last few years while XJO has managed to increase in value by a modest 5% during the same time period.

As I said, this does not mean I will not continue to invest in this fund. The regular and high monthly dividend payments are extremely convenient, and any capital losses made by the fund over time, in my opinion, can be compensated for by investing in ETFs in riskier sectors e.g. investing in tech stocks, emerging market, or small caps or even by investing in internally leveraged ETFs such as GEAR. For example, if you invest half your money in HVST and half in GEAR, you get the convenience of monthly regular dividends from HVST and any capital loss is compensated for with your investment in GEAR which should magnify upside market moves. Note that a limitation of the half HVST and half GEAR strategy is that when the market goes down, GEAR will go down significantly as well. Furthermore, another problem with both GEAR and HVST is that they have management expense ratios that are significantly higher than broad-based index ETFs mostly from Vanguard or iShares. Both HVST and GEAR have management expense ratios of 0.80 percent whereas Vanguard’s VAS is 0.14 percent and iShares’s IVV is 0.04 percent.

Nevertheless, I do recommend many products from Betashares. One ETF that I am interested in from Betashares is their new sustainable ETF called the Betashares Global Sustainability Leaders ETF (ETHI). I normally buy ETFs in batches of $10k to $25k at a time, so I intend to buy a batch of ETHI and write a blog post about it later. I have mostly positive views about Betashares as they provide a great deal of innovative ETFs.

Update 18 June 2017: The poor price performance of HVST is explained in the Betashares blog article Capital vs. Total Return: How to correctly assess your Fund’s performance. If performance includes income as well as franking credits, the gross performance of HVST looks more favourable.