The Art of War is an ancient Chinese military manual written by Sun Tzu, a high ranking military general who thrived in strategy and tactics. This manual consisted of 13 lessons that were devoted to one aspect of warfare. Some people believe that making the correlation between war and investing is absolutely absurd. I will admit that assumption is warranted but there are a significant parallels between investing in the stock market and the principles of war that Sun Tzu outlines in his book Art of War.
What’s At Risk To You?
When a nation or entity engages in warfare each side has something to lose, in most cases what they have to lose is significant, otherwise they wouldn’t have gone to war in the first place. While real war results in the unfortunate loss of life let’s not forget what’s at risk if you lose in terms of investing.
Successful Retirement – There will come a time in your life when working a full time job will no longer become feasible. As of today the U.S. Social Security Administration predicts you will reach this point at age 66. While I personally plan to work well into my 70′s doing something that I love, this is the line in the sand that the Federal Government has established. Once you retire you give up your active income and will now rely solely on your pensions, investments, and social security payments for income. While some companies still offer retirement benefits, the overwhelming majority of companies no longer offer pension plans. Only 11% of Fortune 1000 companies offer pension plans and the Social Security administration recently admitted that they will soon start paying out more benefits than they receive. So, “Will Social Security be there when I retire?” I don’t believe you need a degree or CPA to answer that question. This leaves the only dependable option you currently have, investing!
Reduced Standard of Living – I’m a big promoter of a minimalist lifestyle, but it will be my decision and not a situation in which I am forced to reduce my standard of living. Every year there are thousands of retirees who suddenly realize they will no longer be able to enjoy the lifestyle they had prior to retirement. This forces them to move, sacrifice, or endure hardships that they never had to face their entire lives.
Quality Health Care – As you move into retirement you will realize that health care costs will rise dramatically. Without an employer to subsidize the cost of healthcare coupled with increasing premiums health care can easily become one of your top expenses. How does the old saying go? “You don’t know what you have until it’s gone?” I have a close friend who’s parents spend approximately $1000/month in terms of health care, definitely a hefty sum to say the least!
You have worked hard and will continue to work hard for every dollar you make. Keep it!
Army Of Dollars
Start thinking of the hours you spend at your day job as time recruiting soldiers. Kevin O’leary from Shark Tank understands Sun Tzu’s principles in relation to investing. Kevin views his money as soldiers, he sends them out every day expecting them to take prisoners to bring home. This is the mentality you should have when approaching investing, while war results in loss for both sides, it is your number one objective to never lose money!
Investing isn’t an easy task to learn, however it is a lot easier to understand than most people think. You simply need to master the following 4 investment principles:
With that said, I’m happy to announce my “Investing Is War” series. Where I go into detail about these investment principles that will help you navigate the battlefield of the stock market. Enjoy!