New Year’s day is often a re-e-e-a-ll-y lethargic day for me. I had a slight hangover from my New Year’s Eve countdown, so I spent the day reading Superforecasting – a pretty cool book on how to make better forecasts
The author, Philip Tetlock, organised a “forecasting tournament” where he recruited 3,200 volunteers – regular people like you and me – who signed up to make predictions like:
- Will Serbia be officially granted European Union candidacy by 31 December 2011?
- Will an outbreak of H4N1 in China kill more than ten people in the next six months?
- Will the Euro fall below $1.20 in the next 12 months?
The tournament spanned several years. Along the way, Philip Tetlock discovered something interesting:
As a group, his superforecasters ended up performing even better than professional intelligence analysts. The superforecasters beat professionals in the CIA and NSA who had access to classified information – and often beat them by huge margins.
How could this have happened?
This is a phenomenon known as the “Wisdom of the Crowds”: Each individual person has part of the right answer based on what he or she knows. But each person likely also has lots of wrong information. When you aggregate everyone’s guesses, the right answers get magnified and the wrong information cancels each other out.
Think about how this applies to your life. Every day, we make lots of forecasts: Is it going to rain on the way to work? Will the MRT break down? Will my colleagues be late – giving me time to sneak in a coffee before the meeting?
Most of these forecasts are straightforward. Most of the time, we can accurately figure out the small decisions on our own. But what about the large, important decisions? Decisions like:
- Which flat should I buy?
- Should I get life insurance?
- How should I invest my money?
As we learnt from Tetlock’s experiment, it’s often a good idea to aggregate the views of lots and lots of people. From there, you can access a whole variety of information, extract some common themes and insights – and use them to make better decisions.
Introducing: Investing Your First $20K
That’s exactly why a bunch of financial bloggers, including Alvin from BFP, Kyith from Investment Moats, Thomas from 15HWW and many, many others (including yours truly), got together to write an ebook.
We know that many of our readers are still figuring out how to invest. And we wanted to consolidate our wide variety of views into a single ebook, so that by hearing from many different perspectives, you can make a better decision.
Instead of always sticking to conventional “advice” from your financial planner (aka: Invest in high-cost unit trusts!), we decided to offer an alternative perspective of how we thought someone should invest. We were given some assumptions:
- The investor has $20K in spare cash which he/she wants to invest
- The investor has an emergency fund and no credit card debt
- The investor is relatively new at investing and wants to invest in Singapore’s context
With these, we set out to write a chapter each. Aside from the assumptions, we didn’t consult each other – perfect for avoiding the “Groupthink” trap. The collection of these articles resulted in the book you see today:
In the book, you’ll learn:
- How to identify your wealth building method (page 14)
- How to embark on cool side projects (page 23)
- A sample portfolio of index investments (page 29)
- Two types of investments that will help you beat inflation (page 40)
- How to allocate your money across different investments (page 54)
- Alternative asset classes you can consider (page 57)
- A formula to build your 20/20/20 portfolio (page 66)
- Lessons learnt from losing $108,000 in one go (page 70)
Do I agree with all of these perspectives? Of course not!
But that’s the beauty of it – to be able to read a bunch of different perspectives in one place, understand “the lay of the land”, and discern the strategies that suit you the most.
Oh, and one more thing – the book is absolutely FREE. There are no catches. Think of it as our gift to you to start 2016 right.
To receive it, simply leave your name and email address below so I know where to send it. You’ll also be automatically subscribed to my VIP List, where you’ll receive awesome new material I have planned for 2016, delivered right to your inbox.
Sounds good? ‘Course it does.
I’ll see you on the other side 🙂
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