As Benjamin Franklin pronounced, “the only two certainties in life are death and taxes”.

I’m going to argue 3:

  1. Dealing with mortality is dreadful
  2. Taxes are annoying, and
  3. Uncertainty is inevitable.

These are the 3 unfortunate certainties of life we must get used to.

History is a helpful predictor of future performance yet past performance isn’t entirely indicative of it although we all wish it was.

Successful investors look back to history to map out the future and use these 3 factors to discern their impact on certain decisions.

There are many more roadblocks investors, let alone humans deal with on a daily basis since life is not fair but what we can all agree with is that if we put in the work, the work will work for us.

Remember this slogan: “Live like no one else now to live like no one else later.”

I reference this unknown quote consistently throughout my pieces because it is relevant to everything in finance.

If you plan for the worst, hope for the best you will be in the best boat.

We can’t control these 3 certainties because they are certain and will happen we just don’t know when but we can sometimes extend, delay and diminish them depending on what education we receive and the time commitment we dedicate to the task at hand.

Your best bet as an investor is to realize that past performance isn’t indicative of future performance. Change is inevitable and what’s certain is uncertainty.

Some argue that’s what makes life exciting. To an investor and rational human, it kills them…

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Rollercoaster Ride

Uncertainty and the idea of change ties directly with the two dreaded burdens of generating wealth. There are always downsides to everything and as my economics teacher used to say, “there’s always a downside to the upside” especially when I got a lucky score on a pop quiz through my educated guesses.

The more one makes, the more they have to pay back to Uncle Sam.

The more you own, the more you have to dust, secure, take ownership of, monitor, maintain, pay someone to do all those things for you and naturally worry about more.

Pick your poison.

Wealthy investors have seen it all and as a result they know nothing lasts forever especially a bullish rally. Being overly optimistic is detrimental to your financial well being as it is simply unrealistic. Believing you will have your career in tip-top shape for the next few decades or have no hurricane sweep your home living on a lake in Alabama is foolish.

Plan life so you can live it better which starts with focusing on less.

Let’s see what I mean.

Truth

Long-term investors know the power of disassociating emotions to the markets and not sweating the small stuff. They don’t aimlessly chart and price stocks daily as novice retail traders do. They know what the market is capable of and have confidence it will go up since it always has.

Although past performance isn’t indicative of future performance, passively investing and monitoring the market, not trying to beat it is an investor’s best bet to save time and money.

But no matter how prudent and safe one is with their approach, they must always keep 3 things in the forefront of their mind.

Death

Taxes

Uncertainty

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Death

Starting with the most difficult to come to terms with and just think about, our species have a 100% chance of death. It’s all on our calendars and as morbid as this sounds, we don’t know when it will happen but it sure will. This doesn’t mean you should live it up each night or retire at 30 and cash out now, it in fact means the complete opposite.

Take inventory of your health, have a backup plan, your will and all assets distributed and allocated appropriately, get a grasp of your contacts and beneficiaries, brief yourself upon your health insurance, retirement benefits and realize that you have more control than you think but it’s limited so after that stop worrying.

My father unexpectedly passed away one day when I was 16. He was as healthy as could be and on a cold December afternoon after school I saw he was gone with no explanation.

Never take for granted the people that cannot be replaced and whenever you leave the house, make sure to hug your loved ones tighter and realize that anything can happen anytime. This isn’t intended to scare you rather inform and prepare you so you don’t scramble at the moment and have to sell your investments, belongings/assets, move across the country to live in a lower cost area and tackle finding a new job all due to depending on a spouse for everything.

The number one priority when something drastic happens is to take control of your health, mentality and keep your income secure. When it comes to your portfolio, stack up on cash, roughly 6–12 months of emergency funds to be safe since the market tends to work against you when you’re in trouble as well. You don’t want to loose 2 income streams at the same time!!

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Taxes

This is a burden all earners carry and becomes steeper the more one make syet at the same time easier to get around. From tax shelters and havens to money laundering and accounting shenanigans via loopholes, billion-dollar behemoths (companies) and their founders are known to take advantage of these tactics because who wants to support Uncle Sam?

From Bezos to Musk, Apple to Amazon, these giants are known to hide billions in reserve trust funds in small islands in the Bahamas to Swiss bank accounts that charge zero corporate or income taxes.

Yet for the rest of us this is too risky and expensive to get involved with. For those who didn’t know, cough cough those in the top 1%, it is in-fact illegal and one day you can easily get caught and be put into jail. Sadly nothing has been done about these schemes since the ones in power stay in power and top 10% earners have to pay the most in taxes robbing their incomes while the top 1% keep everything.

Nonetheless, there are plenty of ways to slash your IRS bill in half by following these legal tricks.

Astonishingly 65%+ Americas did not pay any income tax this past year in 2020 presumedly due to the stimulus pump which bumped lower to middle-class citizens’ income threshold to a lower basis so they didn’t qualify to pay any taxes.

The easiest way for any individual to pay less in taxes, get free stuff, and deduct their expenses for more cash flow is to start any sort of business. I’m not talking about a company on the verge of an IPO in 6 months, be realistic. This includes anything big or small from a monetized blog with 3 readers to an online tutoring course with 600 students. Anything that generates you revenue or in fact doesn’t have to, will allow you to get tax-write offs for expenses and not pay nearly as much as you would against your W2 salary working for an employer.

Although there are pluses and minuses to both income streams, the ideal situation would be to dabble in both. You don’t necessary need to turn your side-hustle into a full time gig. Keep it on the SIDE by owning a rental property or a blog like this one. As a full-time student, I’m earning more from my side-hustles than I ever did my first decade working and I continue to enjoy both. I don’t want to turn my side gigs into full-time because I enjoy consistency, the corporate world, the team-setting and rigid schedule. Once I graduate, having the option to enroll in an employer qualified health insurance and 401 (k) retirement plan are massive perks considering self-employed folks need to dish out thousands per year to pay for health insurance and manage their own IRA and additional benefits. No stock options or free lunch for them.

Whatever path you choose to take, make sure you are well diversified and always have several income streams to stay afloat. The best way to ensure this is to not have your main job correlated to your investment choices or other streams such that if you work in the health care industry, despite massive gains for Telehealth and pharmaceuticals this year as vaccine providers such as Pfizer and J&J have soared, if they go down, and have to since they’ve had their best year(s) yet, your company could as well in terms of possible layoffs, furloughs or reduced pay if we hear for instance that the vaccine never worked in the first place which would truly be tragic.

Hold uncorrelated, also known as negative correlated investments compared to your job sector/industry to diversify and tap into markets that your portfolio could boom from.

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Uncertainty

What’s certain is uncertainty and no one has a crystal ball, something investors are trying day and night to discover. The best way to sleep soundly at night and guarantee a sound roof over your head is to tackle your finances first. The number one reason Americans fall into debt is due to their medical expenses and the number one worry for all people on Earth that drags them down till death is money problems.

What does it feel like to never worry about money you may ask?

Read no further than here so you don’t worry!

Getting rid of ‘toxic debt’, improving your credit score, tidying up your investment plan and time horizon, having a short and long-term goal approach, and understanding what you can handle in terms of your risk tolerance are all vital to having on deck to be prepared. Yet that is far from the truth. If I surveyed a random group of 100 New Yorkers, the majority would probably only cross off 1 or 2 boxes max. No wonder 80%+ own toxic debt or aren’t invested entirely!

There’s only so much in our control yet if one unrelated area of our life is falling behind, the rest can topple. If your financial health is improved, your health, relationships, and wellbeing can easily strengthen.

Make sure you know what you are getting into. Life is what you make out of it. If you want to live on the edge, go ahead but you will pay a big price later and realize it’s not worth it.

About the author: Mia Gradelski

Hey I’m Mia, a NYU student passionate about blogging what’s on my mind all finance, tech, lifestyle-related. I'm also an investment analysis intern here at Atticus!

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