There is a difference between rules based versus principles based approaches, especially in law. Rules provide black and white clarity but when there are instances of skirting the rules in compliance to the letter of law but not in the spirit of the law, this is where being principles based can nab bad actors.

Disclaimer: I am not being prescriptive to provide rules and specific formulas to create wealth. To use an analogy to elaborate, in cook books one may find specific volumes of soy sauce as part of the ingredients whereas kings of wok-hei might just use a splash of soy sauce as their description. A free-play of interpretation within unspecified boundaries is obvious.

Live BELOW your means.

You might have heard of the phrase live within your means. In its spirit, do not overspend income. But logically, one has to live below means to generate savings to deploy for investments if not saving in cold hard cash. Having good budgetary control is a bedrock to start creating wealth.

Be BOLD, not reckless.

I understand fully that hero or zero can just be a matter of outcome of a decision. A boxer who does not throw a punch at all and holds guard up all the time, will never win a fight. Throwing a punch risks opening up a window to get hit, is a simple truth. Based on the available information and forecasts along with probabilities to make that informed decision, there are still risks of unanticipated events that can derail an investment view (see portfolio management iterations).

Not making effort to understand enough before making the decision is quite reckless. But once the necessary considerations and factors (see considerations) have been taken into account, there is a need for boldness to act. Even if the bold decision that is acted upon, fails, it is important to be able to take the hit and get back up again.

Granted that everyone has different risk profiles. But one can mix and blend a whole plethora of instruments (see instruments) to express your unique investment portfolio.

Manage RISKS.

Risks come in many forms. Self insuring is a choice. Other valid alternatives include transferring personal risks (see independent areas of coverage) to insurance companies, or taking precautions to reduce risks. (ie regular exercise and healthy diets for good health)

But no matter what options have been undertaken (ie self insure), we have to take responsibilities for the choices we make. The choice of using investment leverage is the same, because there is a moral hazard in protecting people from the consequences of their actions. There has to be boldness in taking some risks, but do not be reckless either.

I hope you have enjoyed exploring my entire site because I believe the inter-connected aspects of personal finance are constantly intertwined with one another. To capture them in one linear reading form would do injustice. Do click and explore links as you deem fit (or whichever piques your interest) so that you can also see better the context of my approach.

If you feel that I can be of service in your personal finance journey, please do not hesitate to make an appointment. Likewise, I will appreciate your referrals too.