Saturday, 25 May 2013

Quote for the day

“Luck is what happens when preparation meets opportunity.” - Seneca

Success Formula: E+R=O

I came across this formula in Jack Canfield’s “The Success Principles“. 
Events + Response = Outcome or in short, E + R = O.
I find it very apt in all situations, even in the field of investment.

E (Events) + R (Response) = O (Outcome)

EEvents are things that happened which you have no control
RResponse is how you react to the events
OOutcome of the events with your reactions

So how can this be applied to your life, especially in the context of money? Here are some of the examples:

On Retirement at Old age:

E – Retirement
R – Save
O – Enough money for retirement

as compared to

E – Retirement
R – No plans, no savings
O – Rely on others for retirement

On Insurance Planning:

E – Death
R – Bought life insurance
O – Beneficiaries have enough money to live after the breadwinner dies

as compared to

E – Death
R – Did not buy any insurance
O – Beneficiaries have to worry and work for money for the rest of their lives

On Financial Crisis:

E – Financial Crisis
R – Practise sound and disciplined investment principles
O – Survive the crash

as compared to

E – Financial Crisis
R – No knowledge on investing
O – Lose most of your capital

On Investing:

E – Value stocks appear after the crash
R – Knows how to select good value stocks
O – Enjoy the profits

as compared to

E – Value stocks appear after the crash
R – Cautious since economy has yet to recover
O – Misses the boat while others’ make profits

From the examples above, you can notice that the events do not change. But the responses will always change the outcomes. Events are situations that you cannot change or direct. They can happen expectedly or randomly. Instead of worrying about the events, you should focus on what is your response. Because it is your response that will create a different outcome. That is the only part of the equation you have control of. Most people give up this control, because it takes much more effort to take actions than hoping the events will turn better.

DO SOMETHING about your situation/event TODAY.