Why it is Important to Dream Big

"If your dreams don't scare you, they aren't big enough",  "Life begins at the end of your comfort zone", "If my mind can conceive it, and my heart can believe it - then I can achieve it." All these were quotes from the famous professional boxer, Muhammad Ali. Nicknamed "The Greatest", Ali is widely regarded as one of the most significant and celebrated sports figures of the 20th century and as one of the greatest boxers of all time.

To celebrate July 4th, a federal holiday in the United States commemorating the Declaration of Independence of the United States, on July 4, 1776, I thought it would be prudent to write an inspirational blog post to conform to the significant event that occurred in 1776. This blog post will highlight the massive moves that occurred in the historic year of 2020 made by everyday individuals, governmental bodies and corporations. 

Dream Big Example #1 - The Federal Reserve

The Fed took an unprecedented step towards reacting to the CoronaVirus pandemic in a way no one could have ever imagined. The staggering stimulus package blew previous past stimulus packages out of the water. Over $2.4 trillion dollars was passed to keep the economy afloat during this health pandemic under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). To put this in perspective, in 2009, the Economic Stimulus Act sent out $14.2 billion in stimulus checks. The one-time payment went to recipients of Social Security, Supplemental Security Income, veterans, and railroad retirees. 

The CARES Act sent a $1,200 check to eligible adults earning up to $75,000. It also sent $2,400 to couples earning up to $150,000. For those who were still paid 100% or more of their pre-CoVid salary and received the CARES Act payment, it is important to be grateful to the Fed and those who ultimately will bear the cost of the payments down the line.

Relief aid was also given towards unemployment, paid sick leave, food assistance, tax relief, hospitals, small business owners, and large corporations. PPP loans and SBA EIDL loans were given out during this period.

No one anticipated a stimulus package this large but we can sure say the Fed was dreaming big. The stimulus package did keep the economy afloat and the stock market has reacted very positively from it with the market rebounding strongly in the 2nd quarter of 2020. My personal stock portfolio is up by over 15% this year so far and I can partially attribute it to the support provided by the Fed along with picking growth companies with a strong balance sheet.

Dream Big Example #2 - A Tech Engineer

During this pandemic, businesses have had to pivot while some companies saw a spike in revenues. The pandemic gave rise to winners and losers in the market. Companies such as Zoom, Zscaler, Bilibili, Apple, Microsoft, Amazon, Facebook, Tesla, and the likes have reached all time highs during the pandemic. Majority of the companies who saw an increase in sales have had to rise to the challenge to meet that demand. Even while all this was going on, there are examples of individuals who switched jobs during this period and realized significant increase in compensation. One example is an engineer within the software technology space. The engineer tirelessly applied and studied for job interviews with an extreme work ethic. He had a vision, a vision only he could see. With all that hard work and a vision, he was able to land a job with a significant 90+% increase in total compensation which includes the annual base salary, awarded stocks, and bonus. Furthermore, the new company is better positioned as a market leader within its sector. This is another example of a dream big moment in 2020 even while the pandemic was ongoing.

Dream Big Example #3 - Organized protests toward a noble cause

Martin Luther King Jr. once said, "I have a dream." In 2020, we saw a rise in the amount of dreamers who stood up for what is right - the call for justice. With Jerome Powell, the Fed chair, testifying about the widening wealth gap and the need for policies to help solve that challenge. Powell mentioned that wages at the middle and lower levels have grown much more slowly than those at the higher end. With this in mind, forward thinking and innovative corporations have started to take action that should, hopefully, help narrow this wealth gap as it is widely known that minorities are typically a large share of the low-to-middle income earners. We have also seen a continued, increasing uptick in the performance of ESG funds relative to their peers as millennials continue to invest more in these funds. For example, the iShares ESG MSCI USA (ESGU) and Vanguard ESG US Stock (ESGV) ETFs have outperformed the Dow and S&P 500 over the same time frame. This brings to light the notion that doing good can also mean making more money.

Dream Big Example #4 - Tesla

To touch more on ESG is the story of Tesla - In 2008, the company released its first car called the Roadster and in 2010, Tesla debuted on the stock market. Fast forward to 2020, the company made over 90,000 deliveries in the 2nd quarter of 2020 alone surpassing expectations. Not only that, Tesla also became the most valuable car company by market cap in the world surpassing Toyota. Although, I am a big fan of Toyota due to its superb efficiency, I have to highlight the dream and vision Elon Musk had since the beginning and his incredible amount of productivity. I personally decided to purchase shares of Tesla this year and was able to get in at a cost basis of $554.58. You can tell I have been pleased with the 118% gain so far with the share price being $1,209 as of July 4th. I doubt I will ever sell the shares but it has been encouraging to see the performance of the stock as the company has continuously hit new milestones.

Dream Big Example #5 - Purchasing a property during a pandemic

In 2020, one of my main goals was to increase my allocation towards real estate through real estate syndication and outright ownership while decreasing my bonds and CDs allocation. With it being the middle of the year, I can proudly say I have done so. Throughout the entire process, I did not liquidate any stocks to use towards the real estate purchases. This prevented any costly mistakes of selling low during a downturn. In fact, I was able to take advantage of the low interest rate environment. With the Fed slashing interest rate to 0-0.25% in March 2020 due to the response to the CoronaVirus (COVID-19), the real estate market became more attractive. The fed funds rate is the rate at which commercial banks borrow and lend money to each other. This rate is typically set by the federal open market committee (FOMC). The Fed Funds Rate has seen a decline from 2.5% to 0.25% YOY with recent talks on negative rates in the near future. This is a 225 basis point drop and represents a 90% drop in the fed funds rate YOY. I was able to participate in 6 real estate syndications across the apartment multi-family, self storage, and healthcare building space. The minimum underwritten internal rate of return (IRR) on the real estate syndications is ~18%.  Finally, I was able to make a home purchase as well. Due to the current environment, I was able to negotiate a 14% discount relative to nearby comparables for the home. The home was successfully closed on within 21 days and rented out at market rate within 3 days. Couple this with a low interest rate, it ended up being a good deal with a projected ~15% cash-on-cash return in year 1 since a 1-year contract was signed and the vacancy for the first year is about 0-1%. Although I might not be done for the year and might have a few more left this year, I would be satisfied with all the moves made this year if this was it for the year.

Secrets to Realizing your Dreams

Be clear about your goals. This might seem obvious when planning out daily activities but things come up, either important or non-important, that derails an everyday person from achieving what they set out to get done in a day. Being extremely clear with simple, direct goals makes it extremely easy to absorb and fully process what needs to get done minimizing the complexities along the way.

The second secret is hard-work. This is easier said than done but one of my favorite quotes by Elon Musk is “Work like hell. I mean you just have to put in 80- to 100 hour weeks every week. This improves the odds of success. If other people are putting in 40-hour work weeks and you are putting in 100-hour work weeks, then even if you are doing the same thing, you know that you will achieve in four months what it takes them a year to achieve.” Now, this quote is simply just life, since the absolute chance of being lucky or being more efficient only increases with more trials.

The third secret is Failure. Yes, that is right, failure. A quote by Elon Musk states “Failure is an option. If things are not failing, then you are not innovating enough.” For those that are entrepreneurs or problem-solvers, this is a really key lesson because it is through failure that one typically finds the solution. Unless you have exhausted most logical options then you are unable to narrow it down to the expected value. For those statistics nerds out there, we call it regression to the mean. There will always be some distribution around the expected value but hope your residuals are not too far off! With proper logic, there is typically a true or approximate solution to every problem.

The fourth secret is evolution. This involves being more efficient and taking on more challenges which can be extremely fun and rewarding! The avenue could be increasing your knowledge on a specific topic, taking up a fun side hustle, or going all in and trying to solve some of the world’s problems. Jeff Bezos started Amazon by simply, selling books online, but these days it peddles everything from pickled carrots to two-carat diamond rings in a convenient and efficient fashion.

Finally, the last secret is have fun while doing it. This is critical as chasing your passion and dreams will definitely lead to fun experiences throughout the process. It will serve as an avenue to grow tremendously, leaps and bounds past initial expectations, and the reward will typically follow.

Financial Savant was born in 2018 and has received a really good reception so far. This blog serves as a resource to help spur open discussions on generating income, saving, investing, and overall wealth management.

Every article written on Financial Savant is based on first-hand experience and pertain to ongoing current events within the financial and economic-sphere.

For a detailed discussion of my favorite financial tools which I typically use weekly, you can visit the sidebar on the homepage. I have thoroughly researched all the products and use them personally. I have cut through the clutter so you do not have to. Financial Savant is glad to be a part of the #FIRE movement as we strive to achieve financial independence opening up a world of possibilities while creating generational wealth.


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