It's 3 hours past midnight and I just came back from a long chat with a friend about how following a system is the key to achieving most things we want in life.
About 6 years ago, I was a scrawny little kid - 183cm in height, weighing 60kgs. It was a real struggle trying to put on weight. I did everything I knew then; running, playing more sports, going to the gym once in a while.
I thought doing a little of everything would improve my predicament. Nothing changed.
Until I discovered the system of bodybuilding with just a few fundamental rules:
1) Eat more calories/protein than your body burnsIt really is as simple as that. I tend to gravitate to systems that have elements that I can keep repeating and is easy to understand.
2) Increase intensity/weight/resistance/variation of training from time to time
I followed the system and 2 years later, I gained 20kgs and no longer looked like a malnourished kid who came from an impoverished family. Oh, and it wasn't fat that I gained.
Vanity aside, the system worked.
The hardest part is not in the technicalities. Rather, the challenge is getting yourself to stick to the system, even when you do not see immediate results.
I discovered that the system will work if I consistently follow the rules of the system, in good times and in bad.
Now, I see the very same principles in personal finance & investing.
There are tonnes of articles about saving & investing out there. But the fundamental rules of personal finance is dead simple:
1) Avoid debt
2) Maintain a large gap between income & expenses
3) Systematically invest the difference in a compounding machine (index funds, dividend growth stocks, real estate).
Right now, I'm very keen on the idea of regularly dumping a fixed amount of money every month/quarter into a low cost index fund. Let it compound for 10 years, then reallocate the funds into dividend paying stocks.
What happens next is decades of freedom.
The question is, do you have what it takes to follow the system, even when you don't see immediate results?
Do you have what it takes to stick to the system in bad times?
Because like it or not, the system works.