Ever since 2012, I’ve invested in equity structured notes to provide for some downside protection. Structured notes have sometimes gotten a bad reputation because they may be complex and expensive. However, just because you don’t understand something doesn’t mean you should burn it at the stake.

In hindsight, I didn’t need downside protection since the S&P 500 has performed very well since I left work. However, because I didn’t have a steady paycheck, I lacked the courage to invest significant sums of money in the stock market. If it weren’t for equity structured notes, I may have just kept the funds in cash or bought even more real estate instead.

For downside protection, an investor in a particular structured note usually has to give up something. That something is usually dividends or capped upside. As a result, these notes tend to underperform during a bull market. But not this one.

Let me share a structured note that just matured as a case study. You can then tell me how bad it really is.

Liquid courage is sometimes needed to talk to a person you fancy. The more alcohol you drink, the more your inhibitions tend to go away.

In the finance world, liquid courage is also what’s needed to make risky investments or investments during risky times. The more cash you have, the more liquid you are and the more guts you have to put money behind your beliefs.

Even though holding a lot of cash can be a drag on performance, you just never know when investment opportunities may arise. As a result, I believe it’s prudent to always have roughly 5% of your investable capital in cash.

Since 1995, I’ve been a do-it-yourself investor (DIY investing). It all started when I saw my father trading stocks on his Charles Schwab online account. I was hooked and asked him to teach me.

The introduction led me to trade stocks during college. Sometimes I’d win, sometimes I’d lose. Thankfully, my portfolio was only about $3,000 at the time. Therefore, even if I had lost all my money, it wouldn’t have been the end of the world.

Throughout my 13 years working in finance, I continued to invest on my own. I found DIY investing to be incredibly fun, especially sitting on the trading floor of a couple of major Wall Street firms. Every day was a new day to potentially make money!

Over time, I gradually started focusing more on asset allocation instead of individual stocks. My career was growing and it was simply too hard trying to consistently outperform the markets.

One time, I was taken into an office and scolded by the lead Managing Director for trading too much. I had whipped around about $12 million worth of trading volume in a month! This incident finally made me realize that trading too much was a career-limiting move.

The more I focused on asset allocation, the easier it was to manage my own money. For me, spending money hiring a financial advisor felt like a waste of money because I worked in finance, got my MBA, and was an investing enthusiast.

I have stated multiple times that real estate is my favorite asset class to build wealth. Therefore, choosing between real estate or bonds is a fairly straightforward decision. Real estate all the way.

However, as I fill out the chapters for my new book with Penguin Random House, I thought it would be a useful exercise to determine which type of investment is best for whom and when. After all, I own both real estate and bonds and so do many of you.

Both asset classes have performed well for decades. Further, we’ve got real estate tycoons and we have bond tycoons. Therefore, you can get rich in real estate or bonds. A lot of it depends on your interest.

If the delta variant is here to stay, we should come up with an investment thesis to navigate new choppy waters.

After all, the first rule of financial independence is to never lose money. The second rule of financial independence is to never forget the first rule.

It would be a damn shame if we gave up all our gains and then some because the delta variant returns the country back to the stone age!

One of the hardest things for an investor to do is to consistently outperform the S&P 500. Most fail, which is why the general recommendation is to invest mostly in index funds.

However, as humans, we always have hope! And it is that hope of outperforming the broader market that keeps the active money management business alive. Like the lottery, we know the odds are against us, but some of us play the game anyway.

I’m one of those delusional people who regularly has 20% or so of his capital invested in individual securities. I got lucky finding a 50 bagger back in 2000. Unfortunately, I’ve been hunting for my Moby Dick ever since.

A recent high-performing stock example reminded me why we should always try to connect the dots when investing. A great investor tends to see things before the average investor does. As a result, a great investor tends to also be much wealthier.

You’ve heard the recommendations of always having an emergency fund equal to 3-12 months of expenses. Just in case something comes up, your emergency fund will be there to bail you out. However, perhaps the need for liquidity is overrated.

Not only may we not need as much cash as we think, we may also not need our investments to be highly liquid as well. After all, the last thing we want to do is constantly go in and out of our investments. It’s usually better to invest for the long term for compounding and tax minimization.

If you are financially competent, there will rarely be a case where you’ll ever run out of money in an emergency. Further, there are plenty of instances where the lack of liquidity has saved many real estate investors in the past.

Having six months of living expenses in cash is good enough for most people. In this ultra-low interest rate environment, unless you’re trying to buy a house, having too much cash becomes a drag on returns.