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#THREE acronyms on this post. i wonder what the average is...
daenystheedreamer · 1 year
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Do u want to talk about cannibalism in asoiaf
i luuurve the way cannibalism is portrayed in asoiaf. it makes me a bit crazy.... the way stannis, a man shown to be the epitome of justice and law, kept men imprisoned just in case they ran out of food. wartime murder, rape, civilian casualties, etc are portrayed as bad but almost necessary/unstoppable symptoms of war, yet cannibalism is this one taboo they still keep.
it is DEEPLY linked to the old gods, it's this primal, ancient horror, next to/linked to guest right and kinslaying. bran eating jojenpaste/coldhands' shady game, the warg starks (inc. robb!) all probably eating people while skinchanging, arya maybe eating human at THOBAW.
i like the way its often class based. king's landing's poor are fed and fuelled by literally eating each other THAT is the true naked face of feudalism. while the red keep has a constant revolving door of huge feasts, arya is eating the brown of flea bottom.
i love the ouroboros of it all, the endless cycle. a lot of it is also linked to the riverlands! frey pies, nymeria, robb and greywind, vargo hoat, the historical mention of danelle lothston.
checking the AWOIAF page for cannibalism (which yes, exists), the amethyst empress myth is linked with it. i'm not much of a GEOTD theoriser but hmm much to consider, especially it's links to azor ahai and nissa nissa.
in summary i think its a great narrative device and metaphor. i think grrm uses it very well! i hope we get 6/6 on starklings eating people (skagosi are rumoured to eat people come on rickon just one finger eat one finger bro come on everyone else is doing it...)
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biffhofosho · 2 years
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I'm just curious about why do you not like writing in second person? Why do you prefer third? I see most fanfictions written in second person so I was just wondering why you made the decision to write your work in third person? And I see you posted a new Hyungwon piece, I can't wait for work to get over so I can read it cause I love all your work so much!
Thank you for this ask! I will try and edit my fiery lion as I answer even though I know I can't lol.
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I don't dislike second person; I actively hate it. :D
This is really for a lot of reasons, but I will limit myself to three and then explain what I mean.
It's pointless.
It's usually disingenous.
It doesn't make any logical sense.
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To point one: All writers in all of history create characters when they write. It is impossible to write an actual reader. Impossible. Period.
It doesn't matter if those annoying hair color, eye color, Y/L/N or Y/B/F acronyms are there. It will never, ever be every nebulous reader out there. Why? Because by writing the story, the author is making choices for that character that will inevitably rule out part of their audience. (Side note: authors, please don't call it a "named reader" either--that's just a character lol. Own it.)
The moment I read about Y/N drinking her morning coffee, my brain screams "Nope! Not me!" I hate coffee, can't even stand the smell. What if I'm shy and awkward (I'm neither lol), but I'm reading about Y/N trading sexual innuendos with Minhyuk? What if I don’t like wearing dresses, but Y/N is wearing a strapless ass-hugger in the club? I can’t walk in heels either. Uh-oh. What if my hair is short, but Joohoney is supposed to be running his fingers through my tresses? You get the drift. But taking out those descriptors feels like stage directions, and that’s boring af to read, which is why authors put in the details in the first place.
For a beloved friend, I once fired out a second person drabble (which feels more acceptable to me because it's like a conversation at that point), and even though I know her well, I put her character in a situation which, later, she teasingly said, "I would never ride a rollercoaster, but I would for you." Ha ha, cute, but also, see? Even intimately knowing my "you" character, I still made an untrue rendition of her.
None of that would prompt me to stop reading (nor did it take out my friend who enjoyed my drabble regardless), but I have seen some very solid pieces with borderline flame comments that say, "yOu sAiD Y/N HaS BrOwN HaIr. I DoN'T HaVe bRoWn hAiR. tHiS ToOk mE OuT Of tHe sToRy aNd i cOuLdN'T FiNiSh. YoU ShOuLd cHaNgE ThAt!"
Yeah, that was an actual comment I once saw (though the style choice is me just emphasizing my scathing tone). Rude af, and, yeah, I wanted to punch that reader in the boob for demanding something so unreasonable (ever heard of a commission???), but it underscores my point.
We don't complain about movies and television and published novels being in first and third. Why not? Nothing's ever stopped us from imagining ourselves in those OC roles before, so why the shift? A different discussion maybe, but it's something to think about.
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To point two: Most writers don't even like writing in it! To those that do, I would never begrudge them their voice, but I don't think the average fic reader really knows how much authors don't like writing second person--they simply feel they have to because that's where the demand has moved.
I commission a lot of writers I enjoy, and before we strike up a deal, I always ask if they're comfortable creating an OC and writing in 1st or 3rd. Every single last writer I've commissioned (I think it's six at this point?) has said the exact same thing to me.
"I don't like writing in second, but it's what gets notes."
>:(
The thought of a writer sacrificing their artistic integrity for a heart-smash sets my teeth on edge. If you're going to go to all the effort to create an alternate universe (and, let's be real, that takes, at the minimum, hours or, in my case, years), let it be true to your voice. That's why I say, if you love writing second, do it. But I know that's not true for the vast majority of fic writers, and it aches my artistic soul.
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To point three: Simply put, second person makes no actual sense at all???
If the goal is for me (the reader) to be the main character in the story, how is that to work? I don't think of myself as "you". I think of myself as "I". So shouldn't it be written in first person? Otherwise, it sounds more like I'm reading a stranger as the MC...
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I don't know where this commitment to second started, but I wish I could time travel back and undo it. I've been writing third person established character/OC fanfiction since I was sixteen. I just turned 40. I will never write anything else. My preference is third for the freedom it affords (between the limited and omniscient and objective focuses, I find something tailored to suit every piece I create), but at least I understand first because I live it every day lol.
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In conclusion: I have no idea how this turned out. I was trying to be equal parts tongue-in-cheek and serious, but maybe it's just kinda bitchy? My first draft was exactly the way I wanted, and I accidentally closed the tab and had to start over. :( Maybe my next rant should be on how Tumblr should have an auto-save feature...
Also, weirdly, I don't ever insert myself in a second person fic anyway. I usually put one of my OCs in (generally my bae, Wally, from "Idol Thieves" because I might be in love with that stubborn bitch). There's something weird to me about copy-pasting myself into a story, but is that just me?
In the end, I guess I'm just grateful that there are still people who can appreciate my craft the way I craft it. I'm different. I like to be so. Read second person if you want to, write it if you want to (but only if you WANT to, not because you feel you have to, pleaseeeeeeeeeeee). Either way, you will never ever find it here, and maybe that's why you're here anyway. :D
So, anyway, thanks for asking (and I'm sorry if you regret it lol)! I hope you enjoy the new story. I love it and feel like I've lived it, even if the OC is not me lol.
(Also, I already had this second pov tag in my tag list lol.)
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omoi-no-hoka · 4 years
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I read your post on how you got started in the translation industry and I was wondering if it is possible to get an entry/basic level translation gigs in Japan with N3-level proficiency or if even those want at least N2 proficiency. Also since you've been living and working in Japan for a long time, what advice would you give those wanting to work in Japan in regards to avoiding black companies?
Finding Translation Work in Japan
Hi there! Thank you for your ask. 
To be honest, “translation” is so very broad that I can’t give you a simple “yes” or “no” as an answer. My answer is “Maybe” with the following caveats. For the sake of this post, I’m going to assume that your native language is English, or that you have native-level proficiency, and you plan to do English↔Japanese translation in a Japanese workplace.
Field of Translation
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This is perhaps the biggest factor. I understand that in order to translate legal or medical things, there is a particular certification that you must obtain. This requires N1/native level proficiency in both languages. I have thought of attempting to obtain the medical one, but I’m not ready for it. I would need to study a LOT of terminology in both English and Japanese.
As for other fields, I think it really depends on the company and how much they are willing to teach you on the job. Also, depending on the field, many field-specific terminology may be katakana words derived from English, meaning that while they will be new Japanese words for you, they will not be entirely new words.
But if I were to work in, say, the banking industry doing translation, I would certainly have a hard time learning all the words, especially if I didn’t already have some sort of background in banking in English.
For example, I specifically work as a translator for a company that provides services to other very big companies that you have heard of. Technically, I work for an anti-malware software company and the technical support aspect of it. When a product is updated, I will translate internal manuals and things like that. I also translate the Big Wig conversations, which are done in English since the client and our company’s HQs are in America, so that our local guys know what’s going on. I also create/translate/edit/take minutes for presentations given to Big Wigs. I also handle all IT issues in our project, because our IT ticketing system is 100% in English. ANYTHING English-related is funneled to me.
Contractually-speaking, I do not work for any other clients. But since I’m the only translator in our company in Hokkaido capable of interpretation as well, I am often asked to assist under the table. (Translation and interpretation are two entirely different beasts, btw.) 
While I don’t have a background in IT or computers or anything like that, since most of the terminology is in katakana and I’m not absolutely clueless about computers, my learning curve wasn’t too sharp. I struggled more with bullshit corporate acronyms and the formalities of Business Japanese (sonkeigo and kenjougo). 
A person holding an N2 is considered capable of Business Japanese. Even if you have extensive knowledge in the field of translation, you will have a VERY difficult time adjusting to the Japanese-language workplace if you are not good with Business Japanese. From that standpoint, I cannot recommend someone at N3 to enter a Japanese company to do translation. It will be grueling. I was N1 when I joined the company, and I still had difficulty composing emails and other workplace-related words I hadn’t come across. 
Start with Freelance Translation/Proofreading
There was a year or so where I had N1 but was still teaching English. I found freelance English-Japanese translation jobs online. Lots of them were one-shot things, like “translate this brochure about our little tiny town” or “I am a researcher who has written a paper on Persian-French relations during the 16th century, and I need someone to proofread my English.” Lol that one was pretty specific and paid very handsomely. By doing well on a job, I established a relationship with that client and I would get more work either from them or someone they knew. Prices are fixed before translation. 
The average price for translation is 3-7 yen per character (if the original text is in Japanese) or per word (if the original text is in English). The price increases depending on the complexity of the material. The brochure about the little town was 4 yen per character, but the research paper was 9 yen word (despite the fact I was only proofreading instead of translating because it was incredibly complex). 
Proofreading goes alongside translation. I didn’t really do much of that, but you can see a price range of 1-5 yen per character/word. If you are N3, proofreading is great way to get your feet wet!
NOTE: Do not take on proofreading or translation jobs for a language that is not your native language. No matter how good you think your Japanese is, it will not be good enough to proofread. Even if you have an N1, you will miss things. Even I, as a translator with almost 3 years experience in my field, always have a Japanese coworker proofread everything I translate into Japanese, and 9 times out of 10 they fix at least one thing. 
How to Avoid Black Companies
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In Japan, some companies are labeled ブラック企業 “black kigyou,” which means that they violate labor laws in some heinous fashion. Denying pay, benefits, or leave, forcing employees to do grueling amounts of overtime that can lead to 過労死 karoushi (death by overwork), etc. These companies will rob you of your sanity at best and your life at worst, and are to be avoided at all costs. 
When I was searching for a position teaching English, I googled reviews of each big Eikaiwa school, like AEON or whatever else there is. Many previous teachers air their grievances on places like glassdoor.com. It was easy to learn which schools I should avoid.
Also, I applied online to many different big Eikaiwas. Three of them (sorry, I can’t remember which) immediately emailed me back and said I was hired, without an interview or anything. That should be a HUGE red flag to you right there. Why are they so desperate to hire that they’ll take you without even giving you an interview? And even if they do later say, “Your hiring is dependent upon an interview,” that means that their initial contact email was fraudulent. 
Research the company as best you can. See if you can find someone who has worked for them. Beware of smaller, private companies. They tend to fly under the radar and are prone to be even shittier. Then again, there was a woman who died of death by over work a few years ago and she worked for the biggest advertising firm in Japan.
Here’s an article from Business Insider about karoushi and black companies.
A 2016 report examining karoshi cases and their cause of death found that more than 20% of people in a survey of 10,000 Japanese workers said they worked at least 80 hours of overtime a month.
The Health, Labor and Welfare Ministry defines the threshold for karoushi as greater than 80 hours of overtime a month. Since this article was posted in 2018, a new law regarding overtime has been implemented by the Japanese government. Now there is a legal cap on overtime of 100 hours per month (and 720/year) for busier months, with the general upper limit set at 45 hours per month (360 hours/year). 
Even if a company isn’t black, be prepared for overtime. My company makes sure that every employee adheres to the 45 hours per month limit...as best they can. If you follow this blog you know that I have done 60 and 70 hours of overtime in certain months, because I am our only translator and when shit hits the fan I’m the only one who can handle it. 
However, my company is very good about making sure that I receive all of my overtime pay. Every single minute of overtime I do is properly reimbursed. Sometimes this means that if I work 60 hours one month, I will only report 45 that month, and then report 15 extra hours the next month. Or I will take a couple days off but claim that I worked (with my bosses’ approval, of course). 
I can’t speak for other companies for sure, but I fear that when this law was introduced in 2019, many companies did not change their business models and instead forbid employees from reporting overtime that exceeded legal limits, meaning they would be going without compensation. 
So be aware that if you are going to work in a Japanese company, you are likely to have overtime. Some people don’t, and congratulations to them! But it is an extremely real possibility. Make sure that you can handle it physically and mentally, and that you are being properly compensated. After my first month of Big Overtime, my boss told me, “I’m surprised that you managed to do all that. I thought that Americans had a poor work ethic compared to Japanese people, but now I see that’s not true.”
kinda racist, but thx
If you have an interview and it goes well and you receive a contract, ask to take the contract and have time to think about it. Then, have a Japanese person you trust read the contract and make sure there is nothing shady hidden in there. Contracts and legalese are difficult enough in my own native language--I don’t trust myself to catch something in Japanese. 
If your friend thinks that the contract is fair as well, and if you feel like the company has a good atmosphere, take the job. That is what I did, and I am glad I did.
Translation and Interpretation
A lot of people don’t know the difference between “translation” and “interpretation” and use them interchangeably, but they are actually entirely different tasks that require different skills. 
Translation: the conversion of written text from one language to another.
Interpretation: the conversion of spoken word from one language to another.
You will most likely be hired as a translator, because translation is much cheaper than interpretation. However, if your company is like mine, you will have interpretation work to do as well. You may be asked to take part in meetings and facilitate communication between the English-speaking and Japanese-speaking people, or act as a guide to a client from American headquarters, for example.
With translation, you usually have the blessing of time. You can look up a word you don’t know, you can think about the grammar, you can think about tone. 
But with interpretation, you need to be:
Listening to Speaker A’s English and mentally summarizing their words
Starting to say Speaker A’s words in Japanese while holding on to the bits that will come later because English and Japanese word order is so different
Continuing to listen to added speech from Speaker A as you concurrently are relaying their previous speech in to Japanese and retaining the parts that you can’t say yet because of word order.
Then do it all for again for Speaker B’s reply, and repeat. 
Basically, your mind has to be doing three things at once. Does your head hurt? Mine does. If I have to do simultaneous interpretation like that for more than a couple hours I literally develop a headache. 
I will NEVER recommend an N3 person attempt interpretation in a business setting. Nor N2 for that matter. It is hard and you do not have the benefit of time to think and double-check things.
Also, many people don’t understand exactly how difficult it is to do interpretation. I have to sometimes just say “Sorry, pause” to the speaker because my head can’t retain any more, especially if figures and data and dates are referred to. Thankfully my coworkers have come to understand my method and are just happy that I can facilitate communication for them. 
If you have any other questions regarding job hunting, please let me know and I’d be more than happy to offer what advice I have! 💖
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katieinmyanmar · 4 years
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(January 18-February 14)
Min gă la ba! Welcome to my blog! Sorry this took so long to get up, I’ve been incredibly busy these last three weeks.
A quick note before I start: I use Myanmar (people here pronounce it “mee-an-mar”) and Myanmar language rather than Burma and Burmese because that is how people here refer to the country and language. I also don’t have a Myanmar language keyboard for my computer, so for Romanization of Myanmar script I use the system designed by Aye Su Mon.
Some background information on how the Peace Corps (PC, they really love their acronyms) works: for about three months we are in training (called Pre-Service Training or PST), then we move to our individual sites after swearing in as Volunteers. We will serve at our sites for two years, integrating into our communities, teaching English, training teachers, and working on community development projects. During PST, we learn about the Myanmar language, culture, and education system, as well as have technical training on how to teach English as a foreign language. They days are long and exhausting (all day six days a week), but I’m enjoying what i’m learning and it’s not too bad for the most part. I’m learning a lot, especially about Myanmar culture and language. We’ve all gotten used to being really tired and super busy. I can’t believe it’s been almost a month since I arrived—it feels like I’ve been here way longer.
The people of Myanmar are truly the kindest, most generous people I have ever met. Whether it’s a hot meal, a tuktuk ride, or simply being patient as we stumble through Myanmar language phrases, everyone has been unbelievably kind. Most people in Myanmar have rarely (if ever) seen a foreigner before, much less an American. Because of this, we attract a lot of attention whenever we go out into the city, which is perfectly fine, even though it does take some getting used to.
One of the highlights of being in Myanmar is the food. Myanmar food is very oily and sometimes spicy, but it tastes very good. Rice (htă miǹ, pronounced like “ta-min”) is served for three meals a day, usually with some meat (the shrimp curry is my favorite) and vegetables and tea. I think one of my favorite breakfasts so far has been mohinga, which is essentially a fish-based soup that you eat with green onions, cilantro, noodles, and chili peppers. Every region has its own version (and every region thinks theirs is the best), so there are many varieties.
Myanmar people don’t really do dessert, usually for dessert there is fruit or jaggery (palm sugar cubes). The other day, one of my PC friends taught the hotel staff how to make pancakes (they were very improvised but mostly worked, and the staff was pretty into it), so we had pancakes (of sorts, they weren’t really “pancakes” like Americans would think of them) for breakfast the next day. It was extremely exciting, there is a version of French toast here but so far no pancakes. Since we don’t have maple syrup (I’ve been told you can buy it in Yangon, but it’s super expensive), we ate our pancakes with honey and bananas.
On my days off, I have been going into Bago city with some of my PC friends and exploring the pagodas. Bago is not like an American city: there are not any skyscrapers or tall buildings, but there are plenty of motorbikes, trucks, and tuktuks rushing by. Crossing the street can be quite a challenge! There are also way more dogs and cats here than in America. So far I have been to the Shwemawdaw Pagoda and the Shwe Thalyaung Buddha (Reclining Buddha), as well as several other pagodas that I don’t know the names of (one had a massive Burmese Python in it, which was really cool). I have also been to the Kanbawza-thadi Royal Palace (Golden Palace) outside of Bago. All the pagodas are beautiful and the Kanbawza-thadi Royal Palace was breathtaking. Everything was golden and extremely ornate. I am really interested in Myanmar history, and I hope to learn more about it while I am serving here. I can do another post on pagodas later if there’s interest, I don’t want to make a long post even longer. 
To help us learn about Myanmar language and culture, each of us has a sponsor family who lives in the community near where we are staying. In most countries, PCVs live with a host family during their service, but for various reasons we cannot do that in Myanmar. The sponsor family program is Peace Corps Myanmar’s adaption of the host family program: we eat dinner with our families about twice a week, and on Saturdays we spend the afternoon with them. My family and my friend Liz’s family are friends, so we spend a lot of time together. In my family (mí thà zú, pronounced “me taaa zoo”) are my ă meì (mother, pronounced “ah may”), ă phei (father, pronounced “ah pay”), ă ko (older brother), ă má (older sister), and nyi má leh (younger sister, pronounced “ni ma ley”). My family is loving and amazing, though it can be hard to communicate because they speak very limited English and I speak very limited Myanmar. I am learning so much from my family regardless, especially about Myanmar language. The other members of my group (cluster) and I have started bringing our language homework because our families always like to help us and teach us new words. My family is kind, loving, and generous; my ă má even took me to a tailor to get a longyi (traditional Myanmar wrap-around skirt worn by both men and women) and shirt made for me!
A few days ago we had our first English Club session. English Club is an opportunity for us to practice our teaching with Myanmar schoolchildren (sixth-eighth graders) in a Myanmar classroom. English Club is very different from the regular classroom because there are only about fifteen students (regular classrooms usually have up to 60 students) and it focuses on speaking. We were co-teaching with a partner (though I was in a group of three because we had an odd number) and had to plan a ninety-minute lesson. It was really cool to be in front of actual students, especially because before this I had only practiced with my cohort. The students were really smart and engaged, we actually felt that we had made the lesson too easy. It was difficult because we had never taught in front of students before, but we were able to improvise when our lesson finished early and the lesson as a whole went really well, so I consider it a win. I’m looking forward to doing it again, even though lesson planning is stressful I really enjoy teaching.
Now, you might be wondering how Peace Corps Trainees in Myanmar entertain themselves when there is limited Internet (except at this hotel, which has wifi!!!). The answer is lots and lots of cards (everything from President to Oh Hell), Uno, karaoke, group study sessions, and chiǹ louǹ (pronounced “chin loon,” but with a very soft n). I can��t really explain chiǹ louǹ except to describe how it’s played: everyone stands in a circle (barefoot) and tries to keep a special wicker ball in the air. The catch is that you can’t use your hands, so you have to hit the ball with your legs, feet, chest, or head.
The second thing you’re probably wondering about is the climate in Myanmar. Myanmar is tropical and has three seasons: hot, cold, and rainy. It’s the end of the cold season right now (hot season starts in March/April), and the average temperature is about 95 degrees Fahrenheit. In the hot season, temperatures can reach up to 116 degrees Fahrenheit, and the rainy season is, well, rainy. Not “rainy” like “Oh it’s pouring for a few days”—actual monsoons, especially in Mon State. There are lots of geckos (which are the best because they eat spiders and mosquitos), snakes (though I haven’t actually seen one in the wild), dogs, cats, chickens, cows, and other various creatures. The mosquitos can be pretty relentless, but I’ve learned to accept it and wear a lot of bug spray when I go out.
(click on the pictures to see the captions) 
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7 Advanced SEO Strategies I’m Trying to Implement Before 2020
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Google makes over 3,200 algorithm changes per year.
That’s a lot of changes.
Just think about that for a minute… and let that sink in. It’s roughly 9 changes per day.
So how can you beat this gigantic company at their own game and rank high? Especially when you consider that they generate over $100 billion+ per year in ad revenue?
You could follow their advice on how to rank well but that won’t do much for you.
The real trick to rank well is to leverage technology.
See, although Google has made things harder, there are things you can do now that I couldn’t when I first started. For years now technology has evolved, which has made your life easier as an SEO.
Here are 7 advanced SEO strategies that I’m implementing as we speak and you should too.
Advanced SEO Strategy #1: SEO A/B Split Testing
To improve your rankings, what do you have to do?
You have to go in and manually make changes to your site. And if you aren’t sure what changes to make, just put in your URL into this SEO Analyzer and it will spit out a report like the one below.
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But there is one issue with making changes manually, and I know this because I own an ad agency and I do the SEO for my own website.
It takes forever to make changes.
Heck, I can barely keep up with the changes I need to make on NeilPatel.com as I have far too many pages.
But now with companies like Rank Science and Distilled ODN, you no longer have to make changes to your site.
I know that sounds crazy, but think about what I just said.
You no longer have to make changes to your site.
You are probably wondering how right?
When you want to track your website, you just install a piece of javascript like the one Google Analytics gives you and you are off to the races.
Rank Science and Distilled ODN are similar. You install a piece of javascript and that’s it. From there it doesn’t matter if you have a CMS, or how your website is built, or any of that… they can make changes to your HTML code without you needing to do anything.
You don’t even have to give them your server password or an FTP login. The technology has changed so much that the simple javascript you add to your website can now make the changes for you.
I know that may be hard to believe, but that is how A/B testing worked for years. If you use Optimizely, VWO, or Crazy Egg… you just add a javascript and from their end, they can adjust your site.
So why can’t the same be done for SEO? Why do you have to manually make changes still?
The cool part about tools like ODN or Rank Science is they can make the changes automatically, which is really useful if you have thousands of pages.
Here’s how they work:
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This way your site can always be SEO-friendly without you having to make any of the adjustments yourself.
Advanced SEO Strategy #2: E-A-T
In the SEO world, there has been an acronym that has been thrown around a lot and it is E-A-T.
It stands for expertise, authority, and trustworthiness.
Google no longer wants to rank just “good” content. Now, they are worried that a piece of content that ranks is inaccurate and can hurt the potential searcher.
For example, let’s imagine you are giving medical advice on your site. You have a ton of links and all of the right signals to rank well but your content is inaccurate. Now imagine someone injures themselves after taking your advice… well, that would be bad.
In the SEO world, you see sites in the health space or financial space having more issues with Google algorithm updates because their information may be inaccurate and Google is looking for sites to prove their expertise, authority, and trustworthiness.
But my hunch is, over the next year or two, they will crack down on many more industries.
If you are going to rank a site, everyone these days can manipulate SEO signals, but it is hard to manipulate things like expertise, authority, and trustworthiness. Especially when you combine all three.
One thing I’m focusing on in the next 12 months is to increase what I believe will help boost my rankings in the long run.
How you may ask? Well, I’m going to leverage a handful of tactics:
Guest post – guest posting on popular industry and news sites should help increase my brand recognition over time. I used to do this more frequently in the past and I will kick this off again. If you don’t know how to guest post, check this out.
Speak at conferences – I’ve slowed down on this a bit, but I will pick it up for the same reason above. It should help with E-A-T. If you haven’t spoken at many events, the key is to just apply to a lot of them and eventually some will accept you.
Awards and recognition – continually apply for more awards. I used to do this when I was much younger and I’ve gotten lazy about it these days. The same goes for publishing more books… I already have one New York Times bestseller, why not go for a few more?
A simple thing that you can do if you believe you have been negatively impacted by some of the more recent Google updates is to include an author bio box on every piece of content you write. And, of course, use author schema markup.
A good example of this is my author box…
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Using this should help boost your long-term rankings.
Advanced SEO Strategy #3: Host HTML Files From a CDN
We all know that speed impacts rankings. It also impacts conversion rates. Walmart, for example, boosted their conversion rate by 2% for every second of load time they reduced.
And nowadays more Google searches happen on mobile devices, hence load time and speed really matter.
I already have a faster server… my hosting bill is a bit more than I would like.
And it’s actually going to get a bit worse.
Currently, I have a server where my site is hosted. That server is somewhere in the United States… I believe the east coast.
That means if someone wants to visit my website from let’s say New York City, it should load fairly fast. However, if someone from São Paulo, Brazil wants to visit NeilPatel.com, it would take a bit longer as they are further away from my server.
To solve this, I’ve been using a CDN. A CDN is a content delivery network.
Services like Cloudflare cache your images and static content and server it from the closest server to the person visiting your website.
So now when someone from São Paulo visits my website, they are usually served up cached content from a server in Brazil. This makes their experience load much faster.
But as your content changes, and with things like WordPress blogs where you are constantly getting comments and going through page changes, not all of your content is served up through a CDN.
My team is now making a tweak to improve my load time even more. So instead of serving up my HTML pages from my server, we are now going to serve them up from a CDN.
In other words, we are trying to serve as much of our site from a CDN.
Tumblr media
As you can see from the Trello list above, that’s all of the stuff we are working on serving up from our Cloudflare account in order to speed up our site and eventually boost our search rankings and conversion rates.
I wish I can walk you through how to do it step by step, and maybe that could be a future blog post, but the easiest is to just find a developer from UpWork to do it for you.
Advanced SEO Strategy #4: Multi-lingual Title Tag Tests
Similar to Rank Science, there’s a tool I currently use to test my title tags.
It’s called Clickflow.
youtube
I use to automatically test my title tag and meta description to maximize my click-through rate. And like Rank Science, you just add a piece of javascript and it can start running tests for you automatically.
That way, you don’t have to manually keep changing things.
And Clickflow has worked well for me for over the past year… really well. Just look at my month-over-month growth from the past couple of months.
Tumblr media
Just in the last 31 days, I saw an increase in organic traffic by 96,723 just through title tag split tests.
But here is the kicker: I’m only able to effectively use the software for my English content. Now just imagine if I did this in less competitive markets like Brazil where I am generating 418,953 unique visitors a month.
Tumblr media
Or what if I did that with my German blog or Spanish blog? The possibilities are endless!
Sure in English, not many SEOs are doing title tag split testing but some still are. In other regions, many marketers haven’t even heard of this yet.
So, over the next few months, my team will have to manually do this to figure out what works in these markets.
If you haven’t done it yet in English, check out this post. Here you will see some of the basic findings when it comes to boosting CTRs were:
Title tags that contain a question generate 14.1% more clicks on average.
Title tags between 15 and 40 characters generate the most clicks.
Leveraging emotions can increase clicks. Meta tags with a positive or negative emotion generated roughly 7% more clicks.
And if you want something really simple, I’ve found that adding the year in your title tag can drastically increase CTR.
For example, look at a lot of the top results that rank for the phrase “how to start a blog”.
Tumblr media
3 of the top 5 results contain the year in the title tag.
Advanced SEO Strategy #5: FAQpage Schema Markup
I blogged about this in the past, but less than .17% of sites are leveraging it.
Before I get into it, just look at my search traffic from the term “digital marketing”.
Tumblr media
Sure the chart is bouncing up and down a lot, but I’m getting way more traffic than I was before I implemented the FAQpage markup.
In essence, what it does is add common FAQ-based questions to your search listing. Similar to the image below.
Tumblr media
I know some people say that if you add this to your site then there is no reason for people to visit your site. And in essence, Google wins because it keeps them on their search engine.
But the way I look at it is if your website provides amazing content and helps create an amazing experience, a portion of those people will remember your URL and will come back in the future.
Plus if you aren’t in the number 1 spot, you don’t have much to lose by implementing this. Even if you are in the number 1 spot like I am for my affiliate marketing page and you add FAQpage schema…
Tumblr media
I’ve found that when I add the FAQpage schema my traffic hasn’t dropped.
Tumblr media
Now all I have to do is add this for another 649 blog posts that we identified that are a good fit for this on my blog. 🙁
Advanced SEO Strategy #6: Content Clusters
I bet you have content on your site. And similar to me, when you wrote the content you used tools like Ubersuggest and wrote whatever had a lot of search volume.
And if you want to get a bit more organized and move faster, you probably even used a content calendar.
But just like me, I bet over the years you never focused on clustering your content together. And because you didn’t you probably have tons of pages on similar topics if not the same topic.
This is a big problem because it confuses Google.
For example, I have so many pages on “keyword tools” and “keyword research” that Google doesn’t necessarily know which page to rank. Because of this, my rankings for some of those terms are somewhat stable, but the rank page from my site constantly changes.
A good solution to this problem and improved overall rankings is to use content clusters. A great example of a site that didn’t use clustering but now does is Hubspot.
Their content went from looking like this:
Tumblr media
To looking like this:
Tumblr media
The overall goal is to have sections of your site and blog about specific topics. And from there you can link and connect other articles around the same topic together. Doing this lets the search engines know which one is the main topic through things like breadcrumbs and URL hierarchy.
A good example of this is the Beginners Guide to SEO by Moz.
Within that guide, they link 8 chapters that cover all aspects of SEO. Each of those chapters links back to the main introductory article.
Instead of making them 9 separate blog posts (including the introductory page), they linked them all together and made them flow with each other.
Just look at how they set up their URL structure.
Here is the URL of the introductory page:
https://moz.com/beginners-guide-to-seo
And here is the URL of a chapter:
https://moz.com/beginners-guide-to-seo/why-search-engine-marketing-is-necessary
Do you see what they did?
They are telling search engines that the chapter is part of the whole Beginner’s Guide to SEO and they did this through the use of folders.
And here is another chapter… https://moz.com/beginners-guide-to-seo/keyword-research
As you can see, they followed the same structure. This a simple way to use content clustering to improve your rankings. Case in point, they rank number 1 on Google for the term “SEO” and have for years.
Tumblr media
Now I just have to do this with my whole site in multiple languages.
Advanced SEO Strategy #7: Conquer the World
I’m serious when I say that by the way… I really am going after all of the major countries.
The most vital SEO strategy I ever learned came from a Google employee. And it was simple… Google has tons of content to choose from when it comes to ranking sites in English but they lack a lot of high-quality content in other regions.
So, I decided to do something simple years ago… I translated my content into other languages. That’s how my traffic has gone from this:
Tumblr media
To this:
Tumblr media
Sure, I have leveraged a lot of other tactics over the years as well, like building Ubersuggest into a free SEO tool. But even that, Ubersuggest has grown so fast because it is translated into 9 different languages.
Just look at the language breakdown of Ubersuggest’s traffic stats.
Tumblr media
When you combine all of the different variations of English, all of the other variations make up roughly 40% of the tools traffic.
Now with my blog, I haven’t gone as far as translating it into as many languages as the tool, but I plan on translating it eventually into 22 languages. I pick them based on population size and GDP.
This one will take me a few years to really scale up but it provides massive gains for me.
If you want to scale globally, follow this.
This is a must if you want to not only dominate SEO but business in general. Companies these days aren’t just based in the US or UK or China… they are all going global.
Conclusion
No matter if you have been doing SEO for just a few weeks or even years like me, there is always more to do.
Google is constantly changing and with the new technology that’s available to you, there is still a lot of room to do well.
As you can see from the above strategies, that’s the stuff I am focusing on over the next 12 months. They’re tactics that work and provide results.
Some of them are really advanced and require engineering help, but SEO is no longer just about hiring a marketer and having them help you get more traffic. To really do well, you have to get a bit more technical than most marketers are comfortable with.
So, what do you think of the strategies above? Have you tried any of them yet?
Tumblr media Tumblr media Tumblr media Tumblr media Tumblr media
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0 notes
marketingcomcaio · 5 years
Text
7 Advanced SEO Strategies I’m Trying to Implement Before 2020
Tumblr media
Google makes over 3,200 algorithm changes per year.
That’s a lot of changes.
Just think about that for a minute… and let that sink in. It’s roughly 9 changes per day.
So how can you beat this gigantic company at their own game and rank high? Especially when you consider that they generate over $100 billion+ per year in ad revenue?
You could follow their advice on how to rank well but that won’t do much for you.
The real trick to rank well is to leverage technology.
See, although Google has made things harder, there are things you can do now that I couldn’t when I first started. For years now technology has evolved, which has made your life easier as an SEO.
Here are 7 advanced SEO strategies that I’m implementing as we speak and you should too.
Advanced SEO Strategy #1: SEO A/B Split Testing
To improve your rankings, what do you have to do?
You have to go in and manually make changes to your site. And if you aren’t sure what changes to make, just put in your URL into this SEO Analyzer and it will spit out a report like the one below.
Tumblr media
But there is one issue with making changes manually, and I know this because I own an ad agency and I do the SEO for my own website.
It takes forever to make changes.
Heck, I can barely keep up with the changes I need to make on NeilPatel.com as I have far too many pages.
But now with companies like Rank Science and Distilled ODN, you no longer have to make changes to your site.
I know that sounds crazy, but think about what I just said.
You no longer have to make changes to your site.
You are probably wondering how right?
When you want to track your website, you just install a piece of javascript like the one Google Analytics gives you and you are off to the races.
Rank Science and Distilled ODN are similar. You install a piece of javascript and that’s it. From there it doesn’t matter if you have a CMS, or how your website is built, or any of that… they can make changes to your HTML code without you needing to do anything.
You don’t even have to give them your server password or an FTP login. The technology has changed so much that the simple javascript you add to your website can now make the changes for you.
I know that may be hard to believe, but that is how A/B testing worked for years. If you use Optimizely, VWO, or Crazy Egg… you just add a javascript and from their end, they can adjust your site.
So why can’t the same be done for SEO? Why do you have to manually make changes still?
The cool part about tools like ODN or Rank Science is they can make the changes automatically, which is really useful if you have thousands of pages.
Here’s how they work:
Tumblr media
This way your site can always be SEO-friendly without you having to make any of the adjustments yourself.
Advanced SEO Strategy #2: E-A-T
In the SEO world, there has been an acronym that has been thrown around a lot and it is E-A-T.
It stands for expertise, authority, and trustworthiness.
Google no longer wants to rank just “good” content. Now, they are worried that a piece of content that ranks is inaccurate and can hurt the potential searcher.
For example, let’s imagine you are giving medical advice on your site. You have a ton of links and all of the right signals to rank well but your content is inaccurate. Now imagine someone injures themselves after taking your advice… well, that would be bad.
In the SEO world, you see sites in the health space or financial space having more issues with Google algorithm updates because their information may be inaccurate and Google is looking for sites to prove their expertise, authority, and trustworthiness.
But my hunch is, over the next year or two, they will crack down on many more industries.
If you are going to rank a site, everyone these days can manipulate SEO signals, but it is hard to manipulate things like expertise, authority, and trustworthiness. Especially when you combine all three.
One thing I’m focusing on in the next 12 months is to increase what I believe will help boost my rankings in the long run.
How you may ask? Well, I’m going to leverage a handful of tactics:
Guest post – guest posting on popular industry and news sites should help increase my brand recognition over time. I used to do this more frequently in the past and I will kick this off again. If you don’t know how to guest post, check this out.
Speak at conferences – I’ve slowed down on this a bit, but I will pick it up for the same reason above. It should help with E-A-T. If you haven’t spoken at many events, the key is to just apply to a lot of them and eventually some will accept you.
Awards and recognition – continually apply for more awards. I used to do this when I was much younger and I’ve gotten lazy about it these days. The same goes for publishing more books… I already have one New York Times bestseller, why not go for a few more?
A simple thing that you can do if you believe you have been negatively impacted by some of the more recent Google updates is to include an author bio box on every piece of content you write. And, of course, use author schema markup.
A good example of this is my author box…
Tumblr media
Using this should help boost your long-term rankings.
Advanced SEO Strategy #3: Host HTML Files From a CDN
We all know that speed impacts rankings. It also impacts conversion rates. Walmart, for example, boosted their conversion rate by 2% for every second of load time they reduced.
And nowadays more Google searches happen on mobile devices, hence load time and speed really matter.
I already have a faster server… my hosting bill is a bit more than I would like.
And it’s actually going to get a bit worse.
Currently, I have a server where my site is hosted. That server is somewhere in the United States… I believe the east coast.
That means if someone wants to visit my website from let’s say New York City, it should load fairly fast. However, if someone from São Paulo, Brazil wants to visit NeilPatel.com, it would take a bit longer as they are further away from my server.
To solve this, I’ve been using a CDN. A CDN is a content delivery network.
Services like Cloudflare cache your images and static content and server it from the closest server to the person visiting your website.
So now when someone from São Paulo visits my website, they are usually served up cached content from a server in Brazil. This makes their experience load much faster.
But as your content changes, and with things like WordPress blogs where you are constantly getting comments and going through page changes, not all of your content is served up through a CDN.
My team is now making a tweak to improve my load time even more. So instead of serving up my HTML pages from my server, we are now going to serve them up from a CDN.
In other words, we are trying to serve as much of our site from a CDN.
Tumblr media
As you can see from the Trello list above, that’s all of the stuff we are working on serving up from our Cloudflare account in order to speed up our site and eventually boost our search rankings and conversion rates.
I wish I can walk you through how to do it step by step, and maybe that could be a future blog post, but the easiest is to just find a developer from UpWork to do it for you.
Advanced SEO Strategy #4: Multi-lingual Title Tag Tests
Similar to Rank Science, there’s a tool I currently use to test my title tags.
It’s called Clickflow.
youtube
I use to automatically test my title tag and meta description to maximize my click-through rate. And like Rank Science, you just add a piece of javascript and it can start running tests for you automatically.
That way, you don’t have to manually keep changing things.
And Clickflow has worked well for me for over the past year… really well. Just look at my month-over-month growth from the past couple of months.
Tumblr media
Just in the last 31 days, I saw an increase in organic traffic by 96,723 just through title tag split tests.
But here is the kicker: I’m only able to effectively use the software for my English content. Now just imagine if I did this in less competitive markets like Brazil where I am generating 418,953 unique visitors a month.
Tumblr media
Or what if I did that with my German blog or Spanish blog? The possibilities are endless!
Sure in English, not many SEOs are doing title tag split testing but some still are. In other regions, many marketers haven’t even heard of this yet.
So, over the next few months, my team will have to manually do this to figure out what works in these markets.
If you haven’t done it yet in English, check out this post. Here you will see some of the basic findings when it comes to boosting CTRs were:
Title tags that contain a question generate 14.1% more clicks on average.
Title tags between 15 and 40 characters generate the most clicks.
Leveraging emotions can increase clicks. Meta tags with a positive or negative emotion generated roughly 7% more clicks.
And if you want something really simple, I’ve found that adding the year in your title tag can drastically increase CTR.
For example, look at a lot of the top results that rank for the phrase “how to start a blog”.
Tumblr media
3 of the top 5 results contain the year in the title tag.
Advanced SEO Strategy #5: FAQpage Schema Markup
I blogged about this in the past, but less than .17% of sites are leveraging it.
Before I get into it, just look at my search traffic from the term “digital marketing”.
Tumblr media
Sure the chart is bouncing up and down a lot, but I’m getting way more traffic than I was before I implemented the FAQpage markup.
In essence, what it does is add common FAQ-based questions to your search listing. Similar to the image below.
Tumblr media
I know some people say that if you add this to your site then there is no reason for people to visit your site. And in essence, Google wins because it keeps them on their search engine.
But the way I look at it is if your website provides amazing content and helps create an amazing experience, a portion of those people will remember your URL and will come back in the future.
Plus if you aren’t in the number 1 spot, you don’t have much to lose by implementing this. Even if you are in the number 1 spot like I am for my affiliate marketing page and you add FAQpage schema…
Tumblr media
I’ve found that when I add the FAQpage schema my traffic hasn’t dropped.
Tumblr media
Now all I have to do is add this for another 649 blog posts that we identified that are a good fit for this on my blog. 🙁
Advanced SEO Strategy #6: Content Clusters
I bet you have content on your site. And similar to me, when you wrote the content you used tools like Ubersuggest and wrote whatever had a lot of search volume.
And if you want to get a bit more organized and move faster, you probably even used a content calendar.
But just like me, I bet over the years you never focused on clustering your content together. And because you didn’t you probably have tons of pages on similar topics if not the same topic.
This is a big problem because it confuses Google.
For example, I have so many pages on “keyword tools” and “keyword research” that Google doesn’t necessarily know which page to rank. Because of this, my rankings for some of those terms are somewhat stable, but the rank page from my site constantly changes.
A good solution to this problem and improved overall rankings is to use content clusters. A great example of a site that didn’t use clustering but now does is Hubspot.
Their content went from looking like this:
Tumblr media
To looking like this:
Tumblr media
The overall goal is to have sections of your site and blog about specific topics. And from there you can link and connect other articles around the same topic together. Doing this lets the search engines know which one is the main topic through things like breadcrumbs and URL hierarchy.
A good example of this is the Beginners Guide to SEO by Moz.
Within that guide, they link 8 chapters that cover all aspects of SEO. Each of those chapters links back to the main introductory article.
Instead of making them 9 separate blog posts (including the introductory page), they linked them all together and made them flow with each other.
Just look at how they set up their URL structure.
Here is the URL of the introductory page:
https://ift.tt/1PP9zZJ
And here is the URL of a chapter:
https://ift.tt/1HU5kut
Do you see what they did?
They are telling search engines that the chapter is part of the whole Beginner’s Guide to SEO and they did this through the use of folders.
And here is another chapter… https://ift.tt/1U16BGo
As you can see, they followed the same structure. This a simple way to use content clustering to improve your rankings. Case in point, they rank number 1 on Google for the term “SEO” and have for years.
Tumblr media
Now I just have to do this with my whole site in multiple languages.
Advanced SEO Strategy #7: Conquer the World
I’m serious when I say that by the way… I really am going after all of the major countries.
The most vital SEO strategy I ever learned came from a Google employee. And it was simple… Google has tons of content to choose from when it comes to ranking sites in English but they lack a lot of high-quality content in other regions.
So, I decided to do something simple years ago… I translated my content into other languages. That’s how my traffic has gone from this:
Tumblr media
To this:
Tumblr media
Sure, I have leveraged a lot of other tactics over the years as well, like building Ubersuggest into a free SEO tool. But even that, Ubersuggest has grown so fast because it is translated into 9 different languages.
Just look at the language breakdown of Ubersuggest’s traffic stats.
Tumblr media
When you combine all of the different variations of English, all of the other variations make up roughly 40% of the tools traffic.
Now with my blog, I haven’t gone as far as translating it into as many languages as the tool, but I plan on translating it eventually into 22 languages. I pick them based on population size and GDP.
This one will take me a few years to really scale up but it provides massive gains for me.
If you want to scale globally, follow this.
This is a must if you want to not only dominate SEO but business in general. Companies these days aren’t just based in the US or UK or China… they are all going global.
Conclusion
No matter if you have been doing SEO for just a few weeks or even years like me, there is always more to do.
Google is constantly changing and with the new technology that’s available to you, there is still a lot of room to do well.
As you can see from the above strategies, that’s the stuff I am focusing on over the next 12 months. They’re tactics that work and provide results.
Some of them are really advanced and require engineering help, but SEO is no longer just about hiring a marketer and having them help you get more traffic. To really do well, you have to get a bit more technical than most marketers are comfortable with.
So, what do you think of the strategies above? Have you tried any of them yet?
The post 7 Advanced SEO Strategies I’m Trying to Implement Before 2020 appeared first on Neil Patel.
7 Advanced SEO Strategies I’m Trying to Implement Before 2020 Publicado primeiro em https://neilpatel.com
0 notes
reviewandbonuss · 5 years
Text
7 Advanced SEO Strategies I’m Trying to Implement Before 2020
Tumblr media
Google makes over 3,200 algorithm changes per year.
That’s a lot of changes.
Just think about that for a minute… and let that sink in. It’s roughly 9 changes per day.
So how can you beat this gigantic company at their own game and rank high? Especially when you consider that they generate over $100 billion+ per year in ad revenue?
You could follow their advice on how to rank well but that won’t do much for you.
The real trick to rank well is to leverage technology.
See, although Google has made things harder, there are things you can do now that I couldn’t when I first started. For years now technology has evolved, which has made your life easier as an SEO.
Here are 7 advanced SEO strategies that I’m implementing as we speak and you should too.
Advanced SEO Strategy #1: SEO A/B Split Testing
To improve your rankings, what do you have to do?
You have to go in and manually make changes to your site. And if you aren’t sure what changes to make, just put in your URL into this SEO Analyzer and it will spit out a report like the one below.
Tumblr media
But there is one issue with making changes manually, and I know this because I own an ad agency and I do the SEO for my own website.
It takes forever to make changes.
Heck, I can barely keep up with the changes I need to make on NeilPatel.com as I have far too many pages.
But now with companies like Rank Science and Distilled ODN, you no longer have to make changes to your site.
I know that sounds crazy, but think about what I just said.
You no longer have to make changes to your site.
You are probably wondering how right?
When you want to track your website, you just install a piece of javascript like the one Google Analytics gives you and you are off to the races.
Rank Science and Distilled ODN are similar. You install a piece of javascript and that’s it. From there it doesn’t matter if you have a CMS, or how your website is built, or any of that… they can make changes to your HTML code without you needing to do anything.
You don’t even have to give them your server password or an FTP login. The technology has changed so much that the simple javascript you add to your website can now make the changes for you.
I know that may be hard to believe, but that is how A/B testing worked for years. If you use Optimizely, VWO, or Crazy Egg… you just add a javascript and from their end, they can adjust your site.
So why can’t the same be done for SEO? Why do you have to manually make changes still?
The cool part about tools like ODN or Rank Science is they can make the changes automatically, which is really useful if you have thousands of pages.
Here’s how they work:
Tumblr media
This way your site can always be SEO-friendly without you having to make any of the adjustments yourself.
Advanced SEO Strategy #2: E-A-T
In the SEO world, there has been an acronym that has been thrown around a lot and it is E-A-T.
It stands for expertise, authority, and trustworthiness.
Google no longer wants to rank just “good” content. Now, they are worried that a piece of content that ranks is inaccurate and can hurt the potential searcher.
For example, let’s imagine you are giving medical advice on your site. You have a ton of links and all of the right signals to rank well but your content is inaccurate. Now imagine someone injures themselves after taking your advice… well, that would be bad.
In the SEO world, you see sites in the health space or financial space having more issues with Google algorithm updates because their information may be inaccurate and Google is looking for sites to prove their expertise, authority, and trustworthiness.
But my hunch is, over the next year or two, they will crack down on many more industries.
If you are going to rank a site, everyone these days can manipulate SEO signals, but it is hard to manipulate things like expertise, authority, and trustworthiness. Especially when you combine all three.
One thing I’m focusing on in the next 12 months is to increase what I believe will help boost my rankings in the long run.
How you may ask? Well, I’m going to leverage a handful of tactics:
Guest post – guest posting on popular industry and news sites should help increase my brand recognition over time. I used to do this more frequently in the past and I will kick this off again. If you don’t know how to guest post, check this out.
Speak at conferences – I’ve slowed down on this a bit, but I will pick it up for the same reason above. It should help with E-A-T. If you haven’t spoken at many events, the key is to just apply to a lot of them and eventually some will accept you.
Awards and recognition – continually apply for more awards. I used to do this when I was much younger and I’ve gotten lazy about it these days. The same goes for publishing more books… I already have one New York Times bestseller, why not go for a few more?
A simple thing that you can do if you believe you have been negatively impacted by some of the more recent Google updates is to include an author bio box on every piece of content you write. And, of course, use author schema markup.
A good example of this is my author box…
Tumblr media
Using this should help boost your long-term rankings.
Advanced SEO Strategy #3: Host HTML Files From a CDN
We all know that speed impacts rankings. It also impacts conversion rates. Walmart, for example, boosted their conversion rate by 2% for every second of load time they reduced.
And nowadays more Google searches happen on mobile devices, hence load time and speed really matter.
I already have a faster server… my hosting bill is a bit more than I would like.
And it’s actually going to get a bit worse.
Currently, I have a server where my site is hosted. That server is somewhere in the United States… I believe the east coast.
That means if someone wants to visit my website from let’s say New York City, it should load fairly fast. However, if someone from São Paulo, Brazil wants to visit NeilPatel.com, it would take a bit longer as they are further away from my server.
To solve this, I’ve been using a CDN. A CDN is a content delivery network.
Services like Cloudflare cache your images and static content and server it from the closest server to the person visiting your website.
So now when someone from São Paulo visits my website, they are usually served up cached content from a server in Brazil. This makes their experience load much faster.
But as your content changes, and with things like WordPress blogs where you are constantly getting comments and going through page changes, not all of your content is served up through a CDN.
My team is now making a tweak to improve my load time even more. So instead of serving up my HTML pages from my server, we are now going to serve them up from a CDN.
In other words, we are trying to serve as much of our site from a CDN.
Tumblr media
As you can see from the Trello list above, that’s all of the stuff we are working on serving up from our Cloudflare account in order to speed up our site and eventually boost our search rankings and conversion rates.
I wish I can walk you through how to do it step by step, and maybe that could be a future blog post, but the easiest is to just find a developer from UpWork to do it for you.
Advanced SEO Strategy #4: Multi-lingual Title Tag Tests
Similar to Rank Science, there’s a tool I currently use to test my title tags.
It’s called Clickflow.
youtube
I use to automatically test my title tag and meta description to maximize my click-through rate. And like Rank Science, you just add a piece of javascript and it can start running tests for you automatically.
That way, you don’t have to manually keep changing things.
And Clickflow has worked well for me for over the past year… really well. Just look at my month-over-month growth from the past couple of months.
Tumblr media
Just in the last 31 days, I saw an increase in organic traffic by 96,723 just through title tag split tests.
But here is the kicker: I’m only able to effectively use the software for my English content. Now just imagine if I did this in less competitive markets like Brazil where I am generating 418,953 unique visitors a month.
Tumblr media
Or what if I did that with my German blog or Spanish blog? The possibilities are endless!
Sure in English, not many SEOs are doing title tag split testing but some still are. In other regions, many marketers haven’t even heard of this yet.
So, over the next few months, my team will have to manually do this to figure out what works in these markets.
If you haven’t done it yet in English, check out this post. Here you will see some of the basic findings when it comes to boosting CTRs were:
Title tags that contain a question generate 14.1% more clicks on average.
Title tags between 15 and 40 characters generate the most clicks.
Leveraging emotions can increase clicks. Meta tags with a positive or negative emotion generated roughly 7% more clicks.
And if you want something really simple, I’ve found that adding the year in your title tag can drastically increase CTR.
For example, look at a lot of the top results that rank for the phrase “how to start a blog”.
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3 of the top 5 results contain the year in the title tag.
Advanced SEO Strategy #5: FAQpage Schema Markup
I blogged about this in the past, but less than .17% of sites are leveraging it.
Before I get into it, just look at my search traffic from the term “digital marketing”.
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Sure the chart is bouncing up and down a lot, but I’m getting way more traffic than I was before I implemented the FAQpage markup.
In essence, what it does is add common FAQ-based questions to your search listing. Similar to the image below.
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I know some people say that if you add this to your site then there is no reason for people to visit your site. And in essence, Google wins because it keeps them on their search engine.
But the way I look at it is if your website provides amazing content and helps create an amazing experience, a portion of those people will remember your URL and will come back in the future.
Plus if you aren’t in the number 1 spot, you don’t have much to lose by implementing this. Even if you are in the number 1 spot like I am for my affiliate marketing page and you add FAQpage schema…
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I’ve found that when I add the FAQpage schema my traffic hasn’t dropped.
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Now all I have to do is add this for another 649 blog posts that we identified that are a good fit for this on my blog. 🙁
Advanced SEO Strategy #6: Content Clusters
I bet you have content on your site. And similar to me, when you wrote the content you used tools like Ubersuggest and wrote whatever had a lot of search volume.
And if you want to get a bit more organized and move faster, you probably even used a content calendar.
But just like me, I bet over the years you never focused on clustering your content together. And because you didn’t you probably have tons of pages on similar topics if not the same topic.
This is a big problem because it confuses Google.
For example, I have so many pages on “keyword tools” and “keyword research” that Google doesn’t necessarily know which page to rank. Because of this, my rankings for some of those terms are somewhat stable, but the rank page from my site constantly changes.
A good solution to this problem and improved overall rankings is to use content clusters. A great example of a site that didn’t use clustering but now does is Hubspot.
Their content went from looking like this:
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To looking like this:
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The overall goal is to have sections of your site and blog about specific topics. And from there you can link and connect other articles around the same topic together. Doing this lets the search engines know which one is the main topic through things like breadcrumbs and URL hierarchy.
A good example of this is the Beginners Guide to SEO by Moz.
Within that guide, they link 8 chapters that cover all aspects of SEO. Each of those chapters links back to the main introductory article.
Instead of making them 9 separate blog posts (including the introductory page), they linked them all together and made them flow with each other.
Just look at how they set up their URL structure.
Here is the URL of the introductory page:
https://moz.com/beginners-guide-to-seo
And here is the URL of a chapter:
https://moz.com/beginners-guide-to-seo/why-search-engine-marketing-is-necessary
Do you see what they did?
They are telling search engines that the chapter is part of the whole Beginner’s Guide to SEO and they did this through the use of folders.
And here is another chapter… https://moz.com/beginners-guide-to-seo/keyword-research
As you can see, they followed the same structure. This a simple way to use content clustering to improve your rankings. Case in point, they rank number 1 on Google for the term “SEO” and have for years.
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Now I just have to do this with my whole site in multiple languages.
Advanced SEO Strategy #7: Conquer the World
I’m serious when I say that by the way… I really am going after all of the major countries.
The most vital SEO strategy I ever learned came from a Google employee. And it was simple… Google has tons of content to choose from when it comes to ranking sites in English but they lack a lot of high-quality content in other regions.
So, I decided to do something simple years ago… I translated my content into other languages. That’s how my traffic has gone from this:
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To this:
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Sure, I have leveraged a lot of other tactics over the years as well, like building Ubersuggest into a free SEO tool. But even that, Ubersuggest has grown so fast because it is translated into 9 different languages.
Just look at the language breakdown of Ubersuggest’s traffic stats.
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When you combine all of the different variations of English, all of the other variations make up roughly 40% of the tools traffic.
Now with my blog, I haven’t gone as far as translating it into as many languages as the tool, but I plan on translating it eventually into 22 languages. I pick them based on population size and GDP.
This one will take me a few years to really scale up but it provides massive gains for me.
If you want to scale globally, follow this.
This is a must if you want to not only dominate SEO but business in general. Companies these days aren’t just based in the US or UK or China… they are all going global.
Conclusion
No matter if you have been doing SEO for just a few weeks or even years like me, there is always more to do.
Google is constantly changing and with the new technology that’s available to you, there is still a lot of room to do well.
As you can see from the above strategies, that’s the stuff I am focusing on over the next 12 months. They’re tactics that work and provide results.
Some of them are really advanced and require engineering help, but SEO is no longer just about hiring a marketer and having them help you get more traffic. To really do well, you have to get a bit more technical than most marketers are comfortable with.
So, what do you think of the strategies above? Have you tried any of them yet?
The post 7 Advanced SEO Strategies I’m Trying to Implement Before 2020 appeared first on Neil Patel.
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0 notes
orcneas · 7 years
Text
Thank you @moprocrastinates for tagging me, you beautiful, wonderful human. Name: Alexis Nickname: Lexi, Lex, Sexy Lexi, Bitch Zodiac sign: Cancer Hogwarts house: SLYTHERIN BITCHES HELL YEh Orientation: Bisexual Ethnicity: so white I glow Fav fruits: fuck me up with strawberries, black cherries, nectaries, tangerines, pineapple Fav Season: Fall and summer Fav book series: Harry Potter, LOTR, TOG, ACOTAR, TMI, TID, TDA, SO MANY ACRONYMS Fav fictional characters: Oh boy. Literally everyone in my fav books. Every single person. Fav flowers: Violets. Fav scents: rain, coffee, books, clover, fresh sheets, Elizabeth and James bourbon perfume Fav colors: black, red, green, purple, blue, etc. Fav animals: dogs, cats, hamsters, ferrets, idk. Fav artists/bands: Troye Sivan (I listen to so many but he's probably my favorite? Idk it changes depending on my mood.) Coffee, Tea, or hot chocolate: Coffee. Sweet Jesus coffee I need a coffee IV I need to bathe in it I can't handle weak leaf water like tea my god Average sleep: lmao uhm I have no idea. At least 5 I think? Sometimes less sometimes more... isn't depression fun. Number of blankets I sleep with: currently three Dream trip: I've always wanted to go to England and around the U.K. in general. I'm studying abroad in London this fall so that's becoming realized. I want more than anything to travel north and see the northern lights. Last thing I googled: omg fuck me "bad naruto pickup lines" IT WAS RESEARCH How many blogs I follow: a couple hundred? Idk the exact number Number of followers: quite a few. A good number. Love you guys What I usually post about: everything and anything. Dank memes, social justice, funny pup videos, I am the epitome of tumblr trash My aesthetic: opening a leather journal with writing indents on the pages, rain hitting the window pains while snuggling in freshly cleaned black sheets before falling asleep, opening a new book fresh from the bookstore, stargazing with a friend next to me, blasting music while driving at night with the windows down, gliding over a hill at night and being met with a burst of city light. Height: 5'6" Nationality: American Blog created: created this nearly seven or so years ago in middle school and then abandoned it till high school... so technically sevenish? I want to hear from @kotahlotah, @sin-ammin666, and whoever wants to do it
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Financial SEER: A Way To Quantify Risk Tolerance And Determine Appropriate Equity Exposure
Tumblr media
This post is for someone who is wondering:
Whether they have the proper asset allocation
How to reduce investment stress while still benefitting from returns
How to quantify their risk tolerance
How to continue moving forward on their path to financial freedom despite all the uncertainty
One of my primary goals on Financial Samurai is to help readers build meaningful wealth in a risk-appropriate manner. Because I started my career soon after the 1997 Asian Financial Crisis, I've experienced a lot of carnage as many international college students in the US had to drop out due to a sudden and massive devaluation of their respective home country's currencies. I fully appreciate how hazardous the road to building great wealth can be.
Even the best-made plans can be laid to waste due to some unforeseen exogenous variable. We always hope for good surprises along the way. Unfortunately, life always has a way of kicking us in the face after knocking us in the teeth. Let's always be thankful for what we have and demonstrate kindness to those who are experiencing difficult times.
Most investors overestimate their risk tolerance, especially investors who've only been investing with significant capital since 2009. Once the losses start piling up, it's not only the melancholy of losing money that starts getting to you, it's the growing fear that your job might also be at risk.
You might also erroneously think that the richer you get, the higher your risk tolerance. After all, the more money you have, the bigger your buffer. This is a fallacy because the more money you have, the larger your potential loss. For most rational people, their lifestyles don't inflate commensurately with their wealth. This is why even rich people can't resist a free rubber chicken lunch.
Further, there will come a time when your investment returns have a larger impact on your net worth than your earnings. As a result, the richer you are, the more dismayed you will be to lose money. Your main hope for recovery is a rebound in investment performance because your work earnings won't contribute much at all.
How Most Of Us Rescue Our Investments
The reason we all continue to fight in this difficult world is because we have hope. But eventually, our hope fades because our brains and bodies slow down. When we're younger, we often think ourselves to be invincible. Then, eventually, we start experiencing the realities of aging.
It is due to our fading abilities that we must bring down our risk exposure as we age. It is only the rare bird that goes all-in after making enough money to last a lifetime to try and make so much more. Sometimes they turn into billionaires like Elon Musk. But most of the time they end up going broke and filled with regret.
The only way most of us can rescue our investments after a market swoon is through contributions from earned income i.e. our salaries. We tell ourselves that when the markets are down, that's alright because we'll simply invest more at lower prices.
However, lower prices don't necessarily mean better value if estimates are cut, but all other things being equal, we like to trick ourselves into believing we're getting a better deal all the same.
To understand reward, we must first understand risk. Since 1929, the median bear market price decline is 33.51%, while the average bear market price decline is 35.43% since 1929.
Therefore, it's reasonable to assume that the next bear market could also bring equity valuations down by 35% over an 8 – 10 month period.
Tumblr media
Let me share a quantifiable way to measure how much equity exposure you should have based on your risk tolerance.
I'm calling it the Financial Samurai Equity Exposure Rule or Financial SEER. It's an appropriate acronym because seer means a person who is supposed to be able, through supernatural insight, to see what the future holds.
How To Quantify Your Risk Tolerance
Most people just regularly invest in stocks over time through dollar cost averaging. They have little concept of whether the amount of stocks they have as part of their portfolio or their net worth is risk appropriate.
Hence, to quantify your risk tolerance based on your existing portfolio, use the following formula:
(Public Equity Exposure X 35%) / Monthly Gross Income.
For example, let's say you have $500,000 in equities and make $10,000 a month. To quantify your risk tolerance, the formula is: $500,000 X 35% = $175,000 / $10,000 = 17.5.
This formula tells you that you will need to work an 17.5 ADDITIONAL months of your life to earn a GROSS income equal to how much you lost in a -35% bear market. After taxes, you're really only making around $8,000 a month, so you will actually have to work closer to 22 more months and contribute 100% of your after-tax income to be whole.
But it gets worse. Given you need to pay for basic living expenses, you need to work even longer than 22 months. Good thing stocks tend to rebound after an average bear market duration of 10 months, if you can hold on.
Given everybody has a different tax rate, I've simplified the formula using a gross monthly income figure instead of a net monthly income figure. Feel free to adjust the Risk Tolerance Multiple based on your personal income tax situation.
Quantifying risk tolerance by calculating working months is the best way to go because time is money. The more you value your time, the more you hate your job, and the less you desire to work, the lower your risk tolerance.
The classic scenario is a 68-year-old retiree with a $1,000,000 portfolio living off $20,000 a year in Social Security and $20,000 in dividend income from his portfolio.
If his portfolio loses 30% of its value because it is way overweight equities, it is almost impossible to recover the lost $300,000 on his $20,000 a year fixed income. His dividend income may likely be cut as well as companies hold onto their cash for survival. The only thing this retiree can do is pray the market eventually goes up while cutting spending.
How To Determine Appropriate Equity Exposure
After you have quantified your risk tolerance by assigning a Risk Tolerance Multiple = the number of months you need to work to make up for your potential bear market loss, take a look at this guide below.
My guide will not only give you an idea of what your Risk Tolerance Multiple is, but it will also give you an idea of what your maximum equity exposure should be based on your risk tolerance. Solutions!
Tumblr media
My advice to all investors is to not risk more than 18 months worth of gross salary on your equity investments using an assumed 35% average bear market decline in your public investment portfolio.
In other words, if you make $10,000 a month, the most you should risk is a $180,000 loss on a $514,285 pure equity portfolio.
The Max Equity Exposure formula =  (Your Monthly Salary X 18) / 35%.
You can certainly have a larger overall public investment portfolio than $514,285 in this example, but I wouldn't risk much more than $514,285 in equities only if you have only a $10,000 a month gross salary.
You can have $514,285 max in equities plus $250,000 in AAA-rated municipal bonds if you wish, for a reasonable 67%/33% equities fixed income split. Your total portfolio size would therefore be $764,285.
Adjust The Assumptions As You See Fit
If you think the next bear market will only decline by 25%, feel free to use 25% in the Max Equity Exposure formula. In the above example, the result would be ($10,000 X 18) / 25% = $720,000 of maximum equity exposure for someone making $120,000 a year.
If you just got promoted and plan to see 20% YoY earnings growth for the next five years, you could use your current monthly salary and a higher Risk Tolerance Multiple to determine your equity exposure. For example, let's say you currently make $10,000 a month, but expect to make $20,000 a month in five years, You also think stocks will go down by 25% at most. The calculation would therefore be: ($10,000 X 36) / 25% = $1,440,000 as your target or maximum equity exposure.
If you decide to live like a hermit in a low cost town in the middle of nowhere, you could increase your Risk Tolerance Multiple to 36. But you've got to question your money priorities for trying to make a bigger return only to never spend your rewards.
Remember, whatever your Risk Tolerance Multiple is, you will have to increase it by 1.2 – 3X to truly calculate how many more years you will need to work to recover from your bear market losses due to taxes and general living expenses.
It is a judgment call regarding how much equity risk you should take. If you've quadrupled your net worth after a 9-year bull market, it's probably wise to lower your risk exposure multiple. Conversely, after a 30%+ correction in equities, it's probably wise to increase your risk exposure multiple.
The closer you get to retirement, the lower your multiple should be as well. Nobody wants to get close to the financially free finish line only to break a leg and get carted off in an ambulance.
Be A Rational Investor With Financial SEER
The valuation of everything is dependent on current and future earnings. It takes time and energy to create those earnings from your job or your business. If you are seriously burning out, please dial down risk and give yourself some time to heal.
For the average person in a normal economic cycle, a gross Risk Tolerance Multiple of 18 is my recommendation. Most people have the fortitude to waste up to around 2-3 years of their lives to gain back what they've lost from a bear market. But after three years of digging out of a hole, things start to feel hopeless as the average person starts giving up.
Remember, things could always be worse! Not only could your stock investments lose more than 35%, you could lose all your home equity due to leverage, your business, your job, and your spouse as well. Please invest rationally and responsibly.
I hope the Financial Samurai Equity Exposure Rule (SEER) helps you take the subjective term of risk tolerance and shapes it into something quantifiable. You now have a concrete way of determining your equity exposure and risk tolerance.
Financial SEER formulas:
Risk Tolerance = (Public Equity Exposure X Expected Percentage Decline) / Monthly Gross Income
Maximum Equity Exposure = (Your Monthly Salary X Risk Tolerance Multiple) / Expected Percentage Decline
Recommendation: Manage your finances in one place with Personal Capital, the best free financial tool on the web. It's important to stay on top of your net worth, understand your risk exposure, and make sure your retirement plans are on track. Get your finances right the first time. There's no rewind button in life.
https://www.financialsamurai.com/wp-content/uploads/2019/01/Financial-SEER.m4a
The post Financial SEER: A Way To Quantify Risk Tolerance And Determine Appropriate Equity Exposure appeared first on Financial Samurai.
0 notes
kerrychelly-blog · 5 years
Text
Financial SEER: A Way To Quantify Risk Tolerance And Determine Appropriate Equity Exposure
Tumblr media
This post is for someone who is wondering:
Whether they have the proper asset allocation
Whether they should sell equities and buy bonds
How to reduce investment stress while still benefitting from returns
How to quantify their risk tolerance
How to continue moving forward on their path to financial freedom despite all the uncertainty
One of my primary goals on Financial Samurai is to help readers build meaningful wealth in a risk-appropriate manner. Because I started my career soon after the 1997 Asian Financial Crisis, I've experienced a lot of carnage as many international college students in the US had to drop out due to a sudden and massive devaluation of their respective home country's currencies. I fully appreciate how hazardous the road to building great wealth can be.
Even the best-made plans can be laid to waste due to some unforeseen exogenous variable. We always hope for good surprises along the way. Unfortunately, life always has a way of kicking us in the face after knocking us in the teeth. Let's always be thankful for what we have and demonstrate kindness to those who are experiencing difficult times.
Most investors overestimate their risk tolerance, especially investors who've only been investing with significant capital since 2009. Once the losses start piling up, it's not only the melancholy of losing money that starts getting to you, it's the growing fear that your job might also be at risk.
You might also erroneously think that the richer you get, the higher your risk tolerance. After all, the more money you have, the bigger your buffer. This is a fallacy because the more money you have, the larger your potential loss. For most rational people, their lifestyles don't inflate commensurately with their wealth. This is why even rich people can't resist a free rubber chicken lunch.
Further, there will come a time when your investment returns have a larger impact on your net worth than your earnings. As a result, the richer you are, the more dismayed you will be to lose money. Your main hope for recovery is a rebound in investment performance because your work earnings won't contribute much at all.
How Most Of Us Rescue Our Investments
The reason we all continue to fight in this difficult world is because we have hope. But eventually, our hope fades because our brains and bodies slow down. When we're younger, we often think ourselves to be invincible. Then, eventually, we start experiencing the realities of aging.
It is due to our fading abilities that we must bring down our risk exposure as we age. It is only the rare bird that goes all-in after making enough money to last a lifetime to try and make so much more. Sometimes they turn into billionaires like Elon Musk. But most of the time they end up going broke and filled with regret.
The only way most of us can rescue our investments after a market swoon is through contributions from earned income i.e. our salaries. We tell ourselves that when the markets are down, that's alright because we'll simply invest more at lower prices.
However, lower prices don't necessarily mean better value if estimates are cut, but all other things being equal, we like to trick ourselves into believing we're getting a better deal all the same.
To understand reward, we must first understand risk. Since 1929, the median bear market price decline is 33.51%, while the average bear market price decline is 35.43% since 1929.
Therefore, it's reasonable to assume that the next bear market could also bring equity valuations down by 35% over an 8 – 10 month period.
Tumblr media
Let me share a quantifiable way to measure how much equity exposure you should have based on your risk tolerance.
I'm calling it the Financial Samurai Equity Exposure Rule or Financial SEER. It's an appropriate acronym because seer means a person who is supposed to be able, through supernatural insight, to see what the future holds.
How To Quantify Your Risk Tolerance
Most people just regularly invest in stocks over time through dollar cost averaging. They have little concept of whether the amount of stocks they have as part of their portfolio or their net worth is risk appropriate.
Hence, to quantify your risk tolerance based on your existing portfolio, use the following formula:
(Public Equity Exposure X 35%) / Monthly Gross Income.
For example, let's say you have $500,000 in equities and make $10,000 a month. To quantify your risk tolerance, the formula is: $500,000 X 35% = $175,000 / $10,000 = 17.5.
This formula tells you that you will need to work an 17.5 ADDITIONAL months of your life to earn a GROSS income equal to how much you lost in a -35% bear market. After taxes, you're really only making around $8,000 a month, so you will actually have to work closer to 22 more months and contribute 100% of your after-tax income to be whole.
But it gets worse. Given you need to pay for basic living expenses, you need to work even longer than 22 months. Good thing stocks tend to rebound after an average bear market duration of 10 months, if you can hold on.
Given everybody has a different tax rate, I've simplified the formula using a gross monthly income figure instead of a net monthly income figure. Feel free to adjust the Risk Tolerance Multiple based on your personal income tax situation.
Quantifying risk tolerance by calculating working months is the best way to go because time is money. The more you value your time, the more you hate your job, and the less you desire to work, the lower your risk tolerance.
The classic scenario is a 68-year-old retiree with a $1,000,000 portfolio living off $20,000 a year in Social Security and $20,000 in dividend income from his portfolio.
If his portfolio loses 30% of its value because it is way overweight equities, it is almost impossible to recover the lost $300,000 on his $20,000 a year fixed income. His dividend income may likely be cut as well as companies hold onto their cash for survival. The only thing this retiree can do is pray the market eventually goes up while cutting spending.
How To Determine Appropriate Equity Exposure
After you have quantified your risk tolerance by assigning a Risk Tolerance Multiple = the number of months you need to work to make up for your potential bear market loss, take a look at this guide below.
My guide will not only give you an idea of what your Risk Tolerance Multiple is, but it will also give you an idea of what your maximum equity exposure should be based on your risk tolerance. Solutions!
Tumblr media
My advice to all investors is to not risk more than 18 months worth of gross salary on your equity investments using an assumed 35% average bear market decline in your public investment portfolio.
In other words, if you make $10,000 a month, the most you should risk is a $180,000 loss on a $514,285 pure equity portfolio.
The Max Equity Exposure formula =  (Your Monthly Salary X 18) / 35%.
You can certainly have a larger overall public investment portfolio than $514,285 in this example, but I wouldn't risk much more than $514,285 in equities only if you have only a $10,000 a month gross salary.
You can have $514,285 max in equities plus $250,000 in AAA-rated municipal bonds if you wish, for a reasonable 67%/33% equities fixed income split. Your total portfolio size would therefore be $764,285.
Adjust The Assumptions As You See Fit
If you think the next bear market will only decline by 25%, feel free to use 25% in the Max Equity Exposure formula. In the above example, the result would be ($10,000 X 18) / 25% = $720,000 of maximum equity exposure for someone making $120,000 a year.
If you just got promoted and plan to see 20% YoY earnings growth for the next five years, you could use your current monthly salary and a higher Risk Tolerance Multiple to determine your equity exposure. For example, let's say you currently make $10,000 a month, but expect to make $20,000 a month in five years, You also think stocks will go down by 25% at most. The calculation would therefore be: ($10,000 X 36) / 25% = $1,440,000 as your target or maximum equity exposure.
If you decide to live like a hermit in a low cost town in the middle of nowhere, you could increase your Risk Tolerance Multiple to 36. But you've got to question your money priorities for trying to make a bigger return only to never spend your rewards.
Remember, whatever your Risk Tolerance Multiple is, you will have to increase it by 1.2 – 3X to truly calculate how many more years you will need to work to recover from your bear market losses due to taxes and general living expenses.
It is a judgment call regarding how much equity risk you should take. If you've quadrupled your net worth after a 9-year bull market, it's probably wise to lower your risk exposure multiple. Conversely, after a 30%+ correction in equities, it's probably wise to increase your risk exposure multiple.
The closer you get to retirement, the lower your multiple should be as well. Nobody wants to get close to the financially free finish line only to break a leg and get carted off in an ambulance.
Be A Rational Investor With Financial SEER
The valuation of everything is dependent on current and future earnings. It takes time and energy to create those earnings from your job or your business. If you are seriously burning out, please dial down risk and give yourself some time to heal.
For the average person in a normal economic cycle, a gross Risk Tolerance Multiple of 18 is my recommendation. Most people have the fortitude to waste up to around 2-3 years of their lives to gain back what they've lost from a bear market. But after three years of digging out of a hole, things start to feel hopeless as the average person starts giving up.
Remember, things could always be worse! Not only could your stock investments lose more than 35%, you could lose all your home equity due to leverage, your business, your job, and your spouse as well. Please invest rationally and responsibly.
I hope the Financial Samurai Equity Exposure Rule (SEER) helps you take the subjective term of risk tolerance and shapes it into something quantifiable. You now have a concrete way of determining your equity exposure and risk tolerance.
Financial SEER formulas:
Risk Tolerance = (Public Equity Exposure X Expected Percentage Decline) / Monthly Gross Income
Maximum Equity Exposure = (Your Monthly Salary X Risk Tolerance Multiple) / Expected Percentage Decline
Related Posts:
Recommended Net Worth Allocation By Age Or Work Experience
The Proper Asset Allocation Of Stocks And Bonds By Age
Readers, how do you quantify risk tolerance? How many months are you willing to work to make up for potential losses in your portfolio? Is your equity exposure appropriate for your risk tolerance? What is your Risk Tolerance Multiple? 
The post Financial SEER: A Way To Quantify Risk Tolerance And Determine Appropriate Equity Exposure appeared first on Financial Samurai.
0 notes
francizwalker-blog · 5 years
Text
Financial SEER: A Way To Quantify Risk Tolerance And Determine Appropriate Equity Exposure
Tumblr media
This post is for someone who is wondering:
Whether they have the proper asset allocation
Whether they should sell equities and buy bonds
How to reduce investment stress while still benefitting from returns
How to quantify their risk tolerance
How to continue moving forward on their path to financial freedom despite all the uncertainty
One of my primary goals on Financial Samurai is to help readers build meaningful wealth in a risk-appropriate manner. Because I started my career soon after the 1997 Asian Financial Crisis, I've experienced a lot of carnage as many international college students in the US had to drop out due to a sudden and massive devaluation of their respective home country's currencies. I fully appreciate how hazardous the road to building great wealth can be.
Even the best-made plans can be laid to waste due to some unforeseen exogenous variable. We always hope for good surprises along the way. Unfortunately, life always has a way of kicking us in the face after knocking us in the teeth. Let's always be thankful for what we have and demonstrate kindness to those who are experiencing difficult times.
Most investors overestimate their risk tolerance, especially investors who've only been investing with significant capital since 2009. Once the losses start piling up, it's not only the melancholy of losing money that starts getting to you, it's the growing fear that your job might also be at risk.
You might also erroneously think that the richer you get, the higher your risk tolerance. After all, the more money you have, the bigger your buffer. This is a fallacy because the more money you have, the larger your potential loss. For most rational people, their lifestyles don't inflate commensurately with their wealth. This is why even rich people can't resist a free rubber chicken lunch.
Further, there will come a time when your investment returns have a larger impact on your net worth than your earnings. As a result, the richer you are, the more dismayed you will be to lose money. Your main hope for recovery is a rebound in investment performance because your work earnings won't contribute much at all.
How Most Of Us Rescue Our Investments
The reason we all continue to fight in this difficult world is because we have hope. But eventually, our hope fades because our brains and bodies slow down. When we're younger, we often think ourselves to be invincible. Then, eventually, we start experiencing the realities of aging.
It is due to our fading abilities that we must bring down our risk exposure as we age. It is only the rare bird that goes all-in after making enough money to last a lifetime to try and make so much more. Sometimes they turn into billionaires like Elon Musk. But most of the time they end up going broke and filled with regret.
The only way most of us can rescue our investments after a market swoon is through contributions from earned income i.e. our salaries. We tell ourselves that when the markets are down, that's alright because we'll simply invest more at lower prices.
However, lower prices don't necessarily mean better value if estimates are cut, but all other things being equal, we like to trick ourselves into believing we're getting a better deal all the same.
To understand reward, we must first understand risk. Since 1929, the median bear market price decline is 33.51%, while the average bear market price decline is 35.43% since 1929.
Therefore, it's reasonable to assume that the next bear market could also bring equity valuations down by 35% over an 8 – 10 month period.
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Let me share a quantifiable way to measure how much equity exposure you should have based on your risk tolerance.
I'm calling it the Financial Samurai Equity Exposure Rule or Financial SEER. It's an appropriate acronym because seer means a person who is supposed to be able, through supernatural insight, to see what the future holds.
How To Quantify Your Risk Tolerance
Most people just regularly invest in stocks over time through dollar cost averaging. They have little concept of whether the amount of stocks they have as part of their portfolio or their net worth is risk appropriate.
Hence, to quantify your risk tolerance based on your existing portfolio, use the following formula:
(Public Equity Exposure X 35%) / Monthly Gross Income.
For example, let's say you have $500,000 in equities and make $10,000 a month. To quantify your risk tolerance, the formula is: $500,000 X 35% = $175,000 / $10,000 = 17.5.
This formula tells you that you will need to work an 17.5 ADDITIONAL months of your life to earn a GROSS income equal to how much you lost in a -35% bear market. After taxes, you're really only making around $8,000 a month, so you will actually have to work closer to 22 more months and contribute 100% of your after-tax income to be whole.
But it gets worse. Given you need to pay for basic living expenses, you need to work even longer than 22 months. Good thing stocks tend to rebound after an average bear market duration of 10 months, if you can hold on.
Given everybody has a different tax rate, I've simplified the formula using a gross monthly income figure instead of a net monthly income figure. Feel free to adjust the Risk Tolerance Multiple based on your personal income tax situation.
Quantifying risk tolerance by calculating working months is the best way to go because time is money. The more you value your time, the more you hate your job, and the less you desire to work, the lower your risk tolerance.
The classic scenario is a 68-year-old retiree with a $1,000,000 portfolio living off $20,000 a year in Social Security and $20,000 in dividend income from his portfolio.
If his portfolio loses 30% of its value because it is way overweight equities, it is almost impossible to recover the lost $300,000 on his $20,000 a year fixed income. His dividend income may likely be cut as well as companies hold onto their cash for survival. The only thing this retiree can do is pray the market eventually goes up while cutting spending.
How To Determine Appropriate Equity Exposure
After you have quantified your risk tolerance by assigning a Risk Tolerance Multiple = the number of months you need to work to make up for your potential bear market loss, take a look at this guide below.
My guide will not only give you an idea of what your Risk Tolerance Multiple is, but it will also give you an idea of what your maximum equity exposure should be based on your risk tolerance. Solutions!
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My advice to all investors is to not risk more than 18 months worth of gross salary on your equity investments using an assumed 35% average bear market decline in your public investment portfolio.
In other words, if you make $10,000 a month, the most you should risk is a $180,000 loss on a $514,285 pure equity portfolio.
The Max Equity Exposure formula =  (Your Monthly Salary X 18) / 35%.
You can certainly have a larger overall public investment portfolio than $514,285 in this example, but I wouldn't risk much more than $514,285 in equities only if you have only a $10,000 a month gross salary.
You can have $514,285 max in equities plus $250,000 in AAA-rated municipal bonds if you wish, for a reasonable 67%/33% equities fixed income split. Your total portfolio size would therefore be $764,285.
Adjust The Assumptions As You See Fit
If you think the next bear market will only decline by 25%, feel free to use 25% in the Max Equity Exposure formula. In the above example, the result would be ($10,000 X 18) / 25% = $720,000 of maximum equity exposure for someone making $120,000 a year.
If you just got promoted and plan to see 20% YoY earnings growth for the next five years, you could use your current monthly salary and a higher Risk Tolerance Multiple to determine your equity exposure. For example, let's say you currently make $10,000 a month, but expect to make $20,000 a month in five years, You also think stocks will go down by 25% at most. The calculation would therefore be: ($10,000 X 36) / 25% = $1,440,000 as your target or maximum equity exposure.
If you decide to live like a hermit in a low cost town in the middle of nowhere, you could increase your Risk Tolerance Multiple to 36. But you've got to question your money priorities for trying to make a bigger return only to never spend your rewards.
Remember, whatever your Risk Tolerance Multiple is, you will have to increase it by 1.2 – 3X to truly calculate how many more years you will need to work to recover from your bear market losses due to taxes and general living expenses.
It is a judgment call regarding how much equity risk you should take. If you've quadrupled your net worth after a 9-year bull market, it's probably wise to lower your risk exposure multiple. Conversely, after a 30%+ correction in equities, it's probably wise to increase your risk exposure multiple.
The closer you get to retirement, the lower your multiple should be as well. Nobody wants to get close to the financially free finish line only to break a leg and get carted off in an ambulance.
Be A Rational Investor With Financial SEER
The valuation of everything is dependent on current and future earnings. It takes time and energy to create those earnings from your job or your business. If you are seriously burning out, please dial down risk and give yourself some time to heal.
For the average person in a normal economic cycle, a gross Risk Tolerance Multiple of 18 is my recommendation. Most people have the fortitude to waste up to around 2-3 years of their lives to gain back what they've lost from a bear market. But after three years of digging out of a hole, things start to feel hopeless as the average person starts giving up.
Remember, things could always be worse! Not only could your stock investments lose more than 35%, you could lose all your home equity due to leverage, your business, your job, and your spouse as well. Please invest rationally and responsibly.
I hope the Financial Samurai Equity Exposure Rule (SEER) helps you take the subjective term of risk tolerance and shapes it into something quantifiable. You now have a concrete way of determining your equity exposure and risk tolerance.
Financial SEER formulas:
Risk Tolerance = (Public Equity Exposure X Expected Percentage Decline) / Monthly Gross Income
Maximum Equity Exposure = (Your Monthly Salary X Risk Tolerance Multiple) / Expected Percentage Decline
Related Posts:
Recommended Net Worth Allocation By Age Or Work Experience
The Proper Asset Allocation Of Stocks And Bonds By Age
Readers, how do you quantify risk tolerance? How many months are you willing to work to make up for potential losses in your portfolio? Is your equity exposure appropriate for your risk tolerance? What is your Risk Tolerance Multiple? 
The post Financial SEER: A Way To Quantify Risk Tolerance And Determine Appropriate Equity Exposure appeared first on Financial Samurai.
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loansguide01-blog · 5 years
Text
How to Save in Your 20s, 30s, 40s and 50s if You Want to Retire Someday
New Post has been published on https://loansguideto.com/%20/awesome/how-to-save-in-your-20s-30s-40s-and-50s-if-you-want-to-retire-someday/
How to Save in Your 20s, 30s, 40s and 50s if You Want to Retire Someday
Articles with titles like “How Much You Should Have Saved for Retirement at Every Age” are super clickbaity and largely depressing.
Sure, it’s easy for someone who doesn’t know me to say I should have two years of my salary saved, but they don’t know my salary, what I’m spending or what I want to be spending in retirement.
And frankly, neither do I.
So while this article will share general guidance for retirement savings goals based on this Fidelity chart, remember: These are merely guidelines. Your retirement objectives should be based on your own needs, priorities and financial situation.
Retirement planning isn’t one of those set-it-and-forget-it things. It doesn’t have to be hard, but you can’t do all the steps at once — which is great, because that would be pretty overwhelming.
Ways to Save for Retirement: 3 Common Retirement Account
First off, let’s not get bogged down by the terminology and acronyms associated with retirement.
There are three foundational definitions you’ll want to know in order to understand your retirement account.
1. 401( k)
This is a retirement plan offered by an employer. The name “4 01( k) ” actually refers to the section of the tax code that allows your contributions to be deducted from your paycheck before taxes are taken out.
If you’re an employee of public schools or certain tax-exempt organisations, your employer may offer a 403( b ), which is similar to a 401( k) but typically comes with fewer investment options.
Most 401( k) accounts offer a mix of the following investment alternatives :P TAGEND
Stocks. Bonds. Mutual monies. Index funds. Variable annuities.
Depending on your workplace retirement program, your employer may offer to match your contributions up to a certain percentage of your salary.( The maximum total combined contribution is $19,000 for 2019.)
What does that mean? Free money! If you induce $40,000 and you contribute 5% of your pre-tax income to a 401( k ), you’re saving $2,000 on your own.
And if your employer offers a 3% match, that adds an extra $1,200 to your retirement account. So it builds sense to take full advantage of this option.
2. IRA
This stands for individual retirement account. The most common kinds are traditional and Roth IRAs — both have great tax benefits and allow you to invest in the stock market, bonds, mutual funds, exchange-traded funds( ETFs) and certificates of deposit( CDs ).
For 2019, your total contributions to all of your traditional and Roth IRAs cannot be more than $6,000( unless you’re 50 or older; more on that to come ).
Traditional IRAs are tax-deferred accounts, which means you get the tax benefits up front, but you’ll be taxed when you take the money out.
With Roth IRAs, you money your nest egg with after-tax money. That means you don’t get the tax benefits up front, but you’ll get to withdraw your fund tax-free in retirement.
And if you’re wondering, there’s a similar after-tax contribution alternative in work-sponsored retirement plans — it’s called a Roth 401( k ).
3. Taxable Account
This is a regular ol’ investment account without the tax benefits of the 401( k) and IRA. But what it lacks in tax benefits, it makes up for in flexibility.
You can open an account with any company and withdraw from it no matter what your age, for any purpose, with no penalties.
You will, however, need to pay income taxation on fund you withdraw, along with brokerage fees to your money administrator.
What’s Another Way to Save For Retirement If Your Employer Doesn’t Offer a Scheme?
If your employer doesn’t offer a 401( k ), bring up the possibility of adding one. If cost is a matter for, companies like SaveDay offer 401( k) schemes at no cost to employers( and low fees for employees ).
But if you’re self-employed or you can’t get a 401( k) through your employer, you’re not off the hook. Contact companies like Vanguard, Fidelity or Schwab to open an account independently.
And if you’re on a high-deductible health insurance plan( and you fulfill qualifications ), you are able to contribute to a health savings account, or HSA, which you can open with an HSA trustee. Contributions are deducted from your paycheck before taxes are taken out, and account balances above $2,000 can be invested just like they would be in a retirement account.
Your HSA can be used for any qualified medical expense at any time, and once you turn 65, monies can be withdrawn for any expense without penalty. At that point, you are able to set the extra money you save on health care expenses toward your retirement income.
You may also consider safer alternatives than the stock market, like a regular savings account — although it will come with considerably lower annual returns. Even if you’re also investing, a savings account can be used as an easy place to stash your emergency fund.
How to Calculate What You Require to Save
Don’t stress too much about not having a specific target amount saved. You’re not alone.
Americans aren’t very good at saving for retirement — in fact, one-quarter of non-retired adults say they have zero retirement savings, according to a Federal Reserve 2018 report.
But how much money is enough money?
Ask yourself questions like:
What is your foresaw retirement age?( Withdrawals from retirement account before age 59 1/2 usually result in a 10% early withdrawal penalty .) Where do you want to retire? Do you want to pay off your home before you retire? Does you have charge card debt, student loans and/ or medical bills be paid by? How often or far do you want to travel?
All these things( and more) will impact what you need to have saved for your retirement.
Know that your plans will change, and that inflation will build the things you want to do 3% to 4% more expensive every year on average.
You can run numbers through this retirement calculator, which accounts for taxes and inflation, so you can get an idea of how much fund you’ll need to save.
Whatever you choose, it’s important to monitor your plan to ensure you’re on track for your retirement objectives.
How to Save for Retirement at Every Age
You don’t have to have your entire life planned to start saving for retirement.
You actually don’t have to have anything planned or know much at all about the subject. But there is a rule that you can use to monitor your savings and to gauge your progress as you figure out where you’re going.
It’s called the 4% regulation. The rule states that if you can live off 4% of your current retirement savings in a one-year span, your savings will likely last for at least 30 years. So if at any time you multiply your investment savings by 0.04 and you can live off that quantity for the first year of retirement, you’ve arrived!
The 4% rule isn’t set in stone, and it doesn’t mean you’ll be living off that savings forever. But it’s regarded as a safe withdrawal rate by most professionals and is a good way to monitor your progress.
How to Save for Retirement in Your 20 s
The most important thing to do in your 20 s is to just start.
The math doesn’t lie; you are able to plug $100,000 into a compound interest calculator over different period spans, and a long time span of hour will always create the highest earnings. Starting with a zero balance and using 6% as an annual interest rate :P TAGEND
$417 a month for 20 years will grow to $184,000. $278 a month for 30 years will grow to $263,000. $208 a month for 40 years will grow to $386,000.
Even if you contribute small amounts, you should start saving for retirement in your 20 s. Induce it easy on yourself by automating your savings. If your employer offers a 401( k) match, signatories to deduct from your paycheck at least as much as the company matches.
If you don’t have a 401( k ), open a Roth IRA online through a mutual fund company like Vanguard, Fidelity or Schwab and enrol in automatic contributions. Roth IRAs are amazing, but they do have income restrictions. It’s best to start one when you have a lower income.
And who has a lower income than person in their 20 s?
Also, the government will literally pay you to invest when your income is low. If you’re below a certain income, the Saver’s Credit allows you to claim between 10% and 50% of your IRA or 401( k) contributions — up to $2,000 per someone.
Savings Objective: According to Fidelity, by age 30 you should have saved the equivalent of one years’ wage.
How to Save for Retirement in Your 30 s
Now that you have a few years of expending under your belt, it’s time to start optimizing your retirement savings.
Your next smartest move is paying off your debt. All the best interest and fees you’re paying eat away at the amount you’re able to put toward retirement. And now that you’ve probably settled into a career and are getting raises, it’s time to double down and eliminate that debt.
If you didn’t open one in your 20 s, open a traditional or Roth IRA and start maxing it out.
Because IRAs have a low limit and “youve never” get those years back, start maxing out your IRA as soon as possible. The type of IRA you contribute to is up to you.
A traditional IRA lowers your taxable income, so if you’re within $6,000 of the next-lowest tax bracket, you can use a traditional IRA to slide in there. If you’re content with your taxation bracket, you might like a Roth IRA, which won’t lower your taxation bracket.
Savings Goal: According to Fidelity, by age 40 you should have saved the equivalent of three years’ wage.
How to Save for Retirement in Your 40 s
If you’re in your 40 s, there’s a good chance “youve had” kids, a house and a stable position in your company. You might start thinking about get a new car, upgrading the kitchen or maybe get that boat you’ve been eyeing for the past 10 years.
Now is not the time to start give way to lifestyle inflation. You’re at a critical time when your investment returns are ideally going to start outpacing your contributions every month, and it’s time to capitalize on that!
It’s also time to figure out what you want to spend in retirement. Now that you have perspective on life, retirement and investing, you are able to plan a more reasonable retirement budget and figure out how long it will realistically take you to get there.
If your plan includes increasing your savings rate, start working toward maxing out your 401( k ). If you don’t have a 401( k ), open a taxable account and contribute there. You can usually do it at the same place you have your IRA.
Savings Objective: According to Fidelity, by age 50 you should have saved the equivalent of six years’ wage.
How to Save for Retirement in Your 50 s
At age 50, you can take advantage of catch-up contributions to your 401( k) and IRA — even though you won’t need to, because you’ve been on track for decades.
As of 2019, you can put an additional $1,000 per year in your IRA and $6,000 per year in your 401( k) once you reach 50.
Annual Contribution Limits
Under 50 50 and older
IRA $6,000 $7,000
401( k) $19,000 $25,000
It’s also time to start thinking about Social security systems. The longer you wait to collect, the more you’ll get each month. Look back at the 4% rule in order to plan when you want to start collecting.
Finally, it’s time to get a fiscal consultant. Most people who try to start with get a fiscal consultant get frustrated when they pick the wrong one, because they didn’t know what they wanted in the first place.
Now that you have a significant amount expended and an idea of what you want to do with it, it’s time to find an adviser with expertise in how to do that. They can help you optimize the final years of your contributions, protect what you already have and make a withdrawal scheme that’s more accurate than the 4% rule.
Savings Aim: According to Fidelity, by age 60 you should have saved the equivalent of eight years’ wage.
This article contains general information and explains alternatives you may have, but it is not intended to be investment advice or a personal recommendation. We can’t personalize articles for our readers, so your situation may differ from the one discussed here. Please try a licensed professional for tax advice, legal advice, financial planning advice or investment advice.
Jen Smith is a former faculty novelist at The Penny Hoarder. Staff writer Tiffany Wendlen Connors contributed to this post.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.
Read more: thepennyhoarder.com
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dorothydelgadillo · 5 years
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Starting a Career in User Experience Design (UX): Nearly Everything You Need to Know
If you’re a creative type, a problem solver, an empathetic listener, or a combination of all three, a career in User Experience might be a perfect entry point for your pivot into the tech industry.
Yes, working in tech CAN happen through more familiar tech roles like web development or web design, but User Experience (or UX or UX design as you’re likely to see it referred to) offers a chance to work on people-first projects while still reaping all the benefits of tech’s high starting pay and flexible schedules.
But what IS UX? And how exactly can you start working in the field?
It’s funny you should ask. We’ve put together this ultimate guide running down everything you need to know (and then some) about finding work as a UX designer (or any other role that falls under the UX professional umbrella).
Don’t feel pressured to take in all this information at once! Bookmark this page and come back as often as you need when you start charging ahead on your own UX odyssey.
And one last thing: make sure to download our free UX Industry Info Sheet from the top or bottom of this page and take some of the most salient UX facts and figures with you.
Table of Contents
Chapter 1: What is User Experience?
Chapter 2: UX Skills and Tools
Chapter 3: What is a UX Designer Salary?
Chapter 4: How to Find a UX Job
Chapter 5: Freelancing in UX
Chapter 6: UX + Bonus Digital Skills
Chapter 7: Final Thoughts
Chapter 1: What is User Experience? What is UX Design? And What About UI? Definitions please!
User Experience: A Definition
Ok, first thing’s first: a quick definition of user experience.
UX, the tech acronym for “User Experience”, is a tech field that involves researching groups of people who use digital products (like websites and apps) and using the findings to literally improve users’ experiences with those products—the way a product makes the user feel while they use its features, how easy the product is to use, and how appealing users find the product overall.
Then, What is a UX Designer?
UX is often interchangeably referred to as UX design (and UX professionals are more often than not called UX designers). This can be misleading (and confusing!) because there’s more to user experience than just the “design” component. It’s also important to keep in mind that you don’t need a traditional design background to work in UX.
But if there’s more to UX than design (and if “UX design” differs from traditional print and digital design) what do UX designers and other UX professionals actually do?
What do UX Designers (and other UX professionals) do?
The UX process can be broken down into three general categories (which show up to varying degrees in any UX job based on specific job descriptions and what your particular employer is looking for).
These categories are:
UX Research. Research is the foundation of UX. Without researching customer experience through interviews, product testing, etc, there’s no data to use against product changes and improvements—which basically means no UX. UX research plays a part in every step of the UX process, but can also be its own UX career path (proving there’s more to UX than “UX design”).
Information Architecture. Information Architecture is the heart of “design” in UX design. After user research has been collected, it’s time for UX designers to craft a strategy for implementing that data—in other words, a user experience design.
Product Iteration Testing. Part of what makes UX such a great field for creatives is the fact that it isn’t a factory line process. You don’t mindlessly crank out a UX design, call it “done” and move on to the next one. Instead, iteration is a critical part of UX, allowing UX researchers, designers, and other industry professionals to apply their creative problem solving to multiple versions of a product during its development lifetime.
Product iteration testing is the stage in the UX process where a current version of a product is presented to clients, users, and other stakeholders, after which collected impressions are applied to the next product version.
And Then There’s UI
To add to the fun, when you start reading up on UX and UX design you’ll probably notice mention of “UI” as well—sometimes even in the same breath (as “UX UI”). Is UI just another way of saying UX? Well, not really.
Think of it this way: if UX deals with EVERYTHING related to a brand or product experience, (tech shorthand for “User Interface”) is one piece of this bigger picture. UI operates on the same basic principles and methodology of UX, but focuses these skills specifically on a product’s interface (a website’s or app’s menu, screen layout, sitemap, form placement, etc).
In this sense, UI design can be considered more adjacent to traditional web or graphic design than general UX, making it a particularly good transition point into the industry if you DO already have print or digital design experience.
Bonus Reads:
Tech 101: UX Versus UI—What’s The Difference We take an even deeper dive into UX basics and what UX UI designers do on the job in this Tech 101 article, plus we cover UX skills and UX salaries (discussed below, as well).
I’m a UX Designer—Here’s What I Do All Day Get a first hand account of what it’s like to work as a UX designer.
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Chapter 2: The UX Skills and Tools You’ll Need to Become a UX Designer
Some of the skills needed to land and succeeded at a job in UX don’t require a single day of UX training. As mentioned above, if you like to listen to people and understand their problems, if you enjoy critical thinking and problem solving challenges, or if you excel in creative environments, you’re already off to a good start.
But what about the UX-specific skills you’ll need to add to your toolkit if you want to work in UX UI?
Here’s a snapshot look at the crucial skills needed for each of UX’s primary areas (and don’t hesitate to consult this companion article if you need a deeper definition for any of the skills listed).
UX Research Skills
Personas (fictional user profiles used to model customer groups)
Journey Mapping (building visual representations of a user’s “journey” with a product)
Design Ideation (the UX version of “brainstorming,” sometimes done alongside clients and product stakeholders)
Information Architecture Skills
Navigation and Layout Best Practices (while traditional design has best practices for elements like color and typography, UX and UI design have their own best practices when it website and web application layout and design, as described in this UX Planet article)
Wireframing (the process of creating visual wireframe models used to map out the basic structure of a website or application.
Prototyping (the next step up from wireframing—prototypes are a more fleshed out website or app model, building on basic wireframe concepts and giving users a sample version of a product that they can interact with)
Product Iteration Testing Skills
Usability Testing (a product testing method where UX designers or researchers observe customers using a product and anay;uze how easy and enjoyable the user experience is)
A/B Testing (product testing where users are introduced to a product iteration (version A) alongside a version with slight design variations (version B) and UX designers/researchers observe which version the user base prefers)
UX Tools
In addition to skills, tools are an important part of the UX trade.
Two of the most must-learn UX tools recommended by our own curriculum team are:
Figma (an industry-standard design tool for creating website and web application wireframes)
Invision (a powerful software tool that lets UX designers create interactive website prototypes to test with real users)
Both Figma and Invision are intuitive and easy to learn (making them ideal for beginners), but they’re also industry standard programs used by UX pros worldwide. Even better, they are free to use when starting out. Both tools offer no-cost plans that allow you to complete and store up to three full projects, which is perfect when you’re learning the ropes en route to paid work.
Alongside these two programs, other recommended UX UI tools include:
Axure (another prototyping tool for web and desktop applications)
Balsamiq (a User Interface design tool for making digital sketches, wireframes, and mockups)
UXPin (a full-service UX design platform for every stage of the UX process—designing, collaborating, and presenting to clients and test users)
Where to Learn UX Skills
If you’re wondering where you can start learning these skills and tools, that part’s easy. Look no further than our Skillcrush User Experience Design Blueprint—an online course designed to be completed in only 3 months (if you spend about an hour a day). Our course will walk you step-by-step through the skills listed above, as well as get you hands on with Figma and Invision.
Bonus Reads:
How to Talk User Experience (UX): 10 Key Terms to Help You Talk the Talk A handy glossary of 10 critical UX terms
5 Crucial Steps in the UX Process That Your Client Wants to See A five-step look at the UX design process
UXPin Free Books A library of free UX-related e-books
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Chapter 3: What is a UX Designer Salary?
Ok, enough hype about the job itself, let’s get down to brass tacks: how much can you expect to make working as a UX UI designer?
When we posed the UX designer salary question previously, Alison Sullivan, Career Trends Expert at jobs and recruiting site Glassdoor, reported that Glassdoor cites an average base salary of $107,880 for UX designers and an average base salary of $86,883 for UI designers.
She added that—in addition to the money—UX design jobs ranked #27 out of 50 among Glassdoor’s recent Best Jobs in America report, a claim that’s reflected by Glassdoor’s own job listings. As of this writing, Glassdoor has over 5,000 UX designer jobs posted on its site, and nearly 5,000 UI designer openings.
You can read more about UX design salaries (and what it takes to earn them) here.
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Chapter 4: How to Find a UX Job
Now that you have an idea of what UX is about, what kind of skills and tools you need to work as a UX designer, and how much money you can expect to make, how exactly do you go about finding a UX job?
Besides staying on top of job boards like Glassdoor and Indeed (as well as as UX-specific boards like the aptly named UX Jobs Board, UX Design Jobs, and Smashing Jobs, there are some proactive things you can do on your end to up your qualifications for those job listings.
1. Get Your Mock Project On
Just because you’re not getting paid to do UX work yet doesn’t mean you shouldn’t be doing UX work.
Huh?
Let me explain: one of the best way to gain experience and have a demonstrable body of work before getting hired for your first job is to harness your UX skills as you learn them and start working on mock projects.
Use Figma or Invision to create wireframes and prototypes of a UX rebranding for a website or application (it can be fictitious, or even a spec project overhealing the UX of one of your favorite real world sites or apps). By creating a mock body of work en route to your first paid gig, you’ll be able to show potential clients (and yourself!) what you can do.
This article on how to create a web design portfolio with mock projects can be applied to UX as well.
2. Then Get Your Portfolio in Order
Having a crisp, easily shareable digital portfolio is a must in order to win over UX clients and hiring managers. But what does that mean?
First, you need to find the right site to house your digital samples. This article on free design portfolio sites will lead you in the direction of stalwarts like Behance and Dribbble, both of which work just as well for UX portfolios as they do for web and visual design.
Second, you need to make sure you’re including the kind of UX samples that will resonate with clients and employers. This article will give you a list of seven foundational projects to start building a stellar UX portfolio, after which you can level up your portfolio game even further with this 4-step guide to making sure your work shines.
3. Have an Elevator Pitch on Standby
In between trolling job listings and compiling a knockout portfolio, life sometimes just happens. You never know when you might be in a situation where you’re suddenly face-to-face with someone who can hook you up with that dream UX job. Which means you better have something to say when and if the time comes.
No problem, we’ve got that covered, too! If you need a little help explaining who you are, what sets you apart, and why (despite maybe not having the most on-paper experience) you’re the person to solve a company’s problems, go ahead and download our guide to writing the perfect personal pitch.
4. Remember—Cover Letters and Resumes are Still as Crucial as Ever
The tech industry may have changed a lot of the ways we work and find jobs, but one institution remains the same—the venerable cover letter and resume. In order to really nail that UX job, you’re going to need both.
Because you’re new to the UX, it’s critical to write a custom cover letter when applying for jobs. Take the time to research the company or client you’re applying with, notice any trends in their projects or even problem areas (what could they be doing more of?), and make sure to include those observations in your letter. You can even mention a personal experience you’ve had with the company, too. The more original, the better.
Finally, when it comes to your resume, it needs to live up to the same high UX standards as the portfolio and projects you’re showcasing. The good news is, there are plenty of free resume templates that will hit that standard for you, giving you one less thing to spend your creative energy on. Check out our list of free creative resume templates for 2019 here.
Bonus Reads (and Watches!):
Make All the Money With UX Webinar Watch the replay of our webinar where a panel of UX pros talk about what UX careers are really like (and how to start one)
The Best Places to Find UX Design Inspiration Online Looking for some UX inspo to jumpstart your own portfolio? Check out this round up of over 25 great sources.
(back to top)
Chapter 5: Freelancing in UX IS an Option
We’ve said it before and we’ll say it again: tech jobs are flexible. And part of what makes them so flexible are the freelancing opportunities available in every tech field. Whether it’s web development, web design, or digital marketing, tech jobs run the gamut from full time jobs for a single company, to freelance careers, to part time side hustles you can do while caring for children or building your skills.
UX is no different. If side hustling appeals to you, or if you’re looking for a way to do paid projects while building your skills AND your portfolio, don’t forget that freelance UX work is always an option.
Of course, if you’re going into business for yourself, you’re going to need some support.
Here are some articles to get you started on the ins and outs of UX freelancing:
Is UX Freelancing a Fit for You?
How to Find Work as a UX Freelancer
A Beginner’s Guide into the World of Freelance UX Design
Meanwhile, you can check out our own guide to calculating a freelance web rate here (this article is about web development and web design, but the same principles can be applied to UX), and you can download our calculator for freelance web design rates here.
Bonus Reads:
The 9-Step Guide to Making a Great First Impression on a Client
9 Free Email Templates to Get You Out of Sticky Client Situations
50 Resources and Tools for Freelancers
5 Mistakes New Freelancers Make
14 Things You Need to Know About Paying Taxes as a Freelancer
How to Get Your Clients to Pay You More
The Ultimate Guide to Freelance Contracts
(back to top)
Chapter 6: Stacking Digital Skills
One of the big questions asked about working in UX is whether or not UX designers or other UX professional need to know how to code.
The short answer? Absolutely not.
If you’ve gotten this far you probably noticed there hasn’t been single mention of coding skills, and it’s entirely possible to have a lucrative UX career without knowing any coding languages.
That being said, digital skills are stackable, meaning the more you know, the more career options and flexibility you’re going to have.
Even the most basic coding skills will add to what you can accomplish as a UX professional (as far as being to able to communicate with developer teams, understanding the technical limitations of projects, being able to make quick fixes to websites, etc).
The same can be said for web design (a particularly handy skill for maintaining and curating your digital portfolio) and digital marketing (understanding digital marketing principles will give you yet another tool in your toolbox for selling users on their experience with a product).
This kind of stacking is particularly important when you’re trying to get your foot in the door with a company of if you’re in the early days of freelancing—a freelance UX designer is one thing, but a freelance UX designer who can also design and/or develop a client’s website becomes a full service digital design studio.
If you’re sold on UX, but also interested in branching out and stacking some additional digital skills, our Blueprints (which you can read more about on our Courses page) are purposefully designed to let you do just that.
And if you sign up for our Break Into Tech Blueprint, you’ll have access to ALL of our courses and materials, putting you in position to become that proverbial one-person tech powerhouse.
(back to top)
Chapter 7: Final Thoughts
You’re still here! Which means you’re probably ready to get serious about this whole UX thing.
Interest and commitment is a big step, so congratulations! But now it’s time to take the next one: consider signing up for our Skillcrush User Experience Designer Blueprint today, and you’ll be well on your way to a high paying, flexible, creative career in UX.
And while you’re at it, download our free UX Industry Info Sheet from the form below and keep it as a reference for some of the most key UX industry facts and figures.
(back to top)
from Web Developers World https://skillcrush.com/2019/02/04/how-to-start-a-ux-career/
0 notes
samuelfields · 5 years
Text
Financial SEER: A Way To Quantify Risk Tolerance And Determine Appropriate Equity Exposure
This post is for someone who is wondering:
Whether they have the proper asset allocation
Whether they should sell equities and buy bonds
How to reduce investment stress while still benefitting from returns
How to quantify their risk tolerance
How to continue moving forward on their path to financial freedom despite all the uncertainty
One of my primary goals on Financial Samurai is to help readers build meaningful wealth in a risk-appropriate manner. Because I started my career soon after the 1997 Asian Financial Crisis, I’ve experienced a lot of carnage as many international college students in the US had to drop out due to a sudden and massive devaluation of their respective home country’s currencies. I fully appreciate how hazardous the road to building great wealth can be.
Even the best-made plans can be laid to waste due to some unforeseen exogenous variable. We always hope for good surprises along the way. Unfortunately, life always has a way of kicking us in the face after knocking us in the teeth. Let’s always be thankful for what we have and demonstrate kindness to those who are experiencing difficult times.
Most investors overestimate their risk tolerance, especially investors who’ve only been investing with significant capital since 2009. Once the losses start piling up, it’s not only the melancholy of losing money that starts getting to you, it’s the growing fear that your job might also be at risk.
You might also erroneously think that the richer you get, the higher your risk tolerance. After all, the more money you have, the bigger your buffer. This is a fallacy because the more money you have, the larger your potential loss. For most rational people, their lifestyles don’t inflate commensurately with their wealth. This is why even rich people can’t resist a free rubber chicken lunch.
Further, there will come a time when your investment returns have a larger impact on your net worth than your earnings. As a result, the richer you are, the more dismayed you will be to lose money. Your main hope for recovery is a rebound in investment performance because your work earnings won’t contribute much at all.
How Most Of Us Rescue Our Investments
The reason we all continue to fight in this difficult world is because we have hope. But eventually, our hope fades because our brains and bodies slow down. When we’re younger, we often think ourselves to be invincible. Then, eventually, we start experiencing the realities of aging.
It is due to our fading abilities that we must bring down our risk exposure as we age. It is only the rare bird that goes all-in after making enough money to last a lifetime to try and make so much more. Sometimes they turn into billionaires like Elon Musk. But most of the time they end up going broke and filled with regret.
The only way most of us can rescue our investments after a market swoon is through contributions from earned income i.e. our salaries. We tell ourselves that when the markets are down, that’s alright because we’ll simply invest more at lower prices.
However, lower prices don’t necessarily mean better value if estimates are cut, but all other things being equal, we like to trick ourselves into believing we’re getting a better deal all the same.
To understand reward, we must first understand risk. Since 1929, the median bear market price decline is 33.51%, while the average bear market price decline is 35.43% since 1929.
Therefore, it’s reasonable to assume that the next bear market could also bring equity valuations down by 35% over an 8 – 10 month period.
Let me share a quantifiable way to measure how much equity exposure you should have based on your risk tolerance.
I’m calling it the Financial Samurai Equity Exposure Rule or Financial SEER. It’s an appropriate acronym because seer means a person who is supposed to be able, through supernatural insight, to see what the future holds.
How To Quantify Your Risk Tolerance
Most people just regularly invest in stocks over time through dollar cost averaging. They have little concept of whether the amount of stocks they have as part of their portfolio or their net worth is risk appropriate.
Hence, to quantify your risk tolerance based on your existing portfolio, use the following formula:
(Public Investment Portfolio Amount X 35%) / Monthly Gross Income.
For example, let’s say you have a $500,000 public investment portfolio and make $10,000 a month. To quantify your risk tolerance, the formula is: $500,000 X 35% = $175,000 / $10,000 = 17.5.
This formula tells you that you will need to work an 17.5 ADDITIONAL months of your life to earn a GROSS income equal to how much you lost in a -35% bear market. After taxes, you’re really only making around $8,000 a month, so you will actually have to work closer to 22 more months and contribute 100% of your after-tax income to be whole.
But it gets worse. Given you need to pay for basic living expenses, you need to work even longer than 22 months. Good thing stocks tend to rebound after an average bear market duration of 10 months, if you can hold on.
Given everybody has a different tax rate, I’ve simplified the formula using a gross monthly income figure instead of a net monthly income figure. Feel free to adjust the Risk Tolerance Multiple based on your personal income tax situation.
Quantifying risk tolerance by calculating working months is the best way to go because time is money. The more you value your time, the more you hate your job, and the less you desire to work, the lower your risk tolerance.
The classic scenario is a 68-year-old retiree with a $1,000,000 portfolio living off $20,000 a year in Social Security and $20,000 in dividend income from his portfolio.
If his portfolio loses 30% of its value, it is almost impossible to recover the lost $300,000 on his $20,000 a year fixed income. His dividend income may be likely be cut as well as companies hold onto their cash for survival. The only thing this retiree can do is pray the market eventually goes up while cutting spending.
How To Determine Appropriate Equity Exposure
After you have quantified your risk tolerance by assigning a Risk Tolerance Multiple = the number of months you need to work to make up for your potential bear market loss, take a look at this guide below.
My guide will not only give you an idea of what your Risk Tolerance Multiple is, but it will also give you an idea of what your maximum equity exposure should be based on your risk tolerance. Solutions!
My advice to all investors is to not risk more than 18 months worth of gross salary on your equity investments using an assumed 35% average bear market decline in your public investment portfolio.
In other words, if you make $10,000 a month, the most you should risk is a $180,000 loss on a $514,285 pure equity portfolio.
The Max Equity Exposure formula =  (Your Monthly Salary X 18) / 35%.
You can certainly have a larger overall public investment portfolio than $514,285 in this example, but I wouldn’t risk much more than $514,285 in equities only if you have only a $10,000 a month gross salary.
You can have $514,285 max in equities plus $250,000 in AAA-rated municipal bonds if you wish, for a reasonable 67%/33% equities fixed income split. Your total portfolio size would therefore be $764,285.
Adjust The Assumptions As You See Fit
If you think the next bear market will only decline by 25%, feel free to use 25% in the Max Equity Exposure formula. In the above example, the result would be ($10,000 X 18) / 25% = $720,000 of maximum equity exposure for someone making $120,000 a year.
If you just got promoted and plan to see 20% YoY earnings growth for the next five years, you could use your current monthly salary and a higher Risk Tolerance Multiple to determine your equity exposure. For example, let’s say you currently make $10,000 a month, but expect to make $20,000 a month in five years, You also think stocks will go down by 25% at most. The calculation would therefore be: ($10,000 X 36) / 25% = $1,440,000 as your target or maximum equity exposure.
If you decide to live like a hermit in a low cost town in the middle of nowhere, you could increase your Risk Tolerance Multiple to 36. But you’ve got to question your money priorities for trying to make a bigger return only to never spend your rewards.
Remember, whatever your Risk Tolerance Multiple is, you will have to increase it by 1.2 – 3X to truly calculate how many more years you will need to work to recover from your bear market losses due to taxes and general living expenses.
It is a judgment call regarding how much equity risk you should take. If you’ve quadrupled your net worth after a 9-year bull market, it’s probably wise to lower your risk exposure multiple. Conversely, after a 30%+ correction in equities, it’s probably wise to increase your risk exposure multiple.
The closer you get to retirement, the lower your multiple should be as well. Nobody wants to get close to the financially free finish line only to break a leg and get carted off in an ambulance.
Be A Rational Investor With Financial SEER
The valuation of everything is dependent on current and future earnings. It takes time and energy to create those earnings from your job or your business. If you are seriously burning out, please dial down risk and give yourself some time to heal.
For the average person in a normal economic cycle, a gross Risk Tolerance Multiple of 18 is my recommendation. Most people have the fortitude to waste up to around 2-3 years of their lives to gain back what they’ve lost from a bear market. But after three years of digging out of a hole, things start to feel hopeless as the average person starts giving up.
Remember, things could always be worse! Not only could your stock investments lose more than 35%, you could lose all your home equity due to leverage, your business, your job, and your spouse as well. Please invest rationally and responsibly.
I hope the Financial Samurai Equity Exposure Rule (SEER) has helped you take the subjective term of risk tolerance, and shaped into something quantifiable. You now have a concrete way of determining your equity exposure and risk tolerance.
Financial SEER formulas:
Risk Tolerance = (Public Investment Portfolio Amount X Expected Percentage Decline) / Monthly Gross Income
Maximum Equity Exposure = (Your Monthly Salary X Risk Tolerance Multiple) / Expected Percentage Decline
Related Posts:
Recommended Net Worth Allocation By Age Or Work Experience
The Proper Asset Allocation Of Stocks And Bonds By Age
Readers, how do you quantify risk tolerance? How many months are you willing to work to make up for potential losses in your portfolio? Is your equity exposure appropriate for your risk tolerance? What is your Risk Tolerance Multiple? 
The post Financial SEER: A Way To Quantify Risk Tolerance And Determine Appropriate Equity Exposure appeared first on Financial Samurai.
from Finance https://www.financialsamurai.com/seer-quantify-risk-tolerance-determine-appropriate-equity-exposure/ via http://www.rssmix.com/
0 notes
jamesgeiiger · 5 years
Text
Financial SEER: A Way To Quantify Risk Tolerance And Determine Appropriate Equity Exposure
This post is for someone who is wondering:
Whether they have the proper asset allocation
Whether they should sell equities and buy bonds
How to reduce investment stress while still benefitting from returns
How to quantify their risk tolerance
How to continue moving forward on their path to financial freedom despite all the uncertainty
One of my primary goals on Financial Samurai is to help readers build meaningful wealth in a risk-appropriate manner. Because I started my career soon after the 1997 Asian Financial Crisis, I’ve experienced a lot of carnage as many international college students in the US had to drop out due to a sudden and massive devaluation of their respective home country’s currencies. I fully appreciate how hazardous the road to building great wealth can be.
Even the best-made plans can be laid to waste due to some unforeseen exogenous variable. We always hope for good surprises along the way. Unfortunately, life always has a way of kicking us in the face after knocking us in the teeth. Let’s always be thankful for what we have and demonstrate kindness to those who are experiencing difficult times.
Most investors overestimate their risk tolerance, especially investors who’ve only been investing with significant capital since 2009. Once the losses start piling up, it’s not only the melancholy of losing money that starts getting to you, it’s the growing fear that your job might also be at risk.
You might also erroneously think that the richer you get, the higher your risk tolerance. After all, the more money you have, the bigger your buffer. This is a fallacy because the more money you have, the larger your potential loss. For most rational people, their lifestyles don’t inflate commensurately with their wealth. This is why even rich people can’t resist a free rubber chicken lunch.
Further, there will come a time when your investment returns have a larger impact on your net worth than your earnings. As a result, the richer you are, the more dismayed you will be to lose money. Your main hope for recovery is a rebound in investment performance because your work earnings won’t contribute much at all.
How Most Of Us Rescue Our Investments
The reason we all continue to fight in this difficult world is because we have hope. But eventually, our hope fades because our brains and bodies slow down. When we’re younger, we often think ourselves to be invincible. Then, eventually, we start experiencing the realities of aging.
It is due to our fading abilities that we must bring down our risk exposure as we age. It is only the rare bird that goes all-in after making enough money to last a lifetime to try and make so much more. Sometimes they turn into billionaires like Elon Musk. But most of the time they end up going broke and filled with regret.
The only way most of us can rescue our investments after a market swoon is through contributions from earned income i.e. our salaries. We tell ourselves that when the markets are down, that’s alright because we’ll simply invest more at lower prices.
However, lower prices don’t necessarily mean better value if estimates are cut, but all other things being equal, we like to trick ourselves into believing we’re getting a better deal all the same.
To understand reward, we must first understand risk. Since 1929, the median bear market price decline is 33.51%, while the average bear market price decline is 35.43% since 1929.
Therefore, it’s reasonable to assume that the next bear market could also bring equity valuations down by 35% over an 8 – 10 month period.
Let me share a quantifiable way to measure how much equity exposure you should have based on your risk tolerance.
I’m calling it the Financial Samurai Equity Exposure Rule or Financial SEER. It’s an appropriate acronym because seer means a person who is supposed to be able, through supernatural insight, to see what the future holds.
How To Quantify Your Risk Tolerance
Most people just regularly invest in stocks over time through dollar cost averaging. They have little concept of whether the amount of stocks they have as part of their portfolio or their net worth is risk appropriate.
Hence, to quantify your risk tolerance based on your existing portfolio, use the following formula:
(Public Investment Portfolio Amount X 35%) / Monthly Gross Income.
For example, let’s say you have a $500,000 public investment portfolio and make $10,000 a month. To quantify your risk tolerance, the formula is: $500,000 X 35% = $175,000 / $10,000 = 17.5.
This formula tells you that you will need to work an 17.5 ADDITIONAL months of your life to earn a GROSS income equal to how much you lost in a -35% bear market. After taxes, you’re really only making around $8,000 a month, so you will actually have to work closer to 22 more months and contribute 100% of your after-tax income to be whole.
But it gets worse. Given you need to pay for basic living expenses, you need to work even longer than 22 months. Good thing stocks tend to rebound after an average bear market duration of 10 months, if you can hold on.
Given everybody has a different tax rate, I’ve simplified the formula using a gross monthly income figure instead of a net monthly income figure. Feel free to adjust the Risk Tolerance Multiple based on your personal income tax situation.
Quantifying risk tolerance by calculating working months is the best way to go because time is money. The more you value your time, the more you hate your job, and the less you desire to work, the lower your risk tolerance.
The classic scenario is a 68-year-old retiree with a $1,000,000 portfolio living off $20,000 a year in Social Security and $20,000 in dividend income from his portfolio.
If his portfolio loses 30% of its value, it is almost impossible to recover the lost $300,000 on his $20,000 a year fixed income. His dividend income may be likely be cut as well as companies hold onto their cash for survival. The only thing this retiree can do is pray the market eventually goes up while cutting spending.
How To Determine Appropriate Equity Exposure
After you have quantified your risk tolerance by assigning a Risk Tolerance Multiple = the number of months you need to work to make up for your potential bear market loss, take a look at this guide below.
My guide will not only give you an idea of what your Risk Tolerance Multiple is, but it will also give you an idea of what your maximum equity exposure should be based on your risk tolerance. Solutions!
My advice to all investors is to not risk more than 18 months worth of gross salary on your equity investments using an assumed 35% average bear market decline in your public investment portfolio.
In other words, if you make $10,000 a month, the most you should risk is a $180,000 loss on a $514,285 pure equity portfolio.
The Max Equity Exposure formula =  (Your Monthly Salary X 18) / 35%.
You can certainly have a larger overall public investment portfolio than $514,285 in this example, but I wouldn’t risk much more than $514,285 in equities only if you have only a $10,000 a month gross salary.
You can have $514,285 max in equities plus $250,000 in AAA-rated municipal bonds if you wish, for a reasonable 67%/33% equities fixed income split. Your total portfolio size would therefore be $764,285.
Adjust The Assumptions As You See Fit
If you think the next bear market will only decline by 25%, feel free to use 25% in the Max Equity Exposure formula. In the above example, the result would be ($10,000 X 18) / 25% = $720,000 of maximum equity exposure for someone making $120,000 a year.
If you just got promoted and plan to see 20% YoY earnings growth for the next five years, you could use your current monthly salary and a higher Risk Tolerance Multiple to determine your equity exposure. For example, let’s say you currently make $10,000 a month, but expect to make $20,000 a month in five years, You also think stocks will go down by 25% at most. The calculation would therefore be: ($10,000 X 36) / 25% = $1,440,000 as your target or maximum equity exposure.
If you decide to live like a hermit in a low cost town in the middle of nowhere, you could increase your Risk Tolerance Multiple to 36. But you’ve got to question your money priorities for trying to make a bigger return only to never spend your rewards.
Remember, whatever your Risk Tolerance Multiple is, you will have to increase it by 1.2 – 3X to truly calculate how many more years you will need to work to recover from your bear market losses due to taxes and general living expenses.
It is a judgment call regarding how much equity risk you should take. If you’ve quadrupled your net worth after a 9-year bull market, it’s probably wise to lower your risk exposure multiple. Conversely, after a 30%+ correction in equities, it’s probably wise to increase your risk exposure multiple.
The closer you get to retirement, the lower your multiple should be as well. Nobody wants to get close to the financially free finish line only to break a leg and get carted off in an ambulance.
Be A Rational Investor With Financial SEER
The valuation of everything is dependent on current and future earnings. It takes time and energy to create those earnings from your job or your business. If you are seriously burning out, please dial down risk and give yourself some time to heal.
For the average person in a normal economic cycle, a gross Risk Tolerance Multiple of 18 is my recommendation. Most people have the fortitude to waste up to around 2-3 years of their lives to gain back what they’ve lost from a bear market. But after three years of digging out of a hole, things start to feel hopeless as the average person starts giving up.
Remember, things could always be worse! Not only could your stock investments lose more than 35%, you could lose all your home equity due to leverage, your business, your job, and your spouse as well. Please invest rationally and responsibly.
I hope the Financial Samurai Equity Exposure Rule (SEER) has helped you take the subjective term of risk tolerance, and shaped into something quantifiable. You now have a concrete way of determining your equity exposure and risk tolerance.
Financial SEER formulas:
Risk Tolerance = (Public Investment Portfolio Amount X Expected Percentage Decline) / Monthly Gross Income
Maximum Equity Exposure = (Your Monthly Salary X Risk Tolerance Multiple) / Expected Percentage Decline
Related Posts:
Recommended Net Worth Allocation By Age Or Work Experience
The Proper Asset Allocation Of Stocks And Bonds By Age
Readers, how do you quantify risk tolerance? How many months are you willing to work to make up for potential losses in your portfolio? Is your equity exposure appropriate for your risk tolerance? What is your Risk Tolerance Multiple? 
The post Financial SEER: A Way To Quantify Risk Tolerance And Determine Appropriate Equity Exposure appeared first on Financial Samurai.
Financial SEER: A Way To Quantify Risk Tolerance And Determine Appropriate Equity Exposure published first on https://worldwideinvestforum.tumblr.com/
0 notes
ronaldmrashid · 5 years
Text
Financial SEER: A Way To Quantify Risk Tolerance And Determine Appropriate Equity Exposure
This post is for someone who is wondering:
Whether they have the proper asset allocation
Whether they should sell equities and buy bonds
How to reduce investment stress while still benefitting from returns
How to quantify their risk tolerance
How to continue moving forward on their path to financial freedom despite all the uncertainty
One of my primary goals on Financial Samurai is to help readers build meaningful wealth in a risk-appropriate manner. Because I started my career soon after the 1997 Asian Financial Crisis, I’ve experienced a lot of carnage as many international college students in the US had to drop out due to a sudden and massive devaluation of their respective home country’s currencies. I fully appreciate how hazardous the road to building great wealth can be.
Even the best-made plans can be laid to waste due to some unforeseen exogenous variable. We always hope for good surprises along the way. Unfortunately, life always has a way of kicking us in the face after knocking us in the teeth. Let’s always be thankful for what we have and demonstrate kindness to those who are experiencing difficult times.
Most investors overestimate their risk tolerance, especially investors who’ve only been investing with significant capital since 2009. Once the losses start piling up, it’s not only the melancholy of losing money that starts getting to you, it’s the growing fear that your job might also be at risk.
You might also erroneously think that the richer you get, the higher your risk tolerance. After all, the more money you have, the bigger your buffer. This is a fallacy because the more money you have, the larger your potential loss. For most rational people, their lifestyles don’t inflate commensurately with their wealth. This is why even rich people can’t resist a free rubber chicken lunch.
Further, there will come a time when your investment returns have a larger impact on your net worth than your earnings. As a result, the richer you are, the more dismayed you will be to lose money. Your main hope for recovery is a rebound in investment performance because your work earnings won’t contribute much at all.
How Most Of Us Rescue Our Investments
The reason we all continue to fight in this difficult world is because we have hope. But eventually, our hope fades because our brains and bodies slow down. When we’re younger, we often think ourselves to be invincible. Then, eventually, we start experiencing the realities of aging.
It is due to our fading abilities that we must bring down our risk exposure as we age. It is only the rare bird that goes all-in after making enough money to last a lifetime to try and make so much more. Sometimes they turn into billionaires like Elon Musk. But most of the time they end up going broke and filled with regret.
The only way most of us can rescue our investments after a market swoon is through contributions from earned income i.e. our salaries. We tell ourselves that when the markets are down, that’s alright because we’ll simply invest more at lower prices.
However, lower prices don’t necessarily mean better value if estimates are cut, but all other things being equal, we like to trick ourselves into believing we’re getting a better deal all the same.
To understand reward, we must first understand risk. Since 1929, the median bear market price decline is 33.51%, while the average bear market price decline is 35.43% since 1929.
Therefore, it’s reasonable to assume that the next bear market could also bring equity valuations down by 35% over an 8 – 10 month period.
Let me share a quantifiable way to measure how much equity exposure you should have based on your risk tolerance.
I’m calling it the Financial Samurai Equity Exposure Rule or Financial SEER. It’s an appropriate acronym because seer means a person who is supposed to be able, through supernatural insight, to see what the future holds.
How To Quantify Your Risk Tolerance
Most people just regularly invest in stocks over time through dollar cost averaging. They have little concept of whether the amount of stocks they have as part of their portfolio or their net worth is risk appropriate.
Hence, to quantify your risk tolerance based on your existing portfolio, use the following formula:
(Public Investment Portfolio Amount X 35%) / Monthly Gross Income.
For example, let’s say you have a $500,000 public investment portfolio and make $10,000 a month. To quantify your risk tolerance, the formula is: $500,000 X 35% = $175,000 / $10,000 = 17.5.
This formula tells you that you will need to work an 17.5 ADDITIONAL months of your life to earn a GROSS income equal to how much you lost in a -35% bear market. After taxes, you’re really only making around $8,000 a month, so you will actually have to work closer to 22 more months and contribute 100% of your after-tax income to be whole.
But it gets worse. Given you need to pay for basic living expenses, you need to work even longer than 22 months. Good thing stocks tend to rebound after an average bear market duration of 10 months, if you can hold on.
Given everybody has a different tax rate, I’ve simplified the formula using a gross monthly income figure instead of a net monthly income figure. Feel free to adjust the Risk Tolerance Multiple based on your personal income tax situation.
Quantifying risk tolerance by calculating working months is the best way to go because time is money. The more you value your time, the more you hate your job, and the less you desire to work, the lower your risk tolerance.
The classic scenario is a 68-year-old retiree with a $1,000,000 portfolio living off $20,000 a year in Social Security and $20,000 in dividend income from his portfolio.
If his portfolio loses 30% of its value, it is almost impossible to recover the lost $300,000 on his $20,000 a year fixed income. His dividend income may be likely be cut as well as companies hold onto their cash for survival. The only thing this retiree can do is pray the market eventually goes up while cutting spending.
How To Determine Appropriate Equity Exposure
After you have quantified your risk tolerance by assigning a Risk Tolerance Multiple = the number of months you need to work to make up for your potential bear market loss, take a look at this guide below.
My guide will not only give you an idea of what your Risk Tolerance Multiple is, but it will also give you an idea of what your maximum equity exposure should be based on your risk tolerance. Solutions!
My advice to all investors is to not risk more than 18 months worth of gross salary on your equity investments using an assumed 35% average bear market decline in your public investment portfolio.
In other words, if you make $10,000 a month, the most you should risk is a $180,000 loss on a $514,285 pure equity portfolio.
The Max Equity Exposure formula =  (Your Monthly Salary X 18) / 35%.
You can certainly have a larger overall public investment portfolio than $514,285 in this example, but I wouldn’t risk much more than $514,285 in equities only if you have only a $10,000 a month gross salary.
You can have $514,285 max in equities plus $250,000 in AAA-rated municipal bonds if you wish, for a reasonable 67%/33% equities fixed income split. Your total portfolio size would therefore be $764,285.
Adjust The Assumptions As You See Fit
If you think the next bear market will only decline by 25%, feel free to use 25% in the Max Equity Exposure formula. In the above example, the result would be ($10,000 X 18) / 25% = $720,000 of maximum equity exposure for someone making $120,000 a year.
If you just got promoted and plan to see 20% YoY earnings growth for the next five years, you could use your current monthly salary and a higher Risk Tolerance Multiple to determine your equity exposure. For example, let’s say you currently make $10,000 a month, but expect to make $20,000 a month in five years, You also think stocks will go down by 25% at most. The calculation would therefore be: ($10,000 X 36) / 25% = $1,440,000 as your target or maximum equity exposure.
If you decide to live like a hermit in a low cost town in the middle of nowhere, you could increase your Risk Tolerance Multiple to 36. But you’ve got to question your money priorities for trying to make a bigger return only to never spend your rewards.
Remember, whatever your Risk Tolerance Multiple is, you will have to increase it by 1.2 – 3X to truly calculate how many more years you will need to work to recover from your bear market losses due to taxes and general living expenses.
It is a judgment call regarding how much equity risk you should take. If you’ve quadrupled your net worth after a 9-year bull market, it’s probably wise to lower your risk exposure multiple. Conversely, after a 30%+ correction in equities, it’s probably wise to increase your risk exposure multiple.
The closer you get to retirement, the lower your multiple should be as well. Nobody wants to get close to the financially free finish line only to break a leg and get carted off in an ambulance.
Be A Rational Investor With Financial SEER
The valuation of everything is dependent on current and future earnings. It takes time and energy to create those earnings from your job or your business. If you are seriously burning out, please dial down risk and give yourself some time to heal.
For the average person in a normal economic cycle, a gross Risk Tolerance Multiple of 18 is my recommendation. Most people have the fortitude to waste up to around 2-3 years of their lives to gain back what they’ve lost from a bear market. But after three years of digging out of a hole, things start to feel hopeless as the average person starts giving up.
Remember, things could always be worse! Not only could your stock investments lose more than 35%, you could lose all your home equity due to leverage, your business, your job, and your spouse as well. Please invest rationally and responsibly.
I hope the Financial Samurai Equity Exposure Rule (SEER) has helped you take the subjective term of risk tolerance, and shaped into something quantifiable. You now have a concrete way of determining your equity exposure and risk tolerance.
Financial SEER formulas:
Risk Tolerance = (Public Investment Portfolio Amount X Expected Percentage Decline) / Monthly Gross Income
Maximum Equity Exposure = (Your Monthly Salary X Risk Tolerance Multiple) / Expected Percentage Decline
Related Posts:
Recommended Net Worth Allocation By Age Or Work Experience
The Proper Asset Allocation Of Stocks And Bonds By Age
Readers, how do you quantify risk tolerance? How many months are you willing to work to make up for potential losses in your portfolio? Is your equity exposure appropriate for your risk tolerance? What is your Risk Tolerance Multiple? 
The post Financial SEER: A Way To Quantify Risk Tolerance And Determine Appropriate Equity Exposure appeared first on Financial Samurai.
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