Life

Is Sending Your Child to an International School Worth the Risk? A Financial Perspective

“The annual income is just over one million, do you want to send your children to an international school?”

This is a real dilemma encountered by a friend around me, and it is also a real choice faced by many middle-class families.

However, American best-selling author Morgan Hauser pointed out that chicken babies are an investment in education that is doomed to failure. “No matter how big the potential gain is, there are many things in the world that are not worth taking risks. Including children’s growth, including priceless family affection.”

So for ordinary people, apart from saving money desperately and investing in moderation, what else can achieve wealth freedom?

A friend works in a new first-tier city. The industry is relatively unpopular, but it is highly anti-cyclical. As long as the company does not act as a demon, it is no problem to guarantee income during drought and flood.

In terms of career development, friends are also very helpful. Before the age of 40, they became key candidates for senior management.

These professional achievements gave her more imagination in children’s education , such as sending her children to private bilingual schools.

The main thing is to let the kids relax.

There is one thing to say, the temperament of children outside the system is really different, self-confidence from the inside out.

When she was so emotional, I seemed to have seen the scene of a well-dressed workplace beauty driving a car to pick up her children at the school gate after get off work, and talking and laughing with foreign teachers.

But then, a friend’s risk assessment made people quickly fall into doubts.

My friend’s husband is a civil servant within the system, and his income accounts for less than 1/5 of the family’s total income. In addition, they bought houses on their own, and now they are still carrying millions of bank loans.

This means that in case of any changes in the industry, once her income is cut off, her husband’s salary can barely support food and clothing.

Mortgage, children’s education, and pension may overwhelm this happy family at any time.

While looking for a school, my friend planned how his child would transfer to another school or class, but at the same time, he was afraid, prolonging the planning period, and he hesitated to make a decision.

How to choose?

I recently read a book – “The Psychology of Money: The Eternal Truth of Wealth, Humanity, and Happiness” , which makes a sharp analysis on similar issues.

We see how the rich spend their money , the cars they drive, the schools .

This triggers a deep desire in us: the desire to be rich, to live a life of freedom and flexibility .

However, we have ignored the process of their accumulation of wealth and what .

As the author of this book, a partner of a well-known fund company and a well-known columnist of the Wall Street Journal, Morgan Hauser did not tell readers how to manage money, but from a psychological point of view, he discussed how people should be in middle age. wealth mentality.

What is rare is that in this financial book, I see the impact and challenges that middle-class families face in terms of their children’s educational values.

Morgan is a veteran of the American financial industry. He is a partner of a fund company and has a column in the Wall Street Journal.

Unlike his wealth-hungry peers, Morgan has reached a unity with his wife since he was young, lived a minimalist life, and has been practicing investment methods that seem to have no characteristics:

I started investing in stocks at the age of 20, but I mainly hold low-cost index funds, and I don’t care whether they outperform the market at all;

Also, put as much money as you can into retirement accounts and plan for your children’s college savings plans.

Currently, all the family’s financial net worth consists of is a house, a checking account and some modest index funds.

Although they are not rich and powerful, the Morgan family can be considered above the middle class. The most important thing is that he and his wife have achieved freedom of time, and they don’t have to worry about their children’s education.

Waking up each morning with the certainty that our family can do whatever we want, our own way.

Every financial decision we make is driven by this goal.

The biggest observation and practice of his half life is that ordinary families should first spare no effort to complete primitive accumulation.

There are two reasons: Primitive accumulation is not only the only weapon against risks, but it can also strive for more blank space for the realization of compound interest.

Many people are familiar with the concept of “compound interest”, and often mention anecdotes about the rich. For example, Warren Buffett currently holds a financial net worth of US$84.5 billion, of which US$81.5 billion was earned after the age of 65.

After listening to the story, many people will conclude: Wow, old Buffett really knows how to vote, no wonder so many people rush to have lunch with him.

In fact, if the return on investment is considered, Buffett may be beaten by a bunch of fund managers.

In fact, time is his greatest luck.

Split into two points, Buffett’s investment career started early, and he lived long enough.

Many people can’t imagine that this person has continued to invest for three quarters of a century, and has truly realized “Live and See”.

Some people may ask, I can insist on brushing my teeth every day, exercising every day, and picking up my children to and from school every day. In this way, insisting on saving money, or investing in index funds, should not be a problem.

Morgan found that most people overestimate their own patience.

Some people just want to make some pocket money in the stock market;

Some people will withdraw all their wealth management funds when encountering emergencies in their lives, such as buying a house, buying a car, raising money for medical treatment, or going to school for their children;

Some people want to take out their money when they see the stock price soaring;

There are also some people who are just the opposite, unable to bear the sharp drop, sell at a low price, and leave the market angrily…

These intermittent investments have forced the interruption of compound interest, and the previous accumulation has fallen short.

Let’s summarize Buffett’s success again. Another version of the story should be like this:

He didn’t get himself into debt.

In the 14 recessions he’s been through, he hasn’t panicked and sold his financial holdings.

He has done nothing to tarnish his business reputation.

He doesn’t rely on a single strategy, a single worldview, or an outdated fad.

He won’t be dependent on other people’s money (managing investments through a public company means investors can’t withdraw their money).

He didn’t burn out and give up or retire.

He survived, and survival gave his investments durability.

This is the experience of the world’s top rich people, but for ordinary people, what can be used for reference is:

Save money at all times, enough to survive the risk.

Going back to the example of my friend at the beginning, the reason why she has not made a decision is because she is not strong enough to “resist risks”.

Because the family does not have enough savings and only relies on salary income to maintain expenses, it is impossible for her to wake up every morning like Morgan and have the freedom to choose her life.

It is also because she has no control over her desires and has an unrealistic longing for a “beautiful life”.

When I asked my friend why she suddenly wanted to change careers after her children were doing well in public schools, she revealed that the children of company executives were all studying in private schools, and she was envious of it.

This “envy in the heart” made her ignore many things:

The child is doing very well in the current school, and the fifth grade Olympiad is a level that can participate in the competition;

Although his Chinese performance is not good, he likes to read books, especially some classic masterpieces such as the Four Great Masterpieces.

Outside the transition system, it may not be possible to give full play to children’s interests and specialties.

Looking back, the transition path she planned for her child was actually caused by a “comparison mentality” .

Morgan details in the book how comparisons put the family fortune at risk.

Many people know McKinsey Consulting, but not necessarily one of its former CEOs, Rajat Gupta.

The CEO’s upper-level experience is very legendary. He was born in a low-caste family in India, but he became the global leader of McKinsey at the age of 40.

Originally, he could enjoy his old age comfortably after retirement, but he refused to accept his old age and was still active in the financial circle. By 2008, his personal net worth had finally risen to $100 million.

However, he was not satisfied with the accumulation of wealth, and finally went astray.

During the 2008 financial crisis, Buffett was ready to rescue Goldman Sachs. At that time, Gu Leijie was a member of the board of directors of the group, knew the news in advance, and disclosed it to a hedge fund manager, who made a net profit of 1 million US dollars backhanded.

Using his identity to resell first-hand information, the US Securities and Exchange Commission focused on Gu Leijie and found that he was a repeat offender, seeking a total of 17 million US dollars for personal gain.

Not only did Gu Leijie lose his insurance at the end of the festival, he was also imprisoned in the end, and lost all the hard-earned money he had earned throughout his life to “greedy”.

Afterwards, people in the circle discussed the matter, and everyone discovered that Gu Leijie always wanted to squeeze into the richer circle . The reason why he served as a member of the Goldman Sachs board of directors was also because Goldman Sachs was closest to the “billionaire circle”.

This is similar to the mentality of many chicken baby parents.

When the child achieves a little achievement, the chicken baby parents will never let it go, either in the blind self-confidence that “my baby will not be a genius”, they will devote themselves to a round of more violent resource promotion, or in the “hasn’t caught up with the old Li next door” In “The Baby with the Head”, he continued to wave the chicken baby whip.

The end result is that the babies born with their own hands are either squeezed dry and have a lot of psychological problems, or they don’t smell as good as other people’s children.

There is no ceiling for comparison, just like if you want to win a bet in Las Vegas, the only way is to turn around and leave the moment you first come in.

For ordinary families, apart from saving money desperately and investing in moderation, what else can achieve wealth freedom?

In Morgan’s view, the key lies not in the number of wealth, but in the understanding of “abundance”.

If there’s one part of my family financial planning that I’m proud of, it’s the decision we made at a young age that our lifestyle desires don’t rise with income.

For example, most of the “good” things in our lives—walking, reading, listening to podcasts—are inexpensive, so we rarely feel like we’re missing out .

Live comfortably within the affordable range, without excessive desires, and withstand the temptation of consumerism, especially the interference of friends around you, and the accumulation of wealth can form a positive energy field.

In fact, many of Morgan’s ideas are very “old-fashioned” when simplified, such as persuading people to save money, invest in an appropriate amount, and manage their own desires, and don’t compare themselves .

But the process of his argument is very convincing.

For example, the reason for persuading people to save money is that only if you save enough money can you ensure that your investment chips will not be taken away at any time.

Saving money is to build a buffer space for risks.

For example, I advise people not to compare, because everyone’s situation is different, and the games they play in the arena are also different. If a long-term investor is led astray by a short-term trader, he will only become capital cannon fodder.

The most essential part of the whole book is the analysis of the power of belief in investment.

This even gave me an epiphany, chicken baby, why is it a doomed investment in education.

Let me start with the story of a Yemeni.

When Ali Hajaj’s son fell ill, the village elders suggested a folk remedy: piercing his son’s chest with a flaming stick to expel the stubborn disease from his body.

After doing so, Hajaj told the New York Times: ” If you’re poor and your kids are sick, you’ll believe anything .”

Seems crazy, but when you desperately need to solve a problem and can’t find a way, a lot of people turn into Hajaj, willing to try anything.

Not only are you willing to try, but you believe in it all.

Isn’t this the attitude of parents towards children’s educational problems?

Since citizens have been recruited together and private schools have been lottery, a gray industry has developed – lottery package.

It is said that the reason why this industry still has a market is not because of any supernatural skills, but because of the gambler mentality of some parents :

Those who get ahead by luck will mistakenly think that the artifice of the middleman has worked, and then push it to the latecomers.

Chicks are similar.

Many parents embark on the road of chicken babies, not because of love, but because of fear and loss : fear of class slipping, fear of being separated from five to five, fear of not being able to find a job with a mediocre education…

But recently another argument has emerged: baby chickens have become a loss-making business for the middle class. Because a high degree of education does not work, Qingbei Jiaozi delays graduation, no longer a minority.

People who hold this view believe that future education ≠ labor force, parents might as well study future industrial development, social division of labor, and then decide whether to continue to enroll their children.

Not to mention how cost-effective chicken babies are, but Morgan pointed out that “faith” may fail in investment:

When you want something to come true too much, your prediction may be completely divorced from reality from the beginning, and the risk is waiting in the “blind zone” that you can’t see.

The biggest risk that chicken babies may have is not that the baby does not get out of the chicken in the end, and does not graduate from the restoration of diplomatic relations in Qingbei, Hayepusima or Niujian, but whether the baby, as a living person, can be invested like an item.

For this question, the answer I can think of is that there is only one kind of chicken baby that can succeed in the end-that is, parents can stimulate children’s self-drive, so that they can learn, explore, and live independently in the social jungle. survived.

And why are most baby chickens doomed to fail?

As Morgan reminds me, there are many things in the world that are not worth the risk, no matter how big the potential gain. Including the growth of children, including priceless family affection.

Finally, here are some suggestions from Morgan for all investments:

1. When things are going in the right direction, be humble; when things are going in the wrong direction, be understanding or sympathetic.

2. The less vanity, the more wealth.

3. Invest in ways that allow you to sleep soundly.

4. If you want to increase your return on investment, the easiest and most effective way is to extend the time. Time is the most powerful force in investing. It makes the little things grow and the big mistakes fade away.

5. Even if many things go wrong, don’t lose your mind.

6. Use wealth to gain mastery over time.

7. Be more kind and less extravagant. You may be able to get these more easily through kindness and humility than luxury cars and expensive watches.

8. Save money. Just save it, no specific reason is needed.

9. Clarify the price you need to pay for success.

10. Pay attention to the fault tolerance space.

11. Avoid setting extreme financial goals.

12. You should like risk, because it can bring you rewards in the long run.

13. Be clear about the nature of the game you are playing.

14. Respect everyone. Especially in the field of financial investment, there is no unified correct answer, and the best investment target is the one that suits you.

I hope that each of us can do what we like with the people we like at any time, and do it for as long as we want, and enjoy the biggest dividend brought by wealth!

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