17. What NOT to Buy

17. What NOT to Buy

The only truly good investment is the NASDAQ-100 index fund. Nothing else compares. In this age of information overload, you are bombarded daily with various investment “opportunities.” Insurance agents tell you savings insurance is the most secure form of financial planning; real-estate brokers say buying property is the best store of value; bank advisors recommend bond funds to “balance risk”; in a friends’ group someone is showing how a stock just went up 50%. Everyone speaks with authority, every product looks enticing. But spread the data out, do a calm long-term comparison, and you will find: none of these so-called “investments” compares to the NASDAQ-100 index fund. First, insurance. Let me repeat the conclusion four times, because it is that important: do not buy insurance. Do not buy insurance. Do not buy insurance. Do not buy insurance. No kind — savings insurance, annuities, cancer insurance, long-term-care insurance, investment-linked policies, increasing whole life — none of it. Having money is itself the biggest insurance. In my life I have seen many families. I have only seen poor people who own piles of insurance; I have never seen anyone get rich by buying piles of insurance. This is a conclusion based on twenty-plus years of observation, with no counterexample. Savings insurance and annuities are the products insurance companies most aggressively push, because they generate the fattest margins. The insurance company uses your premium to invest in the market, earns market returns, and pays you a “guaranteed rate” far below market returns — the difference is its profit. A savings policy’s internal rate of return is typically only 2–3%, which after inflation is roughly zero or negative. You think you are “saving” — in reality you are letting the insurance company use your money to make money, and they hand back you a few scraps. Liquidity is also terrible — once invested, early surrender comes with steep penalties. You locked money that should have been earning 10%+ in the market into a 2–3% product. This isn’t wealth planning; this is binding your own hands. Next, housing. This passage is for all young people: do not buy a house. I know this contradicts what your parents taught you (“first buy a house, then start a family”), but read calmly to the end before you draw conclusions. A house is an extremely high-risk asset. Today, look at how many middle-class people in their 30s and 40s, hit by layoff waves in tech and finance, still owe NT$100,000+ monthly

mortgages while losing their stable income — the tension and fear they are experiencing is the “mortgage backlash” you need to see clearly. Let me say it solemnly: rather raise a child than raise a house. A child gives back love, companionship, the next generation. A house gives back leaking pipes, an aging roof, peeling walls. When the day comes that buying a house is as easy as buying slippers, you can rent or buy whatever mansion you want — and you don’t need to touch your own principal; capitalists live in mansions on the bank’s money. Do not, at age 20 or 30, mortgage your entire life to a concrete box that in 30 years will be a stripped shell — by then you’ll be 50 or 60, with the most should-be-free years of your life crushed under it. Across the Chinese-speaking world, “buying a house preserves value” is almost an unshakeable doctrine. Parents say it, relatives say it, friends say it, banks say it — everyone tells you to buy. Let me run the numbers. 35 years ago, someone bought a Taipei villa for NT$10 million. 35 years later it’s worth NT$30 million — looks like a 3× rise, not bad. But if that same NT$10 million had gone into a NASDAQ-100 index fund 35 years ago, at 12% annualized, what would it become? Over NT$5 billion. You read that right — not NT$50 million, not NT$500 million, over NT$5 billion. Even using a more conservative 10% annualized, NT$10 million in 35 years becomes nearly NT$300 million. Whichever number you use, the conclusion is the same: the NT$10 million spent on a house vs. invested in an index fund is, 35 years later, off by hundreds of times. You bought a NT$30 million house, when you could have owned over NT$300 million in financial assets. The opportunity cost is suffocating. And houses have carrying costs: property tax, HOA, maintenance. Roof leaks need fixing, plumbing needs replacing, exterior needs repainting. Over 35 years these may add up to 20–30% of the original price. Add 30 years of mortgage interest, the real return is far below the surface. More crucially, a house ties down your cash flow and your life. You can’t quit, can’t start a business, can’t say no to an unreasonable boss — a house is not an asset, it is a gilded handcuff.

Don’t Invest in Any Bond

Bonds — let me leave nothing on the table: do not invest in long-term bonds. Do not invest in corporate bonds. Do not invest in any bonds. Every form of debt — long-term Treasuries, corporate bonds, municipal bonds, convertibles, bond funds, junk bonds, structured notes — nothing on the CLEC list. The longer and prettier the name your advisor pitches (“Global High-Yield Bond,” “Emerging- Market Debt,” “U.S. BBB Corporate,” “Investment-Grade Floating-Rate”), the further you should stay. Hear the word “bond” and turn your head away. The 200-year data says: $1 in stocks becomes $27 million; $1 in long-term Treasuries becomes $34,000. The gap is about 800×. Bonds are packaged as “safe asset,” but long- term, bond returns barely keep pace with inflation. You think you are “preserving principal”; you are slowly losing purchasing power.

Real Case: TLT Fell 50% from 2020–2026

If you believe “long-term Treasury = safe” is common sense, look at this real case. TLT is the most famous 20-year Treasury ETF in the U.S., conventionally regarded as a “safe-haven asset.” It fell from a 2020 peak of about $164 to about $85 in early 2026 — a 50% drop in 7 years. It paid about 4% per year in dividends during this time, but vs. 50% capital loss, the dividend is trivial. If you bought TLT at the 2020 high, your annualized return through 2026 is about −5% — you didn’t “avoid risk,” you lost 5% per year. Worse, TLT’s decline kept going 5 to 7 years and still hadn’t stopped. This is what “long- term bonds” actually look like in a rising-rate cycle — not “short-term volatility,” but a structural, slow, no-bottom-in-sight downtrend. This is the truth about bonds as “safe assets” — they’re not safe. They just slowly, quietly make you poorer. True safety is “long-term return beats inflation” — by that standard, bonds (including “Treasuries”) have never been safe. Finally, individual stocks. Buying a single stock is betting you can predict one company’s future — you must correctly judge whether management is competent, whether the product is competitive, whether the industry outlook is bright, whether the financials are truthful. You may judge correctly 3 times, 5 times, but one wrong call — one stock at zero or halved — can erase every gain before it. The index fund solves this for you — the NASDAQ-100 automatically screens the top 100 technology companies in the world; weak ones get dropped, strong ones get added. You make no judgments; you just ride the train that self-optimizes forever. Let me put these “investments” side by side. Assume you each invested NT$1 million 30 years ago: Savings insurance (2.5% annualized): about NT$2.1 million in 30 years. After inflation, purchasing power barely changes — you ran in place. Real estate (3–4% annualized): NT$2.5–3.2 million in 30 years. Before maintenance, tax, mortgage interest. Add those, the real return is even lower. Long-term Treasuries (4–5% annualized): NT$3.2–4.3 million in 30 years. Sounds okay, but pales next to stocks. S&P 500 index fund (10% annualized): NT$17 million in 30 years. NASDAQ-100 index fund (12–14% annualized): NT$30–50 million in 30 years, possibly more. Same NT$1 million start, 30-year results from NT$2 million to NT$50 million. A 25× gap. Not because some products are uniquely bad, but because compounding at different rates produces gulfs. 2.5% vs. 12% is a sub-10-percentage-point gap on the surface; 30 years later it’s tens of times in wealth. That is why choosing the right vehicle is the single most important decision in personal finance.

Where to Park Cash

If you need to park the “not currently invested in stocks” portion somewhere, here is the concrete list:

U.S.:

• BOXX (Alpha Architect 1-3 Month Box ETF) — short-Treasury ETF whose distributions are taxed as capital gains rather than interest due to its box-spread structure; one-liner: “no sell, no tax.”
• SGOV (iShares 0–3 Month Treasury Bond ETF)
• BIL (SPDR Bloomberg 1–3 Month T-Bill ETF)
• Money-market funds (VMFXX, SPRXX, etc.)

Taiwan:

• 00865B (CTBC USD Short-Term Bills)

Mainland China:

• 161115 (E Fund Sui Feng Tian Li Bond Fund) — usable as a short-bond + cash position alternative. Do not park this portion in any long-term bond product (even if packaged as a “bond fund”), and do not touch corporate bonds. The role of this money is “liquidity parking lot” — its goal is not to lose money, preserve purchasing power, be available anytime — not to earn return. So short Treasuries (duration < 1 year) + money market is enough. Do not treat cash as stock: many will ask “Teacher, can I buy high-yield instead of cash?” — No. Cash is cash; its role is “no short-term loss, available anytime.” Swapping the cash slice into high-yield (like QQQI discussed in §22) turns the “liquidity parking lot” into a “volatile income tool” — when the market drops short-term it also drops, and when you need emergency cash you don’t get the original amount back. Cash position only sits in short Treasuries + money market. If you want QQQI for cash flow, allocate it separately under the §22 retirement-withdrawal > 3% tier, kept apart from the cash position. Why not park cash in long-term bonds (like TLT)? The TLT 50% drop case above answers this — a 20-year Treasury ETF is not a cash equivalent. Its duration is long, making it extremely sensitive to interest-rate changes. Real cash equivalents are duration < 1 year — the list above.

Don’t Pick Mag 7, Don’t Pick 50+, Don’t Pick 7+

Many readers, hearing §5’s “QQQ’s top 10 are 46% of the index,” jump to a wrong conclusion: “If the top 10 are 46%, why not just buy Mag 7 (Magnificent Seven) for higher concentration and higher return?” No. Two reasons:

• Too much volatility: the fewer constituents, the more one company’s bad news destroys your account. 100+ down to 7+ multiplies volatility several times.
• You don’t know which ones get kicked out: today’s top 7 may not be the top 7 in 5 years. Costco was in QQQ’s top 10 a few years ago and isn’t anymore. The index automatically culls weak and keeps strong — your hand-picked “7+” basket does not. Don’t touch Mag 7, don’t touch “50+ ETF,” don’t touch “7+ ETF,” don’t touch Taiwan’s 00757 — the fewer constituents, the greater the risk. Pick 100+ (QQQ / 00662), and let the index do the culling.

A Small Exception for 0050

§5 discussed: Taiwan’s 0050 is not a NASDAQ-100 equivalent — it is a mix of Taiwanese local tech + financials + traditional. But during the 2024–2026 AI supply-chain boom, with Taiwan sitting on the critical hardware links, a small allocation to 0050 is acceptable — provided it never replaces your core position (QQQ / 00662). When the AI cycle turns, 0050 returns to native speed of the Taiwan local mixed index — not the locomotive, but a mid- car. In short: the core is always QQQ / 00662; 0050 is at most an auxiliary small slice, limited to this AI cycle. Don’t make 0050 a long-term core holding.

Don’t Randomly Buy Funds: Buying the Wrong “Index” Means Buying the Wrong Destiny

Finally, I have to specifically warn against a common mistake — randomly buying funds. Many readers learn from this book that “index funds are best” and the next day head to a broker to buy “global index funds” — like the U.S. VT, various global stock ETFs, Taiwan’s “global tech funds” — thinking these are the same thing. They are not. VT and “world funds” weight the global market (Europe, Japan, emerging markets, traditional sectors) by market cap into one bowl. Put the numbers in front of you: When QQQ rose 10×, SPY rose only 5×, and VT only 2.5×.

VT’s long-term annualized is typically 3–5 percentage points below NASDAQ-100. Over 30 years, that 3–5 pp gap leaves your final assets one order of magnitude lower. Buying VT is not “diversifying risk” — it is “diversifying your return, diluting your future wealth.” Let me state it plainly — buying a world fund will make you poor. Not that world funds are themselves a scam — but when other people’s children, on the NASDAQ-100, roll out 1 billion or 2 billion in 30 years, and yours rolls out less than 50 million on a world fund, then relatively, you are the poor one. Wealth has never been absolute; it is always relative. Capitalism’s nature is divergence — pick the wrong compounding curve, and 30 years out it’s an order of magnitude. So write this in your heart: not every ETF you buy will make you rich; not every “index fund” is the same thing. The single instrument we focus on is the NASDAQ-100 index fund. In the U.S. it’s QQQ; in Taiwan 00662; in mainland China 513100 / 159941; in Hong Kong 3086 / 9086, 2834 / 9834; in the U.K. CNDX; in Europe EQQQ. These are regional versions of the same instrument — pick the one closest to you, and don’t hesitate between

“global funds” and “value funds” and “growth funds”; those are lures pulling you off the optimal solution.

Summary: The Only Recommended Allocation

So, the only recommended allocation is: NASDAQ-100 index fund plus your cash position. The cash position can sit in CDs, savings, checking, or money-market funds — this money isn’t for investment returns, it satisfies short-term liquidity. It’s a parking lot, where money temporarily not needed but potentially needed soon sits safely. Beyond that, you don’t need any other vehicle. No insurance, no real estate, no bonds, no individual stocks, no global funds, no world funds, no “global diversification” hybrid ETF. This is not stubbornness; this is the most rational conclusion from 200 years of data. ───────────────────────────────────────

Key Points

One, savings insurance has an internal return of only 2–3%, near zero after inflation, with terrible liquidity. The insurance company uses your premiums to earn market returns and pays you a sliver as guaranteed rate — you’re using your own money to make the insurer rich. Two, real-estate long-term returns are vastly below index funds. NT$10 million in a villa 35 years ago is NT$30 million today; the same NT$10 million in a NASDAQ-100 index fund could be billions. And houses have carrying costs, mortgage interest, illiquidity — the real return is even lower. A house isn’t an asset; it is a shackle on your cash flow and your life choices. Three, the only recommended investment is the NASDAQ-100 index fund plus a cash position (CD or money-market fund). No allocation, no bonds, no stocks needed. 200 years of data prove the long-term return of stock indices crushes every other asset class — choosing the right vehicle is the single most important decision in personal finance.