These are 5 things I wish I knew when I first started investing.
- Ignore News media, invest in your own research.
- 90% of Investment planners don’t beat the S&P 500 long term.
- Pay off your consumer debt then invest, invest, invest.
- Automate your investments out of your paycheck.
- Successful Investing is a mindset, not a skill.
This graph and title that generally comes with the graph is designed to do one thing. SENSATIONALIZE. News media creates content that specifically targets emotions. When you’re in an emotional state, do you believe you are going to make a rational decision with your investments?
Come up with a plan and execute it regardless of news media coverage. Here is a real world example in my life. You’ll be able to relate because you’ve seen these flashy news articles all over the place now too.
I’m investing into long term growth assets and securities. A year ago I saw daily news articles about how the impending crash will happen soon. Where we at today? Things have gone up. Great what does that mean?
I’m still investing into my ETFs regardless of the market. Look back at 2008 and imagine for a minute you invested at the top. At the time it was expensive, but now a days people would bend over backwards to buy stocks that cheep.
If we are at or near the top now, remember that in 10, 20, or 30 years the volatility we see today won’t even be a blip on the chart.
Research a shown that 90% of investment planners do not beat the S&P 500 long-term. Investment advisors can cost anywhere from .5 to 2%. Why on earth would you pay a fee to an advisor that only has a 10% chance of beating the S&P 500 when you have a 90% chance to match the S&P 500 for free?
Warren Buffett said that if he were to pass away he has a plan to take care of his wife by putting his assets into the S&P 500. There he believes she will be taken care of just fine, if Warren Buffett thinks the S&P 500 is an acceptable strategy than I do too, and so should you.
imagine for a minute that all the money you were paying towards your consumer debts, was suddenly put towards an investment. For the 80% of Americans who hold consumer debt the average amount is $6200. The interest rate alone on that probably averages in the 10+ percentage range.
monthly payments on consumer debt like this is generally in the range of $500 a month. If you were to get control of your finances and pay this off you could start investing $500 a month. Instead of paying interest towards the debt you would be receiving interest.
Here is a chart how much you’d have if you invested $500/mo.
This one is pretty simple, when you automate your investments you’re spending habits adjust. I like to compare it to the Harry Potter mythical creature dragon that changes sizes depending on the size of the room that it’s in. The more money you have available in your banking account the more you will spend, it’s called lifestyle creep.
If you eliminate the possibility of you being able to spend the money outside of investments then you maximize your potential and you completely cut out the potential for lifestyle creep.
Investing is not rocket science it is a discipline. Sometimes you will fall and make mistakes along your path, but learn from them and grow. The more you learn the more effective and successful you will be with your investments. Learn everything that you can about investing, read books, take courses, emulate the great investors of our time.
If you follow these five steps of investing I don’t have a doubt in my mind that you’ll be more productive and more successful than you currently are at investing. You will be able to take your investments to the next level and be able to eventually retire that much earlier.
if you follow these five steps of investing I don’t have a doubt in my mind that you’ll be more productive and more successful than you currently are at investing. You will be able to take your investments to the next level and be able to eventually retire that much earlier.
as always thank you for reading, check out my other articles and consider subscribing to my newsletter. I have a free e-book about how to get a perfect credit score. Now go get some XP from my article about how to Build Wealth.