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Investing is doing something now to get something you want later. It's the adult version of the marshmallow test.

Financial investing is only one form of investing, and the one this series will be about.

Learn to invest before you invest

When I talk to friends and strangers alike, many express that they don't learn about investing because:

  • They don't have money
  • They don't get it
  • They insert excuse but will start when insert imaginary deadline

The reality is that you should learn about investing now. Not when you "have money" or you reach some ever-moving deadline you set for yourself.

You learn a skill before you need it, investing is no exception

The last thing you want is to have money, and not know what to do with it. People who win large sums of money often spend/lose it if they didn't already handle cash well.

Learn now.

Set goals before you achieve them

No, don't laugh. Do you really think people have an exact number of money in mind when they talk about retirement? Do you know "your number"?

If you want to calculate how much money you need to never have to work again, try the following:

  1. Calculate the amount of money you need monthly (e.g. 1000)
  2. Calculate how much that is per year (1000 * 12 = 12,000)
  3. Multiply that number by 25 (12,000 * 25 = 300,000)

That number will generate income forever if you assume that you get a 4% return on your money. Which is realistic (we'll cover the details later, but you can read some more here).

Bonus: consider what you really want

When setting goals, use the "ask why 5 times" technique. It literally means you keep asking 'why' until you get to the core of what you think your goal is.

Example: 'I want a million dollars'

For example, let's say you think your goal is 1 million dollars:

  1. Why? Because it makes me feel rich.
  2. Why? Because I currently feel like I have too little money.
  3. Why? Because my job pays me too little.
  4. Why? Because I can't quit and my boss knows it.
  5. Why? Because if I quit I can't pay my rent.

So when we really look at it, your goal is to be free to look for another job. Perhaps instead of setting a 'dream goal', you can solve this problem by saving 1-3 months of living expenses.

So a reformatted goal: I want to save 3 months of living expenses.

Example: I want to buy a house

This one is very pervasive in many western countries, it's assumed you should want to buy a house. Ask yourself though:

  1. Why? Because it is a good investment.
  2. Why? Because real estate increases in value.
  3. Why? Because that is what I've been told.
  4. Why? No idea.
  5. Why? Because I never asked.

There is nothing wrong with buying a house, but there is a strong case that real estate is a far worse investment than stocks.

If you want a house to live in, feel free. But perhaps from the above you could formulate two goals, one short term and one long term:

Short term: learn how housing returns work and whether real estate is right for me.

Long term: how do I get high returns on my investments.

We'll cover more investing topics in the coming series, but if you are excited to learn more already I suggest you read my previous posts on the topic: Grow Rich by Handling Your Money & Investments and my Money Master the Game Summary.