If You Are Planning On Making Your Savings Grow Then Don’t Push Off Investing – Start Now
Investing isn’t just about picking the right stock and hoping it will go up. Many treat it like a casino game and end up losing, thereby swearing off stocks forever, that’s what I did back in the early 2000’s.
I’m using stocks as an example here but bonds, TIPS, REITs… there are all sorts of investment options out there on Wall Street which many have tried to crack over the years.
Has your patient who discovered cumin as the cure to all illnesses experienced better health?
Has the Paleo Diet cured all obesity?
Did wheat-grass cure all cancers?
Just like in medicine, in finances there is no one-right-answer or solution. It’s a lifestyle of saving, investing conservatively and watching your investments grow which produces success.
In health you can’t just do whatever the fuck you want, get fat and out of shape then suddenly decide on the Atkins Diet or some other bullshit concept and make it your panacea.
At some point in our lives we realize that health is achieved by small daily choices. It’s an art that you will master after trial and error plus learning to listen to your body.
Just like investing, even if you do everything right, make all the right choices you may still experience an unexpected, unfortunate outcome. The game of life you are forced to play, no way of getting out of that. Investing is something you can certainly avoid.
In this post I want to lay out investing for you as an option and encourage you to pursue it sooner rather than later should you decide to go down that route.
Just don’t be the person who lives a stressed out life, without enough sleep, eating all the wrong shit and find themselves with all sorts of medical problems later in life.
The next step for such a person is to desperately reach for meds and surgeries, diets and supplements to try to regain their health. After decades of practicing shitty health it’s hard to suddenly unlearn it and do it correctly. Not to mention some things in life are hard to reverse.
Also, don’t be the person who will run their finances into the ground, ignore saving, not make wise investments and just listen to the news hype when it comes to making their financial choices. That person will find themselves buried so deep in debt, highly dependent on a steady paycheck and with no feeling of financial independence.
Investing is an art and much less a science. Ignore the many graphs and trends, pie charts and data that is published to justify a pundit’s claims. You don’t need to understand the pathophysiology behind atherosclerosis to realize that cholesterol will clog your pipes.
There are some things which are factual in medicine, excess calories leading to obesity, certain foods and chemicals causing atherosclerosis and cancer. There are also many unknown variables, how strict one has to be with the diet, how active an individual has to be, the role of stress on health and finally genetics.
Should you just fuck it, ignore your health because you don’t have all the facts? Or should you make the best decisions possible based on the lifestyle you desire?
I want to be healthy while I’m alive. I have a mostly plant-based diet and I’m active. I try to curb my stress and don’t ignore my sleep. Even if I die young for some random reason I would have still given myself the best chance at health.
I want my money to grow, conservatively. I don’t care for 20-50% growths. Nothing in life is free. I won’t get those numbers without major risk or major research. But I will settle for a fraction of that with the a tiny bit of risk. The average trend of Wall Street finances is up, I just want to invest in the total market through index funds rather than have my money sit around losing value to inflation.
I wasn’t always healthy, it took me some trial and error and I discovered what lifestyle and diet fit my body best.
I didn’t always invest wisely. I’ve lost a good chunk of money to dumbass financial advisers, to shitty investments which I read about in books or which I sunk money into based on info given by loud TV personalities.
You need to start investing now if you are wanting to take on some risk in return for growing your investment savings.
That’s a pithy statement. If you are unwilling to take on any investment risk then you can stop here, put your money into a savings account, a CD, money market fund, or T-bills.
The downside is that your savings will lose some value due to inflation. Regardless of the percentage lost to inflation your numeric account value will likely keep going up because you are adding funds to it regularly in form of savings.
We will get to why you need to start now. Let’s talk about the risk thing I mentioned. Stocks can go down, they can go up or stay flat. You can view bonds, REITs or all the other investment options out there in a similar way.
There is no way of predicting it, just like there is no way of predicting health. But guess what, I will put my money on the person who eats healthy, exercises and manages their stress/sleep. I may have a few losers on that bet but I’ll definitely do better than my opponent who picked his/her winners based on their physique alone.
So there are ways of curbing risk, by gathering information, diversifying, understanding the markets and looking at some past history just to know what’s possible without needing to predict or control.
In return for taking on this risk our money can grow. How much can it grow? I I think that would be a good post on its own, but US stocks and international stocks, as a whole, are expected to return a profit to the average investor of ~4% after adjusting for inflation.
If this number is too low for you to risk investing then your answer is clear, fuck the market, put your money into savings accounts. Because at any point your investments can go up 10-20% or drop by 50%. Historically, index funds have always recovered but there are no guarantees.
How much can you lose to inflation in those safer accounts? On average 3% per year. The past few years we’ve had nearly 0% inflation and we’ve had years of double-digit inflation in the US economy.
If you have decided that you would rather take on a small risk in order to grow your money by 4% rather than losing its value to inflation then it’s time to start practicing, making mistakes and learning about investments.
For myself, I have chosen to invest in low cost passive index funds which are a type of mutual fund. I’m learning quite a bit and have made my mistakes. For now this is working well for me and I am planning on sticking with this investment strategy.
This is where the title of my post finally becomes relevant. You need to start now when you have enough working years left to make the mistakes you need to make in order to learn the game.
If you fuck it all up and lose some of your money there will be plenty of years left for you to recover. And historically we have had more up-markets than down-markets. So even if you make mistakes you will have plenty of bull markets to cover up even the most rookie of mistakes.
If you learn the game and limit yourself to what are wise investments then the worst mistakes you will make is getting out of the market when it’s low (panicking and selling) or getting into the market when it’s high (trying to time the market because it’s the popular thing to do).
Such mistakes won’t be catastrophic, you’ll lose a small percentage of your investments. But you will learn about the importance of investment psychology, you will learn the value of having a wise guru to guide you, or even better a financial adviser who will warn you and explain to you the downside of your impending bad decisions.
Start now and make your mistakes. Do your research on the funds that you will use to play this investment game. Learn about asset allocation, diversification and prepare yourself mentally for the inevitable time when the markets will be down.
When they are down will you panic and sell? Will you think your investments to be shitty investments and stop contributing to them? Will you seek out more risky investments in times of economic turmoil?
Or, will you keep up with your plan to keep investing even when the economy bears out, perhaps even increase your contribution knowing that you are likely buying the same investments at a lower price?
Is there a good time to start investing, maybe when the markets are lower? Maybe after this inflation things gets figured out?
Let me ask you, is there a good time to start working on your health?