- The older you get, the more you know which obviously means
the less mistakes that you make.
Ha ha ha, that's funny, you're smart.
But you're also pretty dumb, and it's not just you though.
I'm a pretty big idiot as well.
Case in point I still fall every now and again,
when I'm walking up the freaking stairs.
Seriously, though, how does it even happen?
I'm like a small child.
But whether you've been investing for 20 minutes
or 20 years, mistakes will be made
and thousands and thousands of dollars is gonna be lost.
So to help save you a ton of cash and a lot of headache,
I'm gonna go through some of the biggest investing mistakes
that you could make within the next 20 years
that could cost you tens of thousands,
or even hundreds of thousands of dollars.
So money lost is basically the difference
between you being able to quit your job
in 10 years, as opposed to 20.
So think of this like saving you 10 years
in under 20 minutes.
All I ask for in return for saving you time and money,
is just a little tap on that thumbs up button,
maybe a little comment down below to says hi,
or tell me how you're doing.
You're the biggest reason that you'll make a huge mistake
when it comes to investing money.
Not because you're a moron,
but because you are human
and act more on emotion than logic.
Humans are insanely irrational
and do really dumb things with money that's invested
because emotion gets in the way of smart decisions.
As much as I like to trash on them
this is one of the main reasons
that hiring a financial advisor can be beneficial
for some, for some, from an investment return perspective.
They're not the best at picking investments for you,
they're actually really, really bad at it,
but they're good at talking to you off the ledge
when the market is crashing
and all you wanna do is sell off your investments.
Investing is very binary in the sense that
you either make money or you lose money.
There is no in-between, you can't kind of make money
and you can't kind of lose money.
A simple way to win is to buy and hold index funds
with a mindset of never selling and always remembering
that losses on paper are different from actual losses
in your investment accounts.
Both of my sisters are probably the best investors
that I know, I could ask them every single day for a year,
how their investments are doing, and they'd have no clue
because they don't give a sh-
The decision to buy and hold the index funds
that I put them into are going to make them better off
than 95% of people who check their accounts
on a weekly basis and make adjustments.
Now I made that percentage up, but it's a lot.
so you get the idea.
While I like to kind of consider myself
an unemotional robot when it comes to investing.
It still stings a little bit for me
when I see my account go down in value,
but only when I invest in individual stocks,
a solution is to take note of how you react
when the stock market goes up and down.
If you go off the rails when your portfolio is down,
then you might want to change the asset allocation
because your emotions obviously can't handle
how the money is currently invested.
You also might not want to, you know,
look at your investments eight times per day.
That is the best way to stay the course.
But if changing your allocation will lower
the expected returns, then that is just unacceptable.
Right? When we invest,
we want to get the highest returns possible
so that our money can grow at the fastest rate possible.
But it's not that simple.
Investing to maximize your returns
is kind of a double-edged sword.
When you invest money for high returns,
you are automatically taking on more risks.
This isn't necessarily a bad thing,
but if you can't stomach the potential losses
that go along with the riskier investments,
then it's probably better
to accept less risk and a lower return.
Don't always try to focus on the highest returns possible.
You need to match your investment risk with your emotions.
If you have a very high risk tolerance,
then you could probably handle some of
the more riskier investments, kind of like an Ark ETF.
On the other hand, though,
you're better off accepting a lower return on investment
if you are going to sleep a lot better at night.
Someone investing 100% of their money
into 20 different stocks is taking a bigger risk
than someone investing 100% of their money
into something like index funds.
While the person investing most of their money
into those 20 stocks might see a higher return,
they're still concentrating a lot of money
into a smaller number of stocks,
which might be considered more risky.
I know that 20 stocks probably sounds like a lot
to the average person, but in the grand scheme
of stocks available to be traded, it's not very many at all,
which means that you have to be right
about those 20 stocks being successful,
compared to someone like me,
who invests in the Vanguard Total Stock Market Index Fund,
which holds over 3,600 different stocks.
For me, way more than 20 of those 3,600 different stocks
can be losers and I'll be just fine.
Now, keep in mind that because I'm taking less risk
by investing in something like a VTI,
I'm also accepting an average return,
which I am perfectly fine with.
So you should understand your risk tolerance,
emotional state, and invest accordingly.
It's going to change over time as well.
So don't be afraid to kind of switch up your strategy
as you age, different life events arise,
or you become more educated about investing in general.
The investor that you are today is probably going
to be quite different from the one that you are
over the next 20 years.
There is no shame with switching up a strategy
if the current one that you're using right now,
isn't working for you.
That's one of the reasons that I've changed my mind
when it comes to judging
a lot of the ways that people invest,
we are all doing different things based on different goals
and what works for you
doesn't necessarily work for everyone else.
Nowadays, I see so many stock picking YouTube channels
popping up that it absolutely blows my mind.
The views that they get from talking about a few popular
stocks makes my head absolutely explode.
And each of them have their own different ways of investing
and looking at particular investments as well.
And let's be honest, most of the time,
it's not based on any numbers or realistic projections.
They're just reading a news story
and telling you to buy a stock.
They're easy to find, but no names please.
Hype stock investing, penny stock investing,
growth stock investing, value investing,
dividend investing, swing trading, momentum trading,
social arbitrage investing, options trading, day trading,
chart trading, investing in SPACs, investing in IPOs,
investing in what that guy on YouTube told you to.
Did I get them all?
Probably not because there's a lot more.
I'll be honest, It used to annoy me more than people
who release a click baity stock market crash, crypto crash,
or housing crash video every single week.
(clears throat) Once again, no names please.
But now I look at it as a way of investing that works
for that content creator and those viewers.
And that's okay, no matter how dumb I think it is,
it is their money and they can choose
how they want to lose it.
Not my monkeys, not my circus.
I actually think that taking a portion of your overall
invested money and earmarking it as quote unquote,
play money can be pretty beneficial.
Look, I don't think that anyone is going to argue
about the benefits of long-term investing,
but if setting aside something like 10% of your money
would scratch that stock market gambling itch that you have
and allow you to keep your dirty, grubby little fingers
off of those long-term investments,
then I'd say, start shoving those hands in mud,
go visit that wallstreetbets subreddit,
and start spinning that roulette wheel.
Now it is worth it to be just a little bit skeptical
when listening to other people's thoughts
on investing in particular ways,
but I'm all for gathering info from many different sources,
then making your own educated decision.
Let's be honest, it's not difficult to talk anyone
into investing in a certain way or into a certain company.
Heck if you gave me a stock, a really bad stock
and enough time, then I 100% guarantee that I can make
a solid case as to why you should invest
a ton of your money into that company.
Even if it's tanking right now, I can talk you into it.
I'm extremely biased towards index fund investing,
but don't just copy me or listen to me
because I talk about it in a positive light,
go look into it on your own, pick it apart
and understand the bull and bear case
to see whether or not it makes sense for you.
There's a reason why I've created a video on the downsides
of index fund investing, even though I'm 100% all in on it,
because I think that it's always important
to challenge your own beliefs and take an objective
look at the opposing views,
but whether you choose to invest
in index funds or individual stocks,
trying to time the market is usually a loser's game.
I promise you're going to make yourself go crazy by waiting
for that perfect price to hit that buy button.
I'll admit that I've had trouble with this in the past.
I have the cash to invest,
but I just want to wait for that perfect price.
I think in my head, "Oh, just a little bit lower
and I'll buy some shares of that index fund."
I've told the story before where I had a friend
that sat on $30,000 in cash for a little over a year
because he was waiting for the stock market
to sell off before investing the money.
He was listening to a lot
of those stock market crash videos.
The market of course never did
and he missed out on over $18,000 in return
during that time period,
even though uncle Jared over here kept telling him
to just invest the money and forget about it.
We don't know if the market
is going to go up or down within the next 12 months,
but if you were investing in something like an S&P 500
index fund for the longterm, so like five plus years,
then there's about a 75% chance
it's going to be higher than it is today.
The price you pay today
is way less important than you think.
A couple of weeks ago,
I had a few thousand dollars sitting around that
I was planning on dollar cost averaging
into a specific investment account between now
and the end of the year.
Then I said to myself, "Well, if I technically don't need
this money for another 10 years
and I have the money on hand,
then why not just put it all in now?"
Sometimes I even need to take my own advice.
So I decided to practice what I preach.
Now the money is invested
and I feel really good about that decision that I made.
The money is exactly where it was going to end up anyways.
And it's one less thing
that I have to spend time thinking about.
If you're investing for the longterm,
then don't wait, get that money invested.
So it can start working for you
through the growth in the stock price.
And the recurring dividend payments.
Investing can be difficult if you don't know
what to look for when deciding what to invest in.
So you'd think that the best way
to choose where to put your money
is by looking at the past performance, right?
No, no, and heck no.
I remember back when I first learned about investing,
I would automatically sort on the mutual funds
with the highest performance over the past five to 10 years
to decide where to put my money.
Because my natural thought was that
if they had done really well during that time period,
then surely they'd perform at the same rate,
if not better going forward.
Hindsight is always 2020,
just because the ARK flagship ETF
has grown by more than 400 or 500% over the past five years
doesn't mean it's going to grow at the same rate
or even close to it over the next five to 10 years.
This is even more true when we're talking
about actively managed funds like any of the Ark ETFs.
Now just a disclaimer,
I'm not trying to pick on them specifically,
but they are the hottest ETF management company
that most people are aware of right now.
Choosing what you invest in
shouldn't be 100% based on past performance.
Yes, you should take note of it
and use it as one data point,
but don't make that the only reason
that you choose to park your money there,
we have to always remember that the stock market
is based on future expectations, not past performance.
General Electric stock did really well
for a good 15 years.
They were a top notch, publicly traded company
for a long period of time.
Just like some of the ones that we hear about today.
And if you had invested in the stock
expecting it to continue to climb,
then you'd be down quite a bit of money today.
If you were investing in an individual stock,
then understand where the company is today
and where they expect to go in the future.
Don't just look at the bull case of it though,
because as I said before,
anyone can put lipstick on a pig to make it look good.
Understand the bear case
for why it wouldn't make sense to buy the stock.
Then make your decision.
When it comes to funds
like mutual funds, index funds, and ETFs,
understand the underlying investments
within those funds.
What's the percentage breakdown of large cap,
mid cap and small cap companies.
Is it an actively managed fund or not?
How much cash does it hold?
What are the fees?
What industry is it tracking?
There's a lot more questions that need to be answered
about the future of that investment as opposed
to just the surface level ones like past performance.
The best way to think about it is to treat
your investment choices like you're going
to marry these fricking things.
You need to spend the time to understand each one
before heading to that hypothetical chapel
to get hitched because divorce costs a lot of money.
And so does selling your investments for a loss.
Since we're on the topic of investing for the long-term,
we should probably touch on the P word
that no one likes to say.
No, not that one you weirdos.
Patience.
Everyone wants to become rich through investing overnight.
And if you listen to enough
of the scammy YouTube videos or YouTube ads,
then you'd probably think that it was possible.
There's a reason why I get more and more questions
about investing in things that see huge price spikes
like Dogecoin or GameStop stock,
because it's viewed as a way to get rich quick.
Dogecoin coin increased in value
by something like 500% in one week.
So should you invest in it now?
Uh, no, not unless you have some extra cash sitting around
that you want to speculate with,
and you're okay with essentially disappearing.
Talk to anyone who is truly wealthy.
And they'll tell you that it took
a lot of time, energy and hard work.
Especially at first, there will come a point
where the work done on the front end
starts to pay off on the backend.
But it's very rare that it all happens in the beginning.
Yes, you can earn some quick cash
on a speculative investment,
but in the overall grand scheme of your investing lifetime,
those quick speculative investments,
aren't going to make you truly wealthy.
I threw a thousand dollars into GameStop
in January of 2020,
and ended up turning that into $3,000
before selling out of it.
Now, the profit that I took from that one trade,
isn't going to make me rich over the long run,
but it was kind of a fun way to gamble with some extra cash
that I had lying around.
Investing to become wealthy
is like chopping down a tree,
you have to take enough swings on a consistent basis
for it to eventually fall over.
The first, fifth, tenth, or even twentieth swing
won't knock down the tree, but on the 21st swing,
the tree will come crashing down to the ground,
but it wasn't because of the last swing.
It was because all of the swings
that you had taken before that point in time.
If all you're doing is taking a short-term view
with how you're investing, then you'll essentially
be swinging at that tree and constantly missing
the tree completely every single time.
Instead you need to take focused intentional swings
over a long period of time to ensure
that you make contact with that tree every single time.
Don't forget to Hulk smash
that thumbs up button before you go.
In the description, I'll have a link
to get on the waiting list
for our private financial independence group
that's going to be opening soon.
Down there you'll also find
free stocks, resources, and playlists to help out
with your financial independence and investing needs.
Watch these videos too your left next.
I'll see you in the next one, friends.
Done.