You need to invest your money. Learn How.
"And that’s what separates the people that DO things from the people that just dream about them. YOU GOTTA ACT.” Steve Jobs
There are so many young guys who know nothing about finances that it blows my mind.
Financial education is one of the pillars on the road to becoming a man's man. You can't feel safe about yourself and your family if you are not providing enough and not saving enough. However, if you are not INVESTING enough, it surely will be a problem in the long run.
Historically, the probability of making money in the U.S. stock market is 50-50 in one-day periods, 68% in one-year periods, 88% in 10-year periods, and 100% in 20-year periods. That is the reason why you should start investing money as early as possible. Your assets will grow exponentially, and close to your retirement, you will have if not 7 figures but perhaps high 6-figures. Thanks to regular investing and dividend reinvestment.
There are probably no more than 5% of young guys who are thinking about retirement years. Don't feel to save money every month? Perhaps, $20? It's better to spend it on drinks, parties, and expensive toys/games, right? I hear you.
Or maybe spend on bread? In this case, you need one more job (part-time is OK) for a passive income.
You even don't think about the next 5 years, right? I can tell you one thing: the only smartest guys will start saving a few dollars (or the other currencies) with the intent to invest. And guess what? They will be the ones who come with a million or more near retirement.
Here are the questions I am getting on social media where I share my experience:
Why is financial education especially important for the younger generations?
Millennials feel like they’ve been financially screwed. I understand the anger and frustration that most of the generation is feeling toward money because I felt it too. Gaining wealth only gets harder the longer you wait, so financial education empowers millennials to make changes in their lives before it’s too late.
What is your best piece of financial advice for the millennial generation?
Everyone is going to be starting from a different level of understanding and experience, but a good place to start is learning the role that money plays in each of our lives. Once you know its purpose, then you can understand how to manage it through a budget, and then, how to grow it through investing.
That millennials don’t have to get financially screwed! We live in a time where it’s more accessible than ever before to invest and learn about finance. That gives us a huge advantage when building wealth that previous generations didn’t have. But it’s all about realizing that and taking action. Stop browsing your phone mindlessly and better start learning how to invest money. Buy a few books, try to find a mentor, subscribe to newsletters and ask questions. Over time, your knowledge will increase and you will be more comfortable with an investment choice.
Open the brokerage account and begin so-called "paper trading" when you buy and sell the assets (stocks, mutual funds, ETFs, CEFs, MLPs, REITs, BDCs, preferred stocks) without spending actual money. Do not hurry to invest right away. Learn more, compare the results, write notes, and develop the investing rules. You will be glad you have followed my advice.
What is the top lesson in financial education?
Saving money doesn’t make you rich. If you save too much, it can make you poor due to high inflation. Sure, saving money has its purpose and it’s an important part of your financial plan. But if you truly want to be wealthy, you need to invest your money, not only save it. Money must make more money!
What is one thing about personal finance that you wish everyone knew?
Wealth isn’t about owning fancy cars or going on lavish vacations. True wealth is about financial freedom—being able to do what we want whenever we want to. Because at the end of the day, the greatest asset that we have is time. Financial education buys you your time back and financial freedom allows you to spend your time how you want to.
What makes trading challenging is that being average is not good enough. You can be an average teacher, store manager, or contractor and you'll be able to make a living. In trading, however, what is average is losing. If you stay consistently average, you'll consistently go broke or get miserable results (that is what I had for several years until I have change my approach to investing). In performance activities, ordinary is not good enough. The ones who make a living from their performances are extraordinary. Generating enough income from your dividends so you can quit your job and live freely as you wish, enjoy your hobby, travel the world, help in your communities, teach others, and live your life fully!
Two factors define the ordinary trader:
1) Lack of innovation - The average trader looks at the same headlines, the same charts, and the same information as other traders. One vendor of trading software shared online that, when they helped customers via their support service, they found out that the vast majority of traders never moved the indicators off their default values. Even fewer utilized customized features of the software.
2) Lack of distinctive effort - Only in trading keeping a journal would be considered diligent effort. The ordinary trader is not in an active mode of processing information, and that ensures that new and deep learning will not occur. When traders look at new information and put information together in new ways and actively investigate novel data, they exercise their creativity and their capacity for effort. Over time, deep learning--an internalization of meaningful patterns--occurs. You may or may not employ a power measure in your trading.
The point is that creating measures that make sense to you, tracking them every day and within the day, and observing their patterns create a depth of learning that is impossible for someone looking at the usual charts and canned indicators. Innovative trading begins with innovation in perception and effortful information processing. All of us take trips to gym; the question is whether those trips provide us with the workouts that make us stronger.
I hope I did not scare you because my goal was to encourage you. I know you can do it!
The more time you spend on learning how to manage and invest money the more positive changes in your life will be experienced. Learn how to manage risk, and try not to let someone else manage your money because only you will make investment decisions based on your learned concepts. Someone else will always have the first goal in mind -- his wealth, not yours.
Best in investing, man!
Disclaimer: This article is intended to provide information to interested parties. As I have no knowledge of individual investor circumstances, goals, and/or portfolio concentration or diversification, readers are expected to complete their own due diligence before following any investment strategies or rules mentioned or recommended. Please excuse any typos. I assure you that I will do my best to correct any errors if they were overlooked.