,” I’ll give you the Vanholio-eye view of investing and loaning out money. These principles apply to nomads, rubbertramps, boaters, and travellers of all stripes. Well, they work for anyone.
Typical Vanholio, I ain’t gonna give you a rundown on every kinda investment. Stocks, bonds, peer-to-peer loans, rental houses, antiques, etc. are just the tip of the iceberg. You’ve likely heard all about most a them anyway (with a couple exceptions). What I will do is give you some principles. Maybe they’ll save you some heartache and days of eatin’ cat food.
If you’re living in a van down by the river, chances are you can set some money aside. If some of it you won’t likely need too soon, then put it to work. Through
, it’ll grow. Later, you can start adding its little interest and profit babies back to your monthly budget.
Every dollar in interest and profit you can add to your budget is a dollar less you gotta work for. Maybe you’ll even get to where you don’t need to work at all!
Get to where investment earnings make up a piece of your monthly budget pie. Even small amounts are worth it, especially if you live real cheap. Plus it'll protect you against times of unemployment or slow business.
1. Only Invest What You Can Afford to Lose
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| Get financially straight |
An ex-Wall Street banker told Vanholio long ago that all investing is a form of gambling. They also said to never invest more than you can afford to lose. It’s Vegas rules. Set your limits and stick to ‘em.
Well, Vanholio is a small-timer. He needs every fucking penny he’s got, being semi-retired and not rich. So he don’t take big risks. He goes for conservative investments. They don’t promise to make much, but they’re less likely to lose, too.
If you can’t lose absolutely nothin’ at all, then don’t forget about good ol’ US government guaranteed savings accounts and CDs. Also look at
US I Series Bonds and TIPs – With them you can’t even lose against inflation. These investments are closest to a 100% guarantee as you’ll get in this world.
2. A Bird in the Hand Is Worth Two in the Bush
Investor types talk about “
liquidity.” That’s how fast an investment can be turned into cash without takin’ a hit. That’s true whether it’s a paper investment or a piece of property.
As a small-timer, Vanholio needs liquidity. At my level, there’s always a chance I need cash quick for emergency expenses. An investment that’s locked up ain’t no good then.
Friend of mine is into antiques. He bought a living room set that was cheap at $3,000. In a few years, it was appraised at $10,000. Amazing, right!? Problem is he’s a small-timer. Got into money trouble, but he couldn’t sell that furniture. It just wasn’t fashionable at the moment, and he couldn’t find the right buyer. That $10,000 did him no damn good.
“I'm not as concerned about the return on my money as I am the return of my money,” said an unknown wit. (Turns out it weren’t
Will Rogers.)
3. You Ain’t Smarter Than the Market
Every stupid asshole thinks they got an edge. Well, guess what!? The house always wins.
In experiments, it turns out that
stock experts don’t do much better than blindfolded monkeys at beating the market. “Beating the market” means doing better than the
S&P 500 Index. And those are the pros, with lots of experience and info. You ain’t a pro.
That’s why Warren Buffet recommends the average person just go with low-fee
S&P 500 Index Fund. If you got a some cash to gamble longer term, you probably can’t do better than that.
4. More Risk = More Reward, Except When It Don’t
The rule of thumb for all investments – stocks, bonds, real estate, loans, etc. – is that there’s more rewards in high risk. But the problem is that sometimes you lose your shirt.
If you’ve got money you can afford to lose, a stomach for risk, and time to wait it out, then investing in a range of risky things might work out for you.
Problem is, if you’re a small-timer like Vanholio, you can’t afford to lose. Well, except maybe in small amounts. So I invest in safer things with less return – and better sleep at night!
But if you do try to be a high flyer, by golly, diversify. Don’t you ever, ever put all your eggs in one basket.
5 Don’t Put All Your Eggs in One Basket
Even the safest investments sometimes lose. Even a US government guaranteed CD could lose you value if inflation hits.
The key is that as some investments go up, others go down. When stocks are going gangbusters, bonds suck, and vice versa. That’s just one example. So spread your money around a bit. You don’t need to go crazy, just a few investment types will do.
6. Buy Low, Sell High
This seems obvious, but it’s the opposite of what people actually do. Stock prices going up? People put their money in the market hoping to cash in. Right now, people in US cities are buying houses again, raising prices above what any normal people can afford. It’s crazy, really crazy.
It’s a big game a follow the leader. Sometimes it’s also called “
The Greater Fool Theory,” the idea that there’s always some dumbass out there ready to buy at a higher price. But you might be the last dumbass in the chain. Think about that.
If you’re gonna play the game, buy shit when everybody’s crying. Dammit, I wish I’d bought stocks in 2008! Or houses! I’d be selling NOW. Get it?
7. If It Sounds Too Good to Be True, It Probably Is
Researchin’ for this post, I did a lot of Googling on investing. Guess what kept coming up? Companies promising high returns for low or no risk.
Know what that is? A bunch of goddamn bullshit. That ain’t how money works. It’s how you get fleeced, though.
Use your common goddamn sense!
If you think, “Shit, who’s gonna buy this crappy old two bedroom house for $500,000? Who could even afford it?,” go with that feeling.
If a suit tells you that investing in oil leases will double your money in a year, risk-free!, because Trump just got elected, don’t walk – run.
What’ll fool you ain’t the scammer, it’s your own greedy heart. Don’t listen to that fucker.
What Makes Vanholio Think He’s So Damn Smart?
Vanholio ain’t no Wall Street guru. All the above is just my views, tempered by a bit a experience and some good old fashioned common sense. Take ‘em with a grain of salt.
That said, it’s pretty obvious there’s a lot a bullshit investing advice out there. Mostly from bastards trying to skin you.
Think about it: If all those brokers and such know so goddamn much, why the hell ain’t they richer’n Midas and retired? Why do they need your money!?
Humans been messing with money pretty much all a written history. Our grandpappies got the basics figured out a long time ago.
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| Warren Buffet recommends |
Investing Resources
Read the 6-Part Series
Part 1: Overview — Part 2: Reduce Your Needs — Part 3: Do Things Yourself — Part 4: Sell Goods or Services — Part 5: Invest or Loan Capital — Part 6: Get Others to Support You
Also See ...
Warren Buffett’s 7 Best Pieces of Investing Advice (Yahoo! Finance)
Here Are 12 Books That Every Investor Should Read (Business Insider)
How Do I Start Investing With Only $100? (The Penny Hoarder)
Is It Possible to Beat the Market? (Investopedia)
They way I look at it, we’re all in this together. Sharing is the natural state of man. Sometimes we give, and sometimes we take. It’s how and why we all stick together.
