Have you started investing yet? How much have you invested? How much do you have saved? Do you have more saved than invested? Why?
There are myriad reasons why, I am sure. But one reason that is unacceptable is that “I don’t have enough saved to start investing.” If this is you than you need to change your perception of what investing is. The greatest investment you can make is in your education, and that can start with a simple book from Amazon.com. The next investment you need to make is into something that makes you money. Every investment should make you money, but most people fall into the gambler’s mentality and aim for the big reward “investments” with low probability of return.
Just because your neighbor invests in stocks doesn’t mean he knows what he is doing, so you shouldn’t him for advice. Additionally, if he is your neighbor than he is most likely in the same financial situation as yourself, and your goal is to improve your financial situation, always. I recently watched the movie Wall Street 2 for the second time, and the same themes stuck out as the first time I watched it. Oliver Stone did his best job to try and demonize Wall Street, and you could argue that it wasn’t very difficult. Whether or not you have seen the movie this will not ruin it for you:
Shia LeBeouf is questioning Josh Brolin about what his “number” is. His number being the number of dollars he needs to make before he would “walk away”. The villain Josh Brolin responds with this: http://www.youtube.com/watch?v=Humfsis-QLI
If you don’t have the time to view the clip, or don’t have audio, Josh Brolin’s response is: “More.” The audience is supposed to respond with “that greedy jerk!” However, my response was “Hey, that’s my number!”
I do not believe that there is anything wrong with wanting more. In fact, it is human nature. Whether you want more money, more desert, more happiness, more time with your family, more hours in the day we are always going to want more. Its just too bad that the we are taught things such as money is the root of all evil. It is engraved in our minds at a young age that money is inherently bad. However, it is never people that have money that tell us this. Either people that were given money and lost it or never had it in the first place that seem to hate it the most. When you hate something, you subconsciously push it away from you. (Money, if you are listening I love you!)
This brings us back to the original question: What are you saving for? It is important to come to the conclusion that your investments are your savings. You need your money to work for you, and you must always have your money at work. Sometimes this may mean keeping your money in cash, but not always. It is true that cash is king, but cash can mean many things. Holding a lot of liquid assets is similar to holding cash, except for the fact that liquid assets can go up in value, pay dividends or be leveraged. Cash sits in your savings account losing value to inflation as well as tempts you with easy withdrawal access to help pay a credit card bill at the end of the month. Yes I know, you promise to pay it back out of your next paycheck, but you are not going to get rich this way. Ever.
So what’s your number? How much money do you need to “save” before you think you are ready to start investing? Unlike before, your answer better not be “more.”
For new investors looking for a little guidance, I encourage you to check out http://www.skylerirvine.com/ or you can join the discussion on our Facebook page at www.facebook.com/SkylerIrivnePLLC
Asking questions will always be free. Not asking questions can cost you millions.