WARNING: THIS ISN’T INVESTING ADVICE. DO YOUR RESEARCH OR CONSULT WITH ADVISORS AND PEOPLE YOU TRUST. THIS IS MY JOURNEY ON GETTING STARTED WITH INVESTING. NOT A HOW-TO THAT YOU CAN FOLLOW.
Do you like the idea of investing, but find the whole thing confusing?
“Buy and hold, think long-term”.
“Learn technical analysis, then day trade, play the short game”.
“You should have a diversified portfolio”.
“You should only buy stocks in a single company that pays dividends”.
What I’m finding with most advice. Depending on who you listen to, the advice is polar opposites.
It’s a nightmare.
Over the last 5 or so years. I’ve been thinking about investing. Even though I haven’t much money…..yet.
The Best Time To Plant A Tree
There’s a phrase, a saying that I like.
“The best time to plant a tree was 20 years ago. The next best time is today”.
I’d always put off investing.
Thinking that I needed lots of money to get started. And that I need to be some sort of expert. To learn about things like technical analysis. Different types of short-term trades.
But that delayed me getting started.
It’s the same principle as getting started saving money every month. Start small and build up a habit. That’s the key to most things. To get started and then build on the foundations.
If you find that investing is something you want to get started with. But don’t think you have the money.
Start with £100. Even £50. £10, it doesn’t matter, get started.
“Do This” vs “Do That”
It’s all well and good me saying “start”
But it isn’t that easy.
It’s only in the last 12 months I’ve committed to investing every month. To come up with a plan, that I can start and stick to. That is increasing “my pot” every month.
My thought process is the same as if I’m putting money into a savings account. Set some aside every month and get it invested.
But what strategy to use?
Well, this is where it gets tricky.
As I said. I’ve only built up the habit over the last 12 months.
In the past. I’ve tried picking and holding stocks. To build a portfolio. I’ve tried a strategy called “All Weather Portfolio”. Even got into peer-to-peer lending to see if I could grow my money faster.
But I couldn’t stick at it.
Why?
Because I’d see some advice or a tip that would change my mind and I’d then switch tactics.
Guess what?
My money wasn’t growing.
Because the “advice” goes like this:
Buy A Single “Asset” And Never Touch It
You see someone who is a giant in the investing world. Like Warren Buffet.
Even though he has made billions investing in companies (more on this later).
His advice to the “average investor”. The person who is working hard for their money. And hasn’t the capacity to learn and think about investing like he has.
Is to put all your money into a single “ETF” or “Index Fund”. And keep investing your money and let compound interest make you rich.
OK. I’ll listen to Warren Buffet and do that.
But I don’t want to have to wait until I’m in my 70s till I’m rich.
And I haven’t got much money to invest or keep investing with.
Diversify And Only Invest When Your Rich
There’s a great book that I read/listen to over and over.
It’s called Unscripted by MJ DeMarco.
A great book.
Most of the advice in there is solid. But again his advice is the complete opposite of what someone like Warren Buffet gives you.
And I get it.
That’s the point of his book. To go against the mainstream, common advice.
That compound interest is a scam. Until you’re rich. Then you can use your millions to use compound interest to your advantage. To give you a “monthly wage”.
Again, great advice.
But I have to be rich to stay rich and get the benefits of being rich!
Both pieces of advice are solid and I can’t fault the thought process of each.
But neither help me currently. I’m not rich and don’t want to wait 50 or 60 years to become rich.
Why even bother investing then?
And that’s a fair question.
How Do You Think About Money?
The problem I’ve found with all this advice.
Is that they have been successful in whatever strategy they choose. But that it is unique to them and their mindset.
And what if they give advice, but that isn’t how they got rich?
Going back to the previous section.
Warren Buffet advises you to invest your money one way. But he got rich investing a completely different way. Then also has a business that helps grow companies he has invested in. Making him even richer.
MJ DeMarco advises on getting rich by becoming an entrepreneur. And then use the stock market to stay rich and live a life on your terms. But what if you don’t want to start a business? Plus there are no guarantees you’ll become a millionaire. Even make £100K.
Because their advice comes from their views of money and experience.
And because of this, I kept switching tactics. A LOT.
Work Out Your Views On Money
Things changed for me after I read a couple of books.
First was The Psychology of Money by Morgan Housel
He goes into great detail about how your view of money influences your decisions. And they will help you decide the best way for you to invest your money.
As well as giving an example of how he invests his money. Which works for his worldview and perception of money.
The second is I Will Teach You To Be Rich by Ramit Sethi.
Scammy title I know. But it’s an excellent book.
At its core, it’s a “playbook” on how to get better at managing your money and play the “money game”, if you’re starting out.
He also gives simple investing advice. As well as talking about living a full life and thinking about making more money.
What I like about this book. It gives advice similar to Warren Buffet, but also MJ DeMarco.
Investing can be a simple strategy and use compound interest to make you rich (like Buffet). But you shouldn’t have to live a frugal life and stop enjoying things. And you can learn ways to earn money, even on the side (like DeMarco).
So which strategy is best?
Well, after all this reading.
Here’s how I started thinking about things
Attack vs Defence
I love my sport.
And I’m a big football fan. Not NFL, proper football.
Anyway.
A professional football team consists of 11 players. A goalkeeper, then a defensive unit (stop goals going in). Also an attacking unit (to score goals). Then a midfield unit helps with both attack and defence.
And before I read the two books I mentioned.
Investing advice seemed to be either very defensive. Invest in a single thing and wait years. And you MAY become rich.
Or be attack-minded. Become rich as fast as you can by sacrificing in the short term to build a business. Then invest in a diversified portfolio that you review regularly and manage. That puts money in your pocket each month.
And it feels like you have to do one or the other.
But what about both?
Play Both Attack and Defense
There’s another great book that I read on a regular basis.
It’s called The Secrets of The Millionaire Mind.
Again, a great read.
One of the concepts of the book is to drop “either-or” thinking.
You want to build an amazing business. As well as have a great, fun-filled personal life. But you think one comes at the expense of the other.
The book calls bullshit on this. The author states “Why not both?”
So, that’s how I’ve started thinking about investing.
A combination of all the advice I’ve seen over the years. And play both defence and attack at the same time.
A Solid Defence
As I write this. I’m still working a 9-5 job. I’ve got a mortgage and loan debt I’m trying to clear.
I’ve not got the income at the moment to be very aggressive in my investments. Or go wide and diversify.
So what I’m doing is investing money every month. A little under 10% of my take-home pay into a simple strategy.
A third of this “pot” goes into a target retirement fund to “try” and make me rich for when I retire, advice from Ramit Sethi.
A third into an FTSE all ETF and the final third into an S&P 500 ETF. Advice from Warren Buffet and Morgan Housel in terms of ETF investing. But also to start splitting the investing out to diversity, advice from MJ DeMarco.
The goal is to start investing, to stop putting it off. To get into the habit of investing regardless of how that looks.
An Aggressive Offense
In the keeping of “what about both”
I’m also trying to build a business that not only replaces my 9-5. But the initial goal is to triple my monthly income.
To fast track to that first £100K, then £1Million.
But still trying to have a life.
Yes, this slows down the progress. If you’re driving along at 100 MPH, you won’t be able to stop and smell the roses. Life is for living, not only grinding. Unless that gives you enjoyment of course.
So my attack is to try and figure out ways to make more money. They aren’t capped and have some form of scalability to them.
To make as much money as possible from a business or many businesses.
Best of Both Worlds
So my thought process goes like this.
Start with a simple investing strategy that you can put money into every month.
Hoping that the advice of simple, often and wait, will work. That one day I’ll be “rich” even if I’m old, and not rely on my business ventures to work out.
This is my defensive “unit”.
At the same time try and get some form of business success. Start figuring out how to make money.
To see if I can build something for myself.
That not only replaces my salary. But makes me rich a lot sooner than investing alone and the use of investing to keep me rich.
This is my attacking “unit”
Only time will tell if one, or both work.
Conclusion: How I’ve Started Thinking About Investing
Depending on who you listen to. What you read. Investing advice will contradict itself.
And unfortunately, no one has a crystal ball. So there is no way to know 100%, if something will work.
So what do you do?
Do you go all in with a certain type of investing and hope you’ll become rich one day?
Or do you ignore that altogether and work hard now to become rich as fast as possible with a business venture?
It’s hard to know what to do for the best.
What I’m doing is instead of thinking “either-or”. I’m starting to think, “What about both”?
Can I put in place an investment strategy from all the advice I’ve seen over the years? A simple strategy that I can stick to and works for me and my budget
As well as try to fast-track my riches by building businesses. That gives me the money to grow my current strategy and build on it.
To play the money game both definitely and offensively in case one doesn’t work out.
That’s the best way I know to “Diversity” and “Invest smart”.
Oh, if you are interested in my business ideas. I’ve listed a few of them here on my resources page.
