Alright, so today we’re gonna talk about only investing in what you know. It’s critical, it’s critical because when we invest in what we don’t know and don’t understand, that’s essentially how we lose money. You know, Warren Buffett’s number one rule is, is essentially, don’t lose money. And rule number two is, don’t forget rule number one. So when we lose money, it takes us backwards. So we need to invest in what we understand. I learned this lesson very early on. And I’ve still screwed up several times, I’ve still invested in stuff I didn’t know and I lost money. I basically never invested in something that I didn’t understand where I actually came out well, and came out and made, you know, made a lot of money and just almost 01:30 always lose money.
So anyway, I remember that as I was a part of this newsletter, this is a while back, this is probably 12-15 years ago, 20, maybe 15 years ago or so. Anyway, it was a newsletter on penny stocks. So at that time, I was much more easily manipulated. And I was, I was joining this newsletter. And so things would come out and basically be tips and things to invest into. I think, I don’t really know, I think their point was, they probably had a big subscriber list, and they probably made money off of it somehow. But also, I think they, you know, they sent out these tips to get people to buy in which shot the price, the price of the stock up, and therefore, they knew they could almost kind of dictate when they made money from when they send out the newsletter and got a bunch of people to buy in. I think that’s kind of their motive.
Anyway, you know, they sent out this this tip one day, and at that point, you know, I had a savings. I mean, I have a savings of a couple $1,000. And I went all in with it. So I put in my couple $1,000 and it was about the fastest money I ever lost. I think it was, within a week that it went down to zero, there was nothing there. And I’m like, oh, man, like how could I possibly lose money that fast? And that’s the only lesson I ever needed to learn. And so ever since that I’m like, I never wanted to invest into something that I didn’t understand. So, on top of that, you know, most people would teach that as well, as you know, anybody that is, you know, has any kind of Financial Intelligence knows not to put their money into something that they don’t know. And even if it’s a, even if it’s a hot tip, it doesn’t matter because when you invest in something you understand, you’re abiding by a philosophy that is like, that’s the most critical part of it, is your abiding by philosophy. And when you do that, you’re financially structured, the best way I can probably put it. You’re financially structured in what you’re doing, and where you’re directing your money. So rather than getting excited, or, you know, kind of throwing your money out there flippantly hoping that something’s gonna work, instead, you have a plan for it. And when you have a plan, you’re directing your money, and you’re essentially in charge of it.
Okay. I was just talking to a friend last night, Adam, he’s on this video right now. So stock [Unclear 04:15], you know, I’m looking at getting into been considering. And let’s just say looking into, been considering jumping into another real estate asset class. And, you know, running numbers, toss it back and forth and thinking about it. I’m like, man, like, you know, I’ve wanted to do this for a while but at the same time, you know, there’s a learning curve to everything. Anything that we want to learn, there’s a learning curve to it. And we need to be able to expect it to last a minimum of five years. Like if you learn it well, you should be able to start making money from it probably after a year or two. But there’s a learning curve for five years. They call the five years’ learning curve. And so that means during that five years, I wouldn’t be taking my eye off the ball, if what I’m already doing is doing well, and putting my time and effort and skills and resources into something else that’s not really performing. So once I really thought about, I’m like, man, this doesn’t really make sense.
So anyway, that’s all, you know, it’s one of the core principles is only invest in what you understand. And this is also, I’m probably gonna get some pushback from this. But this is also why I don’t believe in a 401k is because I don’t know a single person investing into a 401k, that actually knows where their money is going. They sign up with their employer, which employers should be directing your money, but they sign up with an employer. I remember what I did, like by the last couple employers that I was with before I started out on my own, they presented me with this option, basically said, here’s, you know, essentially, here’s where to sign and here’s the buttons to click, go ahead and sign up. And I didn’t realize at that time. I’m like, I’m just directing this money into something. I have no idea, I have no idea who’s brokering it. I have no idea who’s managing it. I don’t know what’s going on with those companies that are going into. Like, I’m essentially just throwing my money into something hoping that someday in the future, this money is going to grow, and it’s going to be there, right. So in my opinion, a 401k is, is a dangerous place to put the money. Because we just we never know what’s going on with it. And, you know, you’ve certainly seen people, you know, look at 2008, people’s 401k has got cut in half. So something that took potentially a lifetime to build up and then overnight, it’s obliterated.
So, guys, that’s really the principle is just invest in what you understand. And if you don’t, so what if you… The question is, what if you don’t, you don’t have a place to director money to right now, maybe there’s something maybe you don’t really know, like, where to put your money. The answer is save it. Just put it in, have a savings account that’s saving/investment account. And we’ll talk about this on another video but you should be automatically directing a certain percentage of whatever you’re making into that account every single week or month or however you get paid, it should always be that case. But if you don’t know where to put your money yet, put it there and let it stack up. And in the meantime, focus on learning, you know, a skill set or an investing strategy. You don’t have to know, you don’t have to know everything that’s out there because it’s limitless. I mean, there’s, there’s all kinds of different stocks, there’s index funds, there’s, you know, there’s multiple classes of real estate to invest in. I mean, it’s just, it’s unlimited. So you don’t have to know everything that’s out there and you shouldn’t, because it’s overwhelming.
So what you should do is find somebody that you want to emulate, and you know, and learn from them and do what basically do what they do. Find a mentor that can help you through the first couple of phases, through the first couple of investments, get your feet underneath you. And then as you start to get an understanding of it, you start to take off, and you start getting more comfortable. And at that point, you can kind of start increasing your investments. But in the beginning, keep it extremely minimal, because you don’t want to lose money. And if you do lose money, you want it to be an extremely minimal loss.
So again, if you don’t know where to put the money at first, put it in a savings account. Yes, obviously a savings account is not going to be making you much. That’s not the point, the point is to keep it safe. So, guys, that’s the lesson for today. Again, only invest in what you understand, because the whole purpose is not only to make money but is to not lose money. As soon as you lose money, you go backwards and you have to try twice as hard to make up what you already had. So guys, I hope you enjoyed this episode. We’ll see a week from now. Next Wednesday. Bye
