Highly Recommended …
Investing For Dummies
If you don’t know how to invest, then don’t do it.
That’s it. That’s all you need to know. I wish there was a big secret to all of this investing. Something like: spend 5 hours a day sitting at your computer reading endless stories and documents about companies in the energy sector, call 3 brokers and see what they think, and then make your decision after the 3rd day of having talked to an investment professional. But there is no such investing secret.
If you don’t know how to invest, don’t do it. Of course, there is a cure for ignorance and that cure is knowledge. So, your only other option is to learn how to invest.
I’ve said it before and I’ll say it again: invest in businesses you understand and know about. If you don’t really know anything about any kind of business, then get out from under the rock you’ve been living under and take a look around. It really doesn’t make a lot of sense for anyone to invest in companies that they don’t understand.
Saving Money Is Not Optional
An unspoken assumption held by many people is that “saving money is optional”. “I know I need to save money,” says a client, “but I just don’t have anything left over at the end of the month”. Think about what is being said here. There are only 2 possible situations a person will find themselves in, financially:
1) An individual consumes more than they produce. This situation is really only a temporary transition to death. You CAN’T continue living this way because if you try, you’ll die-literally-as you find yourself homeless and unable to afford food.
2) An individual consumes less than they produce. This describes nearly everyone. The fact that you produce more than you consume means that you are saving money-by definition. What you do with that excess money is a matter of choice.
When I say this to people, a third option is often invented-“but Dave, what happens when a person consumes as much as they produce and have nothing left?”. I would say that this, for the most part, is a fallacy. It’s really part of the transitional phase to the first scenario of consuming more than you produce.
Consuming exactly what you produce rarely happens out of necessity. Normally, when someone says that they are spending everything that they make and that they don’t have any money left over to save, what they are really saying is that they are spending all of their savings and are choosing not to save any money.