Today I'm 27. What Have I Learned?
Here are things I have realized that I hope can help those younger than me and older than me. This is the realist list I'll ever produce on here with my experience, my MBA, my investment experience, and my money experiences all before I turned 27 today:
1) My biggest mistake so far can be summed up in 2 simple words. No not "Motley Fool" lol. But instead the words "Financial Advisor". Having one taught me a few things I will never forget for as long as I live. First, no one cares about your money more than you do. Don't believe the hype. Don't believe some stranger that you pay monthly in commissions and fees for cares anything about you or your money. I started off with one of these several years ago and it lasted 18 months until I started to see things clearly. I wound up losing thousands from this mistake. But I always say Fail Fast Succeed Sooner. I feel sorry for the 40+ year olds that use these guys and get suckered in losing so much more money than I did.
2) If you are going to gamble, then gamble with money you don't need or don't plan on using for investment opportunities. Playing poker is not an investment. That is all I will have to say about that. ESPN loves to show the world all these guys with smiles on their faces and winning millions of dollars. These guys represent less than 1% of all poker players. They never show the other 99% that have lost thousands or more and some their entire savings on playing poker.
3) Invest early. This should be #1 but I thought of it as #3. Let me repeat this, INVEST EARLY. This is something I wish I had done when I first started working. I knew a lot about a few companies and a few sectors when I started working at 16. This was 11 years ago. I knew about GOOG when Webcrawler was one of the top search engines. I was around on the first iPod. I was around when companies like MCD were in a downfall. I could of bought GOOG at $100/share. My first summer I made about $3000. I could of turned that $3000 into a $18000 or more just on that one stock. This is just one example and clearly not the best. Luckily I started investing seriously in my 20's and have never regretted it since.
4) Don't take advice of the majority. More often than not, you would be better off following your own advice and your own instincts. Me investing in BAC when it was $3/share when Cramer and every other 'expert' was talking about nationalization was one of my best decisions the past 3 years. Wish I would of invested in SIRI at $0.05/share but that was a lot more risky and I could have done the same with GM and lost it all.
5) Don't listen to your parents if they are not millionaires by now. This is real. Also don't try to change their way of thinking. Doing so is like creating a new reality for them. For people that have been taught to work, make money, work more, make money will not understand the power of investing. They will never understand the idea of having their money work for them - something that is as beyond them as reading is to a dog.
6) If you want to work until you die, then don't bother investing. If you aren't putting 100% in investing, then you are most likely wasting your time. You are bound to get lazy. I love investing. It is something I always wanted to do. It feels natural to me. The entire idea of making money work for me is a lot more attractive than me working for money.
7) Look at macroeconomic trends. Look around in your neighborhood. Base stock decisions on things you know. You will come off a lot better in the long run. If xyz store is closing and you see it about to close in other places, then odds are is that its stock (if there is one) won't be doing so great in the near future. Obviously if it is downsizing, there are exceptions.
8) Pay attention to industries that reveal trends and upcoming designs and products. If I had invested in the 90's when Sony was 2 years away from releasing its first Playstation model, I'd have a lot more money. I had the magazines. I had the tips. I was a gamer afterall. I knew about Playstation 2 years before it was released. Sony's stock SNE went from the teens in the early 90's, to $30+ after the release in 1995, and then went up to $130/share by 2000. At this point SNE was creating both consoles, peripherals, and new systems like PS2.
9) Don't get emotional on stocks. If a stock you really think is going to do great but just isn't, and most likely won't, don't keep it and keep averaging down. Find out why it is dropping. Find out what its future is like. It is better to take a small loss than to lose everything.
10) Dividends. 1 word, and one of my favorite. The power of math, reinvesting, and solid dividend stocks 6%+ will snowball at some point and you will see that math+time = lots and lots of money.