Stop listening to the latest ‘hot’ stock or investment tips: A recent early retiree’s thoughts...

 

Be aware of the next great stock or investment ‘tip’

Warren Buffett:  “If you aren’t willing to own a stock for ten years, don’t even think about owning it for ten minutes.”  

My wife and I are early retirees at ages 51 and 48.  We’ve been slow traveling with our Pomeranian dog Toby, since our early retirement in August 2020.  We’ve visited various destinations on the eastern parts of the United States including Ocean City (Maryland), Atlantic Beach (North Carolina), the Poconos (Pennsylvania), and few others.   We plan on living this nomadic lifestyle in the foreseeable future.

In this post, I’d like to share my thoughts on latest & greatest investing/stock tips.

It’s easy to fall prey to a ‘hot’ investing or stock tips from a fill in the blank (YouTuber, friend, friend of a family, friend of a friend, a stockbroker friend, you get the idea...).  I look at these tips this way.  If it was so great, why would they tell me about it?  Wouldn’t you think this person would keep all this great tip for himself???

I always gauge intent when someone gives me investing or stock tips.  Why is this person telling me this?  What’s in it for him?  Why would someone who doesn’t know me, tell me something that I must do to make unbelievable amount of money???

I had my share of idiot moments in my life.  I tried my hands on gaming scheme where a company promised great wealth if I sent back a ‘easy to get right’ puzzle or questionnaire, with a small processing fee.  They promised I would be in the running for the next round, if I sent back more money to cover the next level of competition.  This continued for few months until I had blown my allowance money at age 14 and realized there was no free lunch.  I was had...

You would think I had learned my lesson from that.  Nope...

When I turned 26, I tried my hands on a pyramid scheme.  After bothering everyone I knew to join this cult and wasting hundreds of dollars, I finally learned my lesson.  

I realized few things from that:

  • Greed is bad.  
It’s how most of us get in trouble whenever we’re investing.  It’s when we try to be too greedy and try for an unrealistic rate of return, that we end up losing most or all of our money.

Cons generally work when someone is desperate to try to make a quick buck.  Unfortunately, making a quick buck rarely works.

  • If it sounds too good to be true, it probably is...
This statement is true in life and in financial life.  When someone promises you riches too quickly, or promises you unrealistic rate of return for life, be very careful!  

There is no easy money quickly!  
  • What’s in it for them?
Once you question a motive for why they’re pushing that, then you’ll understand what not to do!  If something was really a huge money maker, why would they tell anyone about it?  Would you?  If it was me, I would keep my mouth shut and reap all that money just for me and my family!

There are no free lunches or easy money!  Accept this fact, and you won’t make the same mistakes I made!

Please see below for my recommendations and tips on the right way to invest:

  • Embrace slow and boring
Buy index funds, then buy more.  Buying index funds is not exotic or exciting. It’s not something that’s complicated like derivatives or some other scheme thought of by an Ivy League graduate with an economics degree.  

It does however, gets the job done.   Many FIRE (financial independence retire early) movement crowd have retired early thanks to this method.

  • Hold your index funds forever 
Like the famous Warren Buffett quote on top, hold on for a long time to reap the benefits.  By buying, then holding these funds that buys stocks of all the companies in that index, you’ll be sure to pick the ‘right’ stock(s) down the road.

John Bogle, the creator of Vanguard index funds, famously captured this sentiment when he said, “Don’t look for the needle in the haystack.  Just buy the haystack.”  
  • Don’t be swayed by daily ups/downs of the stock market 
Be steady and don’t sell out of panic.  If history is any indication, in every bear market or crash, stock market eventually came back to where it was then went higher.  This is one reason to have emergency funds to live off of, in case of a market crash.

For investors, the best time to buy stocks is when the market is down.  We call it buying stocks at discount!  Keep this mindset.  Buy more stocks, rather than panicking, then selling.  Don’t sell when everyone else does!

Be contrary!  Do what others don’t do.  When you buy stocks when they’re down, you’ll be buying more shares of that company, basically at a discount. 
  • Stop trying to time the market
No one can see the future.  No one can know when the stocks have hit the bottom or the top.  Stop trying to buy only at the absolute low.   No one can time the market consistently!

Be steady and keep buying stocks when it’s down and keep buying when it’s up.  In the end, it’ll even out just fine!
  • Be consistent in saving
Put away money towards your retirement on a schedule.  It’s always better to let your company do this automatically if you have a 401k.   If you have an IRA / Roth IRA, then you can set up an automatic transfer/deposit to go to these accounts on a schedule.

The less this is manual, the better.  Set up automatic deposits once, then forget.  
  • Don’t listen to the latest hot investment or stock tip
Forget all the hoopla.  These hot tips are usually designed to make few people rich, but not designed to make everyone rich.   

Don’t treat the stock market as a casino.  If you want to gamble, do it at a casino.  

For investing, embrace slow, steady, and boring.

In conclusion:

The road to financial independence is never an easy one.  There are many obstacles and hindrances along the way.  There’ll be people trying to pry you away from your money constantly.  Whether that’s spending money on the latest gadgets, or selling you the latest investment tip, be very careful navigating this minefield.

Be firm and stay the course.  Go with a proven method of investing for the long haul rather than listening to the latest tip.  Believe in the power of compounding interest and the US stock market.  Believe that American companies will always innovate and create new markets!

Thank you all for reading!


Jake

Wandering Money Pig 


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Please check out our YouTube channel ‘Wandering Money Pig’ showcasing our travels and our Pomeranian dog! https://www.youtube.com/channel/UC3kl9f4W9sfNG5h1l-x6nHw


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