A Portion of What You Earn Is Yours To Keep
You have expenses every month – rent, mortgages, food, phone bills – why not put yourself up on that list along with them? As a matter of fact, why not make yourself one the biggest recipient of those outgoing remittances, and pay yourself 10% of whatever comes in. The above adage was the attitude of the wealthiest city to ever exist, and if you haven’t read about it before, go read The Richest Man in Babylon – that is all the investment advice you will ever need.
The goal is not to take that 10% savings and throw it in a bank. Invest it. Invest it in some crazy shit and lose it all. The goal is to learn what works for you, and everybody invests differently. But you cannot really learn investing without suffering the pangs of anguish first hand from losing your own money. The pain you experience from losing wealth hits right at the heart, and you will be unlikely to make that same mistake again.
Never trust anyone else to manage your wealth and certainly don’t trust governments. Bankers understand book theory and can put together models to help you mitigate risk, but when it comes to actually investing their ideas are just as good as yours, if not worse. Besides, investing your own money is free education whether you lose or win, so why let somebody else learn with your money?
Investments don’t move based off fancy calculations and accounting statements, they are valued based on what the market feels like valuing them at, which is guaranteed to be anything but rational. Prices that are cheap can always get cheaper, just as the overpriced can always get more expensive. What’s important is you develop your own level of risk tolerance, which is unique to you, and stay loyal to it. Some sleep better at night with 80% of their portfolio in TLT and the rest in gold bullions under their bed (not recommended). Others like myself can gamble it all on one stock, lose it all, and figure out how to make it all back later, and more (also not recommended).
The bottom line is go take your money and invest it in something you believe, being open minded to losing it all. Take risks knowing full well the downs are also part of the game too. The first time you lose money, it hurts, but the next time it hurts less. Eventually, you will crave that feeling as that is what keeps you focused, alert, and always learning.