Where Should I Invest My Money?
(Excerpt taken from Jason C.
Steinle’s book—Upload
Experience: Quarterlife Solutions)
“Get your slice of the moon! Come one, come all, get your lunar
plot.” This is no joke! An Australian real estate agency, Lunar
Realty, is selling one-acre and ten-acre lots on the moon.
It all began back in 1980 when
Dennis sent letters to the United States, Soviet Union,
and the United Nations announcing his registration of the moon and has been
selling lots ever since. After selling
lunar lots to over 2 million people from 180 counties Dennis recently sold the
company to a 33-year-old Australian, Paul Jackson, who founded Lunar Realty.
Paul is selling the one-acre blocks for $40 and the ten-acre
blocks for $298. He even bought a lot
for himself saying, “I would be extremely happy if one day we got the chance to
live on the moon. I look at the world
around us and think stranger things have happened.”
While strange things do happen, investing in
extraterrestrial real estate is probably not high on your list. There are, however, plenty of difficult
decisions when it comes to investing money.
Do you put your money in the stock market, a home, your business, an
education, savings, a car, or stuff it under the mattress? What is the difference between bonds, mutual
funds, the money market, stocks, a tax lien, and the S&P? How much money do you need to get started in investing?
Should you begin investing now or should you first pay off all your debts? These are just a few of the many overwhelming
questions that arise when deciding where to put your money.
I find it interesting that we are
taught how to read, write, and communicate in school; how to drive in driver’s
education; how to shoot and handle a gun in hunter’s safety course; and how to have
safe sex in gym class, yet most of us have never been taught how to handle
money. In fact, even when I filed my chiropractic
office as a corporation, the state did not test to see if I knew the basics
about money. Did you realize that only
four states require that high school students take a personal finance course in
order to graduate?
I asked Chris, a 27-year-old financial
advisor in
“Any money after that I personally think should go into
the stock market. If you’re young most
of it should go into a high risk fund.
As you get older you should put more in secure investments.”
Chris
continued, “It depends on your personality too.
For example my wife and I have some of our money in reasonably safe
investments and some in high risk investments.
For me it’s fun to follow the high risk and to play around with it. I enjoy changing the investment to this or
that, but some people don’t have a tolerance for that risk. They should probably invest in safe
investments for the peace of mind. If
you put it in the stock market you can put it in safe investments that are
reasonably assured to make 6-8 percent a year for 30-40 years, and 6 percent is
about twice inflation.
“Also,
if possible, you should invest in a business.
Maybe more so than the stock market.
Not everyone can do that, but if you have the money, ambition, or idea
and your business does well you can obviously make more than 12 percent a year,
which is greater than what you may do in the stock market.”
Chris and his wife, Kelli, have
established a solid financial foundation. They have been able to do this
because they are what Robert Allen, a self-made multi-millionaire and author of
the One Minute Millionaire, calls
financially literate. They understand
how money works and how to make it grow.
Unfortunately Chris and Kelli are the exception.
Most of us have little knowledge or experience with investing
money. In fact one of the common
patterns I found while conducting research interviews for this book is that our
generation spends money when we have it and charges it when we don’t. Did you realize that in the
Larry
A. Voorhees, a National Sales Director with Primerica Financial Services, told
me, “What’s happening is that we are living in a microwave society. Everybody wants it hot, fast, and now. They plan more for a two-week vacation than
they do for their retirement. People need to sit down and look at what they
need to do with their money. People need
a plan. It really doesn’t take a whole lot to get that million or two million
if you let time work for you. The key to
being financially independent is understanding the
fundamentals of finances and money.”
These fundamentals are the ones
Chris understands and the ones Allen means when he says become financially
literate. The secret to investing is learning and applying the fundamentals. They
include Benjamin Franklin’s Rule of 72, which states if you take the percent
interest you are earning and divide it into the number 72 that is the number of
years it will take for your money to double.
For example if you are receiving 12 percent on an investment it will
take 6 years for your money to double.
Another fundamental is the Rule of
Compound Interest and Time. As 20 and 30-year-olds
we have an advantage our parents and grandparents will never have
again—time. Did you know that if you
invested a dollar a day with 10 percent interest you will be a millionaire in
56 years?
A third fundamental is to Pay Yourself
First. From books like The Richest Man in Babylon to the financial
leaders on television, a common mantra is to immediately take 10 percent of
your pay check and invest it. Otherwise
it is easy to blow through it and have more days than money left at the end of
each month.
These fundamentals are like a recipe
for baking a cake. The closer you stick
to them the greater the chance that you will get the outcome you want.
Money is a part of all our
lives. We earn it, spend it, save it,
and invest it. The
greater our knowledge about money the better our chances of creating more of
it. The key is to enroll personally
in a financial education. The following
are resources and books that I recommend to quicken your learning curve.
The Richest Man in
The 24 Essential Lessions
for Investment Success by William J.
O’Neil
Rich Dad, Poor Dad by Robert T. Kiyosaki
The One Minute Millionaire by Robert Allen and Mark Victor Hansen
The
Millionaire Next Door by Thomas
Stanley and William Danko
It
can also be valuable to sit down with a financial advisor to discuss your
situation. This may be the easiest way
to get started. As one certified financial analyst, I’ve sought advice from,
told me, “Working with 20 and 30-year-olds is fun and relatively straight
forward. The best part is that they can
apply good financial practices from the beginning without making all the
mistakes that their parents did.”
All Rights Reserved 2005
Jason C Steinle
the host of The Steinle Show talk radio and television programs. He is a Doctor of
Chiropractic and Director of Health
and Harmony Chiropractic and Wellness Center in Evergreen, CO. Jason
is also the author of Upload Experience: Quarterlife
Solutions which is available at www.amazon.com
and at www.uploadexperience.com