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Don’t Just Have Investments – Be an Investor

Lack of Knowledge Forces You to Depend on Someone Else

Imagine you are placed in the middle of the woods with another person you have never met before. You are told that it takes one day on foot to get back home. You are given a map, a compass, and just enough food and water for one day. Your companion has the same. The map shows where you are, and where your home is. But you have never used a compass before and you’re not sure how it works. The other person claims to know how to use the compass and offers to guide you to your house.

When we can’t do something for ourselves, we are forced to rely on others. And when we rely on others, we are also surrendering control to them. Do they really know how to use a compass and read maps? Do we trust them to lead us safely out of the woods? Are they most interested in helping us, or themselves?

Because of a lack of education, many people have become totally dependent on outside advisors, such as their 401(k) companies, to take care of their money. They depend on these unknown advisors to make their dreams come true.

Perhaps we are so trusting of these faceless financial advisors because of an illusion that has been created. There is a perception that they possess almost magical predictive powers far beyond our own abilities, even to the point of, supposedly, seeing the future. Even more, we are made to feel that these special powers are beyond the reach of ordinary mortals like you and me. It has come to the point where our culture just assumes we can’t learn these skills for ourselves, that we can’t do the “magic” that they do. So we quietly kneel before the 401(k) companies and lay our futures on their altars, completely at their mercy.

Focus On What’s Most Important: YOU

One of the most common mistakes new investors make is that they focus on what investments they want to own rather than what they want to become. A person with no knowledge or understanding can own investments. But to truly take control of your financial future, you need to gain the skills of an investor that will help you achieve the results you desire.

As you concentrate on growing your knowledge of investing through education, you will enjoy becoming more aware of the investing techniques people use in the stock market to achieve monthly cash flow and retire early. In time, you will not only realize that it can be done, but that you can become competent in how to invest intelligently for your own success.

The ultimate goal is proficiency—the ability to take the right steps that lead to the desired results. Those who are proficient have become investors, while those who fall short of proficiency merely have investments and must depend on others.

The Ultimate Irony

The mutual fund and 401(k) culture promotes the idea that only the “experts” on Wall Street have the skills to invest safely and profitably. Warren Buffett disagrees:

“The ultimate irony of the investment business is that there is no question that an obstetrician can deliver babies better than the husband or wife. If you take dentists as a whole they will pull teeth or fill teeth better than if the patient does it themselves. But in the investment world someone who believes in American business and is consistent will get results that exceed professionals as a group.”

“It’s the only industry I can think of where the professional’s efforts subtract value from what the layman can do himself.”

Examining it more closely, having someone else manage investments robs us of the experience, satisfaction, and financial rewards of becoming serious investors. If we don’t care about our money and don’t care about increasing wealth for the future, then it’s fine to hand it off to someone else.

Having money is sort of like having children. My children are mine, and I’m responsible for them. If I pass off the entire responsibility of raising my children to others, I rob myself of finding out just what kind of father I might have become. Will my children be taught what is important to me? Will they have the values and morals I want to pass on to them? I have no idea, because at that point I have given up control of their upbringing.

Obviously, there’s nothing wrong with services such as day care to help out. We all need some help along the way. Ultimately, though, I’m the dad. Moreover, even the best day care folks do not have the same feelings for my kids that I do. The same is true with your money. No one cares about your money like you do. (Except maybe the tax man.)

When we have money in our hands, it is our responsibility to spend it wisely and invest it with intelligence. Just as with raising our kids, it can be valuable to have an advisor help us along the way. Even with the help of an advisor, we are each ultimately responsible for what happens to our own money.

Remember: No one else will care for our money like we will. But 401(k)s and mutual funds encourage a very hands-OFF approach. They are mostly out of sight and out of mind. Sometimes our only reminder they exist at all is the quarterly statement we get in the mail. Even then, we rarely use that information to take any kind of action. The statement may deliver good news or horrible news, but in either case most folks don’t do anything to change their strategy.

This robotic and mindless blind faith in the long-term performance of the stock market is spun and twisted with phrases such as “being patient” … “being consistent” … “not panicking” … and “staying the course.” These words sound good and feel good when we hear them. But this sense of safety is based on false premises and false promises.

If you were standing inside of a burning building with fiery beams and rubble falling all around you, would you be willing to remain patient, be consistent, avoid panicking, and stay the course while waiting for something to magically transport you to the safety and fresh air that is available outside? Of course not! When you see danger, you do everything you can to stay alive. You run away from the danger as fast as possible.

Waiting around and hoping the fire will extinguish itself isn’t smart or prudent, it’s just foolish. It’s like sitting in the dining room of the Titanic playing cards and as the water rises, saying, “Gee, I hope this situation improves in a little while.”

Make Investing a Life Skill

We can be more than simply a worker bee in life. We have amazing brains that can learn new things and acquire new skills. We can be men and women of many talents. We have the capacity to learn things that can be valuable to us. We can develop hidden talents when we decide it‘s important to us.

Take the example of a young man I know who has become quite an accomplished pianist. From age 8 to 18, he spent 30 minutes each day learning to play the piano.

When you add it up, that’s almost 2,000 hours spent on that piano bench. He also took lessons once a week that cost about $20. That’s nearly $10,000 invested in just his musical education. He wasn’t born with that skill, but with a committed investment of time and money it became a reality. Today he can make beautiful music that blesses his life and those around him.

We can do the same thing as investors. If generating money through investments is important to us, we can acquire new skills that will bless our lives with freedom, time, and great satisfaction.

Just as people take lessons to play a musical instrument… learn to prepare a gourmet dish… or take a motorcycle safety course… you are allowed to invest a little time in learning new things after the formal ‘education’ of high school and college.

However, people are less likely to search for solutions if they do not know there is a problem. That is exactly why this book is so important. Just as I’m dedicated to helping millions of 401(k) victims better understand the problems that loom ahead, I have an even greater passion for teaching thousands and thousands of people the basics of the stock market, risk management, and cash flow. These are concepts and skills that can transform your life.