At one of my recent talks, something interesting happened. Before I started the talk, we were all sitting around, just BSing and getting to know each other. All of a sudden, one of the guys started asking me very direct questions (almost antagonizingly so):
- “What are your credentials?”
- “Are you really rich?”
- “So is this class basically just ‘save more than you spend, and invest?'”
Now I’m happy to answer the questions, and I did, but the last one made me smile. “Is this basically just save and invest” was said almost scornfully, as if it were completely obvious.
My answer: “Yes!”
Let’s be honest. Look at my course syllabus. There’s nothing revolutionary on it. The key isn’t shocking you with some new strategy I discovered. It’s about getting people to get started.
Some people seem to be looking for the secret bullet to making money–the most exotic investment, the sexiest strategy. This is why there are tons of books on making money with different angles (“All debt is bad!” “Buy gold!” etc).
But I think we have to decide between being sexy and being rich. Here’s what I said before:
“When you invest, there’s a difference between being sexy and being rich. When I hear people talking about the stocks they bought/sold/shorted last week, I realize that my investment style sounds pretty boring: ‘Well, I bought a few good stocks 5 years ago and I haven’t done anything. All I did was buy more when the price went down.’ But investment isn’t about being sexy–it’s about making money, and when you look at the investment literature, buy-and-hold investing wins over the long term, every time. Forget what CNBC or the magazines say about the stock-of-the-month. Do a rigorous analysis, make the right decisions up front, and then re-evaluate your investment every 6 months or so. It’s not as cool as those guys in red coats shouting and waving their hands on CNBC, but as an individual investor, you’ll get far greater returns.”
The guy at my class seemed to summarily dismiss the “save and invest” strategy–even though it’s worked for a very, very long time. I guess it’s just not sexy enough.
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