It has been 25 years since I started “Don Steinmann’s Investment Tip of the Week”. Since then (including repeaters) I’ve done over 1000 investment tips.
I thought I would recap what I think are the most important lessons that I’ve tried to share.
Live On 85% of Your Income
The single best piece of financial advice I could give anyone, is to live on 85% of their income and save the rest. If you do that, and are prudent with the 15% you save, you’ll have few financial worries in your life. It doesn’t have to be a dreary thing. Enjoy the bloody heck out of the 85%. But save the rest.
Trust No One
When it comes to money, you have no friends. Consider the ‘no interest’ balance transfer offer from your credit card company. Oh, by the way, there is a 4% fee on the entire balance transfer. Guess what? 4% is not ‘no interest‘. It’s a bald faced lie. Your banker, your broker, your insurance agent, they are all trying to maximize the share of your money that they get to keep. It’s unfortunate, but it’s true. You have to read the fine print and understand what they’re doing with your money. And if you don’t, step away.
You Are Going to Live Longer than You Think
A common thing I hear from investors all the time “I’m 65 I have to get much more conservative”. Gradually, yes. But if you’re 65, you need to plan on that money lasting you another 30 years. You need some growth. “Oh I won’t live that long”, they say. But the truth is that people continue to live longer and longer. A 65 year old couple has a better than 50% chance that one gets to 90. And that’s today. Someone who is 25 years old now, that person needs to plan on being 100 or more.
Learn to be Patience
With any risk investment, whether it’s stocks, bonds, real estate, hedge funds, limited partnerships, etc., we have to be patient. If you had an investment that went up 7% every year, you’d probably be pretty happy. But what if it’s up 20%, then down 4%, then down 5%, then up 17%. In years 2 and 3 you might have the sense of “my investments just go down all the time”. However, over the 4 years, you’d average out to our 7%. Risk investments do not move in a straight line. That’s where the risk is. With time, things like stocks and real estate will be the best performing assets. That’s why it require patience.
Don’t Let Greed Overcome Your Good Sense
There is no magic way to riches. The Bitcoin and Meme stock craze of 2021 is paved with investors who learned that truth the very hard way. Greed is like an off switch. It turns off our common sense and let’s our fantasies run wild. That’s a recipe for disaster.
Don’t Let Fear Paralyze You
I know many people who pulled out of the stock market in 2008 and put all their cash in a 1% savings account. Yeah 2008 was horrible, but that was followed by a 10 year bull market that those people missed. Fear can keep you cautious and that’s a good thing. But don’t let it stop you from making prudent, long term investments.
Seek Value in All Your Financial Choices
Unless you are very wealthy, there is no point in buying a $5,000 Rolex when you can own an excellent Seiko chronograph for $125. No point in buying $20 shampoo when the $2 stuff does exactly the same job. No point in buying a stock for 50 times annual earnings when a similar stock might trade for a 1/3 of that. You’ve worked so hard for your money, make sure you get full value for every penny you spend.
Stuff Doesn’t Make Us Happy
Most of the things in life that are really satisfying are not about money directly. Whether it’s finally running a sub 6 minute mile, that fantastic day with your family at the beach, or the day he/she said “yes”. There is some satisfaction in a new car, or an expensive vacation, but those things are transitory. America is such a consumer society, we get too caught up in stuff. Money is about security and freedom. Stuff is a tertiary satisfaction at best. Keep that in mind when you’re spending, and especially before putting that purchase on the 17% credit card.
I hope my tips have helped you save or make a few bucks over the years. The very best to you all. Thanks for reading.
’nuff said.