WEBVTT - Think Twice Before Investing #434 0:00:00.160 --> 0:00:02.920 Welcome to How the Money. I'm Joel and I'm Matt. 0:00:03.120 --> 0:00:26.240 Today we're discussing how you should think twice before investing. Yes, 0:00:26.320 --> 0:00:29.159 we want you to think twice before investing, Joel. You know, 0:00:29.280 --> 0:00:31.720 just on Monday, we were talking with West Moss and 0:00:31.760 --> 0:00:34.319 he talked about when it comes to being happy, there 0:00:34.320 --> 0:00:36.040 are a lot of things that he found in his 0:00:36.120 --> 0:00:38.920 research that you can do or maybe not do, in 0:00:39.000 --> 0:00:41.120 order to achieve happiness. It's kind of like an Alec 0:00:41.120 --> 0:00:42.800 hartline and you can kind of pick whatever you want 0:00:42.840 --> 0:00:44.640 to kind of throw in the stew. Yeah, you you 0:00:44.640 --> 0:00:46.479 We we talked about how happiness is sort of like 0:00:46.479 --> 0:00:48.720 the stew. There's not this perfect recipe that you have 0:00:48.800 --> 0:00:50.680 to follow. It's not like baking, where you have to 0:00:50.720 --> 0:00:53.920 have very specific ingredients, the right quantity of ingredients, and 0:00:54.080 --> 0:00:56.120 you have to do them in the right order. When 0:00:56.120 --> 0:00:59.240 it comes to investing, investing is a lot more like baking. 0:00:59.360 --> 0:01:02.000 It's a little bit less like throwing a bunch of 0:01:02.160 --> 0:01:04.600 ingredients together in a big pot and just kind of, 0:01:04.920 --> 0:01:07.160 you know, seasoning to taste and being happy with what 0:01:07.240 --> 0:01:08.960 you have at the end of the day. Because if 0:01:08.959 --> 0:01:10.520 you don't follow the right rules when it comes to 0:01:10.560 --> 0:01:13.119 baking you could. Uh. That's the difference between a nice, sweet, 0:01:13.120 --> 0:01:16.200 fluffy cake uh and some salty plato uh. And we 0:01:16.240 --> 0:01:17.800 want to make sure that you end up with a 0:01:17.880 --> 0:01:20.280 nice cake uh, not something for your kids to play with. 0:01:20.560 --> 0:01:22.000 And I know the people who've been listening for a 0:01:22.040 --> 0:01:24.280 while might see that headline and they're like, what in 0:01:24.319 --> 0:01:27.640 the world, dudes, you talk about investing and only in 0:01:27.800 --> 0:01:30.360 the sunniest, rosiest terms. Why in the world are you 0:01:30.400 --> 0:01:32.440 coming out with a podcast. It's like, thing twice before 0:01:32.480 --> 0:01:34.520 doing this, And I promise we're not trying to be 0:01:34.520 --> 0:01:36.280 a click baity, but really, there are a bunch of 0:01:36.280 --> 0:01:38.559 things you need to think through before you actually start 0:01:38.640 --> 0:01:40.720 investing in. So that's really what this episode is about. 0:01:40.760 --> 0:01:42.640 It's saying, yes, we love it, we still think it's great, 0:01:42.760 --> 0:01:44.560 but there's some due diligence that needs to happen on 0:01:44.600 --> 0:01:47.640 the front end before you jump in head first. Yeah. 0:01:47.640 --> 0:01:49.160 And even a few weeks ago, we talked about the 0:01:49.200 --> 0:01:53.520 importance of investing over consumption, right, how ownership is key. 0:01:53.600 --> 0:01:55.760 And so now that we've convinced you now that you 0:01:55.800 --> 0:01:58.480 want to invest, we want to just taper things a 0:01:58.480 --> 0:02:00.040 little bit and say, hey, there are a number of 0:02:00.120 --> 0:02:01.680 things we want you to think about first. That's what 0:02:01.680 --> 0:02:04.120 we're talking about today, no doubt. Before we get to that, Matt, 0:02:04.160 --> 0:02:06.760 I just really quickly, you wanted to mention someone in 0:02:06.760 --> 0:02:09.560 our Facebook group recently was in a car accident. She 0:02:09.600 --> 0:02:13.000 seemed fine, which is fortunately she was. She was seemed 0:02:13.000 --> 0:02:15.560 like she wasn't hurt from what I could tell, and 0:02:15.600 --> 0:02:18.440 so Jessica, we wish you the best. But she had asked, 0:02:18.720 --> 0:02:21.959 what what what are people's best advice when you're in 0:02:22.000 --> 0:02:23.800 a car accident to make sure that you're not taking 0:02:23.800 --> 0:02:26.040 advantage of financially. And one of the things that it 0:02:26.120 --> 0:02:28.280 instantly made me think of that I don't know if 0:02:28.280 --> 0:02:30.160 we've ever talked about on the show, but I feel 0:02:30.160 --> 0:02:32.120 like for anybody who ever gets in a car accident, 0:02:32.560 --> 0:02:34.960 one of the things you need to remember in your 0:02:35.360 --> 0:02:40.400 potential battle with an insurance company is diminished value. Most people, Matt, 0:02:40.440 --> 0:02:43.359 don't even know what that means. But basically, if you're 0:02:43.480 --> 0:02:46.239 twenty dollar vehicle, hopefully it's more like a ten dollar vehicle. 0:02:46.240 --> 0:02:49.040 But let's say you're twenty thollar vehicle gets hit, yeah, 0:02:49.080 --> 0:02:52.120 and it causes eight thousand dollars worth of damage that 0:02:52.160 --> 0:02:54.600 has to be repaired. The insurance company is going to 0:02:54.880 --> 0:02:57.480 pay to have that car fixed. But the problem is 0:02:57.600 --> 0:03:00.240 or they might total it because if it's too much, 0:03:00.280 --> 0:03:03.600 damaging m title totally. But the thing is, after that 0:03:03.680 --> 0:03:07.920 damage is repaired, your car isn't worth anymore, even though 0:03:07.960 --> 0:03:10.600 the work has been done to repair it. The there's 0:03:10.600 --> 0:03:13.120 this thing called diminished value, where on that car Fax 0:03:13.240 --> 0:03:15.600 report that accident is going to live forever and if 0:03:15.600 --> 0:03:18.440 you try to resell it, it's not selling a pristine 0:03:18.440 --> 0:03:20.480 car that's never been an accident. It's selling a car 0:03:20.800 --> 0:03:23.280 that has had some damage done in the past, and 0:03:23.320 --> 0:03:26.400 that affects resale value. And so that is one of 0:03:26.440 --> 0:03:28.040 the things you should pay attention to. That's one of 0:03:28.080 --> 0:03:30.840 the things you should make sure you're asking your insurance 0:03:30.840 --> 0:03:35.120 company for payment for the diminished value of your vehicle. 0:03:35.360 --> 0:03:39.040 And there's actually an easy formula that you can run 0:03:39.160 --> 0:03:41.640 your car through to kind of come up with a 0:03:41.720 --> 0:03:44.800 realistic amount that you should be asking for. Well, we'll 0:03:44.840 --> 0:03:46.800 link to an article I think it was on bankreat 0:03:46.840 --> 0:03:49.320 dot com that goes through the details of that formula 0:03:49.360 --> 0:03:51.600 and how you can figure out dimnased value in your 0:03:51.640 --> 0:03:53.920 specific case. But that's just one of those things nobody 0:03:53.920 --> 0:03:57.520 talks about. UH. Being made whole in an accident also 0:03:57.640 --> 0:04:01.120 involves receiving compensation or the fact that your car is 0:04:01.120 --> 0:04:04.000 now worthless totally. UH. And it's worth noting too that 0:04:04.040 --> 0:04:06.360 this is specifically the case. When you are in an 0:04:06.400 --> 0:04:09.240 accident and it is the other person's fault. You can 0:04:09.240 --> 0:04:11.760 try to file a diminished value claim with your own 0:04:11.760 --> 0:04:14.200 insure if it's your fault, but they're likely going to 0:04:14.320 --> 0:04:17.359 say no, sorry, it was your fault. But if you 0:04:17.360 --> 0:04:19.479 were in an accident it was somebody else's fault, that 0:04:19.600 --> 0:04:22.400 is a claim that you would file with that insurance company. 0:04:22.720 --> 0:04:25.200 Sometimes it will involve you getting a professional appraisal of 0:04:25.240 --> 0:04:27.279 your vehicle. But I mean if you do have a 0:04:27.279 --> 0:04:30.400 twenty vehicle or even more thirty or forty thousand dollars 0:04:30.400 --> 0:04:32.880 on the line here, you know, getting spending three to 0:04:32.960 --> 0:04:36.560 four bucks on a on an appraisal, would one be 0:04:36.560 --> 0:04:38.400 worth the money if that means you're going to be 0:04:38.480 --> 0:04:40.960 made whole and to recoup some of that lost value 0:04:41.040 --> 0:04:43.640 because of the fact that you are in an accident exactly, 0:04:43.839 --> 0:04:45.800 and part of it is just proving your case. Sometimes 0:04:45.839 --> 0:04:47.799 you will need an appraisal if you're working with a 0:04:47.839 --> 0:04:51.080 particularly stubborn insurance company. It varies by state. Yeah, but 0:04:51.120 --> 0:04:55.560 hopefully that that actual formula for figuring out what the 0:04:55.640 --> 0:04:58.360 diminished value is in your specific case. Hopefully you can 0:04:58.400 --> 0:05:01.839 provide that and have to even hire someone and pay 0:05:01.839 --> 0:05:04.360 out a pocket that would Yeah, that would be ideal. So, yeah, 0:05:04.440 --> 0:05:06.080 make sure in the case of a car accident you 0:05:06.080 --> 0:05:08.960 don't forget about diminished value. But Matt, let's mention the 0:05:08.960 --> 0:05:11.240 beer that we're having on this episode. This one is 0:05:11.240 --> 0:05:15.080 called Emergency Drinking Beer. It's by Wild Heaven Brewing, which 0:05:15.120 --> 0:05:17.720 is just around the corner from us in Atlanta. Can 0:05:17.720 --> 0:05:19.760 you believe that we have never had a Wild Heaven 0:05:19.800 --> 0:05:22.080 beer on our show? Is this the first? It's I 0:05:22.200 --> 0:05:25.960 checked actually before before we hit record, and because I thought, 0:05:26.400 --> 0:05:29.440 certainly back in the day we had Yeah, I mean, 0:05:29.480 --> 0:05:31.320 when Wild Heaven first came on the scene, we actually 0:05:31.360 --> 0:05:34.479 enjoyed their beers a decent bit esctan. I remember that 0:05:34.480 --> 0:05:38.119 one in particular, being that delicious quad that we enjoyed 0:05:38.160 --> 0:05:40.640 one night playing some board games. But it has been 0:05:40.720 --> 0:05:43.240 a while since I've enjoyed their beers, and I'm excited 0:05:43.560 --> 0:05:45.359 for us to actually have one here on the show. 0:05:45.839 --> 0:05:48.479 Wild Heaven emergency drinking beer. We'll share our thoughts on 0:05:48.600 --> 0:05:51.120 this one at the end of the episode. Sounds good, 0:05:51.120 --> 0:05:52.960 All right, let's move on to the subject at hand. 0:05:53.360 --> 0:05:57.080 We're talking about thinking twice before investing and matters. We're 0:05:57.080 --> 0:05:58.840 preparing this one and made me think about road trips 0:05:58.920 --> 0:06:01.719 for some reason. And when you're heading to the beach, 0:06:02.080 --> 0:06:04.000 you don't just HAVEV in the car and start driving 0:06:04.240 --> 0:06:06.839 south to get there. If you're in Atlanta, right, unless 0:06:06.880 --> 0:06:10.160 you are the star of a sitcom, you're like, we're 0:06:10.200 --> 0:06:12.599 going to the beach. You're Kevin James and King of 0:06:12.640 --> 0:06:15.160 Queens or something like that, right, Yeah, And because like, 0:06:15.240 --> 0:06:16.640 let's if you're in college. I feel like that's the 0:06:16.640 --> 0:06:18.359 thing that that is something maybe you do in college 0:06:18.400 --> 0:06:21.080 where you just like, hey, guess what, I'm turning twenty 0:06:21.160 --> 0:06:23.599 one tomorrow. I want to wake up and see the 0:06:23.640 --> 0:06:26.640 sunrise at Charleston or at Folly Beach and Charleston. A 0:06:26.640 --> 0:06:28.520 friend of mine actually did that, and I opted not 0:06:28.600 --> 0:06:31.560 to go with him because classes early in the morning. 0:06:31.600 --> 0:06:33.120 I thought, I don't think I want to do that. 0:06:33.240 --> 0:06:36.560 I'm sorry, you're responsible, sir. Yeah, Well, the thing is, 0:06:36.600 --> 0:06:38.960 if you literally just start driving south, you might hit 0:06:39.000 --> 0:06:40.920 a dead end, you might hit a road closure, you 0:06:40.960 --> 0:06:43.760 could get lost completely if you're just kind of going 0:06:43.800 --> 0:06:47.000 with a general navigational principle. And not only do you 0:06:47.040 --> 0:06:50.320 need a more specific set of directions, Fortunately you don't 0:06:50.360 --> 0:06:52.240 have to pronout those map quest directions like you did 0:06:52.240 --> 0:06:54.680 back in the college days. Remember those getting real nostalgic 0:06:54.720 --> 0:06:57.640 over here. That was terrible, that was the worst. But yeah, 0:06:57.720 --> 0:06:59.680 you you also actually need to have done some prep 0:06:59.720 --> 0:07:01.760 work in advance, like did you ask your boss for 0:07:01.800 --> 0:07:05.400 time off before this trip? Because if you didn't and 0:07:05.440 --> 0:07:07.560 you just don't show up on Monday, that's not going 0:07:07.600 --> 0:07:09.760 to be good for you. Right. Did you pack all 0:07:09.760 --> 0:07:12.320 your beach gear? Matt? You always come prepared with a 0:07:12.320 --> 0:07:14.040 shovel when you go to the beach. Oh, I'm a digger. 0:07:15.040 --> 0:07:16.920 I love digging in the sand, and so you know, 0:07:17.120 --> 0:07:19.560 you show up to the beach with a frown on 0:07:19.600 --> 0:07:21.280 your face if you didn't pack it ahead, and if 0:07:21.280 --> 0:07:23.240 I didn't have my my shovel, I would be sadness. 0:07:24.480 --> 0:07:26.800 The same is true when it comes to investing. You know, 0:07:26.840 --> 0:07:29.000 we talk a lot on how the money, about how 0:07:29.040 --> 0:07:30.920 you've got to get started investing. If you want to 0:07:30.920 --> 0:07:34.120 reach your bigger financial goals. We firmly believe this. It 0:07:34.320 --> 0:07:37.400 is a really, really important part of your personal finances 0:07:37.440 --> 0:07:39.680 and building your wealth. But you also don't want to 0:07:39.680 --> 0:07:43.480 pull the trigger before you've considered a bunch of important things. 0:07:43.560 --> 0:07:45.520 And that's what we want to talk about today. Yeah, 0:07:45.760 --> 0:07:47.960 and you know, there's a good chance that you are 0:07:48.320 --> 0:07:51.480 pretty much constantly hearing the quote unquote responsible voices all 0:07:51.480 --> 0:07:55.160 around you saying that you need to be investing. And 0:07:55.160 --> 0:07:57.280 if you are investing, when you say responsible voices, it 0:07:57.280 --> 0:07:58.920 makes me think of Toby in the office, by the way, 0:07:58.920 --> 0:08:02.080 It's like, yeah, I don't know, sound good. He's not 0:08:02.080 --> 0:08:04.560 respond I mean, just because he's hr doesn't mean he's responsible. 0:08:04.560 --> 0:08:07.040 He's just honestly though, I feel like Jim was always 0:08:07.080 --> 0:08:09.360 just the most responsible, well rounded person, which is why 0:08:09.360 --> 0:08:12.040 we liked him someone. But the fact is that is 0:08:12.040 --> 0:08:14.840 what you hear, and even if you are investing, you're 0:08:14.880 --> 0:08:16.640 likely going to hear folks around you saying that you 0:08:16.640 --> 0:08:18.840 should be investing more right It like, it's great that 0:08:18.880 --> 0:08:21.160 you're headed in the right direction, but let's ramp it up. 0:08:21.320 --> 0:08:23.720 And in fact, those are both sentiments that we regularly 0:08:23.800 --> 0:08:26.880 share here on the podcast. Investor early invest often. But 0:08:26.920 --> 0:08:28.800 if you just take some money and you just throw 0:08:28.840 --> 0:08:31.760 it into the market without a plan, without having specific goals, 0:08:31.800 --> 0:08:34.440 and without knowing where you currently are in your own 0:08:34.440 --> 0:08:38.400 personal finance journey, then the advice to just get investing 0:08:38.440 --> 0:08:40.080 may not be all that helpful, and it could in 0:08:40.160 --> 0:08:43.400 fact harm your personal finance journey down the road if 0:08:43.400 --> 0:08:46.200 you get started too early. You're right, Matt, Yeah, some 0:08:46.240 --> 0:08:48.959 people you've actually talked about how you are encouraged to 0:08:49.000 --> 0:08:52.520 start a roth ira really early on and over time 0:08:52.520 --> 0:08:54.600 that has been really good advice for you. But the 0:08:54.640 --> 0:08:56.760 minute that you opened up your raw ira was's not 0:08:56.800 --> 0:08:59.240 ready for not the best time for That's exactly exactly right, 0:08:59.640 --> 0:09:03.400 And the truth is that some people should avoid investing altogether, 0:09:03.679 --> 0:09:06.200 at least for now. That's because there are a number 0:09:06.320 --> 0:09:09.200 of other money gears that you'll need to get through first. 0:09:09.480 --> 0:09:11.840 And we've yeah, we have our seven money gears that 0:09:11.840 --> 0:09:14.640 we've talked about. I believe we did a whole episode 0:09:14.679 --> 0:09:16.520 in January this year. If you go to how to 0:09:16.559 --> 0:09:18.640 money dot com and you click the start here button, 0:09:18.840 --> 0:09:21.839 you'll see our seven money gears laid out, and it's 0:09:21.920 --> 0:09:25.000 essentially a financial order Operations of when you should do 0:09:25.040 --> 0:09:27.000 certain things, and if you do things out of order, 0:09:27.440 --> 0:09:31.000 just like making that making that cake, you're you're going 0:09:31.040 --> 0:09:33.640 to get a different end result. And so, for example, 0:09:33.640 --> 0:09:36.800 it's important to eliminate any high interest debts that are 0:09:36.840 --> 0:09:40.200 weighing you down before you start investing in attack sheltered 0:09:40.200 --> 0:09:43.040 account like a roth ira. We love roth iras, but 0:09:43.120 --> 0:09:45.760 if you're funding your roth ira before you pay down 0:09:45.760 --> 0:09:48.600 your credit card debt, that's not a smart move. The 0:09:48.720 --> 0:09:51.360 one exception we would say is investing enough to get 0:09:51.360 --> 0:09:54.080 the match that your employer offers if you have access 0:09:54.120 --> 0:09:55.760 to one. That's one of those things that you do 0:09:55.840 --> 0:09:58.480 actually want to take advantage of before you pay off 0:09:58.559 --> 0:10:01.360 that credit card debt. But other than that, we're big 0:10:01.400 --> 0:10:04.319 fans of you becoming an investor. We don't want you 0:10:04.360 --> 0:10:06.160 to put the cart before the horse. Want you to 0:10:06.280 --> 0:10:09.599 pay off those unsecured debts or any personal loans that 0:10:09.679 --> 0:10:12.559 have by interest rates too, before you dip your toes 0:10:12.600 --> 0:10:14.839 in the investing waters. You'll get there at some point, 0:10:15.120 --> 0:10:17.679 but now might not be the time. Yeah, And and 0:10:17.800 --> 0:10:20.439 harkening back to your road trip illustration, Joel, like before 0:10:20.480 --> 0:10:22.040 you even hit the road, there are some things that 0:10:22.040 --> 0:10:23.920 you need to do to make sure that you are 0:10:24.040 --> 0:10:25.880 road ready. Right, You've got to make sure you've got 0:10:25.920 --> 0:10:27.840 gas in the tank. Smart, to make sure you've had 0:10:27.840 --> 0:10:30.160 an oil change recently. Yeah, you want to ensure that 0:10:30.200 --> 0:10:32.440 your tires are inflated properly. You gotta have that playlist 0:10:32.480 --> 0:10:34.000 ready to Oh, that's true. You want to have to 0:10:34.080 --> 0:10:36.800 have the tunes ready to go. These are all important 0:10:36.800 --> 0:10:39.160 steps before you leave on a long road trip. Uh. 0:10:39.200 --> 0:10:41.200 And so similarly, you first want to make sure that 0:10:41.240 --> 0:10:44.800 you first have a solid financial foundation before you invest. 0:10:44.840 --> 0:10:47.040 And so, like you said, Joel, paying off that high 0:10:47.080 --> 0:10:50.440 interest debt that is important and this awesome means having 0:10:50.520 --> 0:10:52.880 enough money in the bank to ensure that you're able 0:10:52.880 --> 0:10:57.480 to withstand any unforeseen setbacks. That is the emergency fund. 0:10:57.920 --> 0:11:00.000 And so if you don't have a fully funded emergency 0:11:00.000 --> 0:11:03.000 fund in your bank, you are not ready to start investing. 0:11:03.040 --> 0:11:05.360 In our opinion. Uh. The cool thing though, is that 0:11:05.559 --> 0:11:07.160 you know once that credit card debt is paid off, 0:11:07.200 --> 0:11:09.960 once you've reached that level of savings, then you've got 0:11:10.000 --> 0:11:12.600 a green light to begin investing. Well, Matt, I would 0:11:12.600 --> 0:11:14.400 say you're almost right on that you do have the 0:11:14.440 --> 0:11:17.040 green lights. After a few more considerations. That's what this 0:11:17.080 --> 0:11:20.520 episode is about. Come on, man. But yeah, another really 0:11:20.640 --> 0:11:23.440 key factor, another thing that you have to have before 0:11:23.480 --> 0:11:27.439 you start your investing journey is knowledge, and that's something 0:11:27.520 --> 0:11:30.480 we want to help you receive here on how the money. 0:11:30.920 --> 0:11:33.840 We want to make sure that you understand the fundamentals 0:11:33.920 --> 0:11:38.400 of how any investment you're considering actually works, and do 0:11:38.440 --> 0:11:41.600 you know the how the specific accounts function and what 0:11:41.679 --> 0:11:44.680 they're designed for. You know, lots of folks are going 0:11:44.760 --> 0:11:47.520 straight to investing any brokerage account when they'd be better 0:11:47.559 --> 0:11:50.719 served to start with a roth ira A instead. That's 0:11:50.720 --> 0:11:53.160 our biggest gripe with robin Hood exactly. Yeah, the fact 0:11:53.200 --> 0:11:57.439 that robin Hood allows investors to start investing pretty easily 0:11:57.800 --> 0:12:00.640 is a nice feature. But when you can invest in 0:12:00.679 --> 0:12:02.720 those tax advantage accounts and you're just going straight to 0:12:02.720 --> 0:12:05.320 a brokerage account, a lot of people don't understand the difference, 0:12:05.360 --> 0:12:06.960 and they don't realize that there's going to be a 0:12:06.960 --> 0:12:09.800 big difference when it comes tax time for all the 0:12:09.800 --> 0:12:12.120 trades they've been making. And yeah, when it comes to 0:12:12.160 --> 0:12:15.280 the specific fund or individual stock or commodity or other 0:12:15.679 --> 0:12:19.800 opportunities that you might come across, you definitely shouldn't be 0:12:19.840 --> 0:12:22.800 making the investment because you saw it in a headline 0:12:23.120 --> 0:12:25.960 or because you saw someone say this stock is now 0:12:26.040 --> 0:12:28.520 a buy and you're like, oh, oh really, okay, I 0:12:28.520 --> 0:12:30.800 guess I should buy it, or maybe you saw promoted 0:12:30.800 --> 0:12:33.120 on Reddit. Right, that's definitely a high place for people 0:12:33.120 --> 0:12:37.120 to get investing tips these days that someone on CNBC say, oh, 0:12:37.160 --> 0:12:38.440 this stock is a loser and you need to get 0:12:38.520 --> 0:12:40.320 rid of it right away, and then you decide to 0:12:40.679 --> 0:12:42.920 short it because why not give that a shot too. 0:12:43.400 --> 0:12:46.520 All of those things like using your hard earned money 0:12:46.800 --> 0:12:49.920 to make decisions when you don't fundamentally understand what you're doing, 0:12:50.320 --> 0:12:52.720 that's something that we want to encourage you to actively avoid. 0:12:52.720 --> 0:12:55.760 And it does take research. It takes acquiring knowledge so 0:12:55.800 --> 0:12:58.120 that you can know what you're getting into before you 0:12:58.160 --> 0:13:00.599 put your money. There another thing to ever invest in 0:13:00.640 --> 0:13:04.319 anything you don't understand. If the investment is super complex, 0:13:04.480 --> 0:13:06.800 we would recommend you to avoid it if you do 0:13:06.880 --> 0:13:09.079 not understand how it works. So a real of thumb 0:13:09.160 --> 0:13:10.640 is that if you can explain how it works to 0:13:10.920 --> 0:13:13.120 like an eight year old, it's probably going to be 0:13:13.120 --> 0:13:15.360 a bad idea. So, for instance, when it comes to 0:13:15.400 --> 0:13:18.319 real estate investing, there are all sorts of ways to 0:13:18.360 --> 0:13:21.640 make money investing in physical homes. Some folks are making 0:13:21.640 --> 0:13:24.360 big bucks buying trailer parks or storage facilities and and 0:13:24.360 --> 0:13:26.200 and you know, I guess in this case, we understand 0:13:26.200 --> 0:13:29.880 how that works. But it's just not necessarily our specialty. Uh, Joel, 0:13:30.000 --> 0:13:31.439 you and I we both right now are sticking to 0:13:31.520 --> 0:13:33.840 single family homes near where we live here in Atlanta. 0:13:34.200 --> 0:13:37.160 And you know, could we do more, We could go bigger, certainly. 0:13:37.480 --> 0:13:39.600 And while you know, we are curious and we like 0:13:39.720 --> 0:13:42.440 learning about some of the different opportunities around us from 0:13:42.440 --> 0:13:45.000 the different ways that other investors make their money, we're 0:13:45.040 --> 0:13:47.640 kind of experts, you know, on this one particular form 0:13:47.679 --> 0:13:50.440 of real estate investing. We when we're looking for deals, 0:13:50.480 --> 0:13:53.400 we have a deep understanding of specific neighborhoods and we 0:13:53.480 --> 0:13:55.559 know that when something comes on the market, we know 0:13:55.840 --> 0:13:58.559 when there's a deal. And we've used that specific expertise 0:13:58.600 --> 0:14:00.720 to grow our wealth over the long all by sticking 0:14:00.720 --> 0:14:02.960 to this method, uh that we've been able to hone 0:14:03.280 --> 0:14:05.920 over the years. I'm just not as knowledgeable and comfortable 0:14:06.000 --> 0:14:08.640 with other methods, and so for now we've kind of 0:14:08.640 --> 0:14:10.880 stick to what we know. Like the back of our hand. Yeah, 0:14:10.920 --> 0:14:14.000 and it's completely in a way of investing that I 0:14:14.000 --> 0:14:16.000 feel like I can easily explain to my eight year old. 0:14:16.160 --> 0:14:18.400 She understands that people need a place to live and 0:14:18.480 --> 0:14:20.040 that they have to pay money to do that, and 0:14:20.040 --> 0:14:22.520 they go to work to get that money to pay 0:14:23.160 --> 0:14:26.240 someone for providing them housing. And yet there are other 0:14:26.360 --> 0:14:28.800 ways of making money in real estate that I can 0:14:28.800 --> 0:14:31.400 barely understand, and so then explaining it to my eight 0:14:31.440 --> 0:14:34.400 year old becomes impossible, and so she's like, huh, Dad, 0:14:34.400 --> 0:14:36.320 I don't get it. Like it sounds like you don't 0:14:36.360 --> 0:14:38.720 get it either, and that is a surefire sign that 0:14:38.800 --> 0:14:41.800 I should stay away from investing in that way. But 0:14:42.000 --> 0:14:44.520 we've got more to get to when it comes to 0:14:44.600 --> 0:14:46.760 what you need to think about before you actually get 0:14:46.800 --> 0:14:49.360 into investing. A lot of it has to do with 0:14:49.640 --> 0:14:51.200 what's going on in your own life, in your own 0:14:51.200 --> 0:14:54.280 specific goals. Will get to that and more right after 0:14:54.280 --> 0:15:05.000 this break. Alright, we're back. We're talking about why you 0:15:05.040 --> 0:15:08.360 should be thinking twice before you start investing, and so 0:15:08.440 --> 0:15:10.640 let's dive in. Right, You've done the necessary prep work 0:15:10.640 --> 0:15:13.280 ahead of time. You've got all your ingredients laid out, 0:15:13.440 --> 0:15:15.920 means in plas when it comes to cooking and baking. 0:15:15.920 --> 0:15:18.520 You're ready to bake that cake, You're ready to begin investing. 0:15:18.600 --> 0:15:20.680 I didn't know you were bilingual, Matt. Yeah, that's my 0:15:20.920 --> 0:15:25.360 two French words. But one of the biggest aspects of 0:15:25.400 --> 0:15:27.600 investing that you need to think twice about, though, is 0:15:27.640 --> 0:15:30.000 your time frame. And you can't think about your time 0:15:30.000 --> 0:15:33.720 frame really without considering your specific goals. Your your time 0:15:33.760 --> 0:15:36.200 horizon is going to be everything when it comes to investing. 0:15:36.480 --> 0:15:38.560 You get that one thing wrong and what might have 0:15:38.560 --> 0:15:40.520 been a great decision maybe turns out to be a 0:15:40.640 --> 0:15:42.800 terrible one for you. So, for example, if you're invested 0:15:42.840 --> 0:15:45.960 in the SNP back around the dot com bubble back 0:15:46.280 --> 0:15:48.640 around two thousand right, or even during the Great Recession 0:15:48.640 --> 0:15:50.720 back in two thousand and eight, two thousand nine, or 0:15:50.800 --> 0:15:54.480 even more recently during the pandemic last spring, if you 0:15:54.520 --> 0:15:57.200 were following the fluctuations too closely, yeah, look was looking 0:15:57.200 --> 0:15:59.040 pretty grim. But when you zoom out a bit, it 0:15:59.080 --> 0:16:00.840 is easy to see that there were turns are now 0:16:01.080 --> 0:16:03.920 looking great. This is an instance where your time frame 0:16:04.080 --> 0:16:06.080 is going to have a massive impact on what you 0:16:06.200 --> 0:16:08.880 perceive to be good news or bad news. You know, 0:16:08.920 --> 0:16:10.880 they say timing is everything, and I tend to agree. 0:16:11.040 --> 0:16:12.920 It makes me think about when I first started dating 0:16:12.920 --> 0:16:15.400 Emily matt Uh. I thought she was really pretty. I 0:16:15.400 --> 0:16:16.960 wanted to ask her out. It turned out she was 0:16:17.040 --> 0:16:19.400 dating somebody else and it wasn't It wasn't really good 0:16:19.440 --> 0:16:21.800 time to ask her out. And then I did ask 0:16:21.800 --> 0:16:24.360 her out. Once they broke up and we went on 0:16:24.400 --> 0:16:27.040 three dates, things weren't clicking. It just wasn't the right time. 0:16:27.200 --> 0:16:29.000 But later on, like we as we developed more of 0:16:29.000 --> 0:16:32.360 a friendship, we started dating again. That was the right time. 0:16:32.520 --> 0:16:37.800 And so yeah, third times the charm and so like, yeah, 0:16:37.880 --> 0:16:40.160 you never know when you know. When it comes to 0:16:40.160 --> 0:16:44.680 the timing of your investment decisions, that and and how 0:16:44.760 --> 0:16:47.880 long you plan to be invested for, you have to 0:16:48.000 --> 0:16:50.080 know your own time rise. And that is a huge 0:16:50.120 --> 0:16:52.800 part of thinking twice before investing is saying how long 0:16:52.840 --> 0:16:55.000 am I gonna be doing this for? And yeah, if 0:16:55.000 --> 0:16:57.360 you don't have the right timing, you could be in 0:16:57.360 --> 0:17:00.200 for some heartache. It's important to understand that there be 0:17:00.360 --> 0:17:03.760 periods of time where you're going to lose money even 0:17:03.960 --> 0:17:06.920 in the market. You know, given fluctuations, like there's gonna 0:17:06.920 --> 0:17:09.920 be weeks, months, or even years where an investment you've 0:17:09.960 --> 0:17:12.919 made it doesn't look very good and you're disappointed and 0:17:12.920 --> 0:17:14.800 you're like, well, Matt and Joel said, investing is supposed 0:17:14.800 --> 0:17:16.960 to be a good thing. They always talk it up. Well, 0:17:17.480 --> 0:17:19.680 that's really what we why we want how the money 0:17:19.680 --> 0:17:22.960 listeners to develop a long term mentality. The gyrations that 0:17:23.000 --> 0:17:26.359 happened consistently, they're going to happen, the volatility you're going 0:17:26.480 --> 0:17:29.160 to see, they're they're just not worth your time and attention. 0:17:29.400 --> 0:17:32.240 If you are a long term investor, and I guess 0:17:32.240 --> 0:17:34.320 then the question pops up, does it ever make sense 0:17:34.480 --> 0:17:36.280 to be a short term investor? We would say not 0:17:36.359 --> 0:17:39.359 really not in our opinion. If my short term you 0:17:39.400 --> 0:17:43.120 mean five years, then that's probably okay on a timeline 0:17:43.119 --> 0:17:45.040 that's that long. But if you're talking like six months, 0:17:45.040 --> 0:17:47.440 one year, two years, it's probably not a good idea 0:17:47.480 --> 0:17:50.119 to be much of an investor. If we're talking about 0:17:50.160 --> 0:17:52.000 a whole lot less than five years, you run the 0:17:52.080 --> 0:17:54.600 risk of needing to pull money out during a bear 0:17:54.680 --> 0:17:59.320 market correction. And that's why that time frame is so crucial, 0:17:59.320 --> 0:18:01.600 is so important. If you don't get that part of 0:18:01.600 --> 0:18:04.200 it right, if you haven't thought twice about how long 0:18:04.240 --> 0:18:06.480 you can leave that money be uh, leave that money 0:18:06.520 --> 0:18:08.600 to grow, then you might need to grab it at 0:18:08.680 --> 0:18:11.639 the exact wrong moment, locking in losses. That's right, and 0:18:11.680 --> 0:18:14.000 that's actually the exact opposite of what I'm looking for 0:18:14.040 --> 0:18:15.840