Investing can be like going to the casino

Investing can be word that cause fear in many people. People like my uncle, who lost his life time of saving. The stock market lures you in like casino if you don’t follow good principles in investing. On the other hand, people who think they know investing but failed to do sufficient audit on their own emotions fail too at this game of investing. Lastly, I share about how young adults now do more than the previous generation in understanding money and finally there is a new pool of people who work hard at sourcing information about money, investing and a better outcome in life with money.

Let me share three stories about investing with you today. And let’s talk about the thing that is seldom talked about – people losing their money in the stock market. A lot of it. How? And what do you do?

Investing can be like a casino if you don’t follow good principles of investing. We all are susceptible to our ego, an urge to prove how smart we are and the adrenaline of winning. And we all have one relative we know of who is entirely fearful of investing and this fear came from somewhere. My uncle and his fear of investing is the first story I want to share with you. You see my Uncle is a conservative man, he worked for the government, wanted to play it safe, seldom or never upgraded his skills. He believed the government is going to take care of him and boy was he wrong. He started investing or shall I say gambling like many others, through his retail bank. His retail bank helped him open a brokerage account. It was easy. There was no need for additional financial checks or identity submissions. It was a click, some questions and viola, he has his account. Because my Uncle seldom read, or want to learn about finance, he has little knowledge of the stock market. He went into the stock market like he went into Walmart. Thinking he can buy stocks cheap and hit it rich. Unfortunately for him, like many retail investors, esp. those termed mum and pop investors, he didn’t understand what are penny stocks, what is volume risk, what is bluechip and what’s long term versus short term risk, what’s small cap risk and returns. You see my Uncle felt a great deal of adrenaline when he went into the stock market with his savings and hard-earned money. His early success and profits in trading in and out, made him plough in even more of his savings. Like everything in stock market, the party ended when recession hits, which we know always come. He decide to panic sell, and made a huge loss. He swore off stock market as a way institutions cheated his money and that stocks are all bad.

I wished my Uncle and many others would read up, research and understand many aspect of investing. For example, what is risk and return, and the difference between buying a small cap company versus a big cap company. I wished someone would teach him how to check if a company is set up in Bermudas and how different is that from a company registered locally in united states. I also wished someone would just tell him to check on the auditors on the company he invested because in the end, the company he invested flopped and my uncle not only lost all his savings but lived with a life long shame of losing his money. Information are everywhere now, I wonder why such basic help is not made available to people like my uncle.

Another story is about my friend who was in finance. Obviously because of his background, I expected him to have very sound financial knowledge of investing. Wrong. And very wrong. You see, they teach finance, ratios and price per earnings, mathematical modeling and everything complex you can think of. But I noticed in my finance syllabus, they never taught you what human emotions are involved in investing, how to analyze the best investors and keep to a good investing habit. They did not teach finance graduates how to read up on short sellers, who “game” the system and often lead to huge waves of price change to the stock, and panic. They did not teach finance student like my friend, what losing a lot of money meant for mental health. Perhaps these colleges never taught enough of how experts and gurus who invested long term, has very good discipline and did not let greed of higher returns overcome them. Maybe if they have taught my friend, How to research investment habits based on giants who have continuously returned a profit in the stock markets over 30 years, he wouldn’t have attempted to take his life, lost his marriage. (Yes, there are people who make a living investing in stocks and consistently made a profit). So I know there are many men in their 30s and 40s out there, gambling ferociously with their money, feeding their ego when they win and like my friend, some are going to end badly. I started this blog and course to help people similar to my friend.

The last story I would like to share with you is one about my friend, who is much younger than most of the people I mentioned. She is just 19. But like many of her peers nowadays, she is already looking into FIRE movement, learning about personal finance in bits and pieces. In fact, many young adults nowadays are very quick to learn about money, how they can understand the system of study hard, graduate and find meaningful work. Many young adults, are even doing real life projects on money and spending. So you see, personal finance education is catching on because this new generation saw how hard their parents worked, for a mortgage, paid their taxes, car loans and didn’t take vacations. They know if they master their money, they have a chance at mastering their destiny. They start little investment clubs to talk and analyze about stocks, starting with the places they know, like Walmart, Costco, Apple, Amazon, Dairy Queen.

I hope my stories helped you understand that investing can be fun. I also hope you will go out there, take some courses even if you are not taking ones I am offering, take any courses to learn more about money, stock market before you start investing. Investing can feel a lot like gambling if you are not careful, it lures you in with adrenaline when you make money like a casino. And last of all, you do need not be a fearful of the subject investing, if you approach it with the right attitude.

Putting your money in fixed deposit hurts those who doesn’t earn a lot because inflation and the lost of the magical compounding effect.

Start somewhere small today, read up on something about investing. Read the terminology. Money and finance may not be your favorite subject in school, but getting the ABC of money and finance will save you a lot of sleeplessness.

My name is Lee Nagel, I am a youtuber, and I write and share about money, love and life.

This blog is also on youtube

Author: iwantyoutoberich

Ways to understand money, love money, save money, make money and be rich and happy!