Simple Rules to Guide Your Investing

On this episode:

Over the past century, many of the world’s leading economists have studied the art – or science –
of investing. Dozens of investing theories, models, and systems have been created, most of them
requiring a PhD to understand. But when it comes to learning how to invest, its best just to follow these simple rules from Peter Lynch.


[01:36] Everyone Has Financial Goals, Reach Them By Investing

[02:48] Peter Lynch’s 7 Rules of Investing

[06:19] Applying the Rules of Investing


Episode Transcript:

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[00:00:01] Have you ever played the game Monopoly? If so, you're probably familiar with the image of rich uncle Penny Bags. Now, that's the game's unofficial mascot. Sporting his bushy white mustache, a black top hat and a cane. Mr. Monopoly. As I and most other people like to call them, has become a cliche. He was created as a caricature of JP Morgan. The legendary financier Penny Bags serves as a kind of stock image for the ultra wealthy investor. Now, thanks to this and other stereotypes, some people seem to think that investing is a game for only the super rich to play, but you don't have to own a huge pile of cash to invest. That's because investing isn't about playing the stock market. It's not necessarily even about getting rich. Now you see investing is about building for the future. It's about compounding the money you already have so that you can afford to reach your goals in life. On this episode, you'll discover the simple rules to guide your investing. Welcome, the money moves. I'm your host of Alias Olvera. My goal is to share practical insights about business worth and money so you can design your financial future and enjoy life on your terms. Now let's get moving. No matter who you are or where you come from. Everyone has financial goals. Your goal could be to save retirement so that you don't have to work forever. It could be to help your children attend college. It could be to build a new house, open a business or even travel the world. Could be all those things and more. But achieving those goals costs money. And that's where investing comes in. Nowadays, most people, even those with high paying jobs, simply don't earn enough regular income to achieve all their goals. [00:02:09][128.2]
[00:02:09] It's not enough to store your money under the mattress, nor is it enough to put your money in a bank and rely on the interest in this century. Your money has to grow. It has to work for you. It has to outpace inflation. The good news? All that can be accomplished through investing. People often ask how can I invest if I don't have a huge pile of cash? Fortunately, there are many ways. While I certainly wouldn't recommend any one specific approach without speaking to you one on one. Here are a few simple rules to help guide you in your investing. Over the past century, many of the world's leading economists have studied the art nor science of investing doesn't the investing theories, models and systems have been created, most of them requiring a high level P HD to understand. But when it comes to learning how to invest, sometimes its best turn on the people who actually do it for a living and do it well. Case in point, Peter Lynch from 1977 through 1990. Lynch ran one of the most successful mutual funds ever, posting an average annual return of 29 percent over his career. Lynch espoused many investing principles, but there are seven in particular that you should keep in mind and which can guide you and your investing. Here are Peter Lynch's seven rules of investing. Number one, know what you own. Invest in companies, industries and funds that you understand well. So what do they do? Who uses their goods or services? Is it a company you wouldn't want to do business with yourself? Number two, prediction is futile. No one can predict where the markets will go or what the economy will do, so don't even try. Instead, focus on what you can control, like the types of companies or funds you investing and how much money you save. [00:04:17][127.9]
[00:04:19] Number three. Take your time. Investing is it a race? You have plenty of time to do your research and find outstanding companies to invest in. Follow the tortoises example, not the hairs. Number four of Boyd long shots. Investing isn't gambling either. While we have no control over the markets, we do have control over how much risk we take on your portfolio. Isn't the place for speculation or wild bets? For that, head to Vegas. Number five. Buy good companies, invest in companies that have a proven management, a strong business model, and that sell things that people actually use. Otherwise, you're investing in companies you guess might improve popular over the time. That's just another form of gambling. Number six. Learn from your mistakes. Even the greatest investors sometimes get things wrong when that happens. Accept that humbly and try to determine how you can improve. Number seven. Before you buy. Be able to explain before investing, can you explain to a family member what you're buying and why? Can you describe how that company or fund works? If not, take your time and do more research. You see, these rules from Peter Lynch are simple and they can guide the types of investments that you want to make now or in the future. Ultimately, all investing comes with risk and there is no strategy or a single rule that guarantees success. But these are solid rules of thumb. You can follow to make smart, simple investment decisions. And best of all. You don't need a P A.D. to understand or implement the. Following Lynch's rules allows you to first start small. You don't have to invest a lot of money all at once. Even a little bit is better than nothing because once you've invested, your money can start growing and compounding its value. [00:06:33][133.6]
[00:06:34] Second, invest in broad sections of the market. This is valuable because different industries or types of investments do better than others at different times. By participating, for example, in an index fund or even a well-structured IRR A you can effectively invest in several areas at once rather than relying on one specific investment to do all the work for you. This is known as diversification. Third, save for the future. As you know, so many of the financial decisions we make are based on short term needs. Meanwhile, our long term plans are ignored. But by investing wisely, you're actively determining what tomorrow will be like today. Of course, it's not enough to simply invest to reach your goals. It's even more important to invest wisely. That's why it's sometimes a good idea to seek out the advice of a qualified financial professional with an experienced adviser. You can get unemotional, educated insight into how to invest properly, and we can help you with that. Can sign up for a time to discuss your financial goals with us by visiting financial security group The most important thing to remember is that you don't have to wear a top hat or a hotel or board lock to invest. And because you can invest. You don't have to wait another day to begin working towards your goals in life. So go out and start determining what tomorrow will look like today. Thanks for listening. I hope you enjoyed this episode if it provided you value and got you charged up to make some new money moves. Do me a favor and share it with others on social media. Use the hashtag money moves and you'll never know what kind of swag will send your way. If you're looking for the show, knows links to resources and more visit. [00:08:33][119.2]
[00:08:34] Money Moves podcast dot com. When you subscribe, I'll give you a free copy of my latest guide. The three key money moves to create wealth. Now as my way of saying thank you, that's w w w dot money moves podcast dot com wherever you may be listening or however you may be listening. Thanks for making money moves part of your day. And remember, if you make the right money moves today, you'll be able to navigate your financial life without sacrificing your lifestyle so you can enjoy a prosperous future. [00:08:34][0.0]

About the Author

Evelio Silvera is a business development and financial services professional. Evelio is an best-selling author and acclaimed speaker and speechwriter with numerous national and international awards who has appeared on national radio and television programs and been featured in several publications.