7 Tips for Financial Freedom: What to Invest In and What to Run From
After 15 minutes of speaking to a group of youth for My Brother’s Keeper, talking about how to buy stocks and the wisdom of owning companies they use and like, one of the young men raised his hand. “So, can I buy stock?” he asks.
Even after he heard me say it, he still doubted whether he could invest. Too many people feel like this. The answer is yes—yes, you can invest. And I believe you should.
Now I’m not an investment advisor, but when you play in the NFL, everyone thinks you have money to burn and they come up to you with some crazy-bad investment ideas. I learned the hard way what to invest in and what to stay clear of.
Even if you don’t think you have much money, you need to start saving and investing, right away and regularly, to build yourself a nest egg for down the road. Here’s what I learned to buy and, more importantly, what I learned to stay away from, plus the steps you can take.
1. Read about Money! (Congrats, you’re on your way)
Just by reading this article, you have made an effort to learn something new about money. You are rare!
Every day in the NFL the papers were delivered, including USA Today. Every day only one section went untouched: the money section. Here were dozens of rich athletes, statistically over half of whom will go broke, and not once did I ever wrestle the money section out of someone’s hands. The biggest reason people do not have money comes from the effort we don’t put in to learn about it.
When we get a new anything—hobby, vehicle, friend—we learn as much as we can before, during and after. Yet when it comes to money, it amazes me how many people do not READ about money.
Credit card debt, paying off debt, debt relief programs, things to save for in retirement—no matter what your money situation, read about it now, read about what is next, read about how someone else was in your shoes and what they did. Tune in to a podcast like The Motley Fool or google the hero Suze Orman to learn about what other people do with money. Read, listen, and learn about where you are and where you want to go.
Hey, read this: 10 Smart Money Moves that Saved My…Assets.
2. Decide to Invest In Yourself
When most people say “invest in yourself,” they are just making an excuse for spending too much money. The best way to invest in yourself comes through saving money. Set aside some of the money you earned and hang onto it.
By saving your own money, you give yourself options in case anything unexpected comes up or you ever encounter a failure. For instance, saving gives you choices in case you lose your job. Flexibility in case you have a health issue or accident. And opportunity if you have to use up your paid time off.
One salesperson I spoke to recently had to spend all his paid time off, unexpectedly. He had just bought an expensive new watch and he told me, “I really wish I hadn’t spent the money on the watch because then I could go on a vacation.” Saving money is the number one way to invest in yourself.
3. Open the Account
Take a concrete step: open an account. A savings account you don’t withdraw from (except for real emergencies). An individual brokerage account where you can buy stocks in the companies you use and love. You can open brokerage accounts online, transfer money from your savings account, and get started today.
Investing is a tangible way to reach financial freedom for anyone working any job. Start filling your investment account. An acquaintance started by putting $20 in a jar every time they went out to the bars. In a few months that jar became full of cash, so they started an investment account and bought Twitter stock, something they use.
4. Own What You Buy
You should ask an investment advisor what’s good for you, but “own what you buy” is my favorite advice. To begin investing, look no further than what you wear, drive, eat, and use. If you have an iPhone, buy Apple stock. If you have AT&T wireless, buy AT&T stock. If you stop at Starbucks on the way to Target, own those stocks. You know and love the company and their products. Pretty soon, your portfolio will begin to diversify.
What I love is that when you invest in what you buy, you make money off of everything you see and do. My purchases come back to me. The Netflix stock I own makes me money off every Netflix membership. Every time I go on instagram and Facebook, not only do I get my info for the day, but I’m increasing my likelihood of a higher dividend.
5. Stay Away from Get-Rich-Quick Schemes
Avoid investments outside of your investment strategy. Yes, it’s okay to not be a part of a startup. It’s okay to say “no” to a friend opening a business. Stay away from investments that are uncertain or stress you out. Get the facts. Anything where you expect money back in a short amount of time—just run.
Once I was offered an “opportunity” to invest in a company that was going to soak cereal and resell the flavored milk. This company wanted $10,000 minimum buy-in. Even though they had no equipment, no product, and no sales, they valued their company at a million dollars! Unrealistic.
Also, avoid people who need your money to invest. If someone wants to bring you in along with their own personal investment, that’s a different deal. If they’ve got zero skin in the game, walk away.
6. Don’t Go into Debt to Invest
As much as you can, stay away from debt. One person I talked to bought a townhome with very little money down, as an investment property. Then the market crashed. He could not rent it. He could not sell it. He ended up losing $70,000, which he still pays off to this day.
Every investment has a degree of uncertainty or risk: you might not get your money back. And you need to know—how high are the chances of that? How comfortable are you with risk? Going into debt to invest makes bad possibilities worse.
7. Avoid What You Don’t Know
I’ve heard so many people say they want to invest in real estate. Until you build the knowledge of exactly how to do real estate, why would you invest? I had real estate properties and holdings that didn’t work out the way I expected. You have to know what you are doing.
A friend of mine wanted to start a clothing company. They had never, ever done anything in fashion! A family member wanted to start in real estate (with my money) by buying a property, tearing it down, and building up a new one. Yet they had no experience with city licensing, contractors, architects—no idea how to build a building!
As Warren Buffet says, invest in what you know. Stay away from things you have no idea about. At one point, I started a home health company because I saw how valuable it was for my grandmother. But I didn’t know anything about that industry, how to be a good leader, how to hire the right people, or the kind of licenses I would need. I did not understand the referral process to get clients. That lack of knowledge turned into a very expensive nine-month delay, then constant staff turnover because we did not have a great onboarding process. I could go on. I ended up closing the business and losing money.
All mistakes I could’ve avoided had I researched and learned ‘hey, the home health industry is the second-highest regulated industry after nuclear waste disposal! What licenses will I need? How many doctors on staff? I had good intentions, but I did not know the business.
Bonus Tip: Have an Advisor Look Everything Over
Lastly, always have a lawyer look over any deal you sign. If you want to fund startups, get yourself a lawyer. If you want to start making investments, get yourself an investment advisor. There are reasons these advisors exist.
Start slowly, but start today. Invest in yourself by saving a nest egg. Things happen. Someday, you’ll be very glad you did.