If you would have put $100 into Dogecoin one year ago today, you would now have $10,044.21. Hindsight is always 20-20.
One of my favorite quotes is "the rich invest their money and spend what is left. The poor spend their money and invest what is left.”
There is one overarching reason why rich people get rich and poor people stay poor—the order in which they invest their money. Poor people pay their bills, they buy groceries, they buy junk from Amazon, and then whatever small amount they have left, if any, they invest it. Rich people do the exact opposite.
In order to avoid living paycheck to paycheck and achieve true financial freedom, there is one incredibly important tool that must be utilized: investing first.
It's Not Risky
Whenever I tell people to invest their money, I usually get the same response, “but Jeremy, I could lose all that money! It’s such a gamble.”
Well, not really. If you put your money into an index like the NASDAQ or the Dow Jones Industrial and let it sit for at least 10 years, there is a 94% chance you will make money. Even some of the most boring and least-risky investments like the S&P 500 Index return about 10% annually, on average.
Yes, there are risky investments. But by doing proper research and understanding where to put your money, you can minimize your risk. Don’t let your money just sit in a savings account earning less than 1% interest because you're too afraid of risk. Put your money to work by investing.
Investing first is not easy, but it is not impossible. Investing first requires planning, discipline, and most importantly, consistency.
Plan
If you want to invest first, you must create a plan for your finances every month. You must know where every single dollar is going. Start by setting up a simple spreadsheet or using online budgeting software. When it comes to investing, it’s best to use percentages, rather than set numbers. For a lot of people, their financial income and outcome are different from month to month. For me, I like to invest no less than 15% of my income. Some months when my income is a bit higher, I’ll invest more. But no matter what, I always invest at least 15% at the beginning of every month.
Discipline
It can be incredibly difficult to put a few hundred bucks into an investment account versus going on a fun weekend trip or buying some new gadgets. It’s hard to see the long-term payoff versus the short-term enjoyments. As Dave Ramsey says, “If you will live like no one else, later you can live like no one else.” Staying disciplined in the short term will allow for freedom in the long run.
Consistency
As we all know, consistency compounds. When it comes to investing, compounding is your best friend. As Benjamin Franklin once said, “Money makes money. And the money that money makes, makes money.” You can’t exercise your body once a month and expect to see any results. You must consistently show up every single week. It’s the same with investing. You must pay into your investment accounts on a regular basis over a period of time to see true results. Without consistency, none of it works.
Where to Start
Are you new to investing and not sure where to start? While I am not a financial advisor, I recommend you first hop onto YouTube and watch some basic educational videos on investing. YouTube is your best friend when it comes to personal finance. There are also great beginner’s books and podcasts you can read or listen to. Some of my favorites are Dave Ramsey and Robert Kiyosaki.
What to Invest In
When it comes to what assets to invest in, this is totally up to you. What are you interested in? Do you like certain companies and think they have potential long-term value? Then invest in stocks. Do you like the idea of a decentralized and anonymous currency? Then invest in crypto. If you like more tangible assets, then put your money into real estate.
Whatever you do, invest first and spend later. Maybe you'll find the next Doge.
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