I professed my love for time-tested investing advice from great minds in my previous post on market speculation and decided to expand it into an all out Quote Assault on Personal Finance today. This is the quick and dirty guide to my views on personal finance, aided with quotes that I may or may not have twisted to fit.
Personal Finance in 10 Quotes
The fishing tackle manufacturer I knew had all these flashy green and purple lures. I asked, “Do fish take these?”……. “Charlie,” he said………”I don’t sell these lures to fish” – Charlie Munger
What! Companies make stuff we don’t need? This plays really well into Spend Money on what Truly Makes YOU Happy and systematically cut out the crap.
You don’t need Selfie Toasters!
Welp, I guess I better go and return my purple and green lures… Pink works really well though.
“Credit buying is much like being drunk. The buzz happens immediately, and it gives you a lift. The hangover comes the day after” – Dr. Joyce Brothers
I didn’t know who Dr. Joyce Brothers until I found this quote, but she is a genius and I like her analogy. Our FIRE journey would have been a lot easier if we weren’t digging out of $85,000 Student Loan Debt hole. I couldn’t imagine trying to dig out of high-interest credit card debt. But if that is what you are up against, do yourself a favor and don’t add to the pile
“It’s only when the tide goes out that you discover who’s been swimming naked” – Warren Buffett
I don’t think Warren was talking about Emergency Funds when he said this, but this quote transfers to Financial Emergency Planning nicely. Don’t get caught without a financial bathing suit when your car breaks down or an unexpected medical bill lands on your pants-less lap.
My minimum recommendation is to have at least your highest insurance deductible on hand.
“Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down” – Warren Buffett
Of course Mr. Buffett would talk about socks, we are talking about a billionaire that brings exact change to buy a sausage and egg McMuffin.
I like buying stocks all the time, but especially like them when they are marked down. The easiest way to do that is Dollar Cost Averaging. Invest the same amount on a regular interval, buy more when they are cheaper, reap the rewards when they go back up. Simple.
“Don’t look for the needle in the haystack. Just buy the haystack” – John Bogle
Bogle is THE FIRE community’s hero, and for good reason, he makes investing cheap and simple. It takes a lot of research and knowledge to find the needle. Couple that with having a risk tolerance high enough to put a significant amount of your money in a single stock.
Also, most people don’t beat the market, three of the only people to do it consistently are quoted all over this page. Unless you think you can join them, I wouldn’t try.
“The miracle of compounding returns is overwhelmed by the tyranny of compounding costs.” – John Bogle
I speak from experience on this one, trading fees and short-term capital gains tax take a hefty chunk of your profits (if you even earn profits actively trading).
Why pay more than you need to? Let someone else bundle up everything into a nice, neat tiny package for you to buy consistently over time and don’t sell it until you actually need it. Long term investing is KING.
“I’m always fully invested. It’s a great feeling to be caught with your pants up.” – Peter Lynch
Again, I am taking some liberties with these quotes and am twisting them slightly, but “Pants up investing” to me is don’t try to time the market. If you think the market is too high and move to bonds/cash only to watch it continue running for 25% I would say your pants are around your ankles and you will trip before you catch up.
Also, Why try to be right twice?
And why do investing greats keep stripping people of their clothing? Or Maybe I am just the weirdo picking those quotes.
“Go for a business that any idiot can run — because sooner or later, any idiot is probably going to run it” – Peter Lynch
Applying this to your portfolio instead of a business and I’m not calling you an idiot, but your emotions might make you do idiotic things.
Like investing in things you don’t understand (this is coming from a guy that once owned stock in a Chinese edible alcohol company – I prefer my alcohol in liquid form)
Or chasing a hot stock because someone else is making a killing on it.
How about some Selling Low and Buying High…….Panic Selling is cruel
Instead…….Automate. Automate. Then Automate some More! I spend 10 minutes a month actually investing our money and that is mostly checking in to make sure the automation is running as expected. An idiot COULD run my system. You can take a look at our Money Map and see how much flows without any button pushing.
“Owning stocks is like having children — don’t get involved with more than you can handle” – Peter Lynch
Preach Mr. Lynch. I have questioned the sanity of people that have more than 1 kid at 3:30 AM while I am standing in front of a bottle warmer with a crying baby. I assume people forget those moments and have another one (it will happen to me I’m sure).
More complex does NOT equal better. There are 3 fund portfolios that adequately diversify your money and provide market returns. Create an investment plan or portfolio allocation that aligns with your goals and stick to it.
“If you’re in the luckiest 1% of humanity, you owe it to the rest of humanity to think about the other 99%” – Warren Buffett
If you make over $32,400 a year, you earn top 1% money when compared to the rest of the world.
$770,000 in assets puts you in the top 1% worldwide as well (assuming fewer people fall into the latter but I was surprised how low it was)
Here is how our income stacks up.
You can find ways to make difference without a ton of money, we have made a positive impact with as little as $20 or giving something away for free that wasn’t providing value (Will detail the second thing in an upcoming post).
Any quotes you love from the investing greats that teach valuable lessons?