Tom’s Tips for the Early Road of Investing
Transcript:
Katie Nealis:
What are some of the pitfalls for a beginning investor to avoid?
Tom Vaughan:
Pitfalls for a beginning investor? Well, I would say one of the things, I’ve actually had quite a few conversations with some beginning investors over the last, you know, two years or so. And, and most of the cases where I’ve been talking, they’re a little frustrated, because they’re having trouble kind of making it work and those type of things. And when I dug into it, I mean, they were working with extremely volatile investments had huge upside potential. And they’re really, you know, very, very volatile instruments, though. And what I’ve seen, at least in my experience, is that the more volatility, you know, obviously, the more upside you have, but the harder it is to do it, right. And so you’re brand new investor, and you’re basically just trying to hit home runs. And it takes time.
I mean, personally, I wouldn’t go to a financial advisor to manage my money, unless you’ve been doing it for 20 years, I think it really takes a lot of time to learn how to invest. And so I guess my first thought would be do some basics, you know, try to hit some singles, don’t try to hit home run with everything you can still try. But keep your home runs to kind of smaller dollar amounts, and have your kind of core investments be more basics. And then, you know, get some experience and just learn slowly, but surely had to keep saving, and keep building that you know, that acid base with your monthly savings, but have some core, you know, investments that you might even think a little bit boring, you know, but at least they have a good chance of making some money in over a period of time.
Because a lot of these volatile things, you know, you make some money, and then you have to get out at the right time, otherwise, you lose the money. And so, you know, I saw a lot of conversations with people doing call options will call options expire. So if you don’t do that exactly, right. I mean, you’re basically going from t ball, if you’re an, you know, an initial investor, to the major leagues, I’m going to go I just am learning T-ball, but I’m going to go you know, try to hit a curveball from, you know, one of the Yankee pitchers. And so I would probably try to, you know, practice hitting some balls off the tee first and then get a pitching machine.
Yeah, work, work your experience up a little bit more succinctly, you know, and a little bit more of a planned out methodology before you start, you know, trying to, to go into the to the big leagues, which is where you where you go with some of those volatility pieces. Unfortunately, the news is littered with those few people that actually did it, you know, they made it and they made all this money, and then everybody thinks they can do it. What the news doesn’t show is the you know, the 100 other people that didn’t make it that ended up getting frustrated trying to do it. So I would say you know, just work it up slowly.