The Three Paths You Can Take When Investing In Public Markets
If you are just starting out and are thinking about what direction to head in, let me put a bug in your ear. Take it from me, there are only three paths that lay ahead of you.
The three paths you can take are:
- Hire someone to invest your money
- Learn to invest in index funds
- Become the investor
As I go into more detail about these three paths below, consider the lifestyle you want, the career you desire, and how you want to spend your nights and weekends. Let's start with the first path.
You can hire someone to invest your money for you
Investing is a profession, and requires the same 10,000 hours as anything else you try to get good at and do on a professional level. If you already have a good career, or are passionate about something else, then you should focus on find the best investor to manage your money.
Your time should be spent understanding what makes a good money manager and what makes a bad one, so that you are prepared when you hand your money over to a professional.
Please don't just go to a broker. They are salesman, not investors. They will turn around and ask you what you want to buy.
You can give money to professional investors who run wealth management firms, mutual fund managers by buying into their mutual funds, or hedge funds (if you are already loaded).
You can learn to invest in index funds
This option is for those who want to manage their money themselves, but they don't want to do the extensive work to become the investor. Simply put, if you are happy with market returns, you can buy no-load (no sales charges) index funds over a long period of time and achieve whatever returns the market provides..
You can learn how to invest for yourself
There are three considerations if you want to become the investor. First, is the lifestyle of an investor for you? Second, is your personality a good fit for investing? Third, are you willing to enter a career that lends itself to investing?
The lifestyle of the kind of investing that I do requires long hours of reading in isolation. Basically, I get paid to read and think, and that means being alone much of the time. I don't run a hedge fund with a bunch of traders screaming at each other. I sit alone in a room and read all day. Does this sound good to you?
If you need a lot of people around you all the time, then you may want to consider paths 1 or 2. There are plenty of great careers available to people who want to be surrounded by other people. In my opinion, investing is not one of them.
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