I have been reading one of my favorite authors, Annie Dillard, who wrote “Living by Fiction.” In this book, she describes in vivid detail the complexities of contemporary fiction writing. She quotes writers whose paths I have never crossed, never read. She refers to works of literature that are obscure, yet, to her, profound.
I graduated with honors from U.C.L.A. with a degree in English literature, but I have to tell you that this book is so confusing, so introspective, so off-putting where literature is concerned, that it made me glad I spend so much of my time investing in the stock market and real estate.
Because — if nothing else — stock market and real estate objectives are easy to understand: you want to make money. You want to buy the stocks that go up. You want to buy low and sell high. Lesson over. In real estate, you want location, location, location. And you either want to rent out the property and let it appreciate with a good tenant giving you an income stream in the meantime, or you want to flip it because you bought it so low that it has already gone up in value from the time you bought it until you decide to sell. Done. What could be simpler?
Like most things in life, the unknown is intimidating. The more you get to know something, you psychologically become more comfortable with that subject.
Remember when you were a teenager and someone took you out to an empty parking lot to teach you how to drive? How intimidating was that? You thought you would never master the gas pedal and the steering wheel and the brakes, plus keeping an eye on traffic all around you. It was enough to make you hyperventilate. Now look at you! You zip around without a thought about your driving technique.
Apply the same logic toward investing. Those terms, which sound like a foreign language to you right now, will one day soon just roll off your tongue. That unfamiliar statistic will one day be a close friend.
Baby steps. That’s how you manage to learn about investing. Bit by bit, piece by piece, fact by fact, mistake by mistake, success by success.
There is a statistic that says that if you were to spend just 15 minutes a day studying something, within a few years you would become an expert in that subject. If you were willing to spend just 15 minutes per day learning a little bit more about the stock market, the real estate universe, and other investments available to us all, you would be surprised at how much you would know by the end of any given year.
Try it. It’s not rocket science. Planets do not hinge on what you learn or don’t learn, on whether you understand or don’t understand price to earnings ratios. But it should be important to you, as we’ve discussed already in previous issues. So surely you can give it a little time.
You’ll discover that this investment stuff is really pretty interesting. After all, it involves almost every aspect of life: history, psychology, biology, culture, philosophy and many others.
I have a friend who received a quarter million dollar insurance check when her husband passed away. She was so uninformed as to what to do with the check that she let it sit at the bottom of her purse for several weeks. I calculate that she lost hundreds of dollars in free money by not depositing it in the simplest, easiest savings account at her bank.
Don’t be like her. There are a number of ways she could have investigated what to do with the money:
- She could have asked someone for advice. It never hurts to say, “Hey, I need some help. What should I do?” Better yet, ask a few people in order to get a consensus.
- She could have gone online to research what to do for both short- and long-term. It’s wonderful to live in a day when you can find out information by sitting in the comfort of your own home and spending a few hours digging for good counsel.
- She could have gone to the library or bookstore and found any number of helpful books written just for her, a woman. Authors and specialists in this field have come a long way in terms of gearing their books toward a female audience, and women should take advantage of it.
Read, ask, research. It’s really not that difficult once you’ve made the commitment to not be the victim of your own financial ignorance.
After all … it’s not rocket science.