I never invest in anything I don’t understand.
There will always be new technologies and investment opportunities that people get excited by. The news or social media will popularize some new trend like NFTs, cryptocurrency, etc. and then everyone feels like the need to invest in that.
When Bitcoin was first popular, everyone was suddenly a Bitcoin expert. When the stock market is taking off, everyone is an expert on the stock market.
Everyone becomes an “expert” when things are going up, but there’s really not a whole lot of expertise involved. They’re just riding the momentum of good returns.
That’s why it’s really important to understand the things that you’re investing in.
Keep this in mind anytime you hear the term “passive income” as well. I think when people hear “passive income,” what they’re really hearing is there’s no work involved and they don’t have to do anything. But even if you get into real estate assets, you’re still going to have to manage those properties. Let’s say you have a lot of properties and maybe you work with a property management group, you still have to call them and know what’s going on.
There’s no easy money, and I think if people got away from that sooner, they’d make a lot more progress instead of trying to chase the passive returns.
If you want some sort of passive returns, you can invest in index funds and the S&P 500 and forget about it for 20 years. But that’s not exciting for a lot of people, unfortunately.
I tend to be a more boring investor. I like things that are more steady and consistent. I don’t have to win today. I look at things over the long term. I’m a big fan of compound interest and of real and tangible assets. That may not be as exciting in the sense that there’s not these moonshot returns you often see with trendy investments.
Full transparency: To an extent I’ll invest in cryptocurrency — but a very small percent, like 2-3%, not a huge amount, because anything that’s get rich quick is generally not for me.
I’m a fan of get rich slow and ultimately stay rich.