At this point, you're probably wondering how your grandma manages to grow her wealth so effortlessly. Newsflash: it's not because she's some kind of wizard.
No, it's because she's mastered the art of low-risk, low-reward investing – aka, the art of not losing all her money.
Here are some tips to help you become more like your grandma:
- 1. Avoid all investments that sound too good (or bad) to be true.
- 2. Diversify, but not too much – you don't want to be that guy who spreads himself too thin.
- 3. Don't put all your eggs in one basket, unless that basket is a diversified index fund.
- 4. Compound interest is your friend, but only if you understand what it means.
- 5. Never, ever invest in anything with a name that includes the word 'synergy'.
- 6. Learn to read financial statements, but only the parts that matter (like the 'bottom line').
- 7. Don't be afraid to ask for help, but only from people who actually know what they're talking about.
- 8. And, above all, never, ever invest in a pyramid scheme – unless it's a legit pyramid scheme, like a timeshare.
Next step: Step 9: The Illusion of Understanding