Dr Boyce Watkins: How I got started in investing, and why you should too
Someone recently asked me how I invest and thought that because my PhD is in Finance, I’d have a bunch of complex Harry Potter tricks that allow me to turn water into wine or a dollar into a thousand at the drop of a hat. I think my answer surprised them.
My investment strategies have been relatively simple. The idea is basically understanding how delayed gratification can help you build the life you want. You are investing anytime you allocate a scarce resource toward the pursuit of a longer-term objective. This means that every time you take a pretty woman out to dinner, you are investing in her. When you spend time with your kids, that’s an investment. Thousands of hours of study to become a doctor, well that’s an investment too.
In fact, anytime you get out of bed and do anything, you’re investing in something. Unfortunately, some of us either throw away our most valuable resources (time, love, energy) or don’t invest in the things that will give us what we want.
First, I’ve always invested in myself: I invested tens of thousands of dollars and well over a decade getting the educational background necessary to compete as a black man in a world that would rather see me unemployed and incarcerated. I also invested thousands of hours and most of my paycheck trying to build a business so I could escape the trap I was in on my job. That allowed me to create situations where a) my money was working for me, and b) when I chose to work, I could get paid what I was worth and demand more from the marketplace.
As far as standard investing goes, my approach has been relatively simple. I don’t like stressing over money or worshipping my bank account. I don’t feel that money makes me a better, smarter or more worthy human being. I also don’t believe that having money brings happiness. Instead, it’s the intelligent application of money that can create the options in your life that might bring you happiness if you have a well-developed sense of self. Also, not having enough money can certainly be the key to discomfort, stress and unhappiness, which black people know all too well.
So, you can think about money like a bathroom: You don’t care much about bathrooms until you need one. At that point, it becomes the single most important thing in your life.
Here’s how you can get started with simple, standard investing.
One way to get started investing in the stock market is to pick a couple of mutual funds that are well-diversified, put a consistent amount of money in every month, don’t try to pick the right stocks, don’t try to buy at the right times, don’t obsess over the market. Just be consistent and let your money grow over time. Check your asset allocation every six months (asset allocation is what general classes of investments you have, stocks, bonds, real estate, etc.).
Do that over the course of a decade and you’ll look up and have a decent amount of money in the bank. I don’t know which stocks I own, because my mutual funds literally spread my money over hundreds or even thousands of securities. But I do know how much I am putting into my account every month, I know that it’s growing, and I know that the risk profile is appropriate for a man my age.
The key is consistency and patience. That will help you build your nest egg, and anyone can put aside at least a little bit every month. Most banks have investment options that they will be glad to explain to you. But we have to get into the stock market, that’s for sure. In fact, the gap between the rich and poor is largely driven by the fact that wealthy Americans put a greater percentage of their portfolio in stocks and other investments.
Most millionaires don’t get rich quick, they get rich slowly, despite what you read from rappers featured in Forbes Magazine. Get started in investing right now, you’ve been doing it for your entire life. There is a very popular investing course offered at the link below that is reasonably-priced and offers a nice, step-by-step protocol for investing. I suggest you check it out.