5 BIGGEST LIES ABOUT MONEY AND INVESTING!

how’s it going today guys so today we’re going to be talking about the five biggest lies that you have been told about investing and money now the reason I’m making this video is because I was working on a page for my stock market mastery course and I was trying to come up with the five biggest misconceptions about investing and after I compiled this list I realized that would be a pretty interesting video so I decided to turn this into a video for you guys now if you guys have not applied yet for my stock market mastery course I am going to be running a test group through this and the deadline for that application is Friday at 11:59 p.m. Eastern Standard Time so if you guys do want to apply to be one of the first people through my stock market mastery course the link for that is in the description below but the first lie about money that you have likely been told is that you should trust others with your money so the truth is most people have no idea how expensive active money management is and a lot of us out there have financial advisers because we believe investing is very complicated there’s a lot of sophisticated language used and trade lingo and it’s made so that most of us probably can’t understand it investing is very easy to understand and many financial advisors and people in financial services make it out to appear that they’re the only ones who can do what it is that they do and the truth is they are not so my guess is most people out there if you’re watching this video if you are invested in the markets you probably have a actively managed mutual fund I want you guys to remember that at the end of the day financial advisors are sales men and they make money by recommending certain investing products to you so how is that for an unbiased opinion are they really going to be telling you what’s best for you or are they looking at what is best for them in terms of how much commission they’re going to make by getting you set up in that specific fund the average total expense of a taxable investing account is four point one seven percent per year so the other option aside from an actively managed mutual fund is an index fund and now index funds are not actively managed they track an underlying market index and as a result they are significantly less expensive in fact the average expense ratio of an index fund is 0.25 percent so just for examples sake let’s say you had $100,000 in vested over the course of 25 years and both that actively managed mutual fund and the index fund earns you an average annualized return of 8% so after 25 years you would have two hundred fifty five thousand nine hundred dollars and 63 cents from that actively managed mutual fund if you assume it has that total expense ratio of around four point one seven percent according to that Forbes article now with that index fund with a 0.25 percent expense ratio you would have six hundred forty six thousand two hundred ninety six dollars and seventy five cents so that four point one seven percent expense versus a 0.25 percent expense cost you three hundred ninety thousand three hundred ninety six dollars in twelve cents so that is how much active money management can cost you it can be very expensive the second lie about investing is that you should buy stocks when they are up so let me ask you this if you wanted to go out there and buy a sports car let’s say you wanted to buy a Lamborghini and you got to the Lamborghini dealership and the guy said hey guess what this Lamborghini is 50% off today I’m guessing you would buy that car especially if you were in the market for a Lamborghini but on the other side of the coin if you were looking to invest in a certain company and all of a sudden you found out that they were selling shares of ownership for 50% off you would be afraid to invest in that company because the share price was down the truth is stocks are the only thing that we are afraid to buy on sale and I’m not sure why this is if you ask anyone out there for advice on investing I’m guessing somebody’s going to tell you to buy low and sell high and a lot of people think this is common sense but it really isn’t because so few people actually follow the strategy they buy whatever today’s winner is without realizing that many of today’s winners are in fact tomorrow as losers so as a result they buy whatever stock is way up and they follow whatever stocks are in the news and they buy up high and then when that stock price Falls they sell out of fear and they lose money in the stock market and I believe that is the number one reason why people lose money in the stock market is because they buy high and sell low because they buy today’s winners the third lie about money and investing is that you can save your way to financial freedom now this may have worked for your parents or your grandparents so if they were out there giving you this advice if you talk to older people about money and how to save up money they may tell you just save your money in the bank now they’re not trying to deceit you but they are giving you terrible advice because while this worked for them it is not going to work for you so in July of 1984 the interest rate on a five year certificate of deposit from a bank was around twelve percent and for those of you who don’t know what that is that’s a very simple investment where you essentially lock up your cash for a set period of time and you earn a guaranteed rate of interest on that and it’s FDIC insured so you will not lose any principle it’s guaranteed money at that point so you could have earned a twelve percent guaranteed return over those five years in 1984 now today that same five year CD on average earns you 0.91% compared to 12 percent in 1984 now to make matters even worse the average bank account in the United States pays an interest rate somewhere around 0.05 percent so following the rule of 72 it would take you 1440 years to double your money at a 0.05 percent rate of interest older people had something called a pension to rely on and this was regular payments for the duration of their retirement until they passed away so the employer sponsored 401 K replaced the pension system and the 401 K has been a complete failure if you look at the numbers in fact 50 percent of working families have zero dollars in their retirement accounts and I’m really ashamed to admit this but when I graduated high school and before I started educating myself on investing I thought a 401 K was four hundred one thousand dollars and that’s largely because our schooling system failed to educate us on something so important I mean a 401 K is the difference between being able to retire and not being able to retire yet they never taught us this in school and this absolutely blows my mind now the fourth lie about money is that you can rely on Social Security income so I want to give you guys a little bit of history on this so the Social Security Administration was founded in 1935 after the Great Depression and in 1935 the average life expectancy was 61 years today a man that reaches 65 years of age can expect to live past eighty-four and a woman that reaches the age of 65 can expect to live past 86 so the number-one problem with this system is that we are living a lot longer today than we were when this system was first put into place the scary thing is the Social Security Administration is slated to run out of its 2.8 trillion dollar cash reserve by the Year 2034 on top of this when you consider factors like automation and outsourcing there are fewer people entering the workforce than there are people exiting the workforce and remember the Social Security system is funded by a payroll tax the truth is the Social Security system is going to change drastically because it has to these numbers just don’t make sense and right now the average benefit for somebody on Social Security is one thousand three hundred forty one dollars per month I want to ask you guys a question right now could you survive off of that amount of money and what happens when they have to lower that amount okay so the fifth and final lie when it comes to money and investing is that investing is time-consuming and complicated the bottom line is this guy’s investing can be complicated and time-consuming if you make it complicated and time-consuming it can be very passive or it can be very active and require many hours of your time each day and one of my favorite quotes that explains this is by John Nesbitt we are drowning in information but starved for knowledge and this is very true especially today when there is so much information out there many investments are too complicated for the average investor to understand that is why my number one rule when it comes to investing is never invest in something you do not fully understand yourself so a perfect example of this is the collateralized debt obligation or the CDO and if you guys have seen the movie The Big Short I’m sure you are aware of this this overly complicated investment vehicle was a major precursor to the 2008 housing market crash and that market crash cost the average household 33 percent of their net worth and that was largely due to the fact that people had no idea what they were investing in this is what happens when things become too complicated in fact some of my favorite investing strategies are completely passive I’m going to give you guys two examples of this one would be investing in index funds through a dollar cost averaging type strategy where every month no matter what you’re buying more shares of these exchange-traded funds whether or not they’re up or down and over time you’re paying the market average for them you don’t have to worry about timing the market or anything like that another strategy is to simply invest in blue chip stocks that pay you dividends each quarter and setting up a dividend reinvestment plan where those dividends are automatically reinvested every quarter these are completely passive investing strategies that literally anyone can implement and understand they are not time consuming and they are not complicated so I’d want you guys to understand there’s no reason why investing should be those two things unless you want it to be anyways guys I thought this would be kind of an interesting topic for this video this is the five biggest lies when it comes to money and investing so if you guys enjoyed this video if you agreed with anything I said or if you disagreed please let me know in the comment section below but if you guys like this video please drop a like and then consider subscribing to be notified of future uploads and as always I thank you for taking the time to watch this video you

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