Why You SHOULDN'T Invest

I have a contrarian viewpoint that differs from the general consensus of 99% of finance books and the guidance offered by finance experts. Many people hate my take on this topic. However it is my belief that it is crucial to heed advice based on experience rather than mere theory. In my personal experience, I have found most finance books, gurus, and conventional advice to be plain incorrect or difficult for the average person to successfully pull off while living a quality lifestyle. One of the most misguided recommendations I have heard is to invest one's money. Specifically, I’m referring to investing in stocks, bonds, 401ks, Roth IRAs, etc. Effectively, anything that involves stocks or tools that function similarly to stocks. Let me preface my remarks by acknowledging that investing in assets, building one's wealth, and harnessing the power of compounding interest are all essential. However, the issue with much of the counsel imparted by finance experts is that they exhort people to start investing as a primary goal. I have read countless finance books, and they all espouse the same advice- if one has only a thousand dollars, a significant portion of it should be directed towards a Roth IRA, which will compound over time, eventually making one a millionaire. In my opinion, this is flawed advice.

Investing is Nearly Impossible When You Can Barely Afford to Live

Back in my college days, I was completely broke. When I say broke I mean flat out broke in the red. I literally had the entire McDonald's dollar menu memorized so I could stretch my five bucks and make it last for as many days as possible. Yeah, it was that bad.

Whenever I hear finance gurus or advisors suggest investing in a Roth IRA or whatever, they oversimplify the benefits, the reasons, and neglect the pitfalls of doing so.

For starters, investing is extremely slow. I remember reading this story about a janitor who worked at the post office for his entire life, making like $20k or $30k a year for his entire life. He saved 10% of his income every year and put it into a Roth IRA. And when he died, guess what? He was a millionaire.

Now, the book made it seem like he accomplished something amazing. But think about it: this guy spent his whole life delivering mail and never got to enjoy his hard-earned money. What's the point of that?

To me, money is meant to be spent. If you have money and you're not willing to spend it, or you can't spend it, then you might as well be broke.

Like the current in electricity of water, money is a currency that is meant to move from person to person. If it’s not moving (at least to your benefit) it’s moving to someone else’s benefit. I refer to this as Dead Money. That's just my take on it. I mean, why save up all this wealth and not enjoy it?

You should only invest when you're making over $65,000

The second point to consider is that you should only invest when you're making over $65,000. This may seem like an arbitrary number, but it's not. Investing requires money, and if you don't have enough income to cover your expenses and invest, you'll be putting yourself in a risky financial situation. I’ve learned from personal experience that when you need money and when you’re struggling, it feels as though everything is impossibly expensive. You’re not making enough but suddenly the tax man needs money for property taxes. Or perhaps you receive a random medical bill that you believed your insurance was supposed to pay for (assuming you can afford the absurdly high medical insurance costs). Perhaps you get into a car accident that wasn’t even your fault and your auto insurance stalls. Maybe your company merged with another company and decided to lay people off. Or perhaps the economy shifted and your boss decided to let you go to save the company that suddenly needs to be a lot more frugal with their money. While many people might not have money due to spending issues, finance books often neglect that life simply happens to the undeserving. Things can come up at random at no fault of the recipient. I bring up $65,000 is the minimum because at this income level you likely have enough to cover your essential expenses, enjoy life, and have a bit left over (unless you’re spending wildly and assuming you don’t live in a high cost of living area like New York or California). According to the researcher Daniel Kahneman, at around 65,000 to 75,000 an individual should be making enough to fulfill their essential needs and achieve a quality level of happiness. Ideally, you should be earning enough to comfortably cover your living expenses while still having money left over to invest.

Your Initial Goal Should be to Increase Your Income

This is my personal recommendation that will open the door to investing.

Your initial goal should be to increase your income.

This may seem counterintuitive, but it makes sense. Investing requires money, and if you're not making enough, you won't have anything left over to invest.

By focusing on increasing your income, you'll have more money to invest, and you'll be in a better position to take advantage of investment opportunities when they arise.

Never Invest Unless You're in This Exclusive Group

So, who is this exclusive group that should be investing? It's those who are making over $65,000 and have enough income left over to comfortably cover their living expenses and invest. If you're not in this group, it's best to focus on increasing your income before diving into investing. Remember, investing is not a one-size-fits-all solution, and it's important to consider your unique financial situation before making any investment decisions.

To wrap things up, investing is a popular topic, but it's not for everyone. Before investing, it's important to know if you're in the right group. This group includes those who are making over $65,000 and have enough income left over to comfortably cover their living expenses and invest. If you're not in this group, focus on increasing your income before investing. And remember, most finance books are wrong or misleading, so it's important to consider your unique financial situation before making any investment decisions.

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