Ep 24 | The ONLY Three Things You Need to Know to Start Investing

If the stock market makes you break into hives—or worse, makes you feel like you should understand candlestick charts or pick the “right” stock—you’re not alone. But investing isn’t gambling. And it doesn’t have to be overwhelming.

In this episode, Priya breaks down the only three things you actually need to know to start investing with confidence. No CNBC. No stock tips. Just a clear, simple framework to help your money grow for the goals that matter most.

Whether you're stashing for retirement, a dream home, or your mid-life sabbatical, this episode will leave you thinking, “Wait…that’s it?! I can do this.”

Tune Into This Episode to Hear:

• Why picking the right stock is not the goal—and why that’s great news

• The Fidelity study that proves doing less with your portfolio often earns you more

• How to match your investment strategy to your timeline (and avoid rookie mistakes with your down payment)

• The real risk most people are taking without realizing it

Follow Priya Malani:

LinkedIn | Instagram | Youtube | Stash Wealth

THE STUFF OUR LAWYERS WANT US TO SAY: Stash Wealth is a Registered Investment Advisor. Content presented is for informational and educational purposes only and is not intended to make an offer or solicitation for any specific securities product, service, or strategy. Consult with a qualified investment adviser (that's us) before implementing any strategy. Investing involves risk, including the loss of principal. Past performance does not guarantee future results. There…we said it.

Transcription

If you are just keeping your money under a mattress and you're thinking, oh, I'll get involved when I understand it better, or when I have time to pay attention to CNBC, or when I know what stock to pick, when I feel good about someone telling me like, oh, this is the stock to buy—you are being incredibly risky.

Hey guys, welcome back to The F Word, where finance meets real life for high-earning 30-somethings who wanna stop guessing and start building real wealth.

Today, I am breaking down the only three things you need to know before you start investing. And spoiler alert—none of them require you to know what a basis point is. If you've been waiting for someone to explain it like a normal human, let's get into it.

Okay, so if you've heard me say it once, you've heard me say it a million times: investing is not gambling. This is the one misconception you have to unwind. You need to understand that investing and gambling are two totally different frameworks.

Gambling: get rich quick, double your money overnight.

Investing is a way for your money to grow over time—not overnight. So, with this new framework, you're gonna start looking at a lot of things differently.

And let's start with stock picking, because this is the number one thing I think prevents people from getting started with investing. Well, I don't know what stock to pick.

Okay, so good news—investing is not gambling. If you are banking on a stock to make you a million dollars overnight, you are not thinking about investing. You are thinking about gambling.

Picking a stock and hoping it does well is not investing—it is gambling.

So, I had a friend say to me the other day like, oh man, we really crushed it with Spotify. That's awesome. That is so great. I'm so happy for you. But she isn't investing her money—she's gambling with her money.

She happens to be an entrepreneur who loves risk and is very comfortable taking on high-risk bets. But high-risk bets is like Vegas—gambling, throwing all your chips on 28 red, sipping some cocktail, hoping you hit it big.

If you are someone who thinks that investing is one of those things where you have to pick the right stock or get lucky—that’s for Vegas.

And just a side note—if you want to gamble with your money, do not use the stock market. Go to Vegas. It's way more fun. They give you free cocktails. This is not the blackjack table. That is not investing.

Cool? Good. This should be—this should be music to your ears.

Real investing is about consistency and a very boring term that happens to do wonders if you're investing: diversification.

Oh, and time. You need to leave it the fuck alone. You need to not be watching it.

Okay, so are we all on the same page? If you're trying to double your money overnight, that is gambling.

Number two: You do not need to watch CNBC to be good at investing.

You don't have to watch it every day. You don't have to watch it every week. You don't have to watch it every month—and frankly, you shouldn't even watch it at all if you want to be a good investor.

You think Warren Buffett is sitting there glued to CNBC? He's not. And most of the best investors in this world are not paying attention to what's happening in the news today—because the news is designed to drive emotions.

And emotions and investing do not mix.

So you wanna steer clear of anything that is gonna drive your emotion. Maybe that's going to a family dinner with your brother who's investing in Bitcoin. Don’t talk to him. He's just gonna make you emotional. I'm saying brother because—well, you get it.

So to recap: you do not need to read Barron's, or understand what a candlestick chart is, or watch the market to be good at investing. Yay!

In order to be good at investing, you need a plan for your money. And investments are just one part of that overall plan.

You've probably heard investment professionals say it before: Set it and forget it. And I’ll tell you why.

When you're investing, the biggest mistake an investor can make—I said this earlier—is let emotions get involved. Why? Because when you let emotions get involved, you start second guessing yourself.

You start thinking you need to do something. Um, maybe the markets have moved and you know, maybe there's a correction, and you start fiddling. You're like, oh, maybe I should take a little bit of money out of the market... maybe I should put a little bit more money into the market.

People—retail investors—who try to take money out, put money in, time the market—historically—perform the worst.

So the lesson here is: turn a blind eye. Set it and forget it. And once you have a plan in place for your investments, you let it do its thing.

It's boring, I know it, but you will not help the markets. You just need to let them do their thing.

Okay, so this is the third and final thing you need to know about investing to do it successfully:

Know this—risk, the concept of risk, is not what you think it is.

I know there’s the common phrase out there: high risk, high return. And that's true. However, when you're investing, you never want to invest money that you'll need in the short term—so that that high risk, high return (or big loss) does not impact you in the short term.

In the long run, high risk, high return will play out in your favor.

And the real risk here is actually not investing at all.

There's an opportunity cost to not investing. Every day, every week, every month that you do not invest, you do not get to benefit from compounding—which only works with time.

See? It's all about time.

If you are just keeping your money under a mattress and you're thinking, oh, I'll get involved when I understand it better, or when I have time to pay attention to CNBC, or when I know what stock to pick, when I feel good about someone telling me like, oh, this is the stock to buy—you are being incredibly risky.

Because your money is losing purchasing power. It's losing value to inflation. It’s eating away at the value of your dollar. So every day, your dollar is actually becoming less and less valuable.

You wanna put the dollars you have today to work ASAP.

Now, when it comes to taking on risk as part of your investment strategy, here’s a very straightforward framework.

To start—you don't wanna think about risk in a single dimension, like: I like risk or I don't like risk.

I'm scared of it, or no, I love it. I would jump out of an airplane. I'm a very risky person. I want a risky portfolio. That's not how you should think about it.

You wanna think about risk along a spectrum of time. So—the more time between today and when you want to accomplish a goal, the more risk your portfolio can actually take advantage of. Because you have so much time to ride out the ups and downs—the volatility in the market.

So like, if you have a goal that's really far out, like retirement's decades away, this investment strategy is gonna look very different than if you're like, oh, I wanna buy a home in the next six to seven years. That is a more midterm goal.

The more time you have, the more risk you can take. The less time you have, the less risk you want to take on into your investment strategy.

So you actually want to pair your portfolio with the time horizon of various goals. If you have goals that are further down the road, those should have one investment strategy. If you have goals that are happening more in the midterm—the next three to ten years—you want to use a different strategy.

And above all—you never, never, never, never want to invest money that you're going to need in the next two to three years.

So if you have money sitting in the market right now that you are thinking like, oh, this is my down payment—get it out of the market. You do not want to take on any risk with money that you're gonna use in the next two to three years.

That money should be sitting in cash at a high-yield savings account.

Yes—a high-yield savings account. Still working harder for you.

Just to hit this point home, I’m gonna tell you a story that I often tell clients, which is a study that Fidelity did a couple years ago. It’s probably been more than that now.

But Fidelity basically went back and they looked at all the accounts that are under management. You know, they're a big financial institution and they manage all kinds of different investment accounts—from retirement accounts, to brokerage accounts, to 529s (they’re for college saving), endowments—they have all these different types of accounts.

And they said, okay, let’s do a study and let’s see which accounts have the best performance.

And they came to find out that the best performing accounts for most retail investors were their 401(k). So this was like, oh interesting—it was their 401(k).

Why was it their retirement account?

Well, come to find out, when they did a little more digging, they realized that most people in their 401(k) forget their password. And so literally—they're never in that account. They're never watching the news. Or even if they are watching the news, they’re not going into that account and fiddling.

And so actually, for most people, their best performing account was their 401(k). Just to, again, make the point that you do not want to let emotions and investing mix.

You do not want to pick a stock and keep your fingers crossed. You want to give diversification the time and consistency to work for you—towards your mid- and long-term goals.

If you want a quick win, go to Vegas. Do not use the market to gamble with your hard-earned money.

Okay—if this episode made you feel even slightly less intimidated to get started with investing, awesome. And please send it to a friend who still keeps their money in a checking account. You know the one.

And if you haven’t already, please hit follow so you don’t miss out on what’s coming next.

Thank you so much for listening to The F Word. Alright—see you next time.