He has been on the cover of most major guitar magazines at some point in the last year... but he doesn't know a lot about investing. So as we were hanging out in his hotel room, just the two of us trading guitars back and forth, he eventually asked me for my investing advice.
He told me he had some savings, and he was looking for "a hot tip" to make "a quick buck." (Those were his words.) He said if I couldn't help him, maybe I could point him in the direction of someone who could.
I winced to myself... and collected my thoughts...
Here I was, hanging out with one of my heroes in music... and I had two options:
• Did I brush off the question and get back to music?
• Or did I give him the REAL answer... one I was sure he didn't want to hear?
I took a deep breath and gave him the REAL answer.
As I think back on it, the advice I gave him is the best advice I can possibly give to anyone starting out. Here's what I said:
• First off, there's no such thing as "a hot tip" or "a quick buck."
• Second, if you don't understand it, then don't buy it. Period.
You will be tempted to go against these two things. Many times.
Don't do it. The quicker you believe me on these two things, the quicker you will stop losing money and start making it.
I didn't stop there. I told this hero of mine:
• Nobody will care more about your finances than you. How many rock stars have gone broke by handing off their money responsibilities? Don't do it! You have to captain your own ship. You can't hand that off to someone else.
• Lastly, don't buy what's popular. Real estate was popular in 2006, for example, and many people got crushed.
I told him how I have been buying property, and how a rental property ticks all the boxes today.
Hopefully, he took my advice to heart and didn't do something stupid. I don't often talk about these four things because they're "basics" to me. But you never want to lose sight of the fundamentals.
Make sure these things are ingrained in your head... Teach them to your spouse... and ultimately to your kids.
These four things will do more for building your net worth than just about any stock recommendation I can give. Commit to them!
Good investing,
Steve
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