The Ultimate Cheat Sheet For Investing All of Your Money


In the history of capitalism, this is the hardest time ever to invest. People are going broke, losing their jobs, and fear more than greed rules the news and tries to rule thoughts.

In short: people are scared. And I do think the uncertainty is going to rise quickly so I wanted to put this note together.

In 2001 and 2002 I lost all my money through bad investing. The same thing happened to me on a couple of occasions after that.

So why should anyone listen to me about investing? You shouldn’t. You shouldn’t listen to anyone at all about investing. This is your hard-earned money. Don’t blow it by listening to an idiot like me.

The most important three words in investing is: “I don’t know.” If someone doesn’t say that to you then they are lying.

I was preparing this morning for my podcast conversation I am having tomorrow with Stephen Dubner, co-author of Freakonomics and the upcoming “Think Like a Freak.” One of the statistics he points out is that CXO Advisory Group polled the predictions of 500 investment strategists and pundits. The “experts” had a 47% success rate. Good luck if you listen to any of them.

Here’s my experience (and perhaps I’ve learned the hard way about what NOT to do and a little bit about what TO do.):

I’ve run a hedge fund that was successful. I ran a fund of hedge funds, which means I’ve probably analyzed the track records and strategies of about 1000 different hedge funds.

I’ve learned one major thing, which I will repeat below: all of Wall Street is a scam.

I’ve been a venture capitalist and a successful angel investor (I was a horrible venture capitalist though – but I put that under the category of “does not work well with others”).

I can’t raise money anymore. Nor do I want to play that game. I don’t BS about my losses and everyone else does.

So I’m not in that business anymore. It’s too much work to run a fund anyway.

In the past 15 years I’ve tried every investing strategy out there. I honestly can’t think of a strategy I haven’t experimented with.

I’ve also wrote software to trade the markets automatically and I did very well with that but that industry is now dominated by the high frequency guys.

And I’ve written several books on my experiences investing, with topics ranging from automatic investing to Warren Buffett, to hedge funds, to long-term investing (my worse-selling book, “The Forever Portfolio,” which has sold 399 copies since it came out in December 2008, including one copy for the entire last quarter).

Incidentally, why publish a book called “The Forever Portfolio” during the worst financial crisis in history. I begged my publisher (Penguin) to postpone but they couldn’t. “It’s in the schedule” was their magic incantation. Publishers largely suck. The good news is: they will never make back the advance.

That said, all of the picks in that book have done excellently since then (Claudia proved this in a review of the book on Amazon but then was shamed into admitting she was my wife, which she did not at first disclose) but the one thing I am proud of is that I made a crossword puzzle for the book. I don’t know of any other investing book with a crossword puzzle in it.

So, Ok! Let’s get started. Don’t follow any of my advice. This is advice that I do and follow and it works for me.

how to invest money

A) Should I daytrade?

Only if you are also willing to take all of your money, rip it into tiny pieces, make cupcakes with one piece of money inside each cupcake and then eat all of the cupcakes.

Then you will get sick, and eat all of your money, but it will taste thrilling along the way. Which is what daytrading is.

B) I don’t believe you. Many people daytrade for a living.

No. I personally know of two. Maybe three. And they work 24 hours a day at it and have been doing it for a decade or more. So unless you want to put in that amount of time and be willing to lose a lot first then you shouldn’t do it.

One more thing: when you daytrade and lose money it’s not like a job.

When you go into a job you never lose money. If you show up for two weeks, you get paid. Even if you have been warned repeatedly about sexual harassment you still get paid. You might get fired but they won’t take your money.

The stock market takes your money on bad days.

Sometimes it takes a lot of your money. We’re not used to the brutality of that and it can destroy a person psychologically, which makes one (me) trade even worse.

C) Well, who makes money in the market then?

Three types of people:

  1. People who hold stocks forever. Think: Warren Buffett (has never sold a share of Berkshire Hathaway since 1967) or Bill Gates (he sells shares but for 20 years basically held onto his MSFT stock).
  2. People who hold stocks for a millionth of a second (see Michael Lewis’s book “Flash Boys” which I highly recommend.) This is borderline illegal and I don’t recommend it.
  3. People who cheat.

I’ve seen it for 20 years. I’ve seen every scam. I can write a history of scams in the past 20 years.

Without describing them, here’s the history: Reg S, Calendar trading, Mutual fund timing, Death spirals, Front running, Pump and Dump, manipulating illiquid stocks, Ponzi schemes, and inside information. Inside information has always existed and always will exist. Those are scams from just the past 15 years. If I went back 50 years the list would be fifty times as big.

One time I wanted to raise money for one of my funds. I went to visit my neighbor’s boss. The boss had been returning a solid 12% per year for 20 years.

Everyone wanted to know how he did it. “Get some info while you are there,” a friend of mine in the business said when he heard I was visiting my neighbor’s boss.

The boss said to me, “I’m sorry, James. We like you and if you want to work here, then that would be great. But we have no idea what you would be doing with the money. And here at Bernard Madoff Securities, reputation is everything.”

So I didn’t raise money from Bernie Madoff although he wanted me to work there. Seemed like a very nice guy.

I was depressed when I left his offices in the so-called “lipstick building.” Why will I never be good enough? I thought.

Later, the same friend who wanted me to get “info” and “figure out how he does it” said to me: “we knew all along he was a crook.”

Which is another thing common in Wall Street. Everybody knows everything in retrospect and nobody ever admits they were wrong.

Show me a Wall Street pundit who says “I was wrong” and I’ll show you… I don’t know… something graphic and horrible and impossible [fill in blank].

Remember the magic words.

“I.” “Don’t.” “Know.”

D) So how can one make money in the market?

I told you about: #1. Pick some stocks and hold them forever.

E) What stocks should I hold?

Warren Buffett has some advice on this (and I know because I wrote THE book about him. A friend of mine who knows him told me my book was the only book that Buffett thought was accurate about him).

So since I don’t know anything, I will let Warren Buffett take over here.

He says, “If you think a company will be around 20 years from now then it is probably a good buy right now.”

I would add to that, based on what Warren does. It seems to me he has five criteria:

  1. A company will be around 20 years from now.
  2. At some point, company’s management has demonstrated in some way that they are honest, good people. If you can get to know management even better.
  3. The company’s stock has crashed for some reason (think American Express in early 60s, which he loaded up on. Or Washington Post in the early 70s. Or Coca-Cola in the early 80s).
  4. The company’s name is a strong brand: American Express, Coke, Disney, etc.
  5. Demographics play a strong role. Especially if you can get into a rising demographic through the backdoor. I explain exactly how here.

With Coke, Buffett knew that everyone in the world would be drinking sugared water before long. Who can resist? He also started buying furniture companies right before the housing boom. He knew that as the population in the US grows, people will need chairs to sit on.

Note that Buffett is not what some people call a “Value investor.” But I won’t get into that discussion here.

F) What else?

One time I accidentally got an email that was intended for a famous well-known investor. It was from his broker and contained his portfolio. I can’t say how this accident happened but it did.

Of course, I opened the email.

This is a man who writes about lots of stocks.

His entire portfolio was in municipal bonds…

Municipal Bonds Have Become One Of The FEW Investments I Will Recommend

But you can’t just buy them and hope for the best…I came up with a very specific strategy during the last financial crisis that is very safe (and pays about 250x better than your savings account). I’ll Tell You How – Click Here

G) Should I put all of my money in stocks?

No, because you’ll never know anything about a company and you won’t get the kind of deals that Warren Buffett gets.

So use this guideline:

  • no more than 3% of your portfolio in any one stock. But if the stock grows past 3% you can keep it. To quote Warren Buffett again: “If you have Lebron James on your team, you don’t trade him away.”
  • no more than 30% of your portfolio in stocks (unless some of the stocks grow, in which case you just keep letting them grow).

G, Part 2) What is in a bubble?

Some hedge fund manager (David Einhorn) just said we might be in a tech bubble. Back to rule #1: He doesn’t know. It’s just a headline.

Bubbles don’t mean anything. We had an internet bubble in the 90s. Then a housing bubble. Bubbles bubbles bubbles. And if you just held through all of that, your stock portfolio right now would be about a percent from all-time highs.

So ignore cycles and bubbles and ups and downs.

And never ever read the news. The news has no idea about the financial world and what makes it tick. Any investing off the news is like taking out your eyes because you trust a blind person to drive you to work.

H) My friend has a business idea. Should I invest in it?

Probably not. But if you want a checklist, make sure these four boxes can be checked:

  • The CEO has started and sold a business before.
  • The business is a sector with a strong demographic headwind behind it. (or is that a tailwind?)
  • The company has revenues and/or profits.
  • You are getting a really good deal. (This is subjective but you can look at similar companies and what they were valued at.)

I can say this: every time I have invested with this approach it’s worked miracles. And every time I have not invested in this approach it’s been a disaster. Like, a CLUSTERF*(*K

Claudia doesn’t let me invest in a private company unless all four items on my checklist apply. It’s good to be able to say, “I love your idea but my wife won’t let me invest.”

After that, they usually say something like (….. you can imagine…) but I don’t care. I get to keep the money in my wallet and not give it to them.

Which is important because I tend to believe in everything people tell me.

I) What do you think of bitcoin?

I think bitcoin has about a 1 in 100 chance of being a survivor. So I have 1% of my portfolio in bitcoin. I can write a lot more on bitcoin. I sold “Choose Yourself” in bitcoins before the book was officially released. Bitcoin went up 500% after that.

I can explain everything about bitcoin but I can’t explain the future. So we’ll see.

J) What about metals as a hedge against inflation?

No, they have zero correlation with inflation. The best hedge against inflation is the US stock market since about 60% of revenues of the S&P 500 comes from foreign countries.

K) What about metals like gold? Don’t they have intrinsic value?

The only currency in the history of mankind that had actual intrinsic value was when people traded barley in the markets of the ancient city of Ur. Since then, we’ve developed currencies that depended on our faith in their value.

Every currency has faith and hope backing it. When people began to lose faith in US currency (in the Civil War), the words “In God We Trust” were put on the dollar bill to trick people into having faith in it.

But if you’re going to pick a metal, wait until the gold/silver ratio gets higher than it’s historical average and buy silver.

How come? Because silver is both a precious metal (like gold) and an industrial metal (also like gold, but much much cheaper). So there actually is some intrinsic value in silver.

I bought some silver bars back in 2005. But then lost them when I moved. That’s why nobody should listen to me about investing.

L) What about mutual funds?

No. Mutual funds, and the bank representatives that push them, consistently lie about the fees they are charging. I know this from experience.

One time I accompanied a friend of mine who had made some money (she was a model and had a good run for awhile) and was looking to invest it. She asked me to go with her to see her bank representative who had some “ideas.” Because she was beautiful, I went with her to the bank.

I didn’t talk at all during the meeting but jotted down every time the bank guy lied. He lied five times.

Afterwards I explained each of the lies to her.

What happened? She put all her money with the guy. “He’s practically family.” I can’t argue with a good salesman.

But he lied about the mutual funds’ performance that he was pitching, the fees they were charging, the commissions he was charging, and a few more I can’t remember now. I wrote an article about it in the Financial Times back then.

Fact: Mutual funds don’t outperform the general market so better to invest in the general market without paying the extra layer of fees.

Use the criteria I describe above, pick 20 companies and invest.

M) What are some good demographic trends?

  1. The internet. Yes, it’s still growing.
  2. Baby boomers retiring. They need special facilities to live in. They need better cancer diagnostics and treatments.
  3. Energy. The more people we have, the more energy we will consume. Go for energy sources that are profitable and don’t need government subsidies. Whenever you depend on the government, you could get in trouble.
  4. Temp staffing. Every company is firing people and replacing them with temp staffers.
  5. Batteries. If you can figure out how to invest in Lithium, then go for it. I explain easy ways to invest in demographic trends that in ways other people aren’t looking in my Backdoor Investing Checklist.
  6. and a dozen others. Feel free to list more in the comments. I plan on covering more in my email newsletter.

(Related Post: How I Make Money Off of Trends)

N) Is a house a good investment?

Everyone will disagree with me on this but the answer is an emphatic “NO!”

It has all the qualities of a horrible investment:

a) Constant extra layers of fees and taxes that never go away (maintenance, property taxes, etc that all rise with inflation).

b) Usually housing is too-large a percentage of someone’s portfolio. Even just the down-payment ends up being the largest expense of someone’s life.

c) Usually massive debt is involved.

If you can avoid, “a,” “b,” and “c” and don’t mind the opportunity cost in the time required to maintain your house then go for it. Else, rent, and use the money you saved for other investments that will be less stressful and pay off more.

Fact: Housing has returned 0.2% per year in the past 100 years.

(Related Post: It’s Financial Suicide to Own a House)

O) If no housing and only 30% of my portfolio in stocks, then what should I do with the rest of my money?

Why are you in such a rush to put all of your money to work? Relax! Don’t do it!

There’s a saying “cash is king” for a reason. I will even say “cash is queen” because on the chessboard the king is just a figurehead and the queen is the most valuable piece.

Cash is a beautiful thing to have. You can pay for all of your basic needs with it.

You can sleep at night knowing there is cash in the bank.

I love a stress-free life. When I look back at the past 15 years, the times when I’ve been most stressed is when I’ve been heavily invested and the times when I’ve been least stressed is when I had cash in the bank.

With cash in the bank you can also invest in yourself.

P) What does that mean, “invest in myself?”

  1. It costs almost nothing to start a business. Find something people want and start posting information about it on a blog and then upsell your services on the blog.Or write 1000 small books about different topics and publish them on Amazon. You can do this on the side while you learn and have a full time job and then when you are ready, you can jump to your other passive streams of income. I have a podcast coming up soon with a guy who makes $25,000 a month doing this. Note: It takes a lot of work to find “passive” income but when it happens, it’s worth it. These are some ideas. There are many others.
  2. Invest in experiences rather than possessions. Figure out interesting and unique experiences you can have or places you can go to (but they don’t always have to be places). Experiences pay much higher dividends than an extra TV or a nicer car.
  3. Books. Reading is the best return on investment. You have to live your entire life in order to know one life.But with reading you can know 1000s of people’s lives for almost no cost. What a great return!

Q) Should I save money with each paycheck?

No. Just try to make more money. That is easier than saving money. I find that whenever I try to save money I end up spending more. I don’t know why that is. I’m a horrible spender, which is probably why I’ve gone broke so many times.

Better to just make more with many streams of income so you don’t have to worry about going broke. And then saving will come naturally as you make more money.

Don’t forget that a salary will never make you money. After taxes and the daily grind, and your exhaustion and the feelings of “I hate my job,” and then inflation and then new expenses (kids), you will never be able to save. Avoiding Starbucks every day won’t make you a millionaire, that’s a fact.

I say it glibly, “try to make more money.” I know it’s not that easy. But in the long run, if you have a constant focus on alternative ways to make more money, then you will.

(Note: Every month I give multiple ways to make different streams of income in my newsletter, The Altucher Report)

R) What else should I do with my money?

Forget about it.

Money is just a side effect of health.

I talk a lot about the daily practice I started doing when I was at my lowest point.

I know now after years of doing it that it has worked. I’ve done very well with it, and I started doing it when I was dead broke, lonely, angry, depressed, and suicidal.

I didn’t start it from a position of privilege.

Here’s the whole thing: stay physically healthy in whatever way you know how (sleep well, eat well, exercise). Be around good people who love you and respect you and who you love and respect, and be grateful every day.

Think of new things each day (or all day) to be grateful for. “Gratitude” is another word for “Abundance” because the things you are most grateful for, become abundant in your life.

And finally, write down 10-20 bad ideas a day. Or good ideas. It doesn’t matter. After exercising my idea muscle for six months, I felt like an idea machine. It was like a super power that just wouldn’t stop. More on this in another post.

Money and abundance in your life is a natural side effect of the above. I know this for myself but now since writing about it for almost four years I can tell you from the letters I get that it works for others.

S) What’s in it for you?

I don’t know. I used to write about money stuff because I wanted investors in my hedge fund, or I wanted to sell books, or get speaking engagements. Now I want none of that.

I hate writing about finance now. Because it’s almost all bullshit and I don’t want to be like the other BS.

But I get worried that in a world of increasing economic uncertainty that more and more people are getting “stuck” and getting lied to and are scared about what is happening.

Most people will think I am giving bad advice. That’s fine. I just am trying to avoid the BS and I hope you do also.

Too many people I know are nervous and depressed.

There’s nothing else to know about investing your money. If your bank tries to give you any advice just say, “thanks but I’m OK.”

If they want you to put your money in a savings account, even “so you can get the interest” I would politely decline. There’s a reason they are asking you to do this and I have no idea what it is but it’s not good for you.

You won’t get rich investing your money but you can do very well. And if you combine that with investing in yourself, you will get wealthy.

But only if you remember that financial wealth is a side effect of real inner wealth.

This is the most powerful investment you can do with your time and your life.

You can always make money back when you’ve lost it.

But one single split moment of stress and anxiety you will never make back again.

Investing in the future will never bring back the past.

To be able to sit and not have a million stressful thoughts racing through your head. To be able to appreciate everything around you for the abundance it is.

Most people think they need to say “thank you” to the world.

But the world is constantly saying “thank you” to you for being alive, for creating new things, new energies, new experiences.

Every day give the world at least one more reason to whisper “thank you” to you.

If you can hear that whisper, everything else, every gift in life, becomes expected. You earned it.

Just take it.

  • Amanda Hsieh

    But don’t they charge fees?

    • dylan

      ETF’s are probably the best route.. very low MER’s

      • Ace Dragon


        • Marc Moshman

          Caps lock key broken?

        • Ben Gfrorer

          Wow, you read that! I better sell all etf’s because you read that. ETF’s represent something, whether a currency, commodity, industry; etc. All currencies and commodities will not crash. Maybe some etf’s will crash, but all will not generically crash. Some etf’s may lose their direct correlation with what they represent with age, such as ultrashort industries, these used to shoot way up on a dip now they move less on the same decline.

        • Andrew in Florida

          Crashes can be scary (psychologically), but they are only detrimental for an investor if he or she must sell a portion of investments during the lows. If the investor holds on during the crashes (and the stocks survive), he or she will hold the same number of shares afterwards as prior to the crash. If the investor has a plan and continues to invest, each $1 will buy 20% more of the investments if the market drops 20% during a crash. When recovery inevitably happens, the investor will see 20% growth. Buying during lows (even during crashes) is an almost perfect situation if an investor is not living on the income and can weather the crash while continuing to invest. Folks typically only get in trouble when they panic and sell during a crash for fear of losing more. Those are the folks that typically do not enter again until stocks have risen well beyond their exit point. That is classic “Selling low” and “Buying High”. Just my, $0.02.

          • Ken_Long

            Great posts and good opinions. Thanks I enjoyed them.

          • Ken_Long

            There are a few things that I think work well in the markets, and yes buying big diversified funds with very low expense ratios and just holding them forever, reinvesting dividends and dollar cost averaging is one.
            Timing also works. Buying more when they are cheap and selling some when they are expensive. It doesnt have to be exact. it’s just buying whats on sale and paying a large dividend and selling whats expensive and paying a low dividend, “Dogs Of The Dow” theory.
            401K’s, IRA’s, muni bonds and any way to avoid paying taxes, to defer taxes, or to get a company match on your savings are additional free money.
            Simple technical trend analysis works, Trend riding, swing trading. It works long term or short term.
            Short term trading. Shorter term trades occur more frequently and take more active work, but this tends to smooth the equity curve and produce a steadier income. It just takes more work.
            All trading is a skill and subject to loses. You never want to put yourself in a position to lose too much, but a small percentage in a trading account can make sense for many people.

          • Gregory Santana

            Well said Andrew. That is how I got my 401k more than 3x of the national average during my working years. During market lows, my monthly contribution stayed steady. In an up turn, stayed the course. Retirement came, pulled some money for other investments & a little fun, leaving more than 50%; which combined investments is doing good profit. Like Kevin O’Leary says, whom I met on several occasions, “Spend the interest, not the capital.” At year’s end, the EOY money becomes the new capital level, letting the new year earn its keep.

        • Joelle Weiss

          You also read this article

      • Ashfaq Sheikh

        ETFs are a great vehicle for investors.

      • Andrew in Florida

        Philosophically, consider: S&P 500 EFT’s with a 0.02 to 0.05% annual expense ratio — held for a minimum of 5-7 years and diversified by purchasing shares over time. Not only do you get about 8.1% stock growth but about a 2.5 to 3.4% dividend yield which can give you effective growth of about 10-11% annually. Those returns aren’t every year, but they do hold true over long periods (IE: 5+ years) You’re number of shares won’t fluctuate, just the share prices. When you get closer to retirement, pull out enough cash for 3 years and keep the rest in. Replenish that 3-year when market opportunities arise or you run to less than 6 months expenses in cash. As long as you don’t panic or sell low, your number of shares will remain constant. (When you sell low — you lock in your loses! Losses are theoretical and only realized upon selling. ). For those who can “Stay the course” its as good as anything. And, it technically matches the test of not having more than 3% in any stock, because you have 1 share each of 500 stocks — the composition of which passively evolve over time. Oh, and max out your 401k. If your employer matches 6%, you get 100% instant return on your 6% when they double it 50 12%. You can stand to lose a bit when someone is matching you 1:1. ;-)

        • Alan Steinborn

          Andrew, this is really brilliant…IMO, worth more than the article, though the article has some merit also.

        • Excellent strategy, Andrew.

    • Hanfeizi

      Lowest in the industry.

    • Id like this to be seen so I’m replying here to get near the top. He mentioned batteries. Look up XDSL. $500 will get you a million shares right now. Want more info… research it and make up your own mind looking past tomorrow or even next week, it’s an affordable long term investment and yes I own shares. It just needs a new CEO to pop IMO

      • Carol Efaw

        Nothing comes up when I put XDSL in Did they go out of business?

      • miguel thecreditor

        what is the stock? what industry?

        • The company makes a new type of battery with a shelf life of 15 years.

          • miguel thecreditor

            looks like the stock is worth zero! you posted this 10 months ago whats happening here where can I go to do more research?

      • Ken_Long

        Dont even pay it any attention. It’s a marketing plug on an OTC penny stock. Know what your buying. Be very careful of risky get rich reccomendations.

        • Gregory Santana

          Penny stocks are anything under $5 according to IBD. Yet, that is were some stocks started years ago like Netflix in the early 2000s. Like James said, if there is strong evidence that a stock will be around in 20, then enter the position. But do know your risk limit, long term goal & keep to your trading rules.

          • Joelsky2

            Hey, Gregory, IBD is published by Bill O’Neal. So, i would take that paper’s opinions with a BIG grain of salt.
            Checkout: they discuss companies whose stocks are currently considered penny stocks and under the radar.

      • Gregory Santana

        I don’t think so, at .0000 on Dec 31, 2016.

    • Ace Dragon


      • God

        Like in another 9 months?

      • Gregory Santana

        So we are a year later, closing December 2016, my 401k is at 15% ROI. Yet, ready to pull to cash since I learn market trading & IRA.

  • Nelson Benson

    Buy a 3-4 family not far from where you live. Collect rent. Pay down mortgage. Once it’s paid you will have: an appreciated asset. Income in perpetuity. And all throughout control of your money. Buy another one if you can. Buy the book “how I turned one thousand into five millions” by William Nickerson and never read stupid blogs

  • McMuffin

    Someone with the commitment necessary to make money day trading won’t be discouraged by a blog entry, esp. one that starts with, “don’t follow my advice”. I would not recommend my friends to have NFL quarterbacking as their money-making strategy. Neither would I recommend day-trading to them if they are wondering what to do. That would be foolish advice, and for them, unlikely enough to be successful as to be considered “impossible”.

  • wow, what great and honest insights! Thank you so much for sharing your thoughts and experiences so transparently. I’m a 25 year old entrepreneur from Germany finally found a way to have passive income pay for all my living expenses and a few K extra each month. Been thinking the next step would be to invest in property following Kyosaki’s advise. Interesting to hear you say “keep renting”. I guess the house you end up living in yourself will always end up being a liability since it’s not creating any positive cashflow so you might as well pay rent and save yourself the struggle, right?

  • dylan

    much love to seinfeld.. probably the greatest sitcom ever.. but that’s not investing.. that’s speculating

  • Guest

    Best reason to follow James’ advice and not listen to him:

    “The best hedge against inflation is the US stock market since about 60%
    of revenues of the S&P 500 comes from foreign countries.”

    So during inflation invest in companies whose COSTS go up as their inputs are US dollar denominated and REVENUES stay the same because they are foreign denominated.

    This statement is only true if the dollar weakens with inflation, which is not necessarily a given. In addition, there is historical data showing that S&P 500 does poorly in times of high inflation.

  • People often forget one of the most important investments, yourself(or those around you).
    If you invest in keeping healthy, you can work more and wont need to pay medical bills.
    Buy resources and services to improve your career prospects.
    Buy things around the house that make your life easier.
    Buy a house if you can instead of renting if it is a better deal.

  • Mike

    Mr. Buy and hold forever. I love when talking heads say buy and hold is dead. Well, I bought 200 shares of Microsoft at IPO in 1986. I have never sold. I have 57,600 shares now, currently worth $2.5M, paying me $64,512.00 in yearly dividends, which seem to be raised every year. Yes, I own other stocks forever. KO, MA, CME, XOM, ADP, CL, GOOG, WM, SRCL, PCP, & 1 ETF– SCHB A few weeks ago, some pundit said anyone who buys and holds no matter what the stock market is doing is either catatonic or stupid. Well, I am not stupid. Ha.

  • Hanfeizi

    As a portfolio manager, I hate-hate-hate the mutual fund industry. People think it’s safer and more conservative, but with the exception of a few Vanguard index funds and SPDR ETFs, it’s practically a scam. The commissions “financial advisors” charge are ludicrous.

  • fizmath

    How about collectibles like art, books, coins, etc? They help diversity a portfolio. They offer privacy. Most of all they can be a fun hobby.

  • Conjo Con Patatas

    My mentor is teaching me how to daytrade. He has 25 years experience at some of the biggest funds and an amazing trackrecord. He says there are no garantuees I will ever learn.

  • Conjo Con Patatas

    You are talking about gamblers, but there are longterm profitable daytraders out there

  • fizmath

    There are two known ways to beat market averages. Buy the same stocks as Congressmen have in their portfolios. Also, buy stocks from companies that spend a large portion of their earnings on lobbying and campaign contributions.

  • middleclassvoter

    Think about this: Does Warren Buffett “buy and hold low cost diversified index funds?” Why does he not follow his own advice to the minions?

    • hey voter
      because he’s warren buffett.
      he buys whole companies and restructure them, has access to all the inside information in the world, and the best traders and entrepreneurs come to HIM with the best deals and ideas. He simply picks the best.
      aaanddd… you could argue that he is one of the shrewdest businessmen that ever lived.
      tough benchmarks for the rest of us minions.
      take care

      • middleclassvoter

        So you’re alleging that Buffett is guilty of insider trading?

        • I didn’t mean inside information in the legal sense. Proprietary is a more appropriate term probably. It’s one thing to look at balance sheets like analysts do, it’s a whole different thing to buy a large share in a company and be in on everything that goes on inside it. Or having Bill Gates as your buddy. Makes sense?

        • David

          When you are buying an entire company you get to look at all the information about a company that you want. Warren Buffet gets entrepreneurs who come to him to sell their companies because they know he will just let them continue to operate as they have been and make steady returns, whereas if they went public then Wall Street would immediately start demanding that the company be broken up or that people be laid off to “unlock shareholder value.” When Warren Buffet buys shares on the stock exchange he has the same information as anyone else. He will usually only do that when a company is obviously undervalued.

          • middleclassvoter

            Yeah, I’ve bought companies outright before. I’m aware of how it works. I also know that it’s entirely feasible (and easy) to make a fortune investing in individual stocks … just like Warren Buffet does. It takes commitment and time and time and experience to do it. His portfolio consists of 40 – 50 stocks. Not the diversified nirvana that most advocate.

            Ironically, if Warren Buffet were starting out today, he’d be ridiculed and admonished for investing the way he does.

        • Gregory Santana

          Not inside trading when you are the owner or majority stock holder. That is the privilege of membership.

      • Joelsky2

        Read Dave kranzer’s “take” on warren buffet – which I happen to agree with. The dude would have gone broke had Obama not saved him from financial ruin during the financial crisis. Read Dave Kranzer on warren buffet

        • Joelsky2

          Dave Kranzler

        • Gregory Santana


      • Lawrence Sanchez

        Agreed, he does reccomend index funds for his wife’s portfolio should he pass before her.

    • kenckar

      Berkshire Hathaway is a fund. YOU and I should not buy individual companies. Warren can because it is part of a diversified portfolio and he is really good.

      You can always buy Berkshire Hathaway shares…

    • Andrew in Florida

      Yes, but you can generally trust an expert (someone who has subject matter expertise on something like finance) to be able to tailor information to a specific audience. For example: Jay Lenno (car lover) could probably make a good recommendation for an “every day driver” sports car for someone who only has $25,000 and loves to drive fast. Sure, Jay wouldn’t own it… but he drives it and knows cars. The audience to whom Warren Bueffet recommends EFT Index funds to are largely those who have no idea what else to do. Performance on the S&P 500 is historically about 8.1% plus another 2.4 to 4.1 in dividend yields…. with annual expense ratios of about 0.05% (that’s 5 hundredths of a percent… not 5%). The cheap, passive S&P 500 Index fund generally outperforms managed funds (where humans try to reweigh the industry sectors beyond the raw S&P market weights). It also tends to outperform a number of target date and mutual funds (which can charge up to a 2-3% annual expense ratio for active management — built into the cost of the fund). The advice isn’t for “Everyone”. The advice was more for folks who know nothing else and have no desire to learn yet. Just my $0.02.

  • Laura Hendrickson

    Thank you!

  • finrod

    What do you think about investing in Motifs ( You can buy fractions of equities and so easily diversify in a lot of companies. In a way it is similar to ETFs, but you really own the (fraction of) stocks. Therefore you can earn also the dividends etc.

  • Yan Amenta

    The World and I Thank you <3

  • Interesting read,Investing in yourself is the best investment ever.Read books,Travel to places that you never been till now.

  • This is the best ever. Thank you.

  • Sam

    Fantastic piece!

  • Ashfaq Sheikh

    “Money is a side effect of good health”. Love this sentence along with the whole witty and informative piece. If one reads it carefully, one can find gems of wisdom.

  • June

    What would you say about paying off credit card debt?

  • Amit Patel

    Thank you James for this great financial guide. But now I am in a limbo about my house that I am paying mortgage on. Too many emotions linked to it . . . Any way I like to see if I can implement some of the advice that here in future specially on stocks.
    One thing I am happy about is retracting from my investment in Mutual Funds after 2 – 3 years in loss. I still feel it was a good decision.

  • Anatoly Halizev

    Thank you for this article.

  • Lyn Bowker

    James I wish you were in Australia (or vice versa, wherever you are :), I’d track you down and hug you to pieces. (Don’t worry Claudia I’m old enough to be James’ mum!)

    I was reading this with the intention to share it with my brother who’s on a pension & is determined he will now become a day trader after getting sucked in by an ad he saw. I HAVE shared it with him so hopefully he’ll see the light.

    But the reason I’m responding is because of the jolt you’ve given me about my procrastination over starting my own online biz. 3 years in the pipeline! Fear of overwhelm, making a mistake, being seen, not making any money & so on. Yet I’m streets ahead of so many others I see in my chosen niche in terms of knowledge, resources & tech capability. Procrastination to the point where I’ve completely run out of money AND am not working!

    But the jolt you gave me when I read your simple words about having gone broke several times has given me access to the courage I’ve been losing along the way. I’ve always been hugely courageous & full of self belief so it’s time to embrace that again.

    Thank you for reminding me. I love receiving your emails (through another of your sites), so keep ’em coming!!

    Warm regards

  • Nick Barnett

    As the market tanks (for now), I have been really considering the 3x inverse ETF to short the SPY…..$SPXU. The recent volatility creates good opportunity as the market tanks, yet $spxu gives a good opportunity as well for cheaper price.

  • Vanguard index funds. Case closed. Lowest fees in the industry. Buy and hold forever.

    Fucking retard fools everywhere

  • ZillaGod


  • Yes exactly. All in a single blog post.

  • Ernst Schnell

    A book about the history of scams, now there you are on to something. Crime, suspense, inventiveness and education in one. Niall Ferguson has touched on that, but fully dedicated, I think that might be a gap in the market.

  • HarryJohnsonthe3rd

    Invest in me. Give me 1% of each paycheck and I will call you after each deposit with a greeting and a big thank you.
    lickmyanus at gmx dot com

  • First of all, James advice is a subjective advice, his autobiographical advice so please, as he points out at the beginning: read it with a grain of salt. You should never ever take everything what anyone says (including James) for granted but use your own experience if it make sense or not.

    Here is my take:

    A) day trading: unless you put 10 000hours min to it, do not expect to succeed. Deliberate practice of well defined edge is the key! Success comes with time, so unless you have not spent a min 3 years in this daytrading business trading full time, which James did not, the opinion is just an opinion not backed with much of a data

    C) hfts and other way how to make money: hft or not, it has nothing to do with any of us unless you are hft trader. I would extend the list to anyone who has put enough work into finding the edge, eg. A)

    J & K) gold and metals: it is a one strategy. Again. Ask yourself. How long do I wanna hold, what is my entry strategy, exit strategy? How well I know gold. What are my hypothesis behind my investment/trade? What can go wrong? What changes my opinions and I have to bail out (eg. exit strategy)

    H) house investment: too many variables play a role and James is talking just about one strategy. Can you pay 50% or 80% or 100% of the mortgage straight away in cash? Where are the mortgage rates currently? What is the return on my investment. 5year, 10years, 20 years? Am i buying and renting. Where am I buying? Is the price in the area I m buying gonna rise? What is the demographic tendency around that area? Use your head and if it make sense, then invest in the house/apartment but it has to make sense to YOU in terms of return and your priorities and freedom/choice.

    Overall, good article. James has always fresh point of view and I like that but you have to remember. It is HIS point of view. Use your own head if it make sense to you and dont follow just blindly. I bet that is what James would tell you as well.

  • CWR

    LOL. Stocks go up with inflation? Well I guess everyone who owns Venezuela stocks must be rich then. Price the stock casino out in gold and you will see real quick you’ve been taken.

  • David

    I really liked this article but this article but I agree that he gave short shrift to stock investing. If you have 30 years there is no better place to invest your money in a broad index fund. I put my money in there and sleep just as easy as if it was in a checking account. Yes maybe our whole economic and political system will collapse but if that is the case I will have wished I invested in guns and canned food, not in a checking account. His best point was ignoring the news. Just invest in stocks and don’t even look at your balance.

  • BlackMarketExchange

    Costanza also held onto his shares and ended up making out great too.

  • I never click ads, but I did to read this, and I like what you wrote.

  • Charles S Bush

    The one problem is he says you need to make more money and forget about trying to save. The opposite is the case and he tell you why contradicting himself. It makes no difference how much money you actually make if you just spend it as he said he does. It matters what you spend.
    It doesn’t matter how much you make as long as you spend less than you make. If you spend less than you make, then you stay out of debt. If you stay out of debt you have money in the bank. If you have money in the bank you have money to invest, to use in emergencies… or whatever you like or need. I have never made a lot of money.. but even as a full time college student, with a wife (who was also in college full time) and having a kid in the process we never went without, graduated debt free, and are on track to have our house payed off 10 years into the loan. Spend less than you make. It’s that easy.

  • Looks like you’ve identified every possible failing strategy I can imagine.
    Operating a cash value life insurance as the funding source for a covered call strategy is best

  • miguel thecreditor

    why save money when they are printing it like it’s monopoly money?

  • Shug
  • Andrew in Florida

    “Earn a better Salary” is great, but there is an event called “Retirement” which is a period when you no longer earn a salary. I can appreciate why someone might not try to use investments to get rich during “working years”, but folks who want a dependable income if they ever stop working will need to save and invest for retirement. Not to scare anyone, but if you want to earn about $60k on investments for 20 years (say age 65-85), you need about $1.2 to $2.4 Million in the bank earning about 8.1%. And, as warren buffet points out, that’s about the annual return on the S&P 500 with divided yields reinvested into growth. I think some of the advice may be short sighted, though the majority is fairly good (if not harmless).

    • Ken_Long

      $1,000,000 in a muni fund earning about 5%, I know most have dropped below that now but they were earning more, will produce $50,000 tax free income. That’s about equal to 60K.

      Other than that there are still a large number of dividend stocks that can do quite well over time, without much trading.

      • Greg F

        Hi Ken,

        Can you please tell me what Muni this is and how its doing now? Thanks

  • racindavid

    I think mutual funds are a joke. Just look at the list of their holdings… You can literally go down it and say “yeah, yeah, yeah… then WTF ? Why would ANYONE buy THAT ?” ie: GM when it was clear they were insolvent, etc. They bundle OBVIOUS losers with winners. Build your own mutual fund.

  • Curt Squires

    James, you mention in this post that all of the picks from the Forever Portfolio have done excellently as proved in an Amazon review by Claudia. Of the 14 reviews currently active there (on 7/25/16), I didn’t see it.

    2 questions:

    1. What is the definition of “excellently” in this case? (Better than a given market index or…?)

    2. Does such analysis exist anywhere?

    Basically, I am looking for the comprehensive list of stock symbols recommended in the book along with their performance since the publish date.

    Disclaimer: I did not read through all comments here to see if this has been asked or answered previously.

    Disclaimer 2.0: I have purchased a copy of this book and intend to perform this analysis myself in case it does not already exists.

    Disclaimer 2.5: Since I purchased a used hardback copy on Amazon, the total number of copies printed has not increased because of me.

  • I did much better with T Rowe Price

  • Sabbie

    Gold is a store of value. It’s value doesn’t go up or down much in the long run, only in relation to fiat money. It’s a proven hedge against losing the stored value of your labor to currency debasement, which is happening at an alarming pace all around the world today.

  • Ken_Long

    I liked the copy on this marketing sheet. I like some of the quotes and opinions, and gratitude and abundance. These are always good reminders.

    The actual report didnt offer much that I didnt already know. Back in 2008 this was a great idea that I hadnt looked at closely, and these funds were paying a lot more back then. It’s still a great idea, 5% tax free income is still good money, but it’s not 12.5%. Your almost a decade too late for that claim.

    • Ken_Long

      Sorry, that was the followup article and $7 report. This one just talks about different investing styles.
      What one should remember is that everyone has their own aptitudes and time available. Buy and hold index funds are great for someone who has a job and a life and a lot of other stuff going on, and Muni bond funds are a great part of any taxable account. But the fun game is trading and trying to beat all of these, and it’s totally possible. It just requires a strategy and diligence, and there are as many different strategies and time frames as there are good traders, even day trading works if you can manage your time and money and not get trapping into trying too hard.

  • Ken_Long

    Wasnt this article about Muni funds? Back in 2008 they were seriously undervalued and paying incredible rates of tax free interest, plus they rose by 100%. This was a great investment strategy at that time, and still a good one today, but your not going to make 12.5% like he claims.

    • Ken_Long

      Sorry, that was the followup article and $7 report. This one just talks about different investing styles.
      What one should remember is that everyone has their own aptitudes and time available. Buy and hold index funds, and Muni bond funds are great for someone who has a job and a life and a lot of other stuff going on. But the fun game is trading and trying to beat all of these, and it’s totally possible. It just requires a strategy and diligence, and there’re as many different strategies and time frames as there are good traders, even day trading works if you can manage your time and money and not get trapping into trying too hard.

  • Anthony Hill

    I had stop reading when he said never to real estate.

    I’m sorry – tax benefits, renting to people and getting their $, leveraging appreciation at 9-1… Tell me again, would you rather invest 10,000 at a 3% return, or leverage that into 100,000 at 1%. Before you answer, what If I told you youre going to rent that asset to someone for an additional 7k per year, plus youre going to be able to deduct 100% of the expenses and mortgage interest, plus other tax advantages, etc.Real estate offers 4 avenues of wealth growth stocks simply dont: Appreciation (which i believe is the only gain stated here), Passive Income, Tax advantages (both paper depreciation, and expense write offs), and leverage. Its not the holy grail, but you’re dishonest if youre trying to say real estate investment is always a poor investment.

    • natxlaw

      Most millionaire’s made their first million in real estate.

  • Ken_Long

    Case closed? That’s an absurdly stupid thing to say. If all you want to own is low cost index funds you are probably better off using the exchange traded funds. However, there are many ways to make money in the markets.

  • Ken_Long

    While there are some good points in this article it should be pointed out that there are many ways to trade and invest and make good money in the markets, and plenty of people who trade or invest successfully to supplement their income and/or grow their accounts. Even day trading works very well for some people, and it doesnt usually require a lot of time as much as being there at a specific time and knowing when not to trade. However, for most of us a slightly longer time frame while still maintaining a trading perspective to get in and out with a very controlled risk works best.

  • Sarah

    I tried downloading your report but the links did not work.

  • Brett Rothenberg

    Nothing about Vanguard Go, Betterment.. some good easy options..

  • avalpert

    What a bunch of gibberish BS – but you got my click-through so at least you ar emaking money off of this even if it is a disservice to your readers.

  • avalpert

    How’d that work out for you?

  • Ken_Long

    This article comes up almost every other day in my Facebook news feed, and it is good in many ways and yet totally wrong when it speaks about trading in the markets.
    Many people make a supplemental income from trading in the markets. Many people also lose money trying to trade. It comes down to a learned skill much like any other, except with huge amounts of money and misdirection, marketing scams, management scams, and almost everyone has their own ideas of what works and what doesnt.

    But as a simple, efficient, portable income producing skill that is practically set up for you and can be done practically anywhere with a laptop computer and an internet connection there isnt much better.

  • Stu

    I must be missing something…..

  • If you ask me why I recommend this article, I will tell you why—”I.” “Don’t.” “Know.”
    All I know is it resonates with what I’m already doing—”Investing in myself.” (I’ve been making some savings, though; but it’s now ready for the following reasons: 1. buy an IMac & an Intuous Wacom tablet to position myself and be more helpful as a logo and brand identity designer, 2. buy books & continue homeschooling my beautiful mind). THAT’S INVESTMENT for me; again, “I don’t know” if this will work for you.

    “I don’t know,” but I’ll continue to read this article.

  • Kevin Conklin

    Cool article. Then I read the comments. Instantly loose all the benefits of the article itself. The financial system if a freaking virtual matrix game. All more clever ways of keeping me distracted by details while separating me from my money. I’m not playing the game. Wall street can just keep on with its VR self-mutilation. I’ll invest in myself.

  • Rugile

    That’s an amazing post which helps everyone to understand what is investing and how risky I am. Of course, you don’t need to listen to me as well as I am just a secondary care specialist with a very small knowledge in investing. I have listened to a couple of lectures and in one I heard that “if you have 1000, invest 100 but never invest 1000 if you have only 100”. I think this sums up everything, you can play whenever you want but never let all your money go somewhere…

  • Andres

    Day/swing traders do make money, I can name 15 off the top of my head who make a living doing it every single day.

    • Can you name them? Anyone who I might know?

      • Andres

        to name a few. You can also check out www, to see even more success stories

      • Andres

        Check out the podcasts on

  • Gregory Santana

    Super summation, thank you.

  • JDSmith

    I’m in the position of selling my home or renting it out? Ive been agonizing over it, but my business is experiencing cashflow problems, and I”m literally broke, and yes, as James says, those Mortgage lenders are hounds the second you’re late. I’m lucky enough to have made a “good” investment, at least as much as one can in Real Estate since I’m a Veteran and I didn’t have to put anything down, and I bought in an amazing neighborhood in Dallas/Fort Worth with real historic value. I stand to make almost double what my loan was, but after reading what James has to say, I WILL NOT be investing in another house, I think I got lucky, and i’d rather not experience the feeling of being “unlucky.” I’ve been “Investing in Reading” as well, that and playing guitar. Though my business has only done ok, I know why, and that’s bc of the horrific nature of the family court system through my suicidal divorce proceedings and losing all access to my children after the fact, btw, marriage, WORSE THAN A HOME! DO NOT INVEST IN “LOVE.” Please, James, touch on this, I’d Love to hear your thoughts on the marriage investment… if you can call it that?

  • Ike Nonso

    Thats really great.

  • Yassin

    I’m reading this in a critical moment of my life. Thank you!

  • Jeremie Rodger

    “If you think a company will be around 20 years from now then it is probably a good buy right now”

    Can you reference this quote? I cannot find an official publication of it, so wondering if you just made it up.

  • Faith Williams

    I can assure you of, he is to good in repairing credit he helped me repair my credit and i was able to buy my first house, thanks to this professional credit repairer

  • Andres Triveno

    Not true, there are plenty of people I personally know in the NYC area who day and swing trade successfully for many years, and many others in the world who also trade actively and do well. YES there are 90% plus people who attempt and fail, but dont discourage others by giving trading a bad name.

  • Mike Hunt

    Now this shitstain is into Bitcoins and for three thousand he will show you how to buy some. Fuck this scammer.

  • Livinus Tuyisenge

    Fantastic jobs

  • Seán Feehan

    Brilliant post!

  • NewHampshire

    I am desperately trying to figure out how to invest in less-than-penny cryptos but can’t seem to do it and it is frustrating to watch them rise up so high before my eyes. Can you explain how to figure out WHERE YOU CAN BUY THESE COINS? I see great numbers of them, but no place to actually buy them. You never address this in your newsletters.

    Places like Bitstamp, Coinbase, or Kraken only have a few coins that are already too expensive to make any money from. THANKS.

  • Scott

    You say no to day trading and then endorse Tim Sykes penny stocks strategy. Looks very contradictory and casts a shadow over you and your advice. I have purchased cryptos at your advice and thus far have lost money-I know, that’s the risk you take– I am a small time investor who needs to create a steady stream of income.

    A) Should I daytrade?
    Only if you are also willing to take all of your money, rip it into tiny pieces, make cupcakes with one piece of money inside each cupcake and then eat all of the cupcakes.

    Then you will get sick, and eat all of your money, but it will taste thrilling along the way. Which is what daytrading is.

    B) I don’t believe you. Many people daytrade for a living.
    No. I personally know of two. Maybe three. And they work 24 hours a day at it and have been doing it for a decade or more. So unless you want to put in that amount of time and be willing to lose a lot first then you shouldn’t do it.

    One more thing: when you daytrade and lose money it’s not like a job.

    When you go into a job you never lose money. If you show up for two weeks, you get paid. Even if you have been warned repeatedly about sexual harassment you still get paid. You might get fired but they won’t take your money.

    The stock market takes your money on bad days.

    Sometimes it takes a lot of your money. We’re not used to the brutality of that and it can destroy a person psychologically, which makes one (me) trade even worse.

  • Richard Hoffman

    I find James to be a very interesting person. He tells it as it is. I came across his name
    from a post on Stock Gumshoe. The investor spoke positively of him.

  • Chuck Friedrich

    I want to buy several small amounts currency how am to do this using this

    • Elaine Harward

      Hi guys, I have something to share here and i want you to make use of this opportunity. I had a total of $22,000 in student loan and credit card debt that I couldn’t pay for 3 years until I was introduced to Spacewebexperts@ gmail com ,who then asked few questions regarding fixing my credit and cleared all my debts. They also helped raise my credit score to 800+. I’m so happy right now and preparing to buy my first house

  • Mode Kalnutis

    Portfolio diversification.
    If you would have a chance to invest into cryptocurrency as Bitcoin – 5 years ago.
    Think about this like a good opportunity to invest part of your crypto.
    We are talking about Cloud Storage mining Burscoin, a coin based on Proof of Capacity.
    imagine that entry point to mine crypto will be as easy as connecting your HardDrive to the network, which would be so decentralized that anyone, who has any spare space could be part of it.
    I believe that would make a sense to you.

  • Some nuggets of info.

  • RicardoG.Carpenter

    If you ever kept all of those cheat sheet then you might know the perfect way to handle all of those things and the upcoming situations..