This is the third post in a seven part Las Vegas themed series, “What Las Vegas Can Teach You About Your Personal Finances”. In case you did not know, this week’s posts are brought to you directly from Las Vegas, Nevada where I am, like everyone else who comes to the glittering city in the desert, currently on a mission to maximize my investment and minimize my losses on the felt.
You should never split tens in blackjack. Never! You should always stand on a hard 17, and you should always split aces and eights. If you do not know these basic rules of the game, then you have no business playing. You are just throwing your money away. You should know the rules and simple strategy before any game you play.
And, the same can be said for investing. You should know the basics of investing and personal finances. It is okay if you don’t know them to start with, but you should definitely learn before you spend your hard earned money and waste it in an investment that is not right for your personal situation. It is alright not to know, but you should seek help and learn through books, blogs, magazines, classes, etc. Like the saying goes, knowledge is power!
Warren Buffett is famous for missing the dot-com technology bubble of 2000. He justified his self imposed sideline from the rabid investing that seemed like it could only go up and up by saying that he did not understand the business. He could not understand why someone would pay a huge price for a company with a high P/E Ratio or valuation that had not even earned much of a profit yet and didn’t have much of a business plan to get to profitability (Pets.com anyone?). Despite the huge tidal wave of investors falling all over themselves to invest in these new technology companies, Buffet famously sat out of the spectacle. The story ends, as many people know, unhappily with many of those tech companies not surviving the crash of the industry’s stocks in 2000.
We all can learn something about the investment vehicles that are available to us. Should you be in a Roth IRA or be contributing to your 401-k? How much can you contribute to both? What are the tax implications? Like a casino player sitting down to the blackjack table, you should know all of these answers BEFORE you invest. If you do not know, you should seek the advice of people who do know such as a Certified Financial Planner. There is no reason to waste your hard earned money on investments, whether they are good or bad for your individual situation. You should know everything you can about where your money is going, who will be responsible for it, and what it is doing to benefit you. No matter what, you are the sole person responsible for its safe keeping, and no one cares about your financial well being than you do.
When I went on vacation to Guadalajara, Mexico a few years ago, I made sure to buy a tourist travel guide before leaving home. I did not want to miss a single great tourist stops on this potentially once in a lifetime vacation. You should be the same way with your gambling and your investments.
This is the third of a seven part series of what Las Vegas can teach us all about personal finance. Check out the others in the series below…
- Post #1 – Invest In What You Know
- Post #2 – You Need Perseverance
- Post #3 – Know The Rules Before You Start
- Post #4 – Do Not Watch Your Bankroll (The Market)
- Post #5 – Know Your Risk Tolerance and When To Stop
- Post #6 – Do Not Gamble More Than You Can Lose
- Post #7 – Know When You Are In Over Your Head
Just to be clear….in no way am I advocating gambling. If you think that you may have a gambling problem, you should find help as soon as you can. There is help available. You can find help andresources at the Gambler’s Anonymous website, the National Council on Problem Gambling, and the National Center of Responsible Gaming.