How to Invest

There are four common types of investments: stocks, cryptocurrency, businesses, and real estate.

Stocks: Types and Risks

I find it helpful to divide stocks into three different categories: Total Market Indexes, ETF's/Mutual Funds, and single company stocks. The only difference between these types really is how many companies each one represents. The more companies under an investment product, the less risky it is. Hands down, the most secure investment to make is a total stock market index. Buying one of these, which are bought just like any other stock (I purchase Vanguard's Total Market Index, whose ticker symbol is VTI), is akin to buying a tiny slice of every single company in the stock market. Total Stock Market Index's return on average 7% annually in growth and dividends. It is the standard for which all other investments should be compared to.

Total Stock Market Index's are not very personable and might not represent your interests very well. That is where Mutual Funds and ETF's (Exchange Traded Funds) come in. These are large groups of stocks that represent many companies in one niche or sector. If, for example, you believe in the marijuana industry, you may consider ETF's such as the one represented by the ticker symbol: YOLO.

I would never suggest buying an individual stock, aside from solid blue chip companies, unless you want to be much riskier with your money. Single stocks have the potential to rise much more than 7% annually, but more than likely they will drop like a rock right after you buy them (or at least that's my experience).

Cryptocurrency

Everyone's new favorite investment to talk about or least favorite to listen to! Personally I do believe cryptocurrency is doing to money what cell phones have done to talking - they make transactions faster and easier! That unlocks many novel types of interactions. I think most importantly, it offers a new paradigm of investing to those who don't believe or trust the old system. It offers a democratized and immutable medium of exchange that can be sent electronically.

Because it's so new, even the classic types of crypto are quite volatile, which are namely Bitcoin (BTC) and Ethereum (ETH). Personally I will not stray too far from investing in the top ten coins by market cap. I don't want to look at my investments more than once a month so I'm not interested in a highly fluctuating new coin. My strategy is to dollar cost average in and hold until 5 to 7 years after each bitcoin halving, when the crypto super cycle is around its highest. Riding the roller coaster of crypto teaches you a lot, really nails the intelligent (yet emotionally difficult) way to invest, which is to be happy when the market is red because that's when you buy, and to be pretty nervous when everything is looking super great. Nonetheless, it is a skill to be able to invest in crypto and only only look at its price once a month. Bet!

Businesses

If you have a passion, hobby, or skill that can earn money, considering investing in your own business can be a good way to create a system of profitable value exchange. It is very easy to form an LLC, get an EIN number, and get a business bank account so that you can start properly accounting for taxes with at least some level of liability and protection. There are innumerable ways to invest in your or other's businesses, this can be one of the more personable and satisfying ways of investing.

This is also where in some, hopefully MANY cases, where some passionate individuals put their bets with their own money. Investing in stonks and crypto are really only ever are going to amount in more of the same, and not necessarily meeting any particular soul enhancing activity (at least, not directly). Creating a business is as easy as cheese nowadays. Here's how to do it. Google "how to make an LLC in [my state]" (it's free, you just need an agent. You can also apply to be your own agent). Get an EIN number (free on the IRS website) and then a business bank account (see your bank or credit union). You can also make a website for free through google, and awesome domain names (like www.sickprints.art) are an added $15/year. Then (more or less conditions may apply at this point), Do. Yo. Thang. Tracking expenditures is most important. Your product or service should ideally bring you joy when you provide it, and connect people to our world or others in novel ways. 3 to 5 years later, boom! It's probably changed and transformed in way's you didn't see coming. Start slow, stay steady, have a big picture guided by immovable personal values, and most importantly, be healthy, mindful and avoid burnout. Surround yourself with people you admire.

For continuous entrepreneurial quotes (this is a shameless unsponsored plug) join James Cleary's email list. Many times it has helped me remember my priorities and pivot my response.

Real Estate

Land is the al-ma-mater of investments. It is not going away, only getting smaller, and ever more being demanded of. I would argue that buying a single family home to live in is not an investment. An investment is something that you buy that earns you money back. One can very easily live in their investment real estate properties, reducing their cost of living down and sometimes living for free or better. In my opinion, the easiest options to consider are buying a duplex with a FHA loan, buying a fixer-upper with very little if any of a loan, or buying a multiplex. Real estate isn't just space on a map though too keep in mind, it's a place with neighbors and hosts other living beings. A proper lesson in social ecology has recently connected all these topics for myself. Highly recommend these pods.