What Every Investor Should Know

Excerpt from Wall Street Journal Publication: "What Every Investor Should know."

You can have a good home, there will be plenty of money for your kids’ educations, you can contribute generously to the community, your retirement can be financially comfortable and you can expect to pass along an estate worth far more than you might have otherwise dreamed possible.

In short, you can have financial independence.

What you cannot have, however, is all of that and the biggest, newest, fanciest house in town, the biggest car, the longest yacht, the priciest jewelry, the finest couture gowns, the best wines or grandest vacations.

Don’t confuse spending a lot of money with having a lot of money.

No one ever got rich or stayed rich by spending.

Investment hucksters and schemers don’t want you to know that. They dominate the bestseller lists and late-night TV hours peddling a vulgar, upside-down vision of wealth. Like con artists, they seduce their dreaming, gullible marks in the get-rich-quick crowd with images of the unsupportable lifestyles of not simply the idle rich, but the indolent, petted, parasitic rich, the kind of people who give wealth a bad name.

This fetishism of extravagance is reinforced day in and day out on television, in movies, in books and magazines, and even in some newspapers. It’s a fantasy that is rarely challenged – or balanced, even – with views of the tens of thousands of people who have amassed considerable riches by resisting the domination of the consumer spending culture.

The vast majority of rich people are distinguished by one overwhelming, dominant trait: They’re frugal.

They drive old cars, live in modest houses and wear average clothes. They are rich, not because they are lucky or they have found some secret formula to wealth, but because they work hard, keep a long-term perspective and spend little.

And that’s not something investing “gurus” want to tell you. No huckster ever got you to give him money by telling you not to. And since most hucksters are not in a customer-service business (they are in a customer-exploiting business), they are not going to tell you the real secret to investment success.

They are not going to share with you the one and only guaranteed path to financial freedom:

save your money.