What investment concepts / sayings did you "not get" when you were younger?

What are some sayings, proverbs, investment concepts that only "clicked" as you got older? To name a few:

1) Cash "burning a hole" in your pocket - when I was a kid I never understood how having too much cash unused in your bank account could be a bad thing

2) Perhaps extending from #1 - the power of inflation. When I was a kid I used to think ..."a few percent a year? Pfffft, it'll take forever for it to make a real difference"

3) Equity - but it's not like it's free money, you STILL owe the bank...

 

Only two -
Pay yourself first
Doodads

 

Ongoing leverage and borrowing. I thought you got a property, paid it off with the help of rent and then went again. Borrowing to pay it off and borrow again makes little sense at best.

 

Yes 100% this.

 

Sometimes you are better off renting then buying. Disclaimer: So long as you wisely invest the difference.

 

One I never paid enough attention to was "time in, not timing"...

Always thought I was smarter than the crowd and could time the clock. I've learnt the power of investing through the cycle now.

 

Buy real estate..cars & women are expensive.

 

• Leverage.
• Opportunity costs.
• Using debt to create wealth.
• Thinking "value" not "cost".
• Ability to mitigate most risk.

 

Make a plan that extends beyond 1 year. Actually, start with the end goal and work backwards over whatever time frame is required.

When i was younger I kept buying and selling for small gains and giving away stamp duty, agent fees and income tax each time. Didnt end up making a lot and was a bit unorganised in my approach. I had no idea where i was going and was just focused on the next small gain. 10 years later i have worked it out and worked out my strategy - buy, add value, then rent out, repeat. My end goal is enough income from rent to retire ASAP.

 

I didn't understand the concept of trusts until after a few trust purchases.

Also didn't fully understand the deductibility of interest and the importance of loan structuring.

LMI costs are piddly in the long run.

 

I didn't understand that you can have debt work for you. Last time I called my broker for a meeting, I told him I don't have enough debt I would never have said that when I was younger.

 

Re self investment - Go to uni and get a good job.
I still don't get it...
My older sister and brother were both fully supported by my working class parents to get a Uni degree, my brother got multiple.
I went to work right away and supported myself.
In this case, real life education wins, Uni failed miserably.

 

This one really resonates with me as well. I’m still young so I’m fortunate I learnt it early but I always grew up with the mainstream view of purchasing a house and spending the next x amount of years furiously trying to pay it off to save interest. Once you managed to pay the house off you’d than buy an investment property and try to pay it off before purchasing another one etc. Obviously that does save paying interest; however, it comes with a huge opportunity cost from not taking advantage of leverage and compounding interest (especially when you have a tenant in there paying the majority of the interest, which is also tax deductible). Bearing that in mind it’s allowed me to increase my risk profile and get away from the negatives of ‘but what happens if you lost your job?’ etc.

The only principle where I still keep a traditional risk profile is with P+I. It seems like 99% of this forum utilises Interest only but for me I like to pay down the principle as well. Financially it’s not beneficial but physiologically I prefer to at least pay down some debt and also because I can be impulsive at times. Having P+I forces me into sticking to a budget, which is why I do it that way.

 

Make your money work for you
and
Use other people money

 

The importance of dcf & npv.

How to source widgets.

Estimating from 1st principles.

Why you need tools.

 

My parents lied to me.

 

+1

Did this a few times before getting smarter.

 

This is very true... sorta

Statistically people who go to uni earn more, so if you're going to be a wage earner for the rest of your life uni is a smart investment. But... What I have figured out after 6 years of uni is that you will never get ahead earning a wage and that those six years would have been better spent earning income and investing in property. But this only works for people who invest and save.

The other thing I figured out has to do with mindset and societal expectations. A degree can stop you taking risks and being entrepreneurial. I think there is a saying: A students work for C students while B students work for the government.

Nevertheless, life is still more than about money and a university education is a great thing... maybe not six years but still. If I was advising someone I would tell them to go to uni if they had the option; even if they wanted to do a trade. You only live once, go for a year, see what it's all about and then go earn some cash.

 

Good debt!.

I get it now.

 

"whats your strategy"

Took me a while to figure what it even meant. Unfortunatly I only "got it" after buying a couple of lemons which weren't a good fit for my portfolio.

Costly lesson...but just one of many.

Blacky