20+ Investing Lessons from One Of The Greatest Investors of All Time!

In this episode of the Personal Finance Podcast, we're gonna talk about the 20 plus investing lessons from one of the greatest investors of all time.

 

Join Our Newsletter here!

 

Learn to Invest with Index Fund Pro! Our complete step-by-step guide to investing! https://mastermoney.co/index-fund-pro/

 

Thanks to Our Amazing Sponsors!:

• Chime: Start your credit journey with Chime. Sign-up takes only two minutes and doesn’t affect your credit score. Get started at chime.com/
• Thanks to Ka’Chava For Sponsoring the show! Go to kachava.com/pfp and get 10% off on your first order.
• Shopify: Shopify makes it so easy to sell. Sign up for a one-dollar-per-month trial period at shopify.com/pfp
• Policygenius: This is where I got my term life insurance. Policygenius is made so easy. To get your term policy go to policygenius.com and make sure your loved ones are safe.
• Healthy Cell: The best way to get your vitamins and nutrients based on your goals. I take one pouch every day to perform my best mentally and feel better physically. Go to Healthycell.com and use promo code PFP for 20% off your first order! Get all the nutrients your body needs today!

 

22+ INVESTING LESSONS FROM PETER LYNCH

One Up On Wall Street

Checklist of relevant episodes:

• From Police Officer to Multimillionaire investing in ATM’s (With Paul Alex)
• Why Live-In-Flips May Be the Best Way to Invest in Real Estate with Carl and Mindy Jensen
• The Easiest Way To Invest: Target Date Retirement Funds
• How Much Should You Have Saved and Invested (By Age!)

 

Personal Finance Youtube Channel

https://www.youtube.com/@thepersonalfinancepodcast

FREE GUIDES:

==============

- Free Ebooks here: https://mastermoney.co/resources/

-Check out the free guide on where to put your money in what order!

https://www.mastermoney.co/stairway-to-wealth

 

-Here is the free How to Ask for A Raise ebook!

https://www.mastermoney.co/get-a-raise-ebook

 

-Get Access to the 75-Day Challenge: https://www.mastermoney.co/75daychallenge

 

=============

 

We have a YOUTUBE channel! Check it out here! 

 

Our Latest Videos:

How To Grow A Podcast Organically

What Would Happen If You Maxed Out Your Roth IRA By Age?! (These Results Will Amaze You!)

How to Become a Millionaire With a Small Amount of Money (Is it Really This Easy!?)

Pre-tax moves for high earners

 

Got questions? Ask me on Instagram Here. @mastermoneyco This is the fastest way to get in touch with me.

============

 

Want to Support the Show? Follow on Spotify or Follow and Leave a 5-Star Review on Apple Podcasts!

 

============

 

Check out all the Stuff I Recommend! 

Check out all my favorite Credit Cards https://milevalue.com/top-offers-mastermoney/

 

USEFUL RESOURCES:

• The Year-End Money Checklist https://mastermoney.co/year-end-money-checklist/
•  The 75 Day Money Challenge https://mastermoney.co/75-day-challenge/
• Finally, Get That Raise https://mastermoney.co/resources/

============

 

 

DISCLAIMER: I am not a financial adviser. This Podcast is for educational purposes only. Investing of any kind involves risk. While it is possible to minimize risk, your investments are solely your responsibility. It is imperative that you conduct your own research. I am sharing my opinion.

 

AFFILIATE DISCLOSURE: Some of the links on this channel are affiliate links, meaning, at NO additional cost to you, I may earn a commission if you click through and make a purchase and/or subscribe. However, this does not impact my opinion.

 

============

 

 

Check us out on social fam!

 

Twitter

 

Tiktok

 

www.thepersonalfinancepodcast.com

 

www.mastermoney.co

Learn more about your ad choices. Visit megaphone.fm/adchoices

Learn more about your ad choices. Visit megaphone.fm/adchoices

 

Transcript

On this episode of the Personal Finance Podcast, we're gonna talk about 20 plus investing lessons from one of the greatest investors of all time.

What's up everybody, and welcome to the Personal Finance Podcast. I'm your host Andrew, founder of Master money.co. And today on the Personal Finance podcast, we're gonna be talking about 20 plus investing lessons from one of the greatest investors of. Time. If you guys have any questions, make sure you hit us up on Instagram or TikTok at Master Money Co.

And follow us on Spotify, apple Podcast or whatever podcast player you love listening to this podcast on. And if you want to help out the show, leave a five star reigning and review on Apple Podcast or Spotify. It truly does help out the show and we are trying to get to that thousand review mark on Apple Podcasts as well.

So it truly would help us out if you leave that five star rating and review on Apple Podcasts as. Now today we are going to be talking about over 20 lessons that we've learned from one of the greatest investors of all time. And who is that investor? We're gonna be talking about Peter Lynch today, and if you've never heard of Peter Lynch, Peter Lynch was actually an investor who wrote the book called One Up On Wall Street and one Up on Wall Street is one of the best books that I've read.

Uh, and I read it very early on. I think I read it back in 2013 or 2014. But once you go through that book, I think there's so many great investing quotes there as. But Peter Lynch was the manager at a fund called the Magellan Fund. And the Magellan Fund was one of the most profitable mutual funds ever.

And he would go in there and he would buy individual stocks and he made all the investing decisions and he averaged a 29.2% annual return when he was at the Magellan Fund. But at Hart, Peter Lynch was a value investor. And so what we're gonna be talking about here is a lot of these investing lessons will portray to people who are interested in individual stocks, but they will also really.

Set the tone for people who are interested in index funds and ETFs as well, because it's really important to learn from people who have experience and look at some of their experiences, and you can also learn from their mistakes. They don't have to be your mistakes for you to learn from mistakes. They can be from other people's mistakes as well.

So we're gonna talk about some of his investing lessons today, and he has a wealth of knowledge when it comes to investing lessons. In fact, he's got some of my favorite things to ever read. So if you've never read one up on Wall Street, that is a fantastic book that we will link up down below so that you could check that out as well.

And if you want to get a copy of these investing lessons so that you can review them if you want a PDF version, or you can use them to remind yourself, say for example, if the market's down, he has some quotes on that, then. We'll, uh, give you a PDF version of this so that you're gonna just have a downloadable PDF so that you can remember it.

So we'll link that up in the show notes down below as well, so that you have that available for you for free. So, uh, these are some of the things we're gonna be talking about here today. And without further ado, let's jump into these lessons. So like we talked about, Peter Lynch was a value investor. He bought individual stocks, but at the same time, he was also a proponent that a lot of people should be investing in index funds as well.

So we're gonna look through some of these quotes. I'm gonna read off his quote, and then I'm gonna give you some of the key takeaways that I have from each of these quotes as well. The first one, everyone has the brain power to follow the stock market. If you made it through fifth grade math, You can do it.

Now, what a lot of people think is when you're investing your money, a lot of people are intimidated by investing because they think it's a very complicated endeavor, especially very early on. But truthfully, investing isn't that complicated once you kind of get the basics down. And so this podcast has talked about a lot of the basics before, but understanding some of those basic things and really what matters more is your behavior around stocks.

And this is the key thing to understand. People are intimidated by the numbers. The numbers are less. Of your performance and what is more indicative of your performance is your behavior around stocks. And we're gonna talk about a lot about behavior today because that's the most important thing that you need to understand when you invest your dollars.

But most people think it's overcomplicated, it's not. And Peter Lynch is saying that here, if you can do fifth grade math, then you'll be able to really understand the numbers when it comes to investing in stocks. So if you are someone who has overcomplicated stocks in the past, Overcomplicate stocks. Do not think through this as something that is really, really scary to have to go out and do.

Instead, understand that investing is a few basic principles that if you get the few basic principles right, you can do really well. Investing for the long term, and you've heard us talk about this if you're a student of Index Fund Pro as well. The first five modules are just us talking about psychology.

For the most part, we're going. What happens if you invest your dollars over time? How can that money grow? How fast can that money grow, and what are the principles that you need to be putting forth to be able to do that? That's exactly why we do that upfront, because we want your behavior to change first so that you know what the outcome is going to be.

If you invest your money, if you invest a thousand dollars per month, what's going to happen if you invest it with a x? Rate of return, for example, and we show you that and show you if you get to the end here, this is exactly how much money you could have with that rate of return. So this is the cool thing about learning how to do this, is you don't have to overcomplicate the math.

The math is simple. There's a lot of calculators out there that can help you with it as well. We have our own, uh, calculator. We've developed that the index fund pro students are gonna get this week, so you can see how this is gonna work so that you can go through that process. As well. So do not overcomplicate this.

Do not become intimidated by investing. It's actually very simple math number two and number two is about the rule of 72. We'll go through this in a second as well, but the rule of 72 is useful in determining how fast money will grow, take the annual return from any investment. Expressed as a percentage and then divided into 72.

The result is the number of years it will take to double your money. The rule of 72, if you listened to the episode we had with Brian feral, Brian Feral invest in individual stocks as well. He has an amazing book called Why Does the Stock Market Go Up? And Brian Feral talked about the rule of 72 in that episode as well.

What the rule of 72 is, is you can divide any rate of return. Say if, for example, you get a 10% rate of return on an s and p 500 index fund, for example, well you can divide that. 72 and you can see how long will it take me to double my money if I invest my money with a 10% rate of return. It's a really cool calculation and it's a very cool way for you to be able to see, hey, how fast might my money grow over time?

So let's give you some examples here. Say for example, that you invested with a 10% rate of return will the rule of 72, you divide 10% into 72, it's gonna take you seven. Two years to double your money. So every thousand dollars that you invest, it would take you 7.2 years to turn that into $2,000. Every $10,000 you invest, it would take you 7.2 years to turn that into 20 and so on and so forth.

Say for example, you got an 8% rate of return, will that bump it up to nine years before you could double that money? Or if you got something like what we see in our savings accounts right now, by the way, savings accounts are really rising. Say you got like a 4% return on your high yield savings account, then it would take you 18 years before that money would double.

So this is a really good calculation to kind of assess, Hey, do I want to invest my money in some of these places, or should I pull back and find another investment that may be more profitable for me and fits my risk tolerance? Those are two things you gotta think through as you go through this process.

So that's how the rule of 72 works. Number three, if you're prepared to invest in a company, then you ought to be able to explain. In simple language that a fifth grader could understand and quickly enough so that the fifth grader won't get bored. I love how Peter Lynch brings some of this stuff out because you need to simplify your investments, and we talk about that all the time on this podcast.

Why? Because simplification means that you're gonna continue to do something over a long period of time and invest. Is a long game. You need to simplify your investing ideas. In fact, Warren Buffet is very famous for buying billion dollar companies with a one page contract. Why he simplifies down those companies to a one page contract so that he can go out and buy them and streamline the process.

Simplification is the name of the game in finance. If someone's trying to overcomplicate a financial situation, say for example, you're talking to an advisor and they're trying to overcomplicate a financial situation, they're using technical jargon that you don't even. You need to tell them to simplify this down because you can simplify money and really have some of the best returns out there.

That's why we talk about index funds so much because index funds are the most simple way that you can invest and you can get some of the best returns. Where most professional money managers can't even beat out index funds. That's why we love 'em so much cuz you can. Simplify down your investing principles.

So if you're gonna invest, say for example, a company, you need to be able to simplify why you're buying that company on a simple napkin, and you need to be able to explain it to a child so that that child will also stay engaged. This is kind of how you have to think through investing. You need to know why, and you need to understand the business completely, and then be able to explain that in a very simple way, number.

You get recessions, you have stock market declines. If you don't understand that's going to happen, then you're not ready and you will not do well in the markets. This is a very important thing to understand because if you are a long-term investor and if you're investor in whatsoever, you need to understand that recessions are.

Normal recessions are going to happen. You are going to see your portfolio reduced by 20, 30, 40, sometimes even 50% if it's like 2007 and 2008, where your money might get cut in half, and a lot of people start to panic when that happens. But guess what you truly need to do? You need to understand that this is a normal part of the cycle within the market, and it's a very normal thing.

It has happened so many different times that. Bear markets. We've had recessions, we've even had depressions. So understanding that this is a very normal thing, but long-term investors always win. Why? Because they're willing to ride out that wave. They're willing to ride out that volatility. This is a mindset thing.

This is a psychology thing. Very early on in my vesting career, when I saw my. Stocks dip. I got very nervous. I remember my heart would start to flutter, all those different things. Now, I could care less of my stocks dip. Why? Because I'm a long-term investor and if you take out a stock market chart, pull out your phone, take out the stock market chart and put it to the longest time horizon that you can, what direction does that market go?

Long-term it goes up, and that's what it's done historically over time. Now, sure, historical performance is not indicative of what's going to happen in the future, yada, yada, yada. We understand that, but at the same time, Historically, since the very early 19 hundreds, we have seen the stock market go in one direction, so you have to expect these downturns.

You cannot panic during downturns, or you will never be successful when you are investing. Instead, what you need to do is you just keep investing no matter what. Just keep buying consistently. Every single month. Take the portion of your money, whatever your savings rate is, 20%, 25, 30%. Put it into the market or put it into whatever you are investing in.

Maybe it's real estate, maybe it's something else, but put those dollars into income producing assets that produce an income for you so that you can retire. Because if you don't invest your money, you will not be able to retire. Number five, and this is kind of goes along with number four as well as the real key to making money in stocks is to not get scared out of them.

So people who buy stocks then when the market declines they sell, are not going to be successful with their long-term returns. You have to stay invested over the long run and not get scared out of investing. But the cool thing for people who do do this, if you're listening to this podcast and you're like, I've sold so many stocks, when it goes down, then it goes back up again, and I'm driving myself crazy here.

This is a skill that you can learn. Like I said, early on in my investing career, I would get worried when my stocks would go down. Now I could care less. Why this is a s. Skill that you can develop. There's a couple ways that you can actually develop this skill. Number one is education and educating yourself on the markets and how the markets move, and reminding yourself that this is a very normal part of the cycle is one of the biggest things.

So you can do this through reading books. I read a lot of different investing books, especially early on. I would read tons and tons of investing books that. 30, 40, 50 investing books every single year so that I can understand how market cycles moved. Study some of the best investors. Look at Peter Lynch.

That's why we're doing this. Look at Peter Lynch. Look at Warren Buffett. Look at Charlie Munger. There's so many amazing investors out there that you can see. How did they react when the market dipped? Did they panic? Or did they buy more? How did they react when they did that? So you gotta think through how you are going to react and visualize what's going to happen, because this is a very emotional thing for a lot of people.

And once you take the emotions outta the equation, all of a sudden you can be a much better investor. Listen to podcasts. Listen to podcasts who talk about this kind of stuff that market recessions are very normal. If you listen to any personal finance podcast or investing podcast that tells you to sell when markets go down, then you need to write that person off because this is something that.

Over the long run, markets go in one direction historically, so you gotta understand how this works. So the more educated you become, the less fearful you become. That is the bottom line when it comes to this. Number six, there are substantial reward for adopting a regular routine of investing and then following it no matter what.

An additional rewards for buying more shares when most investors are scared into selling them. There's two parts to this number. Is most people are rewarded with a regular routine of investing. Now, if you heard the episode we had Nick Maul on, he talks about his book, just Keep Buying, and that's one of the premises of the investing portion of that book on just keep buying is just keep buying.

Just keep investing. Why? Because historically, that is the proven way to build wealth. Over time, that is the first half. And the second half is if there are investments that you truly love and they take a dip in the market and you have cash on hand. Now, I'm not a person who keeps cash on hand just to buy dips.

That's not something I do. I'd rather have the cash working for me right away. But if you have extra cash on hand outside of your emergency fund, don't use your emergency fund for this. But outside of that, if you have extra cash on hand that you just don't know what to do with, and there's an additional stock that you know, or an index fund or an ETF or whatever it is.

That you truly believe in, you've done your homework, you understand it completely, and you can understand it and explain it in a simple way, then that may be something where you'll be interested in buying that at the dip, because that's what rewards people as well, and that's what a lot of these investors do when you go through that process.

Also, I'll give you an example of this. I hold mostly index funds and ETFs. The majority of what I hold is index funds and ETFs, but I do hold individual stocks as well. I have a dividend portfolio that I hold, but in addition, I hold some individual stocks in my taxable brokerage, and one of those stocks, my largest holding overall is Apple.

Why do I hold Apple overall as my largest holding? Because Apple is a way, in my opinion, where you can buy something that everybody is addicted to, which is their phone, and so you can actually buy into a company where people are addicted. In fact, in this room, I have 1, 2, 3, 4, 5, 6, 7 Apple products in this.

Alone. So when I go through this, I'm a person who buys a ton of Apple products. I understand the company wholly, completely. I've owned Apple since 2012, and so it's one where I've held this company for a very long time. It's been one of my best performing assets that I've ever had. So when Apple takes a dip, I understand this company wholly and completely.

So when the market takes a dip, a lot of times I'll just buy more Apple along with index funds and ETFs, but I will buy more Apple during that timeframe. Why? Because I think Apple's on sale. I think this company is on sale. They have so much cash that they produce. I understand the balance sheets. I understand how the financials work.

And so when I see that take a. every single time I go and buy more Apple. Now, that's not saying you should go buy Apple. What I'm saying here is this is a company I believe in that I fully understand and I understand the surrounding financial metrics that you need to know in order to invest in a company like this.

And the same thing can go for you on those dips as well. So that's what Peter Lynch is talking about here when he looks at some of this. Number seven, and this is a good one. The list of qualities an individual investor should have includes patience, self-reliance, common sense tolerance for pain.

Open-mindedness, detachment, persistence, humility, flexibility, willingness to do independent research, and equal willingness to admit mistakes and the ability to ignore the. This is a lot of characteristics that an individual investor should have, and this is why I like to invest in index funds primarily because those are a lot of characteristics that you need to master before you can actually buy individual stocks for a number of different reasons.

And so when I'm looking at this, this is why I just think most people should invest in index funds. In fact, we had Brian Ferdi on this podcast we talked about earlier. He wrote the book, Why does the stock market go up? And Brian Aldi talks about this as well. He's an individual stock investor and says that 99% of people should be invested in index funds.

But why? There's so many characteristics that you have to have and you really have to master the psychology part. You have to master your psychology and master your behavior in order to be a good individual, stock investor. Number eight, if you go to Minnesota in January, You should know that it's gonna be cold.

You don't panic when a thermometer falls to zero. Now, this is a great example of you need to expect what you should expect, and when you invest in a market, you need to expect that the market is going to go down. You don't get surprised when the market has a decline of 20 or 30%. Instead, you understand that this is a normal part of this.

And if you expect the expected, then panic does not set in. That is how you master. This is when you expect the market to go down. You're expecting this. Then the panics not gonna set in. And that's why now I used to panic way back in the day, and now I could care less, like I said, because the panic does not set in.

I expect the expected. So this is another key lesson that we have to learn right here. Number nine, the natural born investor is a myth. So learning how to invest is absolutely a skill, and it's a skill that we've talked about a bunch of times here already, where you have to master your psychology, but you also have to understand some of the basics as well.

This is why we created Index Fund Pro, because I believe that you can. Build the skill of investing, and I believe anybody can build that skill. That is why we started with that course first as our first offering. The reason for that is so that people can really, truly learn how to build wealth, but this is a skill that you can learn.

There is no natural born investor. Nobody is born with this. Some people may be more intelligent than others, like Warren Buffet, for example, as a rumored to have a photographic memory. So that is a different. Entirely, but all of us can get the average rate of returns, which is a very profitable endeavor just to get the average rate of returns.

Average is absolutely amazing when it comes to building wealth, especially when it comes to your investing. So here's a life hack. You can learn from the experiences of other people. So that's why I always read biographies from, say, some of these investors like Warren Buffet. There's a great biography called the Warren Buffet Way, where it walks through all of the investments that Warren Buffet did throughout his life and it kind of breaks down why he did them.

And it shows you in a very digestible way where it shows like each investment is like a page or two long, where it breaks down exactly why he did that. There's a bunch of great books out there like that where you can learn why people invest, how they invest, and what they invest in. Maybe you don't wanna invest in the market.

Maybe you wanna invest in boring businesses. We had Cody Sanchez on this podcast and she talked about investing in boring businesses. I think that's one of the best ways to invest your money. Maybe you wanna invest in real estate, but learning these different concepts so that you can understand the natural born investor is a myth.

You have to learn this stuff. It's a skill that you can learn, so that you can earn, and that is the key when it comes to this number. I don't know anyone who sits on their deathbed and says, gee, I wish I could spend more time in the office. So the reason why we talk about financial independence so much on this podcast and why we talk about financial freedom and the power that your money has is because money is there to bring you value, and the value that it can bring you is it can give you back your time so that you don't have to spend more time in the office.

It gives you freedom of your time, and it also gives you freedom so that you can spend more time with your family, your friends, whatever else you want. Nobody gets to the end of their life and says, I wish I spent more time in the office. You've gotta remember that every single time you're thinking, Hey, maybe I just need to spend four or five, six more hours tonight.

I won't see my kids maybe for the rest of week, but I can get some of this work done. You gotta think through some of this before you get to that point, and this is why financial independence is so important, because you don't have to make that decision anymore. Number 11, and listen to this one closely.

A price drop in a good stock is only a tragedy if you sell at that price and never buy more. To me, a price drop is an opportunity to load up on bargains from among the worst performers and your laggers to show promise. If you can't convince yourself when I'm down 25%, I'm a buyer and banish forever the fatal thought, when I'm down 25%, I'm a seller.

You'll never make a decent profit in stocks. This is another example of what Warren Buffett's most famous quote is, be fearful when others are greedy and greedy when others are fearful. What does he mean by that? Is that when the market goes down by 25%, you should not freak out. You should not panic.

Instead, you should become a buyer because you bought these things with conviction for a. and you gotta remember that conviction. And you have that one page sheet available if you're gonna buy individual stocks. One thing I recommend if you're gonna buy individual stocks is you have a one page sheet that you create for each stock that you buy on why you bought it.

And every year as you're going through those individual stocks, you say, Hey. Do I still believe in this premise? Do I still believe in these reasons on why I bought the stock at the end of the year? If you don't, then maybe that's a good reason to use that capital and put it towards another investment that you do believe in more.

But having these one page sheets is incredibly important so that you remember why you did what you did and if that is still a good reason to actually own this company. So that's another quick tip there that I utilize when I buy individual. Now. Another thing is people always ask me when the market takes a dip, I get a flood of dms that ask me, should I sell, should I sell?

Should I sell? You're gonna know my answer based on listening to this podcast this far, all the way through so far. But you gotta understand that when you buy something, if you buy something like the s and p 500, the s and p 500, for example, is the 500 largest stocks in the stock. It's the 500 best companies in the US stock market.

Unless you think the US is going to crash, which we have way larger problems. If that happens, then sure, you should stay invested for the majority of the time in the s and p 500. In fact, I would never sell an s and p 500 in Next Fund personally because I believe in the US going forward. Number 12, stocks are a safe bet, but only if you stay invested long enough to ride out the corrections.

This is a powerful message that a lot of people need to hear. Stocks are a safe bet, but only if you stayed invested long enough to ride out those corrections. This is the same exercise. Pull out your phone. Look at the longest time horizon there is on a stock market chart, and you'll see why long-term investors always win.

If you're a short-term investor, you're a day trader. This is obviously not the podcast for you, but at the same time, day traders really are not as profitable. There's a number of reasons why we can talk about taxes. There's a bunch of other reasons as well, but you wanna be a long-term investor. If you wanna build generational wealth, if you wanna build generational wealth, the best investors in the world buy and they don't.

They only sell if you need the money in retirement. When you're drawing down that money in your portfolio, you have not lost money unless you sell. Now, one quick tip is if there is a downturn and you really still start to panic, even though you understand all this stuff is you can look at your portfolio less during downturns or during bear markets, which is exactly what I do.

I don't look at my portfolio very often at all, but you can look at your portfolio less during downturns, and that's going. Think less about it as well because you know, over the long term the market goes in one direction, which is up. Number 13, long shots. Almost always miss the mark. Shout out to NFTs. So if it sounds like it's too good to be true, it probably is.

I have a major lesson in this. So one of my first investments that I ever bought when I was a teenager. Was a penny stock. And I would get this newsletter and I thought this newsletter was amazing. It was just some scammy guy who would send out this, uh, penny stock newsletter and every day he would send out the penny stocks that he loved to buy.

And I would watch them and a couple of them would go up and I'm like, oh, this guy knows what he's talking about. And then eventually I finally took my $600 that I had at a teenager and hit the newsletter. Came out the next day and I'm like, I'm gonna buy whatever he sends in this newsletter. Cause I didn't understand investing yet Completely.

And so he sent out the newsletter. I bought the stock that morning. By the end of the day, that stock went from whatever the penny stock was. I think it was like, you know, a dollar or whatever it was. Went all the way down to zero. That company was non-existent by the end of the day, and this was a pump and dump newsletters.

Essentially what it was I learned that day, that long shot's always missed the mark, and I would never do something like that again. This is kind of what drew me to go towards index funds. And learn more about how to invest your money, where eventually I went to mutual funds, bought some mutual funds, and then then went to index funds.

But this is the lesson that I had to learn. I had to lose basically my entire net worth as a teenager all in one day. So this is something where you can learn from my mistake that I just told you right here. When I was very young, you do not want to invest all of your dollars into long shots. And really, if you're gonna invest in long shots, this is why we talk about your crypto portfolio should be 5% or less of your portfolio.

Why? Because these are long shots. These don't have intrinsic values. They have no financials backing them. They're only worth what someone else says they're worth. So understanding that early on. , it's gonna be very, very helpful for you. Number 14, you just don't know when you can find the bottom. This is something where, when I used to day trade and I did use to day trade, by the way, when I used to day trade when I was young, I was in my very, very early twenties.

I never knew when to get out, and you just don't know when the bottom is going to happen. I never knew when to get out. No. Day Trader can really tell you when to get out. They can have all these technical indicators and they can have all these things that come into play, but they never come into play at the time they think they're going to come into play.

So understanding early on that you'll never be able to buy a stock at the bottom if you're an individual investor, but if you can find a stock at a good price and you think it's a good price, then it probably is a good investment for you if you've done your research. Number 15, this is for individual investors.

The person that turns over the most rocks wins the game, and that's always been my philosophy. So Peter Lynch is saying here, the person who looks through the most companies and reads the most reports and understands the most companies usually wins the game. This is why Warren Buffet and Charlie Munger read about 500 pages per day, and he talks about some of the reasons why, because it helps him find investments.

He's turning over an insane amount of rocks. Peter Lynch did the same thing. Peter Lynch would walk through the mall and look at companies and see which companies are busy, and if those companies were busy, then he would go home and research the stock and he would do all these different things to kind of think through how can I find trends and how can I find investments?

But this is for individual investors. Number 16, there seems to be an unwritten rule on Wall Street. If you don't understand it, then put your life savings into it. Show me an enterprise around the corner, which can at least be observed and seek out the one that manufactures an incomprehension. Product.

What he's saying here is you need to understand what you're investing in. If you don't understand what you're investing in and you put a ton of money into something that you don't understand completely what you're investing in, then you are making a huge mistake. Look down the street. All the companies that have been around forever within your community are all companies that you understand.

They're companies that a lot of people understand. They know what it does. Maybe it's the local restaurant or the bakery, you know, the lumber yard, or whatever those things are in your local industry. Well, think of it the same way as a stock market. You can have fun in everything in life, but to me, when it comes to my investments, I'm not looking to have fun.

I'm looking for the best chance to get the highest rate of. That's gonna be steady throughout my lifetime. I don't want the extra risk. I don't want the extra added things that can throw me off of my plan. I want to get from point A to point B the fastest and safest way. I don't want the excitement. I don't need the excitement.

I don't need the thrills. That's why I invest in index funds. But the same goes for investing in your portfolio. Number 17, I love this one. The extravagance of any corporate office is directly proportional to management's reluctance to reward shareholders. So when you invest in a mutual fund that has really high fees and they have this really extravagant offices down in Wall Street, who do you think is paying for those offices and those fancy suits and all of those fancy horror for graduates?

Your investment fee is, this is why we. Fees as low as possible because it doesn't go to income producing activities for you. Instead, it goes to the fund manager and their office and funding their lifestyle, keep fees as low as possible, but I love that quote. 18, 19, and 20 are all related, so we're gonna combine these three together.

18. You shouldn't just pick a stock. You should do your homework. 19. You should not buy a stock because it's cheap, but because you know a lot about it. Number 20, the worst thing you can do is invest in companies you know nothing about. Unfortunately, buying stocks on ignorance is still a popular American pastime.

All three of these are all about understanding the investments that you're looking at. And if you're gonna buy individual stocks, you need to understand that company. Holy. How do you do this? You can look at 10 Ks. You gotta understand how to read financial reports. There's a bunch of great programs out there to understand how to read financial reports, but you gotta be able to put the work in and it's a lot more work than a lot of people are willing to do, especially if you're looking to invest in something like value stocks, for example.

Or if you're looking to be a dividend investor, you gotta have a whole complete plan on exactly why you're doing this. Then explain it simply. So all of these are talking about, you need to fully understand the companies that you're investing in. For the longest time, Warren Buffet would not invest in tech companies.

Why? Because he did not understand how some of these tech companies operates. Now, he invests a large portion in companies like Apple, but early on he did not understand tech companies. And during the tech boom, he thought there was a lot of risky companies within that tech boom. So instead he invested in companies.

Coca-Cola, Proctor and Gamble, railroads, all the classic companies that he understood and can fully understand how they work. Number 21, never buy anything that you can't illustrate on the back of a napkin. This is another great one. I'm fully understanding, but keeping it simple. And then number 22, and this is a great lesson for a lot of us to learn.

You only need a few good stocks in your lifetime. I mean, how many times do you need a stock to go up tenfold to make a lot of money? Not a lot. And what this is saying is that if you simplify your portfolio, You keep your investment simple and you buy things that you completely and fully understand, then you're gonna be a much better off than someone who buys a hundred different stocks and has no idea what they're buying.

Or if you buy index funds, you don't have to buy 20 index funds. In fact, we talk about this in Index Fund Pro. You buy one to five index funds to build out your portfolio. You don't need to overcomplicate this. So keeping your portfolio simple is one of the best things that you can do in order to simplify your entire investing life.

Listen, so these are the 22 lessons from Peter Lynch. I think these are absolutely amazing for you to kinda look through. If you want this pdf, we will link it up down below so you can download and look through all these and use these as reminders. These are something where they are fantastic to remind you, especially if you get stressed out when the market takes a dip.

There's a bunch of things here that are gonna help you walk through that so you can think through every time you start to invest your money, you wanna see some of these. And in fact, if you are not motivated to invest, automating your investments is one of the best things that you could do. But also using this as motivation.

And reading through some of these quotes is also a great way to stay motivated as you invest your dollars. If you guys have any questions, make sure you hit us up on Instagram or TikTok at Master Money Co. And follow us on Spotify, apple Podcast or whatever podcast player you're listening on right now.

And don't forget the Master Money YouTube channel has a bunch of new videos coming out. We just had one about the best Fidelity index funds. We have one about the best Vanguard Index funds coming out as. So make sure you check out the Master Money YouTube channel. We have a bunch of great videos coming out in the three fund portfolio, the three fund portfolio versus the s and p 500 portfolio.

We're doing some deep dive breakdowns on there, so Master Money YouTube channel is a great place for additional resources as well. Thank you guys so much for listening to this podcast. Make sure you share it with a family or friend if you got any value whatsoever and we will see ya on the next episode.