Rule #1: The Simple Strategy for Successful Investing in Only 15 Minutes a Week! is a book written by Phil Town that gives us another perspective on investing.
Money is an important factor in life. It would be a lie to say that money can’t buy happiness. It’s true that money can’t buy everything in this world, but money can buy most things. That’s why money has become something that motivates people to do extreme good and extreme evil in order to achieve the happiness they want.
In fact, there are many ways to push someone to become rich, wealthy, or have a lot of money in their hands as desired. If referring to what we have heard, it is that you have to work hard, have to be determined, and then you will become rich. But if that were really the case, there would not be an abundance of poor people in the country like today.
“You don’t have to be that smart to make money.”
Study hard, study hard and you will get a good job, which means a lot of money, right? This process is not wrong, but it may not work for everyone. From many ways to show the way to get rich, from the book Rule #1 Phil Town has told about another way to get rich, which you do not have to be smart with a high IQ or be number 1 in the class. You can have a lot of money in your wallet just by learning how to invest with Phil Town’s Rule #1, which is the result of an investment strategy that responds to the needs in the market. Just having a computer, you can be a Rule #1 investor.
“Higher returns come at a higher risk.”
Almost everyone who is into investing or is interested in investing, one of the well-known truths of investing is that higher returns also mean higher risks. Everyone is wary and anxious to lose a lot of money in exchange for higher returns, but they can’t help but touch the tempting risks. The truth is, higher returns do not necessarily come with higher risks. If you don’t know the direction, needs or goals of what you are trying to do, your journey on the investment path can be slow and potentially dangerous.
“The importance of rule #1 is to know what you are doing.”
Being a mutual fund investor is riskier than being a rule #1 investor. If you own a mutual fund that is trying to beat the market and trust your fund manager to help you retire comfortably, you are falling victim to a big scam. Most fund managers don’t beat the market, even when it’s what you pay them to do. At the very least, you should know what you are doing, not just paying someone else to do it. Investing with confidence in what you are doing will keep you from losing money.
3 investment myths that have been passed down as the basics or core of investment that will prevent you from wasting your money and not knowing the real reason for losing a lump sum.
1. You need to be an expert in money management. It’s not hard at all to just spend 15 minutes a week learning how to invest, understanding what you’re doing, or trying to learn how to manage your own money.
2. You can’t beat the market, but you can take advantage of your daily mistakes to reap 15% or more returns.
3. The best way to reduce risk is to diversify and hold for the long term. You buy dollars for cents and sell them later for a dollar. Do this repeatedly and you will get rich.
Dollar Cost Averaging (DCA)
A trading tool used by fund managers and brokers is Dollar Cost Averaging (DCA), a strategy of buying the same amount of stock or mutual fund each month, regardless of the stock or fund’s price. If the price goes down, your money will buy more stocks, and your money will buy fewer stocks when the price goes up.
“Rule #1 is actually “Don’t waste your money.”
But in practice, it means investing with confidence, which comes from making great investments at attractive prices.
The goal of Dollar Cost Averaging is to limit your investment risk by making the average cost per share smaller. For DCA to work, you have to put in the same amount every month no matter what. Rule #1 has been the foundation of great investing for the last hundred years, and it will be the foundation of great investing for the next hundred years.
“You should know that you can make a lot of money from a great investment at an attractive price.”
The word “great” can be easily understood by covering 3 elements: the business must be meaningful to you, you understand it enough to want to own it, and if you do, it will reflect your value. Next, the business must meet the criteria of financial strength and predictability. Finally, you need good management. However, these 3 elements may not feel enough to make an investment. Another thing to consider is that the business is attractively priced, has a very large margin of safety (MOS). And most importantly, it is important to know that the price of something does not always equal its value.
Investing according to Rule #1 has the following 4 steps:
- Find great businesses
- Know how valuable your business is
- Buy at 50% off
- Repeat until you become very rich.
“Imagine investing your money in planting seeds in the ground. You will reap what you sow.”
Great businesses have people who actually drive to achieve great goals. In his book, Good to Great, author and business researcher Jim Collins says that CEOs who move companies do so because they are moving toward their chosen greatness, which he calls Level Five leaders. Level Five leaders are committed to a larger purpose, have a desire to build great companies, and their characteristics can be summarized as ownership-oriented leaders who have a desire to drive the business.
“Ownership-oriented CEOs are those who have a direct personal interest in the shareholders of the business.”
Microsoft’s Bill Gates and Steven Ballmer see themselves as owners and managers of their companies. They focus on ownership as if the company is the only asset their family will hold for the next 100 years. They push for change in the world in small, quiet ways, but make a huge, positive impact. Because the small changes they make, made regularly and with focus every day, will ultimately create value for them as they become the vision for the company. If they are good, they can drive the business for many years.
Conclusion
Remember… your goal is to buy $1 for $1. You may find at least one business that means something to you that you will be proud to own and that you will understand. You should start doing your homework now if you are interested in other avenues to get rich besides studying and working hard to build your own business. Set aside some time to really study investing. You will find that there are many businesses out there for you to find and invest in.
Remember… the only businesses that have a future and are predictable are great companies. Don’t be lazy. Most importantly, don’t overlook the #1 rule of being a true investor. Step into the field to make money for yourself. Take it one step at a time, without rushing. There are always great companies in the world at attractive prices. Don’t let the fear of losing force you to continue giving your money to the financial services industry. You don’t need a fund manager. You can invest successfully on your own.
“Rule #1 is not for the old-school investment gurus, high IQs, or socialites. It’s for anyone who’s ready to use it properly and doesn’t want to worry about money anymore.”
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