Using a Checklist Approach To Investing - The Money for the Rest of Us Philosophy
Nov 22, 2023
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Bill Yount and Becky Heptig discuss investing using a systematic checklist approach. The topics include the importance of understanding the upside and downside of investments, the basics of investing in bonds and stocks, efficient markets and asset classes, and reasons for selling investments. They also explore two main websites: MoneyForTheRestive.com and AssetCAMP.com.
Investing requires asking key questions, understanding upside and downside, and assessing different investment vehicles.
Adaptive markets call for adjusting investment strategies based on changing conditions and making decisions based on available information.
Differentiate between dependable and speculative return drivers when evaluating investment options, diversify with dependable assets to mitigate risk.
Deep dives
Understanding the Purpose of Money for the Rest of Us Podcast
Money for the Rest of Us is a personal finance show focused on educating and empowering individual investors to navigate the complexities of finance and investing.
Investment Philosophy and Approach
David Stein, the podcast host, shares his investment philosophy and approach to investing, emphasizing the importance of a systematic and grounded approach. He highlights the need to focus on cash flow generating assets, diversification, and understanding market conditions to make informed investment decisions.
Key Questions for Successful Investing
The podcast episode discusses the importance of asking key questions when making investment decisions. These questions include understanding the investment, differentiating between investing, speculating, and gambling, determining the upside and downside of investments, identifying the other party in a trade, and assessing the attributes of investment vehicles such as open-ended funds, closed-ended funds, and ETFs.
Adaptive Markets and Wayfinding
The concept of adaptive markets is introduced, highlighting the importance of adjusting investment strategies based on changing market conditions. Wayfinding, a term borrowed from exploration, is used to emphasize the importance of making decisions based on available information and rules of thumb, rather than trying to predict the future precisely. The episode also addresses the concept of market efficiency and the challenges of active management.
Understanding the Risk of Bitcoin Investing
Investing in Bitcoin is risky because it is volatile and there is no cash flow. Unlike real estate, where you can still earn rent even if the price goes down, Bitcoin is binary - you either make money or lose money, with no control over the outcome.
Considering Dependable and Less Dependable Return Drivers
When evaluating investment options, it is important to differentiate between dependable and less dependable return drivers. Bonds, for example, have a dependable return driver in the form of interest payments, while gold is less dependable and more speculative. Diversifying with dependable assets like stocks and bonds provides consistent cash flow and helps mitigate risk.
In this bonus episode, David visits with Bill Yount and Becky Heptig of the Catching Up to Fi podcast in a wide-ranging discussion on investing using a systematic checklist approach.
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