Over the past few weeks I have noticed that there have been blog posts about:
- Fun and personal finance
- Fun and investing
Get Rich Slowly asked its readers “Where’s the Fun in Personal Finance”? Amazingly, JD Roth, the author of the site gets a kick out of things like increasing income and developing methods for paying down debt (good for JD). However, JD correctly points out that in the case of personal finance it is not a good idea to just focus on the means – improving your finances, rather than the end – what you will be able to do when you have got your finances in good shape. JD suggests that you should always develop goals which you can achieve based on improved finances. In JD’s case the goals include saving for a Mini Cooper, or for holidays. So, I would say that practicing good personal finance can lead to fun when the results are greater financial freedom or goods purchased without debt.
However, when it comes to investing, one should never ask the question – is investing fun. Good investing should not be fun. Good investing should be boring, and should be nervous and edgy since the most important part of it is managing downside risk.
But unfortunately for investors, the investment world is being portrayed more and more like a game as discussed by Clusterstock in “Why People Pick Stocks: Cause It’s Freakin’ Fun”. The business channels with their scoreboards, hot lady presenters, and rapid fire commentaries are becoming more like game shows. And there is form in this historically – in the Wild West poker was used as a method of determining who were more intelligent investors since people realised that good poker players were good at weighing up risk and managing money.
The Crossing Wall Street blog also talks about this point where Eddie states that US citizens should be allowed to treat investing like a game since so many other vices in the US have been banned – like playing poker online! But I think that Eddie of Crossing Wall Street is making a mistake, as are any other people advising investors to have some fun while investing.
Investing can be interesting, and challenging, but it should never be considered fun. This may seem like an ironic statement given that I am promoting Texas Holdem Investing which teaches investing through the medium of poker – a game. But the key point to learn from Texas Holdem Investing is that when playing poker / investing well, it should not be exciting. There will be adrenaline rushes but these must be dealt with, accepted, and then put into the background. Excitement should be pushed out of the equation. Interestingly, somewhat like the inaction required to help achieve your personal finance goals, inaction is a strong skill you will learn with Texas Holdem Investing so you can wait for the best investment opportunities.
Finally, with personal finance you will save money / cut debt / increase income with a goal of acquiring something with the excess funds (freedom, goods, experiences). With investing, you should never decide to start investing with an objective of using your “winnings” to acquire something (you will learn about this in Texas Holdem Investing). Investing should always be done with separate funds. If you’re not investing with dedicated capital i.e. speculating with your rent money, your nerves are likely to get the better of you if you suffer a bad run of investing.
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