Why Talk to Yourself?

Is it healthy to talk to oneself?

10 things I would tell my 50-year-old self about life and investing.

According to Stephen Khan, “Talking out loud, when the mind is not wandering, could actually be a sign of high cognitive functioning. Rather than being mentally ill, it can make you intellectually more competent. The stereotype of the mad scientist talking to themselves, lost in their own inner world, might reflect the reality of a genius who uses all the means at their disposal to increase their brain power.” This leads me to an interesting question from Dino. SOURCE

Here is what he said, “Thanks for your recent posts!  Very informative.  If you have time and it’s not too much trouble, would you be willing to write a post on what you would tell your younger 50-year-old self, given your current financial knowledge?  I’m 50 years old and about 10-12 years away from retirement.  Not sure how many of your readers are in my position.  But knowing what you know now, how would you set up your retirement accounts when you were 50 years old?  At 50 years old, would you have invested differently?  Would you have invested more or less?  I’m not saying it in a way that you knew what the market or individual stocks were going to do (i.e. NVDA), but would you have done something differently? Thanks again, Dino.”

What Comes to Mind Immediately

Unfortunately I cannot have a conversation with the 50-year-old me. In the 23 years since then I have learned much that I did not know at that young age. But what first comes to mind is the importance of preaching to myself. By that, I mean there are some even bigger truths about life that I need to tell myself repeatedly, much like a good preacher does when he is talking about eternal truths. We all talk to ourselves but sometimes our inner conversations are not helpful and can be destructive.

 “No one is more influential in your life than you are because no one talks to you more than you do.” – Paul Tripp So once you build a plan, and solicit some sound advice, keep talking about it to yourself. It doesn’t hurt to write it down and say, “This is how I will view my life and my investing life.”

The Ten Things I would tell my younger 50-year-old self…

Hey Wayne, listen up to an older (and hopefully wiser) Wayne…

  1. Think even longer term than long-term. In other words, think about the end of life and then work back from there. At the same time, link and compare those thoughts and priorities with what I will view as really important in eternity.
  2. Don’t wait until later to build an income model as a part of your investment portfolio, Wayne. Understand the power of dividends and don’t pay as much attention to the siren call of the really big win. The lottery and chasing the next big thing are going to disappoint far more often than not. Don’t be cautious about how much you invest in stocks. Don’t sit on cash unless you have a strategic purpose for doing so.
  3. Wayne don’t buy the marketing ploy that the mutual fund manager or an investment advisor can do something better than you. Ask yourself if you are really getting better results by paying someone more than you need to for something that isn’t really that complicated. Learn more sooner.
  4. Hey, younger me, learn about options and start experimenting with covered call options. Then use the income from those options to buy more dividend growth stocks and trade even more options. There is a gold mine in options trading.
  5. Pick two resources that can help you invest better and make fewer mistakes. Wayne, don’t be cheap about this investing work. Pony up the dollars for the AAII Journal and for a Seeking Alpha subscription. Why? Because you will save yourself far more than you will spend by making better investing decisions and making far fewer dumb or foolish decisions. Take what you learn and build your buy and sell rules from the wisdom gleaned from others.
  6. Start sooner to move assets from your traditional IRA to your ROTH IRA. Pay the tax today. It won’t be easier to pay the tax at age 73.
  7. Share what you are learning with your children, your spouse, and your grandchildren. They will benefit from not having to learn the harder way like you did.
  8. Don’t worry about your sector allocations. If you see more opportunities in technology or the financials, focus there. Give up on the idea that utilities are a good idea.
  9. Don’t buy bonds or bond funds. Never, ever buy them. Bonds are a dead-end street and inflation will bludgeon you to death when you get closer to the end. To make matters worse, they can also lose money.
  10. Finally, do not listen to the mantra, “You must rebalance your portfolio.” Why rebalance what is working? Buy what is working and sell what isn’t. The balance will be a bigger investment portfolio that pours income into your lap.