“If only I had invested in Amazon, Apple, or Nvidia 15 years ago” or “I knew I should have bought that property 20 years ago when it was under $250,000.” This is an all too familiar sentiment. It’s also a waste of time and energy because there are new rules of the game.
A new game with different rules. Unfortunately, you can’t go back in time and change what you did or did not invest in.
Although there are basic financial principles everyone would be wise to follow, the rules of the game change year over year and decade over decade.
Examples
An investment that worked in 2000 may not have worked in 2010 or 2020. For example, after the Great Recession in 2008, you could have bought almost any house for sale and have done very well either living in it or renting it out.
You also could have followed the BRRRR method for several years after and made a killing. You can’t do that today by just picking any old random house. You will need a new strategy.
Today if you want a property to cashflow, you probably need to do a value add, improve the property somehow, or come up with something creative. Whatever it is, it’s more than likely going to be a lot more work than back in 2010.
My Grandparents
I remember my grandparents back in the 80’s putting a bunch of money in a CD. They parked a large percentage of their money into them and did very, very well.
Even though I had little understanding of CD’s back then, it stuck out to me that they bought a brand new car with the interest they made from CD’s. That was impressive to me and the memory stuck.
The rules of the game have changed though. While CD’s provide a decent return versus just holding it in cash, they aren’t providing the same kind of returns as they did in the 80’s. Very few people are going to put a substantial part of their portfolio in a CD.
The Low Interest Rate Period
From 2010 to 2022, interest rates were at historic lows. The game many people played and succeeded with was to borrow money to pay for assets like rental properties.
Now interest rates are higher so that isn’t a game as easy to play. There’s a huge difference between a 2.8% and 7% interest rate. New game, new rules.
Saving Accounts
Robert Kiyosaki famously said savers are losers. Of course he didn’t mean losers in life, but that savers were losing money every year to inflation.
People holding cash earning less than a percent in a savings account lost money every year to inflation. Now that savings accounts pay closer to four percent, it’s easier to save more money as an emergency fund or for a little extra cushion. Also new rules.
Conclusion
Being skilled with money means continually assessing the markets and the current economic situation. Then adjusting based on the economic climate, or rules of the game.
This doesn’t mean altering timeless principles like paying yourself first, automating your money, or keeping an emergency fund. It does mean adjusting strategies as needed though.
Figure out what game you’re playing, identify the rules and make your decisions from there.
