Porter Stansberry: Two simple rules everyone needs to know about money
The secret to Stansberry Research founder Porter Stansberry’s incredible success is simple… He consistently delivers great advice for people looking to live a better, wealthier life.
This post is a classic example of that.
This piece is an excerpt from our book, The Stansberry Research Starter’s Guide for New Investors. Written by some of our most trusted and respected editors and advisers – including Porter – this must-read guide identifies the 10 core concepts that are vital to successful wealth-building and investment.
In the excerpt below, Porter details two key ideas people can use to build significant wealth. He says out of all the things he did right financially, these were the most important.
He directed his comments toward young people. But these ideas are useful, no matter what your age. Before you make a single investment, make sure you understand these ideas…
From Porter Stansberry, founder, Stansberry Research:
For the young folks out there, the single most important thing you can learn, at your age, has nothing to do with investing.
It’s simply this: Live beneath your means. Do not borrow money.
It’s that simple.
If you just go to work every day, try your best, build a career, save 20%-25% of your income, and don’t get into debt… by the time you are 35 years old, you will be well ahead of the game.
By the time you’re 40, you can be a millionaire, easily. And you don’t have to do anything with investing beyond corporate bonds, municipal bonds, and local real estate deals. There is no reason for you to become a stock trader or an options seller or anything like that. You don’t have to do that, and I wouldn’t recommend you do it until you can do it full time.
Now, let’s say you’re 55 years old and you’re retiring. You’ve got 40 hours a week to spend on your investments. Fantastic! You can trade stocks or stock options.
But if you’re 20-something right now, don’t waste your time and energy with all that stuff…
You can read about it. You can learn about it. That’s great. But just focus on increasing your income by building a career and/or having a part-time business of your own… and living beneath your means.
Now, here are some easy things to avoid: Don’t ever borrow money to go to college. College is a waste of time to start with. Why would you borrow money to waste time? It makes no sense.
Second – and this is the trap that a lot of people fall into – they want a huge house. They’re 28 years old, they’re 30 years old… They get married. They have a kid. And they believe, therefore, they’ve got to have a house – the house. They go crazy into debt to buy it.
Don’t do it. I swear, you don’t have to go into debt and get the “perfect” house. If you just focus, instead, on living within your means, you can buy a small condo. You can live there for five years until you can afford to buy a small house. And by the way, I said “buy.” I didn’t say “mortgage.” I said “buy.”
If you become dedicated to never getting into debt, your entire financial life will be brilliantly successful. If you can’t avoid the temptation to get into debt, there’s a 50% chance that you’ll never make it. So what’s the best thing you can do to increase your odds at financial success?
Simple. Live within your means and avoid debt.
The thing I want to tell young people is that unless you can do it on a full-time basis, you don’t need to start investing yet…
Sure, some of your money should go into high-quality, blue-chip, dividend-growing stocks. Absolutely. That’s part of your savings program. You can do it via your 401(k). You can do it with an IRA. I’m not saying avoid stocks altogether. I’m saying most of your money should be in corporate bonds, municipal bonds, gold, silver, and rental real estate.
More importantly, figure out how to avoid being in debt.
There is an easy way to do it. Just say, “I’m not going to borrow money.” Then everything else in your life will become a lot simpler. You’re not going to be shopping for a new car, for example. You could buy a decent car for $2,000. Why would you borrow $20,000 to buy a new one? It makes no sense.
If you really want to be rich, the first step is: Don’t ever borrow a penny. As soon as you understand interest, you will only be a lender. You will never be a borrower.
Out of all the things I did right financially, that was the most important one.
Crux note: The Stansberry Research Starter’s Guide for New Investors is packed with research, personal accounts, and interviews from some of the most successful wealth-generators we know.
It cuts through the nonsense you hear from Wall Street and the media… and breaks down the path to wealth into 10 simple, core concepts – including the four common mistakes investors make, how to identify incredible bargains, the magic of compound interest, and much, much more.
Take these ideas to heart, and you can ignore just about everything else. Claim your own copy right here.