24

Investing

“Every day I get up and look through the Forbes list of the richest people in America. If I’m not there, I go to work.”

ROBERT ORBEN

comedy writer, author, magician, and speechwriter for President Gerald R. Ford

Invest in the stock market

Invest in your future.

Invest in yourself.

I always made sure I saved anywhere from 25 to 50 percent of every dollar I made. I still do.

Remember, we all have to pay taxes, so that whittles the amount we earn down by as much as half before you decide whether to spend or save your money.

Always live below your means.

I’m like you. I wasn’t educated in these areas. And they never taught me any of this in public school.

When I was twelve, at my mother’s urging I opened up my first savings account in a local bank. It was a good idea. Money I didn’t have in my pocket would be money that I wouldn’t spend, especially on things I really didn’t need. Eventually, I noticed over time that I actually made a little bit of money in my account. It was called “interest.”

As I accumulated more money, I also saved more. I started learning about things like inflation. And how prices of everything seem to keep going up and up. Inflation means the decrease in the actual value of money. Simply put, ten cents no longer gets you into a movie theater. Nor will a dollar. It’s now increasingly common to pay ten dollars or more for a movie ticket.

When you combine the fact that a dollar loses value every year and things cost more every year, it becomes clear that savings accounts in banks will only do so much for you. They simply don’t earn enough interest to make up for the rise of the cost of things and the rate of inflation.

I had to learn about the stock market.

When I first started reading about it in newspapers and books, it seemed no different than learning Mandarin Chinese.

It was difficult to learn, but I had to do it.

If you’ve built up a decent amount of cash that you don’t need to pay your bills with, you might consider investing in the stock market. Millions do.

Early on, I learned about spreading the risk, mutual funds, and the Dow Jones Industrials, aka “the Dow.” And penny stocks. And futures. And commodities.

You don’t have to learn all of that, but it helps if you do.

So let’s simplify.

You’re twenty-five to thirty years old.

You’ve been able to save $40,000, after tax. I commend you. That means that you’ve already paid your tax. You’ve already paid your bills.

And remember, I’m a novice, just like you are. I am not a trained accountant or a financial or business adviser. These are just my opinions. I have to say that to minimize my legal risk. (I don’t wanna get sued. Who does?)

You will need to keep some cash handy, in case there’s an emergency (this is known as being somewhat “liquid”). After you pay your bills and your tax, keep 10 percent “play money.” But don’t keep too much cash around. You will spend it.

You may decide to invest the rest of your money. If so, get some professional advice. Some investments may punish you if you take out the cash too early. You may have to wait a certain period until the investment “matures” in order to withdraw the cash. Which is good, because we are told that the longer you stay in the market, the better your chances of making money by investing.

Take the remaining money and invest in the stock market. Get a financial adviser, and ask about mutual funds.

Mutual funds sprinkle your dollars across a few different investments. In the game of roulette, they tell you not to bet all of your chips on one number. It’s also known as not putting all of your eggs in one basket. The simple idea is that if something goes wrong with one investment—and it certainly can—you still have other investments that will hopefully make up for the loss and keep you in the profit margin.

Spreading the risk means exactly that. Some of your investments will go up. Some will go down. Hopefully, the overall number will give you an increase—a profit—above the rate of inflation (that is, larger than the rate at which the dollar is losing value).

I’ve done well in the stock market. In fact, it has made me quite a bit of money.

In 2009, I was invited by the New York Stock Exchange to ring the bell at the start of the trading day. It was a proud moment. I never imagined that I would wind up there, let alone that I would be there by invitation. As it happens, the former head of the New York Stock Exchange was a classmate of mine in high school. And when I came down to the NYSE, the media was there. Photographers were there. And our TV show, Gene Simmons Family Jewels, filmed the event.

From my vantage point above the trading floor of the world’s trading center, I was reminded that I came to America as a legal immigrant with my mother, and step by step, day after day, worked to get where I was. Tears almost rolled down my face, and I was grateful to America and its people for allowing me all of this. I was humbled.

I know—the big bad capitalist actually had an emotional connection to the money game. Strange, isn’t it, since guys like me are always portrayed as the villain? That is because my preoccupation with money comes from somewhere real—it comes from buying my mother a house, making her comfortable. It comes from putting as large a wall as possible between myself, my children, and starvation. Doesn’t sound quite like the evil CEOs you so often hear about, does it?

Around 2008, the marketplace was unhealthy. It was the beginning of a period of big plunges in the real estate market, with people and banks both getting hurt. The Dow (meaning the stock market) was right under 8,000 points then. That number was bad. It signaled a very bad time for the investment community, and a general lack of health in America’s economy.

As I was leaving, I walked the floor of the New York Stock Exchange, and there were photographers and TV crews shooting there. One news outlet, Fox Business, asked me what my view was regarding our economy in general, and about the Dow being in the unhealthy neighborhood of 7,800.

My answer, in so many words, was this: I don’t know about you, but I’m investing in America. I am taking all of the money that I stupidly waste throughout the year, and instead of throwing it away, I’m investing in the stock market. In biotech, in food, in McDonald’s, in Coca-Cola. Take all your stupid money, and don’t throw it away on needless things. Take it and invest in yourself—invest in America.

If you followed my point of view, and had a little gut instinct and luck, you would have doubled your investment in just a few years with picks of a few of the right stocks. Today, the Dow is over 17,000.

So, what level of money should you invest in the stock market? Use your own judgment. Seek sound advice.

Consider all the times you went to a bar or restaurant and treated your friends. Think about all the trips and vacations you’ve taken. Afterward, you may have wished that you hadn’t taken that trip or vacation. I would suggest that if you’d taken all the money that you spent on clothes/shoes/electronics/cars/houses (with after-tax dollars, remember), and invested it instead of spending it, you’d be a lot better off.

Remember, once you’ve spent money, you will never see it again.

But, if you invest money, you will probably see a profit, and pay tax only on the capital gain, meaning, the profit that you made on the money that you would have spent otherwise. See?

You will also have to invest in your individual retirement account (IRA), but your employer can help there.

You will also need to have insurance. Health insurance. All sorts of insurance.

These are things you need.

The shoes/electronic gadgets/cars are things you don’t need. Not when you’re starting out.

Invest in America.

Invest in what you know.

Invest in yourself.