Speculating vs Investing

Today's Newsletter:

• My Latest

• The Rearview Mirror

• Speculating vs Investing

• A Money Question

My Latest

I try to share everything I know about money with you all.

Including what I am doing with my own money.

Well on this episode of MoneyWise, I shared more than ever before.

I hope you will check it out as it will give you the context behind my money moves.

You can check it out below ⬇️⬇️⬇️

The Rearview Mirror

I remember as an 18-21 year old looking at the “stocks” app on my iPhone and playing the “what-if” game.

I would hear about some company (usually a tech giant) and their incredible growth.

I then would go back to look at the 5-year or 10-year return and play this game…

If I invested xyz amount in that company it would be worth some crazy amount today.

Honestly, it was fun to dream about it but it was harmful in all reality.

You see, investing doesn’t work like that. We can’t look in the rearview mirror and just focus on the past winners.

Remember, I never did that same exercise and pulled up companies with sharp downturns.

No, no, no, just show me the winners!

It was the ultimate form of speculation and did me no good in becoming a better investor.

Speculating and investing are two vastly different things.

And…that is exactly what we are going to talk about today.

Let’s dive in…

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Speculating vs Investing

The Webster’s Dictionary defines these as the following:

Speculating ~ To assume a business risk in the hope of a gain.

Investing ~To commit money in order to earn a financial return.

I mean do we have to go any further…one says “hope” and one says “to earn”.

See the difference?

We invest money for our clients, we don’t speculate with their money.

Yet, that doesn’t mean we can’t have a bucket of “speculative money”.

You see there are countless factors when it comes to investing and your rate of return isn’t the biggest one or everything (it is just one factor).

Wait what?

I know, I know, I know…we have all been fed an untruth.

No the biggest factor in investing is to reach the specific outcome you are trying to accomplish.

Consider these two examples:

Family 1

• Desired Outcome - To keep living their current lifestyle and sleep well at night.

Family 2

• Desired Outcome - To grow their legacy bucket as much as possible for the next generation.

Now you tell me, should those two families be positioning their resources the same way?

Not a chance…

Family 1 should be avoiding anything that even remotely touches that speculative bucket.

Yet Family 2 could certainly consider positioning a portion of their money towards speculative bets.

So step one is to determine what your desired outcome is and step two is determining if you are willing to stomach the risk (both material and emotional) of having speculative assets in your investment portfolio.

The most speculative asset in today’s investment landscape is Crypto.

• Some people believe it will take over the dollar as everyday currency.

• Some people see it as a store of value.

• Some people see no value in it.

Here is what I think ~ It is speculative because we don’t have long-term data to support it. 

Some coins could (and probably will) 1000x from here and some coins (probably most) will take a nosedive from current prices.

The Crypto craze makes me think of the Warren Buffett quote, “Speculation is the most dangerous when it looks easiest.”

I don’t know about you but social media keeps telling me how easy it is to make money in Crypto (or name your preferred speculative investment).

So if you hear me say nothing else, hear this:

• It is pointless to look in the rearview mirror.

• Speculating and investing are two different things.

• Your desired outcome should shape your investment portfolio.

• Choosing to add speculative assets requires an acceptance of extreme risk.

For my Crypto enthusiasts out there, I own some. Yet I also have no idea where it is going next (no one does).

So just remember to keep your investments investments and your speculation speculation.

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My goal with this newsletter has been to help you get smarter with your money.

Yet, I think it is important to remember.

 I struggle with many of the same roadblocks with money.

Heck, half the time I write this newsletter I am writing it as much for me as for you all!

Until next time!

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A Money Question

What dollar amount (not percentage) do you have in speculative assets?

There is no wrong answer here because everyone’s desired outcome is unique to them. Yet everyone should know their numbers and be comfortable with the risk it entails.

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3 Ways I Can Help You

💰 Schedule an introductory call with Moment. We help athletes, entrepreneurs, and key employees build and protect wealth.

📹 Check out my YouTube channel. A safe place to get smarter with your money.

📷 Interact with me on Instagram. Where I provide bite-sized daily content to level up your money game.

Moment Private Wealth, LLC is a Registered Investment Advisor, located in the State of Missouri. Moment Private Wealth provides investment advisory and related services for clients nationally. Moment Private Wealth will maintain all applicable registrations and licenses as required by the various states in which Moment Private Wealth conducts business, as applicable. Moment Private Wealth renders individualized responses to persons in a particular state only after complying with all regulatory requirements, or under an applicable state exemption or exclusion. Nothing in this content is intended to be, and you should not consider anything in this content to be, investment, accounting, tax, or legal advice.