Wednesday, January 31, 2007

Be comfortable with your activities and investments

I was at an airshow this summer and had the pleasure of watching the Army’s Golden Knights skydiving demo team. They teased and toyed with gravity and did things in the sky that made me shake my head in amazement. As I watched them step out of their plane that was WAY up there I couldn’t help but to think that a plane would have to be on fire, heavy fire, for me ever to want to jump out of it. Shortly after the Golden Knights finished an airshow pilot pealed his sleek aerobatic plane off the runway rolled it once and put it on an upline that had me craning my neck back in seconds. I stood and watched this guy roll, loop, and literally summersault this plane across the sky. As he landed all I could think was, “How do I get a ride in one of those?” Being upside down in a plane I am comfortable with, jump out of that plane I’m not.

Uncomfortable is pretty much my emotion when I read about people using money from zero interest credit card balance transfers to invest with. In short you pull money out with the balance transfers and usually push that money into an online savings account yielding 5% plus. Somewhere down that road you pay the money back and keep the interest. Is the plane on fire? Now don’t get me wrong. There are people that do this and make money consistently. Just ask 2Million. Over on his blog he has a great how-to about making money with balance transfers. More power to you if balance transfers work for you. For me it is too much like jumping out of the plane… blindfolded.

On the flip side of that I have no problem buying stocks on margin. With the margin buying I am still borrowing good size sums only now the interest is far from zero and the stocks a long way from FDIC insured. Can you make the plane go upside down again, please. Some would go as far as to say that buying on margin comes with greater risk than the balance transfers path. I would not disagree with that being said. For me margin buying is like snap rolling an Edge 540… exciting and fun. (Could one of these ideas be better than the other for you? Sure. Could they both be bad ideas for you? Yes! Could you be comfortable using both? Some people are.)

Many “professionals” say we should invest in things and companies that we know something about. Well hell I know a little bit about a lot of things, not all of them I would be comfortable sinking my money into. (I’ll take margin buying over balance transfers, stocks over rental property, aerobatics over skydiving, a mountain view over a city skyline…)

My point is this: Seek investments and activities that you are comfortable with. Don’t get me wrong I am not advocating NEVER doing things that take you out of your comfort zone, after all that is how we continue to grow. Just keep in mind as you read, listen, or watch different investment ideas being showcased that not everyone of those “great ideas” is great for you. There are no hard and fast rules as to how or what you ultimately should invest in. Don’t give it a second thought if your comfort level doesn’t match up with Dave Ramsey, David Bach, Robert Kiyosaki, Jean Chatzky, or even me. As long as you are making an effort in managing your money, preparing for your future, seeking enjoyable company and activities then that’s enough.
We all make far better decisions when we are comfortable with our current situation and investments as opposed to being mind numbingly stressed out. Repeatedly making better decisions not only increases the return on our investments but also the return on our life.

That’s it for today. Here’s to people, activities, and investments that make us smile. And to keeping an eye on our EveryDay Money.

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