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FAST CLASS: Start Late, Finish Rich

Lesson 16 of 18

The 6 Biggest Mistakes Investors Make

David Bach

FAST CLASS: Start Late, Finish Rich

David Bach

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Lesson Info

16. The 6 Biggest Mistakes Investors Make

Lesson Info

The 6 Biggest Mistakes Investors Make

I got six of the biggest mistakes investors make. The whole point is showing this to you is just is to basically prevent you from losing a whole bunch of money. So here examples examples of investments I see people make where they have been wiped out. Limited partnerships, hedge funds start up investments, real estate partnerships. Even though I like real estate, I'm personally not a big fan of real estate limited partnerships. What I have learned growing up in the investment business is this. A lot of stuff gets packaged up and sold to retail investors. By the time it is sold to you and I as a retail investor, it is garbage because the commissions in the fees everybody's making money but the retail investor. So how do you present prevent yourself from losing money in these investments? Here's how you prevent it. The question you always ask yourself Who's ever selling you? That investment is, is the investment liquid. Can I sell that investment? And like everything I showed you today, ...

all the robo advisors, for example, you build a portfolio diversified mutual funds, E T f stocks, bonds, all that stuff, long as it's gonna take you your money back. Five days you can put in a sale. They're gonna solar trade, and they're gonna get you a check. And you have your money back in five days. You buy a home. You're not getting your money out in five days, but its liquid. Unless you buying a really bad market and you price your home really wrong, you are at least getting your money back within a year. Most cases you're selling your home, you're getting out your real estate with 120 days. Okay, so that's liquid. Most package products are not liquid. Unless you are worth in excess of $10 million you should never be considering hedge funds. Okay, limited partnerships. I would avoid these. Like the plague in most cases. A lot of promotion around this idea that there's a secret way into these start up companies. You're gonna win, invest in these next Facebook. You're gonna invest in next Airbnb. You're gonna invest in the next create alive, and you wanna know the truth. The chances are that you're not okay. If you're not a professional investor with a whole lot of money, these private equity firms and these VC firms, they go out on the investing 50 companies or 75 companies, 100 companies. They know they're gonna lose money and most of investments. You As an individual investor, you need to be. You could buy one or two companies you know, about 15 20 of these companies. And the problem is that today it is easy to invest in sort of companies. And there's all kinds of crowd sourcing websites. I could give you 20 crowd sourcing websites right now where you can invest in the next hot start up. Here's what I can tell you for most of those investments that tends really badly. So the amount of money that you should put if you're gonna have money and these kind of risky investments no more than 5% of your net worth to 10% total. Okay, So mistake number two investing more than to 10% of your money in one asset or money manager. So I don't I see people put all their money with one money manager. They pick out one mutual fund. Let me go back to that Vanguard Star Fund, OK? Because I told you I love that one fund talked about Target date mutual funds. There's 11 funds in that one fund, so it might be one investment. But there's 11 separate asset classes. You might be able to buy one mutual fund and have 15,000 separate investments inside that one fund. Don't put all your eggs in one basket. Steak number three Investing on margin. Anybody here know what margin is so margin is? Yeah, Margin is basically you've got a brokerage account and you can borrow against it and keep investing. You could have $100,000 in a brokerage account and the brokers from alone you another $100,000. And so the loan and the launch you It depends on how much money you have and what kind of a client you are. But they'll charge you 8% as low as 1.5% depending on the brokers from some of these brokerage firms. Even market to this will say, you know, you can borrow 1.5% and you can go and buy dividend producing stock at 2.5%. You could make the spread. You could make 1% great unless the stock goes down, Let's the market corrects. Happens to be even. You were an all time high in the stock market. And no surprise. There's more money on margin right now. There's then there's ever been in my lifetime. Um, number four. Uh huh. Loaning money to people that a bank won't loan money to. So by the time someone comes to you, too, borrow money, everybody else said no. Right? So someone's got a business. They're like, Hey, I'm I'm doing a convertible note. People do have invested in convertible notes, but im investing it with my percentage and I and I know what I'm doing. By the time the average person someone comes you and says, Hey, on a bar, $100,000 I'll give you 10% like 10%. I mean, my God. David showed me the numbers. If I could get 10% that's great. Is guaranteed until they stop paying you and then they don't pay you back. Don't loan money to someone that a bank Paul no money to. You're not in the banking business. It always ends badly. Steak number five. Signing a personal guarantee. Onbusiness step or leases So this one's tricky, right? Because when you go to borrow money, um, and you've a business in most cases, especially if it's a smaller business, they're gonna make you do a personal guarantee. You need to really think through what you just signed up for. Um, and it's everything. That's the That's the lease. Like you go lease office space, you go leaves furniture, all of that if you sign a personal guarantee. First of all, if you can avoid signing a personal guarantee never saw on a personal guarantee and the most important thing when you sign up for anything that is a personal guarantee. Don't look at the month. Look at the lifetime of the loan steak. Number six. Not signing your own checks. Um, I don't care how successful your business is. I don't care how busy you are. Always saw in your own checks. It's like it's like the one rule that never goes away. Somebody else can cut the check. My business, my bookkeeper, cuts of checks, puts him in front of me. I go through, I check it off the invoices attached to the check. Then I signed the checks. Truth is, I do most my banking online this point, so I'm signing last checks. Um, but every time somebody gets ripped off, it is because they let somebody else sign their cheques. Every time you hear about celebrities that have been scammed is because they hired a money manager or financial management team, and those guys sign their cheques.

Class Description


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A proven, insanely simple plan to get out of debt, fix your financial life, and achieve your financial dreams— no matter where you are on the financial spectrum— “Start Late, Finish Rich’” is a one-day program that has helped millions and can help you achieve your best financial year ever.

Author of nine New York Times bestsellers, including #1 New York Times bestsellers Start Late, Finish Rich, and The Automatic Millionaire, David Bach will teach you why it's never too late to live and finish rich. He will also share the secrets to becoming an “Automatic Millionaire” and how ordinary people with average incomes can achieve extraordinary wealth.

You’ll learn the basics of financial responsibility, and quick, specific actionable steps to help you increase your savings, improve your investment returns, and crush your debt. David will show you why you’re already richer than you think.

In this class you will learn:

  • How to build financial security starting with as little as $5 a day
  • The #1 Millionaire Habit that changes everything
  • Why budgets don’t work and almost guarantee failure
  • The secret to having a “retirement, dream and security” account
  • How to become rich faster, as a freelancer or small business owner
  • How to organize all your financial information, using the “Finish Rich” file folder system
  • How to create an “Automatic Millionaire Blueprint” system to automate your financial life forever
  • How to create a retirement plan that works “automatically”
  • Why you need a will and what needs to go in that will
  • How couples can work on their finances together and not fight about money
  • Why women must take charge of their financial future today, and what’s the fastest way to own your financial power

Whether you are in debt, living paycheck to paycheck or simply feeling behind schedule on your savings and retirement dreams, David Bach has helped millions take charge of their financial life and he can help you, too.

The proof is in the numbers. With over seven million books in circulation around the world, over a million students, and over a hundred appearances on NBC’s Today Show, David’s teachings work. This one-day program takes a true deep-dive, change-your-life, comprehensive approach to fix, crush, and handle your financial life and financial worries once and for all. It’s never too late to live your dreams.

WARNING: This is NOT a get-rich-quick program but rather a timeless, simple approach to money that anyone can act on in minutes. If you are looking for an “earn more money program, make money online, get rich in days not decades,” this course is not for you. If you want to learn in a fast, fun, and non-judgmental environment, how to build financial security for life, then this is for you. David tells it like it is, and he empowers you to take action now.

Class Materials

Bonus Materials with Purchase

Automatic Millionaire Starter Kit

Finish Rich Quickstart System

Pay Yourself First Graphic

12 Steps to Live & Finish Rich Graphic

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