The One Thing Gay Men Should Know Before They Invest

Investment Strategies for Gay Men

Joshua Kennon, About.com Guide to Investing for Beginners, answers questions gay men have about investing and saving money.

I asked: What's the one thing beginning investors should know before they start investing?

Joshua said: In the words of one Nobel Prize winning economist, successful investing should be like watching paint dry. When investing, your net worth is not going to steadily and regularly increase like it would in an FDIC insured bank account. Instead, there is going to be a lot of volatility. You may be down $40,000 one year, and up $80,000 the next. Stay the course, take advantage of free money in your employer match, shield your assets in tax-advantaged retirement accounts, and be patient. Make sure you have life, car, home, health, and disability insurance to protect your assets. One day, after a lifetime of diligent work, saving, investing, and financial responsibility, you should wakeup to find yourself comfortable and secure.

If you happen to own individual stocks, you should know how the companies generate their profit, and how much you are paying for each dollar of profit (this is known as the price-to-earnings ratio). If you are paying more than 10 to 20 times earnings for a huge, successful company, you are probably going to lag the market and get mediocre results; pay more than that, and you are probably going to have part of your capital wiped out at least once in your lifetime. These rules would have protected you from nearly every stock market bubble in history, but most folks just can’t watch their neighbors get rich as they continue to compound their great, steady cash-generating blue chips. It’s upsetting to think how many average Americans actually sold their shares of Exxon-Mobile and bought dot-com companies with no profits and huge operating losses.

More Investing Questions:
Are bad economic times a good time to invest?
Where should beginning investors start?
What about gay couples looking to invest together?
What should gays look out for when investing?
Should gay men invest in companies that discriminate?
How can a person calculate their personal level of risk when it comes to investing?