The 5 Millionaire Investing Habits That Changed My Life

What's up guys, it's Graham here.

So throughout the last 10 years, I have tried every single millionaire productivity optimization life hack that you could think of. From waking up at 5 AM, meditation, creating a to-do list, goal setting, regular exercise, the five-minute rule, the list goes on. Honestly, I could confidently say that all of that has helped, and I made a lot more money as a result. However, I wanted to take a slightly different approach with this video and go for the most important investing habits that have helped me grow from a few thousand dollars to over 20 million dollars in the span of just over a decade.

Because I know a hundred percent these techniques will help anybody who follows them, it's like being able to cut the line of investing experience that some people take decades to learn, and you got it all right here, neatly packaged in a YouTube video. And, of course, if you're wondering, "Wow Graham, how much is this information going to cost me? Surely it can't be cheap." Well, I'm gonna be real with everybody. It's not free. It's going to cost you one like on the video.

And listen, if you don't like the video, it's not like I'm gonna track you down or anything. We're gonna operate on the honor system here. And if you want to take it a step further, it would mean a lot if you subscribed if you found this video helpful.

First, we'll start with something easy: invest as soon as you possibly can. Now, I have to say throughout all of the investing advice out there, this one is easily the most impactful in terms of how much wealth you can accumulate throughout a lifetime. I know it might sound super basic to some people, but the reality is most people are not going to follow it. They'll continue to delay until that upcoming crash that everyone predicts is going to happen every year.

Now, they think, "What's the rush to buy right now if I could just buy it next week or next month or next year? It's not going to make a difference anyway." Now, I will say from firsthand experience that the type of person to continually make delays or wait until the perfect time to buy is often the type of person who just never gets around to doing it ever until it's too late.

See, here's the thing: when you're young, one of the biggest advantages that you have is really simple. It's just time. Not only do you have the luxury of riding out any short-term fluctuations in the market, but you also have the huge advantage of what's called compound interest. This means the money you invest is able to grow at a faster and faster rate because the interest you make makes you even more interest, which makes you even more interest, which makes you even more interest, until pretty soon you could buy a mega yacht with a support yacht.

So now I kind of feel like Morpheus from The Matrix because I'm about to tell you, you have a choice to make. You could either use this knowledge to make you a lot of money, or you could ignore it, and only time is going to tell how much that costs you.

Just consider this: if you invest a hundred dollars a month starting at the age of 20, at an eight percent return, by the time you're 65 years old, that hundred a month will have turned into a nest egg of almost five hundred and forty thousand dollars. However, if you think to yourself, "I had my entire life doing that; I just want to buy Gucci slippers and drink Starbucks," and you invest that same hundred dollars a month but you start five years later, at the age of 25 instead, by the time you're 65, that amount will have only turned into 361 thousand dollars.

That works out to a difference of 177 thousand dollars just by waiting five years to invest a hundred dollars a month. What's even more eye-opening is that during those first five years, you've only invested six thousand dollars. So that six thousand dollars invested between twenty and twenty-five is worth an extra one hundred and seventy-seven thousand dollars later in life, which let's be real, it's a lot of money just for not buying stupid stuff.

Even for me, throughout my entire twenties, I was in overdrive investing mode because I understood the importance of compound interest, and I knew that I would never have that good of an investment opportunity ever again. That's why I saved everything I made. I invested as soon as I could. I maximized my income, and now I could pretty much splurge on anything that I want, even though I prefer to splurge on good investments.

Second, do not try to time the market. This is probably the simplest, most factual piece of advice you will ever hear when it comes to investing, but it's also the most difficult for people to actually follow. That's because all of us, deep down, want to believe that we have what it takes to outsmart the market. And each time it's easy to believe that this time is different. If you don't just take my word for it, but here's the science to back this up: since 2006, had you just bought and held, you would have seen a 10.66 return.

But had you been trying to time the market and missed out on the top 10 best trading days over 15 years, your return drops down to five percent. And all it takes is to miss out on the top 30 trading days over 15 years, and you'll experience a negative 1.18 return. Of course, people are going to trade regardless, so another study looked at 83,000 investors on eToro who made more than three trades a year, and the results were pretty bad.

This graph shows the average profits from each trader over a 12-month span, and at the end of the day, 79 percent of them lost money. The median return was negative 36 percent. Only one in five people who traded stocks were able to just break even, and statistically, you were nearly also just as likely to lose everything.

Generally speaking, research shows that the more trades you make and the more you try to time the market, the lower your overall return becomes. On the other hand, though, performance shows that a 20-year holding period in the stock market has never once produced a negative result.

So, without overloading you on too many facts and studies, all you need to know is this: the Buy and Hold investment strategy is not only the safest but it's also the most profitable for the vast majority of investors. In fact, just buying into the markets immediately, regardless of where it's priced, has outperformed dollar cost averaging 71 percent of the time. Or in other words, there's a 70 percent chance you're more likely to make more money by investing everything right now than spreading your investment across a longer period.

Third, only invest in what you understand. Now, I know this is another one that's like, this is common sense, Graham, obviously we shouldn't invest in something we don't know anything about. But yeah, apparently it's not common sense because people do it all the time and they don't listen. They invest in something because someone told them it was a good idea or they see something going up in price and they don't want to miss out because everyone's talking about it on Reddit, or they blindly follow someone else who appears confident in what they're doing.

I'm not saying you have to be a full-fledged expert on the U.S. equities market or anything, but you should understand where your money is going, how much your brokerage is charging you, what's been the historic return of that investment, how they make their money, and how much volatility you could realistically expect to handle.

If you cannot answer those questions, then why is your money best suited for that particular investment? Then it's probably best you just not invest, even if this means you miss out on some potential profits. Just trust me, you'll save a lot more money than you'll miss out on in opportunity costs by randomly following other people or just jumping into things you don't know anything about.

Especially in this market, when nearly everything has increased throughout the pandemic, it's so simple to get disillusioned that investing is easy and get accustomed to consistently making money. But that doesn't always happen. You need to understand that investing is going to be cyclical. Some investments will lose money for years in a row, and you have to expect that going in. By doing so, you'll be that much better off as an investor.

You'll be less likely to sell at a loss, and you'll feel more comfortable holding on to your decisions because you understand the fundamentals and you did the research yourself.

Fourth, never invest money that you need in the short term. Here's the thing: when you invest your money, there's always a chance that the value of that investment is going to go down the moment you buy it. Take my podcast co-host Jack for an example. Every time he buys an individual stock, it just goes down the day after. It's a fact.

I mean hypothetically, if you were able to just short the stock... But that's really the reason why investing should be a long-term strategy. You generally cannot predict where the markets are going to be a few months or even a few years from now, and as we've seen, anything can happen. But you can look back historically and see that the chances of coming out ahead, profitable over 10 to 20 years are pretty good.

So for that reason, investing any money that you'll need in the short term is generally not a good idea, and you could lose a lot of money. Like what we saw back in 2020. Had you invested your money right before that, when you needed it in April, you would be screwed.

However, if you invested your money that you knew you didn't need for the next 10 years and you held on a little bit longer, well now you would be sitting at a 30 percent profit just for holding on and doing nothing. So when it comes to this, here's what I do: if I know I'm gonna need the money in the next one to two years for a down payment on a house, to pay a tax bill, or save up for something in particular, I'm not going to invest it. Instead, I'm probably gonna throw it in a high-yield savings account and that's it.

Now sure, that probably means I'm going to miss out on some potential profit, but it also means I'm not going to lose any money, and it guarantees that I'll have everything I need by the time I need it without any risk whatsoever. The thing is, mentally, when I make an investment, it's basically like I'm locking it away for 20 years, and whatever happens between now and then doesn't matter.

Fifth, you also have to always invest consistently. For me, investing is like a way of life. It's not something I dabble with here and there, and it's not like a hobby you'll get bored with after a few weeks or months. Investing is really meant to be as consistent of a habit as brushing your teeth twice a day, going to the gym, or smashing a like button for the YouTube algorithm.

Once you get into the routine of investing consistently, it just tends to stick after a while, and then you do it without even thinking about it. And as far as why this needs to be done consistently, just consider this: if you decide to invest ten thousand dollars today and then you do nothing for 30 years at an eight percent return, after that time you'll have a hundred thousand dollars.

However, if you instead just invested two hundred dollars a month and did that consistently over the exact same time frame, you would have 317 thousand dollars, or three times more money, just by investing less up front but with more consistency. Here's another example: quite a few people are able to cut back on their weekly spending by a hundred dollars a week.

If you literally do nothing besides investing that hundred dollar weekly savings, preferably in a Roth IRA so it's tax-free, at an average of an eight percent return, you'll have over 2.3 million dollars saved up in 45 years. That means you would be able to call yourself a tax-free multi-millionaire from a hundred dollar weekly investment. That could be your retirement right there! Plus, a Lamborghini used of course, preferably a Gallardo, eager because the six speeds are going up too much in price.

That is what happens when you take saving and investing seriously. The other benefit is that investing consistently protects you against the Lost Decade scenario, where the stock market trades relatively flat. Take the years 2000 through 2012 as an example. Assuming you just bought in once, you would have made a total of a 4.66 percent return over 12 years, or 32 percent if you include the dividends.

However, if you consistently bought in month after month, regardless of where the market was trading, your cumulative return jumps to 24, and with dividends reinvested, your return is as high as 42. In order to do this and not forget about it, I highly recommend that you just automate your investments as much as possible.

Just set up automatic withdrawals into a broad index fund without even thinking about it. It's out of sight, it's out of mind. You don't need to be actively involved in it from there on out, but just remember it's there and you're pretty much done.

So it's really from those five habits, along with living frugally, maximizing my income, and saving, that I formed my entire investing career. In fact, I can't think of a single investment that I made without considering each of these five points that we talked about here. Like I mentioned, everything here is meant to last you a lifetime.

This isn't a video about what works now or how to invest in 2022 for beginners, step-by-step, not clickbait. This is how to invest forever, and you can feel free to save this and come back to it time and time again, anytime you just want a refresher, you're unsure about something, or you want to invest in something you know nothing about. Just follow this, stick with the process, and no matter what, if you found this helpful, it does help me out a lot if you subscribe or hit the like button.

So thank you guys so much for watching! Also, feel free to add me on Instagram. Thank you guys so much for watching, and until next time.