Episode 3: Know Investing

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Would you believe me if I told you that an app on your phone could have the most powerful people on Wall Street shaking in their boots? 

That a simple investment in a company where you used to spend all your allowance money could make huge ripples throughout the US economy?

Welcome to KNOW MONEY! I’m BRANDON COPELAND – AKA – Professor Cope, class is now in session.

We all know about GameStop. That store in the mall you used to go to when you had a bunch of old video games you wanted to sell. You backed up a full of used games and consoles that you’d spent thousands of dollars on, and they offered you $7.21. Yeah, that store.

In early 2021, GameStop was the center of an investment battle that made The Big Short look like a comic book. Wall Street Bets is a page on Reddit that posts memes about stock and option trading. This community realized something: Hedge Funds on Wall Street were shorting the stock of GameStop.

When you short a stock – you are making a bet that the value of the stock is going to go down.  

In this case, these Hedge funds were piling into short positions because, well – when’s the last time you’ve seen a long line at the mall to buy video games. I mean the short position did make a lot of sense – but it also exposed them to the Wall Street Bets Community  

Fortunes were made overnight, and some were lost the very next day. 

People trading from their phone in their mom’s basement had Wall Street veterans looking stupid as hell on CNBC. A bunch of firms had to shut down GameStop’s trading. Some Hedge Funds lost so much money that they literally had to close up shop.

So – what’s the lesson here?

A.) Don’t mess with people who go on Reddit every day. They’re built different. 

B.) We the people  actually have the power to out-invest Wall Street.

And C.) Where you choose to invest your money can make a major impact on YOU, and the WORLD around you. Your wallet is more powerful than you think!

Investing isn’t an “Oh maybe one day” or an “Oh depending on how much money I make” type of thing – Investing is a MUST.

Raise your hand if you want to live to be 70 years old…Ok I’m not seeing every hand up, we’ll unpack that another time. But moving on…

Raise your hand if you want to be WORKING when you’re 70 years old — If you want to be setting your alarm every morning and busting your old ass every day. 

Talking ‘bout I’m dream chasing – no days off..How many of you want that? Yeah – I didn’t think so.

Who here wants to look your future self eye to eye and tell them sorry, I didn’t invest and you gotta keep working. Definitely a conversation I’m not trying to have.

Unfortunately, Nate Meeker had to have that conversation. He might also want to invest in a razor, that beard’s lookin kinda janky

What’s YOUR plan to achieve financial freedom? 

Are you going to win the lottery? Are you going to release a number one hit single? Oh… maybe you’re going to sign a max deal with the Lakers? 

A vast majority of us aren’t gonna get rich overnight. My dude up here is 5’9″, I see you. Respectfully, I don’t think the Lakers are interested. Instead of working on your jump shot, make your money work for YOU by investing it.

The harsh reality is, if you have any intention of living comfortably one day WITHOUT having to work, then you NEED to invest. 

You don’t have to work on Wall Street to invest. You don’t need a net worth of $50 million. You don’t have to be the Monopoly man. Speaking of the Monopoly Man, did you guys realize he doesn’t have a monocle? Am I trippin’? I could’ve sworn he had one.

I’m getting off track. The point is, investing is for everyone, not just the top 1%.

And are you ready for the truth? ALL of you have invested before…Even if you don’t know it. Investing is simply looking for a rate of return on your money.

You might not even realize this, but if you have any money at all, you’re already investing. Where you choose to keep your money is an investment decision.

If you put your money in a checking account, on average, you’ll get about a .03% return

If you put your money in a savings account, you’re looking at a .21% return

Investing in the stock market usually yields 7-10%

Keeping your money under your mattress will get you 0% return

And I can’t imagine you’re sleeping well either. That makes your mattress lumpy as hell! So…if you have one dollar saved or a bank account, then you are an investor. Welcome to the club. We meet on Tuesdays.

A lot of people think about investing like gambling. They’re looking for that diamond in the rough that will blow up and turn them into an overnight millionaire. I can’t tell you exactly what to invest in. Legally, I definitely can’t. My lawyers would be on my ass. 

But I can tell you the key to investing. And that is something I struggle with. No, it’s not.  PATIENCE!

Every once in a while – someone will hit it big on a meme stock or a cryptocurrency that skyrockets at the perfect time. But those stories are few and far between. They’re the EXCEPTION, not the rule. You’ll have way more success in the long run setting your money aside, and letting it grow over time.

As we all know, the center of the investment world is WALL STREET. 

We have a special message from a man on the inside who wants you to know how important investing is.

So rule #1 when it comes to investing: TIME is your biggest asset. What do I mean by that?? I see a lot of y’all checking your watches…

But there’s this little concept that you have to know about called Compound Interest. 

Clearly the Einstein of Wall Street is passionate about investing, but the REAL Einstein, was also passionate about investing – Specifically about Compound Interest. Albert Einstein loved Compound Interest so much he called it the 8th wonder of the world. 

Think about that for a second. 

The man that DEVELOPED THE THEORY OF RELATIVITY was even more amazed by compound interest. Unlike the other wonders of the world, you can’t take a trip to see compound interest. This ain’t the pyramids. But you can see compound interest over time in your account statements, and – eventually –  you’ll see it in your pocket

Compound interest is interest on top of interest – or making money on your money.

Let’s say we put $100 in the bank and received a 5% return with compound interest. After year 1, I’d have $105 – a gain of $5. But year 2 is where the magic starts happening. With compound interest, not only do we earn money on our initial investment of $100. But we also earn 5% on the 5% gains we got in year 1! So after year 2, our total would be $110.25, with a yearly gain of $5.25.

I know what you may be thinking: $5.25?! Cope, I’m trying to invest in my future – not buy a Big Mac! 

We have to take a step back and look at the bigger picture. 

Remember what I said, your biggest asset is TIME. Let’s blow this up to a bigger scale so you can see how important TIME is in this equation. 

Take my boy Josh. Josh was ahead of the curve. Instead of spending all his extra cash on beer, he started investing at 20 years old. But some 20 year olds have more beer money than they know what to do with.

Hey, worth a shot, right?

Instead of going broke buying beer, Josh started tucking away $500 every month into an IRA, or an Individual Retirement Account. He kept saving that same amount of money, every month, without fail, for 40 years. 

Not a penny more, not a penny less. The man is CONSISTENT.

By the time he turned 60, Josh had invested a total of $240,000 into his IRA. That’s a lot of beer money. And thanks to compound interest, with a 7% average rate of return, over time, that $240,000 cash investment grew to $1.37 MILLION.

That’s the beauty of compound interest – time. 

Let’s remove some time from that equation. Let’s say at the age of 20, Josh decided to buy those beers instead of investing in his future. Now Josh shouldn’t be drinking until he turns 21, but I ain’t gonna snitch. Anyway, he kept spending that money on beers until he was 35 years old.

By the way, if you’re spending $500 a month on beer, we might need to have a separate conversation. $500 a month on beer will have your grocery store runs looking like this. That is the slowest high speed chase I’ve ever seen. But Josh has a come to Jesus moment at 35, and starts putting that same $500 into the same IRA, with the same rate of return.

Instead of being a millionaire at 60, because he started saving at 35, Josh’s IRA was worth $566,764.72. 

Don’t get me wrong! $500 grand ain’t chump change! But we’re looking at a difference of $800,000 here. And when you’re in your 60s, you’re gonna be feeling that difference. BIG TIME. Now if you’re sitting there watching this at 35, and you haven’t started investing in your future, I don’t want you to panic. 

The best time to start investing was… Yesterday. 

But the second best time is TODAY. So we’ve established that time and patience are essential when it comes to investing.

There’s no right answer. That’s the beauty of investing. We’re all walking our own paths. Social media will have you believing that the key to becoming a millionaire is hitting it big and blowing up overnight. 

But I can’t stress this enough: THAT is NOT the CASE. 

Most millionaires reached millionaire status by being smart, hardworking, and most importantly, patient.

8 out of 10 millionaires invested in their company’s 401k plan.

3 out of 4 millionaires said that regular, consistent investing over a long period of time was the reason for their success.

79% of millionaires – did not receive ANY inheritance from their parents or family

Only 31% of millionaires earned an average of $100k per year over the course of their career, and one-third never even made six figures in a single working year. 

The top 5 careers for millionaires? Engineer, Accountant, Teacher, Management, Attorney

Life is all about progress….Either you’re growing or you’re stagnant… Stick with me for a second – When I was in high school, I was a hooper. But not just any hooper, I was the first coming of Lebron. 

But I got husky while he got taller so uhh…football, and ice cream became my happy place. I was diagnosed with a medical condition called Osgood schlatter’s disease…I was growing too fast, and as I grew my knees were in pain because of it. Growth can be uncomfortable and painful, and investing can be the same way sometimes, but I have never looked in the mirror and wished I stopped growing at 14

Soooo, why would I do that with my money? Why would I stunt its growth? Investing does not equal stocks or bonds, or oil, or gold, or even bitcoin… Investing is making the CHOICE to GROW.

So, where does that leave us? Put your money to work for YOU so you don’t have to work for YOUR MONEY for the rest of your life…

I’m Brandon Copeland, AKA Professor Cope – and now you Know INVESTING.

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