“You’ll never be ‘ready’ to get your financial house in order .... The best way to save and invest is to start now and build up your tolerance incrementally. If you start saving small amounts you realize after a couple of months that you don’t really miss that money.” Ben Carlson
If you know me at all you know I attribute most of my life lessons from the game of poker. I never had much success in the academic realm, and when I dropped my computer science major in the second semester of my freshman year, I was - at least temporarily - lost. Than, like all worthwhile journeys, something I didn’t expect to happen happened. I found my path on the online, micro-stakes, No Limit Texas Holdem tables.
For me poker emulates life. I view poker simply as a series of decisions that lead to unpredictable results. What separates the hobbyists from the pros is the ability to establish a process for making those decisions that uses rational thought driven by data and math instead of gut feelings.
ESPN doesn’t air folks playing two cent / four cent stakes. What you see if you consume poker content like I do is the best of the best battling for millions. They don’t show you the years of struggle those pros had to go through to get to where they are now. At 19 years of age and looking for some validation that I was good at something, I didn’t want years of struggle; I wanted to get rich quick. I wasn’t focused on perfecting my strategy and process but rather how quickly the dollar signs went up in my account.
I had unexpected (and unrepeatable) success in the first few weeks after I started playing, and it nearly killed me. I fully embraced my identity as a poker player and after the first few months, after running $50 to $1500, I thought I could do anything. Instead of playing responsible stakes I would put it all on the line with no fear of failure. You can guess how that story ended up.
Looking back now, losing that money was the greatest thing that ever happened to me. After a week of feeling bad about myself, I deposited another $50 and approached the game with a new attitude. I actually worked hard to improve (much to the chagrin of my parents, who couldn’t understand why I didn’t bring that same level of focus to Math 141). ) On the wall above my computer I attached a piece of paper that said “Stop being stupid.” (I used something stronger than stupid but you get the idea). Instead of being dejected that all I was doing was playing for pennies I became determined that this was optimal foundation from which to improve. I could establish a process with almost no emotional risk, because if I lost, who cares; it’s only pennies.
I strongly correlate my experience with micro-stakes poker to people who are beginning to think about the saving process. Let’s say you are an individual who is receiving a salary for the first time in your life. After you pay for all your expenses you are left with only a thin margin of cash. It’s incredibly easy to rationalize to yourself that you don’t need to start saving now because eventually you’ll be making a lot more. “What difference is $50 in an investment account really going make?”’ But as the Joker taught us in The Dark Night, “It’s not about the money, it’s about sending a message.”
I take it for granted that I think investing as soon as possible is common sense. My exposure to Ben Carlson and Michael Batnick has rewired my brain such that I no longer think in numbers but rather behavior. In one of the many articles Ben has on the topic he writes, “There is something to be said for gaining experience in the markets by going through many different investing environments to prepare yourself for future possibilities.” Why start learning about investing when you have thousands, or more, on the line when you can begin with almost nothing. The attitude you will acquire through routinely saving a percentage of your income is worth more than any dollar amount. Investing is an intimidating process. Starting small sounds boring but you will acquire skills required for long term success. And as all investors know, time can be your fiercest ally or your most vicious foe.
Getting rich quick won’t keep you rich. It’s hard to think investing pennies is worthwhile when most of the investment articles feature the likes of Buffet, Dalio, and Tudor Jones. However, they all had long journeys to get to where they are now, a struggle that often goes unappreciated. Beginning as early as possible may not net you the biggest cash return but you will develop a behavioral process that will last you a lifetime. Learn to love the micro-stakes arena and you will be destined for the big leagues.