How to Invest Your Money—A Beginner’s Guide to Keeping and Growing Your Funds

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There are a lot of entrepreneurs who are great at building wealth through their businesses, but flounder and lose their money when trying to grow it. Investing is an entirely different field than entrepreneurship.

But as your projects become successful, you’ll inevitably be faced with some decisions about how to take care of, and ideally, grow your accumulated wealth. This article aims to provide some basic, introductory advice for young entrepreneurs when it comes to handling newfound wealth, drawing from what I’ve learned over years about wise investing.

This is not comprehensive, but it provides an entry point, and wraps up with some of the best resources I’ve come across on the subject.

There are two main concepts that run through this article. Both of these have been emphasized by investing legend Warren Buffett, who for good reason I turn to for much of the advice I’m offering in this post. Keep in mind these two things:

  1. If it’s too good to be true, it probably is.
  2. The best investment you can make is in yourself and your strengths.

Both of those pieces of advice are to say—don’t chase after huge, fast investment returns. At the end of the day, the best way to grow your wealth is through steady, reasonable investment, combined with putting your money back into your own skills and your business.

A lot of people don’t follow this simple advice, and think they can outsmart the market, or know a guy who knows a guy. But it’s ended badly for a lot of very talented people.

Best-selling personal finance author Ramit Sethi starts off all his interviews with a story of when he put half of his scholarship money into the stock market and lost it immediately.

The well-known podcaster James Altucher made tens of millions of dollars, put all his money into tech stocks, and lost it all. It scarred him really badly for years. He was so broke he couldn’t pay for his father’s hospital bills:

Celebrities like Shaquille O’Neal, Selena Gomez, and Justin Bieber have invested in start-up businesses and lost their shirts. It’s amazing how confident people are unloading a large amount of their hard-earned money on something they don’t know much about.

The Basics

I’m here to steer you away from these fates, by offering a pretty simple, reliable formula for how to handle your money as it starts to grow. Follow the advice here, which is based on a ton of research I’ve done about the successes and mistakes others have made, and you’ll escape the trap of trying to quickly make a lot of money from a little, and ending up with nothing.

Invest in yourself and things you know

This isn’t exactly investing advice, per se, in the sense that it’s not about picking the right stocks or hedging your bets. But when you find yourself beginning to build some wealth, there’s a surefire way to put it to good use—invest in yourself.

The first reason is, when you use your money to grow your own skills or knowledge, that cannot be taken away from you. You will be marketable and keep that skill no matter what happens to the economy. It’s crash-proof and inflation-proof. That advice doesn’t come from me. It comes Warren Buffett, widely considered to be the greatest living investor. I’m a huge believer in Buffett’s teachings on managing money, and he’s made this point multiple times.

During one ABC News interview, Buffett said:

Generally speaking, investing in yourself is the best thing you can do. Anything that improves your own talents; nobody can tax it or take it away from you. They can run up huge deficits and the dollar can become worth far less. You can have all kinds of things happen.  But if you’ve got talent yourself, and you’ve maximized your talent, you’ve got a tremendous asset that can return ten-fold.

Consider how this works in your business. The best investment most people can make is in the same ways they made their initial wealth. You can grow your money faster by improving as a CEO or manager or creator.

Let’s say you made your millions through your business, sales, and marketing knowledge building a clothing company. You can probably make a lot more by investing in the right course on marketing or sales, maybe a networking conference, or improving your product. This will further the progress of the business you know intimately, rather than spending your time competing against full-time investing professionals. After all, would you advise someone who made their money in a different industry to try their hand at the clothing industry that you’re a master of?

That is to say, by investing in yourself—your skills, your knowledge, your exposure to great people, or even the tools you have at your business’s disposal—you’re keeping your money within your circle of competence, what you are knowledgeable about and fully understand.

When I say the best investment is in yourself, that doesn’t mean you shouldn’t be discerning and careful with your choices. Don’t go crazy. Take your time to decide on a great and efficient use of the cash. Be patient. Don’t be afraid to sit on it until the right opportunity.

Don’t gamble

Don’t expect to put in very little work, or do this as a side hobby for 20 minutes a day, and expect to grow five bucks into millions of dollars. That stuff doesn’t happen.

James Altucher spent decades learning about every investing style under the sun. And lost money through all of it. His advice is the same: Stay away. He knows thousands of day traders and only two who are successful. And those two have to spent 15 to 20 hours a day on it. And quite frankly, they might have just been the outliers who lucked out.

I’m not saying you can’t grow your money through investing. You can, but you have to have modest expectations.

Remember: If it’s too good to be true, it probably is. Acknowledge that you will not get extraordinary returns and resist the temptation to gamble with your money.  

In The Intelligent Investor, Ben Graham (chapters 8 and 20) explains the huge difference between speculating (gambling) and investing. Speculating is guessing. There’s a lot of uncertainty and risks you haven’t accounted for. It could go wrong. It could go right. There’s not much math or calculation. If there is, it is not thorough.

Investing is when you have every little thing calculated out. You have all the numbers. You’ve looked at a business from every possible angle. You know the costs, returns, and downsides if you screw up.

A good investor takes care of his downside. A great investor has made a calculated decision that has almost eliminated the downside or made it close to impossible.

As Mohnish Pabrai says in the book The Dhandho Investor, a good investor makes it so that if the coin is heads, you win, but if it’s tails, you don’t lose much. They find a situation where the downside is covered and so you win either way.

A lot of people seem to be gambling and calling it investing. There’s tons of unaccounted for risk in what they do, so they’re basically just playing with dice. The point is that it’s not a game.

So let’s start with what to be cautious of:

• Financial advisors: I was once recruited by a big company that does this and was shown the whole process. They make their money by charging high percentage fees and getting as many friends and family as clients as possible.

• Funds with high percentage expense ratios: These are companies that will invest your money for you in stocks, bonds, or other things with “promises” of higher return in the future.

They can charge at least 3% of what you invest. The 3% might seem like a lot but after 30 or more years, it can literally take over half of your $500,000 nest egg away in fees.

How is that possible? They charge you every year and eat away at you. For example, your $100,000 invested returns 10% the next year and you now have $110,000… but then comes the 3% yearly charge of $3,000. A good benchmark of an expense ratio is 0.2%

So what should you do?

Invest in Vanguard 500 and be patient with market fluctuations

how to keep your money

Grow your money with the one strategy that Warren Buffett has recommended to everyone, including his spouse, for over 40 years: Buy and hold a Vanguard 500 Index fund forever. Don’t ever sell, and let it grow to something massive. If you want further reading on this read Common Sense on Mutual Funds by John Bogle.

An index fund literally copies the entire market. You are buying a small piece of ownership in the top 500 businesses in the U.S. The return on this index fund mirrors the money made from the combination of those 500 businesses. This is the benchmark that people who do this full time as a profession measure themselves against. Every year, they try to “beat the market return,” which means beating the money made from an index fund in that year.

What if I told you that over the last 10 years, only 24% of people who do this FULL-TIME beat the market? What if I told you this has been the case for the last 100 years?


A lot of reasons. It’s very difficult. You also incur transaction fees every time you buy and sell a stock, and those fees eat up any profit you make. That’s why it’s super tough to be a day trader jumping in and out of the market. The point is that even people who do this full-time can’t do it that well.

I recommend Vanguard because it has the absolute lowest fees in the industry. All stocks require fees and they have the best deal. If you want to be safer, add more bonds to your portfolio, which provides more security. I recommend U.S. Treasury bonds that can be fairly quickly turned into cash, but with the understanding that you will get lower returns in the long run.

There are many temptations to take risks, try something different, follow a trend your friends are talking about, buy or sell erratically based on scary fluctuations. Don’t do it.

Honestly, I’m guilty of this myself. The first time around, after a lot of research, I ended up choosing a Vanguard Total Market Index Fund, which is a very tiny difference in that it diversifies over more companies than just 500. If I could do it again, I think I would have just stuck to what I said Vanguard 500.  

You’ll hear a lot hedge fund managers talk about their history and ratings, but they are in the business of selling something, so be careful. Tons of people out there are WAY too eager in their estimates. They say that you can get 10% on average per year or 15%. It’s all BS. You won’t get even close to that consistently. Ever. Especially as you move beyond the 10 year span to 15 to 30 year records.

You want a get rich slowly approach. That’s because a modest index fund can still yield 7% per year, which can still turn $30,000 into $228,367 over 30 years. I may be a little conservative with my 7%, but better to be on the safe side.

The long-term reliability of the market has been proven over hedge funds in tons of books and research over the decades. Remember our hero, Warren? He even made a million-dollar bet for charity that a simple index fund would beat hedge funds over 10 years. After eight years, he’s far ahead.

And if you do buy an index fund, the most important thing is that you don’t look at it frequently. Don’t check it every day or every week or every month or even every year. The idea is that things fluctuate yearly, but on a 10-year to 20-year to 30-year horizon, it will win out. You want to look at the long view and avoid the temptation to buy and sell based on external factors.

Money manager Ken Fischer made a relevant point about this. He found that most people who invested in a fund make less than what the actual index fund makes each year.


Because they sell at the wrong points and buy at the wrong points. Plus, they jump in and out constantly, incurring transaction fees. They see it drop, get spooked, they sell; it rises, they buy at a more expensive price per share. Rinse and repeat.

So here’s my simplified recommendation: buy, commit to hold for 10 to 20 years if not longer, and don’t look at it much if at all during that time. This is because looking at it will cause all sorts of screwed up psychology that will spook you to sell. The price goes up and down sporadically and will freak you out. Don’t worry about it. It’s the nature of the market.

Instead, you should have confidence, because the market represents some of the most enterprising businesses out there and has consistently risen over the last two centuries almost every decade. You are buying ownership in hundreds of the best run companies in America: Apple, Facebook, Johnson & Johnson, McDonald’s, etc.

More Resources 

how to keep your money piggy bank

Whether you’re on your way to 7 figures or already there, anyone can stick to this advice and come out on top. But there’s no harm in wanting to learn more about money management. Here are some of my top recommended books on the subject if you want to dive into more detail, based on order of priority.

Common Sense on Mutual Funds by John Bogle

This is a great book that will go into depth on what I’ve talked about and why it works. Everything else written by him is great, honestly, but that’s the one I recommend reading first. He walks through the numbers throughout history and thoroughly proves the point.

I Will Teach You To Be Rich by Ramit Sethi

It has a gimmicky title, but has solid information. This book covers a lot of useful topics like eliminating credit card debt, negotiating a raise, automating payments online, and how to find the most affordable car (so you don’t get ripped off). He has a great section on investing, which is really good for employees who have no idea what a 401k or IRA does. He also has a passage that goes into depth on the numbers to prove what I’ve said.

Money: Master the Game by Tony Robbins

If you want to learn more about the fundamentals, this one goes into great detail for the average person. Tony manages to interview some of the world’s top investors using his connections. Just be a little careful with this one. It’s a fairly thick book and there’s a few areas in there that will lead you down a rabbit hole. Nonetheless, there are some great principles.

A Random Walk Down Wall Street by Burton Malkiel

It’s a bit more advanced, but also goes into great detail on the numbers I discussed here.

Finally, if you like Youtube videos, I suggest you check out this one by the source of much of this wisdom, Warren Buffett:

You can absorb some of the same mindsets I echo here by listening to the guy. That speech and Q&A video is over an hour long and offers access to one of the world’s richest men, something you just couldn’t get in the past.


Put money back into your and your company’s development. Don’t try to beat the system. Stay away from day traders. If people approach you asking to handle your money with promises that are a bit too good to be true, run.

What about you? Any hard-fought lessons on money management to offer? Any burning questions? Hit me up in the comments.

  • Will Chou

    EXCITED to see this up! THIS IS AWESOME

  • Sai Nikhil Dintakurthi

    it was really informative.

    • Will Chou

      Thanks for reading!

  • Supermythbuster

    If you have a pension then the best investment you can make is to live as long as possible. Beat the actuary is the name of the game.

    Currently, of those aged 65 years In the USA, males can expect to live to around 76 years of age and females to 81. MY ADVICE IS TO INVEST TIME IN YOUR HEALTH. Every year you live over the average lifespan is a year’s worth of pension you would otherwise lose.

    • Will Chou

      I respectfully disagree. I suggest Ramit Sethi’s info on this topic (or his book). Of course you should always invest in your health but annuities like that will pay out pennies. They have a team of full-time geniuses who statistically analyze your likelihood. It’s like saying “INVEST IN LAS VEGAS GAMBLING; YOU CAN BEAT THE HOUSE.”

  • Tom

    Very well written and thank you for the information!


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