Edotor's note: This article originally ran on the personal finance blog Five Cent Nickel. It has been reprinted here with permission.
First time for everything, isn’t there? This past Labor Day weekend clay pigeon shooting showed up on my “first time” radar, courtesy of a great friend who figured that killing bright orange pieces of clay couldn’t be beat for a long weekend of fun.
There are two ways to do this: you simply go to your local shooting range, or you drive a whole day to some wide open space with a complete change of scenery. A while ago, Brian pushed the retirement plan envelope by buying a farm somewhere in the middle of America — you know, the part where you look at the map and all you see are thousands of roads of all sizes running east and west. Well, his farm is where the 377th road from the top crosses the 298th road from the west. Can’t miss. And so we drove through a pretty part of America and caught up on a few years’ worth of mistakes, bonehead moves and other “educational” events in our lives.
His retirement plan so far is working well. The prices of corn, wheat and this thing they call milo are doing so well the income on his farm is rising, so its value has almost doubled, compared to what he paid before the recession. And he gets to go play there from time to time — as retirement plans go, not that bad.
When we arrived, it wasn’t long before we headed outside to invade the domain of dragonflies, cicadas and other heat-loving bugs. I live in a state famous for its hunting, but I’ll confess the only thing I’ve ever fired in anger has been my camera. An education therefore was needed, and an education I duly received.
We looked for the prototypical tin can to shoot at, but our hostess, it turned out, was way too environmentally minded for any stray cans to be lying around: all were safely sealed in recycling containers. So we made do with a few scraps of 2 by 4 feet wood, which still met the main criterion: they didn’t move.
And then the lessons started.
1. There is such a thing as an easy start
Shooting at a stationary target with a shotgun is easy. It’s not a single bullet you’re firing off, but a circle of small pellets. With your lousy rookie aim, a single bullet may have missed the target, but with a shotgun, all you need to be is “close” and one of the pellets will fling the little target backward in a dramatic display of your prowess. Cheers all around.
Investing is the same. You can start with something as simple as a savings account or a 401(k) plan at work, and all you need to do is put money in. It doesn’t have to be the perfect investment, it just has to be something. And, wonder of wonders, the more money you put in, the more the new account grows.
2. There is a progression
After shooting a few stationary pieces of wood the novelty wears off, and you become ready for a target that actually moves. They have a mechanism where you put in this little orange disc, pull a rope and there’s your target flying through the air. You learn to aim on the fly, pull the trigger and watch the target land in the brush, intact and unharmed. This is not nearly as easy as those stationary little pieces of wood. You need a higher level of skill, which comes from some instruction and some practice.
Investing also has a progression: after you get accustomed to the discipline of saving, the 0.75 percent you earn will get your attention, and you’ll notice other investment opportunities out there with better returns. Let’s be honest, it’s not hard to beat 0.75 percent.
3. Higher rewards take more skill
The feeling when you see that little clay pigeon shatter into a million pieces on your seventh try is hard to beat. With practice, you get better and you get that thrill of success more often.
Of course, you have the option of just staying in the beginner’s class and potting the close, stationary targets over and over. If you do that, though, you miss the rewards progression inevitably brings. Same with investing.
If you step up and make the time to develop your investing skill, your rewards will go up. Most people who do well in investing are those who understand this is their own future, nobody cares about it as much as they do, and therefore they make the time to get better. Those are the people who end up in good places (like my neighbor Jim).
4. Pulling the trigger for the first time is intimidating
This was the first time our host’s 7th-grade son had a shotgun in his hands, and it took him more than an hour to get over the intimidation of the unknown especially when the unknown is loud. We took a dinner break (always a good suggestion) and not long after that, little Gareth was firing away like a veteran, doing better than I was.
With investing, the first move can be intimidating. The key is to just pull the trigger, and don’t expect the first shot to be perfect. The key to success is repetition, and the sooner you take the first shot, the sooner you become a veteran.
5. Aim ahead of the target
When you shoot at a moving target and you aim at where it is, you’ll miss, because by the time the shot gets there, the target has moved on. You quickly learn to anticipate where the target is heading and aim just ahead of where it is.
Managing your money is the same: you have to anticipate where things are going and act not on your current circumstances but on where they are moving toward. This is especially true of debt: based on your current job, taking on a payment of $500 a month may look like a no-brainer. But when you get laid off before the loan is paid off, you miss and pay dearly. Much better to save the money and buy cash.
How about you? When’s the last time you learned something new, whether it be seeing how a different part of the country lives, or a new way to look at your money?
Not all new things are good but you never know what good things you may be passing up simply because you’re not looking.
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