The Questions You Need To Ask To Invest Successfully With David Stein

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[122] – Are you new to investing? Don’t worry.

Investing doesn’t need to be complicated, and we have a checklist to help you.

In this episode, Jeremy Keil is joined by David Stein, the host of Money For The Rest Of Us, to talk about how you can invest on your own. Jeremy and David go over the questions you need to ask to invest successfully. Together they review David’s investing checklist and discuss his investing principles.

David discusses:

  • Why he started his podcast and blog, Money For The Rest Of Us
  • What his investing principles are for how to invest successfully
  • Some of the questions in his investing checklist
  • What the most common investment mistake is
  • The difference between gambling and investing
  • And more

How To Invest On Your Own

Every successful investor needs to have a framework, but not everyone has one when they start out. That’s why we’re talking about David’s investment checklist to help beginner investors invest successfully.

The Most Common Investing Mistake – Not Knowing What You’re Investing In

Most people make the mistake of chasing the newest and shiniest toys when investing. A lot of newer investors invest in whatever is doing well at the time and hits the news.

With limited experience and research on what they’re investing in, putting too much money into that investment is the most common mistake. To invest successfully, investors should understand what it is they’re investing in.

If you truly understand what you’re investing in, then you should be able to explain it to someone else. 

Being able to answer simply what an investment is, is a good foundation for investing because it helps humble us and realize we might need to do a little more research to understand the investment.

Investing, Speculating, or Gambling?

A lot of the time, people confuse investing with speculation and gambling.

The idea of investing is to do something with a positive expected return, such as purchasing a piece of real estate that will generate rental income.

Gambling is something with a negative expected return. If you go to Vegas, the house wins in Vegas if you’re there long enough. People gamble for entertainment, not to make money, because the odds are against them.

Speculation would be somewhere in between, where there’s some disagreement about whether the return will be positive or negative. For example, Gold or cryptocurrency would be speculation because they have to go up in price for you to make money because they don’t have any cash flow associated with them. So to invest successfully depends on individuals or institutions being willing to pay more for the asset where there’s speculation and disagreement on what it’s worth.

Who Is On The Other Side Of The Trade?

Whenever you buy an investment, ask who is selling it to you.

When we buy stocks, the price is based on the consensus of investors, and typically it’s an institution selling it to us because they’re involved in it. So when we buy a stock, we are predicting the future price will increase, but that puts us against the sellers who might know information about the stock’s future price that we don’t.

Individual investors also trade against large institutions and often find themselves at a disadvantage. These institutions are typically heavily invested in resources, with hundreds of highly trained investors, and they frequently use ‘high-frequency trading’ to gain an edge. High-frequency traders rely on having the fastest computers available and positioning them as close to the stock exchanges as possible so their trades can be made even faster.

We should avoid relying on accurately predicting the future or outsmarting other investors. Instead, we want to structure things where we have a positive expected return because of the structure of the investment rather than having to be smarter than everyone else.

Who Is Getting A Cut?

Anytime someone tells you something is a good investment or you should look into investing in something, ask who is getting a cut and how much of a cut are they getting if you invest in what they suggested to you.

As investors, we should know who takes a cut of the investment return from fees, expenses, and taxes and understand the fee structures but also understand how the investment is supposed to generate a positive return and who gets paid from said return.

To understand any investment, we need to know what has to happen in order to generate a positive return and what the maximum potential loss for the investment is. That way, we cover all our bases and have a good frame of reference for making a successful investment decision.

We’re never going to be an expert on any given investment, but if we can at least answer some basic questions, that will help us make better decisions to invest successfully.


To learn more about how to invest on your own, check out the resources below!

If you have any questions, feel free to contact us or our guest, David Stein, using the contact information provided below!


Connect With David Stein:

Connect With Jeremy Keil:

About Our Guest:

David Stein is the founder of Money For the Rest of Us. Since 2014, he has produced and hosted the Money For the Rest of Us investing podcast. The podcast reaches tens of thousands of listeners per episode and has been nominated for twelve Plutus Awards and won one. David also leads Money for the Rest of Us Plus, a premium investment education platform that provides professional-grade portfolio tools and training to over 1,200 individual investors. He is the author of Money for the Rest of Us: 10 Questions to Master Successful Investing, which was published by McGraw-Hill. Previously, David spent over a decade as an institutional investment advisor and portfolio manager. He was a managing partner at FEG Investment Advisors, a $15 billion investment advisory firm. At FEG, David served as Chief Investment Strategist and Chief Portfolio Strategist.



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