One of the best things about starting this blog a little over a year ago is when people make the effort to get in touch and ask a question. Either through the comments or via my email, it’s always fascinating to see what people have made of my scribbles and what they’d like to know more about.
A popular topic is around the money side of early retirement. How did I know what to do? How did I learn about money and investing?
After all, it’s not something we’re often taught at school. Despite how much more useful it would have been than most of the stuff on the ‘must learn, repeat and promptly forget’ cycle I went through…
And whilst some people are born into families with strong investment and money knowledge, most are more like mine I suspect. Good at budgeting and spending. Not so much on investing. Sharing knowledge through example rather than discussion and learning.
So where exactly did I learn about money? Especially given it wasn’t until I was in my early twenties that the internet became the vast but varied sea of knowledge it now is?
Well, if I think about it – a large part came from the variety of jobs I held. Earning and learning, for better or worse.
So let’s get out the fabled time machine and take a look back shall we…
Earning And Learning - A Risky Business
Often we don’t really understand what we learned from something until much later on. The Steve Job’s theory of life and dots joining up.
It’s a theory I’m fond of as there is much of my life that fits this pattern. I was never one of those people who knew exactly what they wanted, where they were going.
Instead, a series of opportunities presented themselves and the only overwhelming theme among them is I have a habit of saying ‘yes’ and giving it a go.
Which is all a long-winded way of explaining why this upcoming series of jobs looks like a bit of a car-crash of a career path. But each one of these random ‘fill the time and pay the bills’ type jobs taught me something about money I didn’t know before.
Hence the title – earning and learning. But what exactly did I learn??
When The Fun Stops...
I’m going to bypass my very first job working at the local garage forecourt. That one was very definitely all about earning money for beer and meeting boys with cars. Fun, but perhaps not so useful…
Instead, it was one of my first summer jobs whilst home from Uni that first opened my eyes to how differently people saw money. My young fresh-faced self was pretty amazed to land the job in the local betting shop given the lack of effort I’d put into applying.
In hindsight perhaps I should have been less surprised at the lack of competition… Nevertheless, I duly turned up bright-eyed and bushy tailed and entered the murky world behind those smoky windows..
It was an eye-opening experience straight away. A very different sort of world, one where the thrill of excitement lurked with an edge of desperation.
I soon got to know the regular faces. Every single one of them had their own special, secret ‘system’. A sure-fire method for placing their well-thought through bets.
All I learnt was that these systems must involve wanting to lose an awful lot of money. Again and again.
It was often heart-breaking stuff. I’d have to watch the same young lads wander in, brown envelope in hand with their hard-earned wages for the week. Only to leave with a slightly dazed look in their eyes a couple of hours later. That same brown envelope crumpled and empty on the floor.
Despite this, I don’t actually have a problem with people enjoying gambling at all. But it really did teach me about ‘play money’.
Lesson Learnt; Only gamble with what you can afford to lose. Today’s equivalent of having a small crypto stake in your otherwise well-balanced portfolio?!?
Playing The Odds
It often fascinates me how different people learn. For me, it tends to stick much better if I experience or do it versus read about it.
So although part of my journey to early retirement involved a maths degree, the equations et al I learned there didn’t teach me much about how probability feels.
Whereas spending five days a week in a bookmakers will quickly bring home the reality.
Backing a 100-1 winner is sexy stuff, alluring and tempting. Putting together a whole string of them can change your night entirely.
But – unsurprisingly – it rarely pays out. It may sound exciting but after the first few races of watching your horse trundle in last again, it gets old.
Favourites are just that for a reason – they’re far more likely to win. Or at least make it vaguely interesting. But, as ever there’s a but. They don’t pay out much. Sometimes hardly anything.
Money’s the same way. You want a sure thing? Go with that FSC protected cash savings account and collect your pennies. Try and ignore the fact you’ve actually locked in a loss in the real world after inflation takes its bite out of your hard-earned cash.
Go for something a bit riskier and you have to accept that probability of it not playing out as you’d like. Instead of spending those pennies you mocked earlier you’re now looking at a glowing red portfolio worth number.
Experiencing this day in, day out taught me a lot about risk tolerance and unrealistic expectations of beating the odds. An optimistic mind set is not always your best friend!
Lesson Learnt; Reward never comes without risk. Intellectually understanding you can lose it all is a very different thing to actually doing it. Always know your own risk tolerance.
Following The Money
By now you’d have thought I’ve milked this first job dry of learnings, right? But no – there’s yet more…
Some days could be dull, really dull. It would be quiet and the hours would drag by.
But occasionally we’d have a day where it just all went crazy. For whatever reason the shop would be bustling. And punters would be sharing their tips and news freely. Gotta sell your system 😉
It was on one such day I first saw my first phenomenon of ‘follow the money’ in action.
Usually by the time people were in the shop placing bets, the odds on each horse were pretty stable (ha….ha….). Whilst I had several customers who firmly believed that waiting until the last possible second before racing up and demanding I accept their money right now would get them better odds, it rarely did.
But every now and then you’d get a horse whose odds would suddenly start to shrink rapidly. Getting slashed from the 50 or 20-1 they started at down to near favourite level.
Clearly – some new information was afoot (ahoof?). And the punters would pretty much go wild for it. Not knowing the cause or the reason. Not even caring. Just following the money.
Wild-eyed and thrusting slips and money at me, desperate to get in on the action.
Did the horse always go on to win? Of course not. It usually did do better than it’s original odds had suggested for sure. But that was small comfort to those who had just bet their proverbial shirt on it to win.
Lesson Learned; Don’t follow the money blindly. If you don’t know why a share is rapidly falling or rising, it’s probably not a good idea to jump on the bandwagon.
There’s a good reason Monevator bangs on about cheap global index funds…they’re the favourites of the investing world. They even beat inflation, usually..
Trust Or Bust?
One of my favourite parts of this surprisingly interesting summer job was the renowned ‘hot tips’ board.
This hallowed item was in fact a well-used white board, mounted to one side of the cashiers desk I usually lurked behind.
After a couple of weeks and having shown an unusual interest in the job ( as in I actually asked to read the betting manual – a first for the manager I think.. ) – I was given the responsibility of this cherished item.
In reality, it involved picking four horses from four different races for that day. Writing them up and drawing a few pictures when particularly creative – but mostly lots of exclamation marks and pound signs. Hey, I was a maths student, not art 😉
My ‘system’ involved studiously looking at the form page before picking out four potentials, usually based on a combination of name, colour and odds.
Unsurprisingly my magic system faired no better and no worse than the others. I’d usually call one winner and perhaps a place. Not enough to offset the losses from the others though.
But one glorious day I called three winners and a place – all without picking a favourite. It’s pretty much hitting the betting jackpot.
The punters instantly hailed me a genius. Assumed I had some insider knowledge through working in the shop. Followed my suggestions over the next few weeks, revelling in the wins, brushing aside the losses.
This experience has stuck with me ever since. I knew I had no special knowledge – it was just blind luck that day. Far outweighed by the many other days of dismal failure. The survivorship bias was stronger than the actual reality on the ground.
Lesson Learned; Be wary who you trust and why. One good outcome does not make a decent track record or a repeatable system.
Always Earning And Learning
Wow…not bad for one summer job, right? Perhaps it was because it was such a different world to what I was used to it but I learnt way more than I ever expected to get out of it.
I suspect that in today’s pressured world of getting the ‘right’ summer job to impress on the CV, this kind of position would fall far down on most people’s wish lists. But even with the value of hindsight I’m still glad this is where I ended up that year.
Learning what mistakes to avoid making can be as valuable as anything else. And I learned plenty there about that. Which is a good job since it didn’t exactly pay fantastically!
So I hope sharing these lessons helped answer some of those questions received that I mentioned earlier. Originally I was going to on to my next early career jobs where I learned a lot more about actual money – but I think they will have to wait to another post!
In the meantime, it’d be great to hear what unexpected lessons about money you learnt from your first job??