Eighteen Years Old and Want To Start Investing - The Philosophical Answer

by Alex mason


Earlier today I received an Instagram DM from a podcast listener who had checked out the show. They explained they were 18 years old and wanted to get started investing - what should they do? Did I have any general advice?

Though I responded to their message personally, I wanted to also take some time out to flesh out my thoughts on the subject because it really is an important (and big) question. What do you do when you want to start investing but don’t know how?

This is part one of my thoughts and is the philosophical answer to this question. I’ll follow up with a more practical answer in part II.

Know Your Why

The first thing that I can say is that, without question, the most important aspect of getting started with investing is to know your why. What is your purpose? Making money is not a good enough answer. Go deeper. Look inside yourself and ask what you are trying to achieve.

For me and my wife, the answer began in a complex place and was sourced from a variety of experiences we had growing up, but as we matured we realized that we wanted to leave a legacy and do as much good as we could in the world during our short time here. You can’t leave a legacy unless you have influence, and having money and using it wisely is one important form of influence.

Aside from the philosophical or moral facets of the question, also consider the practical side. What kind of lifestyle do you want to live? When I was picking old dryer sheets out of the trash to reuse when drying my clothes at the college dormitory laundry room to save money, I knew I didn’t want to live that lifestyle forever. So I had to do my best to excel in school and land the best job I could to afford something different.

Do you want to live in a paid for middle class home in a nice suburb, with no financial stress and the occasional luxury? Or would you not be satisfied unless you were able to charter jets around the globe with 24 hours notice, or fill a mansion with handcrafted furnishings that resemble their artists’ exquisite attention to detail? You have to know yourself.

What does your dream lifestyle cost? On a monthly basis? On an annual basis? Think about it, research it and write it down. If your dream is to one day own a Mercedes-Benz SLR McLaren with the butterfly doors, well that’s going to cost you around $500,000 for a pre-owned model. Or, perhaps you are perfectly happy with a gently used Toyota Camry that starts around $15,000? The choice is yours.

Whatever if it is, know that your desires will likely change over time, and your motivation for why you want to continue to invest probably will as well. If you are young and just starting out, or maybe a little older and starting over, you probably just want to begin building something for some big purchase in the future, or perhaps a comfortable retirement. On the other side of the coin, if you’re already at a stage in life where you have more than enough money for yourself, you may naturally focus more on charity and giving to others.

Getting Better At Any Skill Set Comes Down to Learning

Now that the motive has been established and you know your ‘why’, it’s time to get down to business and begin the work of learning about investing. Treat it as a lifelong goal with milestone markers along the way. Those who say that “life is a journey and not a destination” proclaim a half-truth - the journey is vitally important to how we value our short time on this earth. However, I would be dishonest if I didn’t tell you that I would be dissatisfied if I reached the end of my days and didn’t hit certain destinations or milestones. Focusing on both process and product are, in my view, essential components of any type of skill development, and in general, living a content and enjoyable life.

There is a nifty little book out there by an entrepreneur named Gary Hoover called The Lifetime Learner’s Guide to Reading and Learning. The main idea I got from it, which is now permanently attached to my memory, is that there are fundamentally five ways that you or I can learn anything. They are:






Let’s tackle these one by one and apply them to an investing context.


When you’re just getting started with learning any skill, it is always important to learn the language of the industry or field. It does no good if I see in an annual report that a company had “record earnings per share this year” if I don’t know what that actually means. Things must first be broken down into fundamental concepts that are easy for you to grasp, and then gradually built back up into more complex topics. Studying the fundamentals of a subject is a necessary first step to eventually gaining mastery of it. Knowledge expands and compounds just like money does, but to start that process you need to learn basic terminology and the meaning behind different concepts.

For example, the book Financial Statements by Thomas R. Ittelson has been instrumental for me in understanding how to actually read and understand a company's financial statements in their 10-Ks and other SEC filings.

Reading the History section of a company’s website helps me understand where the company came from and how it got started, giving historical context for the business operations that are going on today.

Podcasts are also an amazing source of knowledge. I’ve been helped tremendously by learning from interviews of other investors, hearing investor’s thoughts on financial topics, and of course, creating my own podcast where I get to think, analyze, and share my own voice [link to stockstoryteller.com/podcast].


Interaction between two people is an irreplicable form of communication. Language itself is innate in our nature as humans, and we’ve developed it in many different ways across cultures throughout the millennia. We’re built to talk to each other.

This is why lectures, workshops, and conferences can be such powerful accelerants of knowledge and ideas - people get to talk to each other in real time and bounce ideas off of each other quickly. When you engage with someone in discussion over any subject, whether or not you realize it, your subconscious mind is continually analyzing and evaluating what the other person is saying when they are speaking. The exchange of ideas is rapid, and you and I can learn far faster than we can with this method than with other methods. That is, assuming the teacher is a good one, of course.


A lot can be learned simply by looking at the world around you and noticing connections. This is true in investing as with anything else. Let’s consider an example. Who are the wealthiest people in the world? Well, as of Spring 2021 they are Jeff Bezos, Elon Musk, Bernard Arnault, Bill Gates, Mark Zuckerberg, and Warren Buffett, in that order.

Four out of the six own significant portions of dominant software companies: Amazon, Tesla, Microsoft, and Facebook. One is a master investor who can grow capital at incredible rates of return (Buffett), and one owns a significant share of the world’s premier luxury conglomerate, Louis Voitton Moet Hennessey (Arnault).

Just observing that small set of facts should tell us something about investing. Software companies have amazing scalability and have been proven to be one of the fastest ways to grow wealth in the modern era. Also, investing in timeless brands that people love, like Louis Voitton trunks, Christian Dior perfume, Coca-Cola beverages and See’s Candies, has been a strategy that has historically worked very well. This is, of course, a simplification of reality (maybe I’ll do a full write up on this idea at some point), but the point is that simply observing the environment of interest can lead to some pretty interesting conclusions.

Look around you. What do you see? Often we go through life not even noticing the things right in front of us - from the biggest things that should be obvious down to the most tiny detail. Stopping and paying attention reframes our perspective, and allows for greater insight and ability to connect the dots then just letting our brains sit in default mode and relegating most of our actions to our subconscious.


Book knowledge is essential, but it should be supplemented by actually doing investing. It is one thing to read about historical returns of the S&P 500 over the decades during different economic conditions, and it is entirely something else to buy shares of Coca-Cola and see how it feels to watch the stock go up and down every day.

When you actually own shares of stock, you get the experience of being a passive owner in an asset. You can look up the ticker symbol and get a sense of what other people in the market are willing to buy or sell it for.

I remember when I bought my first shares of stock - they were Coca-Cola shares. I figured that Coca-Cola was such a dominant company with a high quality of earnings, it would be hard to mess up, even if I got the price wrong. It wasn’t a big purchase by any means, but the important part was that I actually began the process of investing.

Going through the initial steps of setting up a brokerage account and putting in my first buy order was a bit scary at first, but that’s just because it was something I had never done before. It is like that with learning any new skill. There is a moment of doubt and uncertainty as you try that new thing, and over time your knowledge level and skill level builds.

I want to make an important point though that simply trying something and then repeating it blindly over and over is not a winning long term strategy. Analysis is critical. Sometimes you have to shake things up a bit.

A big lesson for me when I started investing in more substantial positions in stocks was that you don’t have to invest all of your money at once! It is ok to watch and wait a bit until you get the price that you want as an investor.

This is just one of many lessons, but if I had never thought about my previous actions and consciously made the decision to try things differently in the future, the same mistakes would probably be made over and over again. Continuous learning demands a constant check-up - an internal audit if you will - in order to verify that the results you get are consistent with what your goals are and the process you are using.

For example, if you want to make 12% annually with your money, you are not going to be able to do that by investing in 30 year Treasury bonds (unless the year is 1978, but that’s a black swan event). You’ll need to find asset classes and/or investment situations with much more potential. Investing in bonds could very well be a great safe place to start learning how to invest, but if you have your sights set on compounding money at high rates of return that is not going to cut it.

Likewise, if you expect to return 100% annually on your money, a buy and hold strategy with even the best stocks is not going to get you there. You might need to try learning the skill of technical analysis in order to trade stocks or options (which carries a very unique set of risks, I’ll add), invest in real estate projects with significant leverage (which I wouldn’t recommend!), or start your own business.*

*Note that I am not necessarily recommending any of these things as I do not know your personal situation and am not giving financial advice.

Try different things. In the beginning it is useful to ask simple, fundamental questions that have easily defined answers and can teach you basic skills. For example, I remember I had a lightbulb moment when I realized that a company’s net income = earnings = profits. Those three terms mean the same thing! I didn’t know it though, so I had to experiment with the types of books I was reading, and more fundamentally, the types of questions I was asking.

When you begin to progress with your investing knowledge a little bit more and have a firmer grasp on the fundamentals, the world of finance becomes ever more complex, and it becomes more natural to ask advanced and sometimes difficult questions. One that I am pondering a lot these days is how do you compare the potential for high risk-adjusted returns from two different stocks when one is clearly trading at a lower valuation, but the other clearly has much better growth prospects? Or, to put it a bit more succinctly, how does one objectively compare value and growth? That has been on my mind a lot lately.

One of the ways I have experimented to answer this question is to purchase some shares of companies that are considered “value” stocks (low price to earnings ratios, and lower expected profit growth) as well as shares of companies that are considered “growth” stocks (just the opposite - higher price to earnings ratios, but higher expected profit growth). Fundamentally, I know that a business becomes worth more over time as its level of profit grows, but trying to rank investment opportunities from most attractive to least attractive must take both growth and valuation into account.

But how much to weigh one factor (or set of factors) over the other…? The PEG, or price to earnings to growth ratio that Peter Lynch has written about seems to partially answer that question, but I feel like there is more there...I will have to keep experimenting and researching to figure it out. That is why I have purchased shares of different types of stocks - I want to see how they perform in real life, and then note the similarities and differences in investment performance. It is always great to test your best ideas to see if they are practical.


The final way to learn something is to “cogitate”. When I read this word in Hoover’s book, I didn’t know what it meant, so I had to look it up. To cogitate is to: “think hard, ponder, meditate”.

Thinking is part of the learning process! All of the other methods of learning: study, conversation, observation, and experimentation - none will have their maximum effect unless you take some time to step back and reflect upon what you’re learning.

I think of cogitation as the second stage of learning. When I hear a new idea on an investment podcast, for example, sometimes I’ll pause the podcast and just think about the idea for a while.

Reflection is what cements an idea in your head.

Cogitation is what separates people who “know” things and just memorize facts and figures with those who really know. To internalize an idea is to make it your own, and that is what gives you power, skill, and what moves you forward in life.

So, if you are learning about return on equity, compounding, growth stocks, or modern portfolio theory and don’t feel like you’re getting it yet, take some time for yourself and just think about it for a while. Put aside your phone, computer, or any other distractions, and just think. You’ll be amazed at how much more you remember just because you do this.

If you incorporate these five methods into your daily habits in order to learn about investing, you’ll go far faster and be able to increase your comprehension far beyond what most people are able to accomplish when they attempt just one or two of these approaches.

There is a reason that the best colleges and universities in the world incorporate multiple modes of learning - students are not just listening to lectures, but they’re having discussions, reading books, and managing student-run investment funds. Learning about investing comes from multiple methods, so find what you’re naturally drawn to first and then expand from there.

That’s the philosophical answer. I’ll provide a practical answer to this question in a follow up article.