I was asked the other day what I thought about all the new weed stocks that are becoming available as laws continue to change. I’ll admit that I too was very curious and have spent some time researching the industry already before being asked this question. While short term it’s a very logical assumption, I’m not much of a short term investor and I don’t think you should be either.
Now it’s very likely that this particular industry will grow as marijuana becomes legal in more and more places. But can you tell me how long it will grow? Can you say with certainty that there won’t be a new law put into place that ends the pattern of recent legalization? (Remember prohibition?) While I think these are unlikely personally, you can see how one event can completely wipe out the industry. I feel more comfortable being more diversified when I am growing my wealth and keeping it once I have it.
The truth is, investing is pretty simple. Putting your money into an S&P 500 index fund or a total stock market index fund is one heck of a great way to get that diversification with a long history of good returns and for very low fees. I don’t think anyone sums up why these are good places to put your money better than J L Collins. J L Collins does a fantastic job explaining how simple it is to be a great investor in this very easy to read book The Simple Path to Wealth*. I also highly recommend listening to the Audible version narrated by J L Collins himself. If that’s not a comforting voice you can listen to all day I don’t know what is. Of course, J L Collins has all of the information listed for free on his website, though the book is more an excellent summary and much more organized; I wanted everyone to have that option as well just as J L Collins himself makes it known. The website is jlcollinsnh.com.
If you’re still not convinced or you think you’ll get bored with the approach laid out by The Simple Path to Wealth, another great educator in the world of finance is Paul Merriman. Paul Merriman is perfect if the Simple Path to Wealth is too simple for you, while still offering excellent advice from years of studying the historical returns of the stock market. Both paths will probably get you where you want to go, it all just depends on how much you want to think about your investments. You can find out more at paulmerriman.com.
The principal is the same with both men though. Invest in low cost index funds (in J L Collins case, just the Vanguard Total Stock Market index is enough) and by keeping up with the market, you should put yourself easily in the upper tiers of investors in America.
Of course, I cannot recommend M1 Finance enough when you’ve decided on which path you’d like to take, especially if you are just getting started. M1 lets you get started in the same funds recommended by both J L Collins and Paul Merriman for only $10 instead of the much higher minimum investments needed to buy an index fund through a place like Vanguard. By using this link*, you and I will both get $10 to invest after you sign up and fund your account.
Now, after all of that and you still wanna play with weed stocks, set aside a small amount of your portfolio and have at it. If you have a strong foundation with your investments and you won’t miss the money if it all goes away, then by all means, pick whatever stocks you want. Until then, I recommend the simple path.
*Disclosure: Some of the links above are affiliate links, meaning, at no additional cost to you, I will earn a commission if you click through and make a purchase.