Don’t fall for scams – Investment tips for millennials

Millennials are the most educated generation in history, yet they reportedly have a very reserved approach to investing – ironically because they don't feel they are educated enough. Even before the coronavirus pandemic began shutting down economies around the world, millennials have been faced with an uncertain economic future, and this has been made significantly worse in recent months.
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However, the current market is probably one of the best opportunities for new investors – if you know what you are doing, says Michaela Vybohova, founder and designer of Michaela V footwear. Vybohova is also an accomplished model and possibly not the first person you'd consider for financial advice, yet the successful entrepreneur has made a point of educating herself.
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"I went to business school and studied economics," she says. "But I've learned that you don't actually need an expensive education at a fancy school to learn how to make good financial decisions. There is a wealth of freely available information from reputable sources that you can use to educate yourself, as well as some excellent books that will help you wrap your head around the core principles of good investing."
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Successful investing doesn't need to be complicated, and Vybohova has shared her top tips for millennials looking to invest safely.
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1. Educate yourself
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Despite studying economics, Vybohova has found that some of the best tools for educating herself have been relatively inexpensive and readily available books by renowned economic experts. Among her favorites are books recommended to her by a prominent investor by leading economists such as Warren Buffett, Benjamin Graham, Mohamed El-Erian, and Robert Kiyosaki.
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"The first book I would recommend to new investors is 'The Only Game In Town' by Mohamed El-Erian," says Vybohova. "The book explains how central banks and money circulation works through storytelling and engaging explanations that make it easier to understand complex concepts."
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She also highly recommends "The Intelligent Investor" by Benjamin Graham, which looks at "value investing" – a philosophy that protects investors from substantial error and teaches them to develop long-term strategies.
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Another must-read is "Rich Dad's CASHFLOW Quadrant" by Robert Kiyosaki – one of Vybohova's favorite authors and mentors. "His book discusses economic strategies based on different personality types," she explains. "Every financial decision you make comes with a price that is often not financial. To become a model, for example, your lifestyle needs to be extremely strict, and you don't have the stability of a secure paycheck. Your body gets criticized to an extreme degree, and this can affect your self-esteem. That's a price that many people might find too high to pay."
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On the other hand, she believes that the price of having a stable office job is something she could never be truly happy with. "I studied accounting, but if I had to look at sheets of numbers every day, I think I would lose my mind," Vybohova says. "Everyone is different, and that's actually a very good thing. But it's important to make the best financial decisions and to find the right investment for your personality type."
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2. Do your research
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One of the economists that Vybohova respects the most, however, is Warren Buffett, who cautions that you should never invest in a business you cannot understand. "When you invest, don't think about it as buying shares," she says. "Think about it in terms of buying a piece of the company. You would never buy a company if you didn't understand what the business did. Even if you are only buying a single share, research the company as if you are planning to buy the whole business."
 
Doing your research is especially important when considering how long you will need to hold onto that stock. Buffett argues that you shouldn't consider owning a stock for even ten minutes if you aren't planning to own it for ten years. He promotes a buy-and-hold mentality and has held some of his investments for several decades.
 
Does that advice still hold during the coronavirus pandemic, however? Buffett admitted that there's no way to know what would happen when you shut down a portion of the economy since it's never been done before, but he remains convinced that "nothing can basically stop America," speaking at the annual meeting of Berkshire Hathaway shareholders.
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"Buffett's advice is largely available to the public," says Vybohova. "You can read his Berkshire Hathaway shareholder letters dating back to 1969 for free, and these are a fantastic resource for building your investment knowledge. You'll also learn why investing in dividends is such a good idea for new investors since this type of investing is much safer and more reliable."
 
3. Learn to spot a bad deal
 
One of Vybohova's biggest concerns is regarding the number of scams she sees within her own Instagram feed. "I often see comments that say, 'invest in this hot tip, and you will make $21,000 in just a few days,'" she says. "I delete those comments immediately because I would never want any of my followers to get scammed by that advice."
 
One adage is especially true in investing – if it seems too good to be true, that's because it is. Regrettably, even the investment world is filled with "gurus" who are looking to make an easy commission by offering "hot tips" to new investors and preying on the desperation of those who are afraid of the current economic climate. 
 
Even Warren Buffett warns against these charlatans, saying that their only value is to make fortune-tellers look good. He advises investors to do their research, set realistic expectations, and stay the course while ignoring the unreliable chatter about markets, the economy, interest rates, and the price behavior of stocks.
 
"When I see people following 'hot tips,' I get very anxious," says Vybohova. "Too often, they don't understand the market or the companies that they are investing in. It's a surefire way to lose a lot of money."
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In fact, she argues that you're better off just buying a lottery ticket. "It's safer and cheaper to invest in a lottery ticket than it is to follow a 'hot tip' or invest in something you haven't researched," she concludes. "And you actually have a better chance of winning the lottery than making any money from a scam."