“How do I turn down that kind of money?” my son asked me with a pained look on his face.
This 17-year-old kid had a huge decision to make. He was offered a large scholarship to a prestigious university – but it was a school he hadn’t liked after several visits, and it didn’t offer the major that he’s passionate about.
On the flip side, he was accepted into another university that is ranked No. 1 in the country for his desired major. It’s in a part of the country that he loves, and he liked the students and professors he met there…
But he’d be paying full price.
“Every time I’ve made a decision that was based solely on money, it has been the wrong decision,” I explained.
When I graduated college, I had two job offers. One was at a company where I would have fit in well, and the people I would have worked with genuinely seemed excited to have me work there.
The second was at an artsy company in Greenwich Village, New York, and it was filled with people who took themselves very seriously.
The company just needed a warm body to fill the position – but it paid more. So I took the second option.
I was miserable. I was out of there in eight months.
I nearly made that mistake again years later.
Shortly after starting with The Oxford Club, a job offer fell in my lap. I had the opportunity to return to Wall Street at a higher salary and bonus than what I was making. It was an attractive offer, and this firm was steeped in history.
It was tempting, but then I thought about my day-to-day work. I could talk with hedge fund managers and try to make them even richer, or I could help regular investors improve their financial situations.
Additionally, I really liked my colleagues at The Oxford Club, and my CEO was genuinely interested in my success, not simply what I would bring to the bottom line. That was refreshing.
So I turned down the big money from Wall Street. That was 12 years ago, and I’m still here. Staying was one of the best decisions I’ve ever made.
Obviously, the goal of investing is making money. However, if you chase the money without thinking, you’ll likely end up making a mistake.
For example, income seekers who buy dividend payers are often attracted to stocks with double-digit yields. That’s all well and good if you understand the risks, but many investors get practically hypnotized by the shiny 10%-plus yield and forget to do their homework.
They don’t realize that if a stock has a 10% yield, it most likely has a higher degree of risk than a blue chip stock with a 4% yield.
Then when the 10% yielder falls, they wonder what happened.
That doesn’t mean all stocks with double-digit yields are bad investments. It means investors should understand what they’re investing in and not just buy based on a big dividend.
The same goes with chasing profits. Many investors went full speed ahead during the dot-com boom without understanding that many of these companies had no real business plan. These shareholders got their heads handed to them.
It was the same with the boom and subsequent bust in cryptocurrencies. Now that pot stocks are hot, I’m concerned many investors are chasing potentially large profits without understanding the risks.
There’s nothing wrong with speculating or buying high-yielding stocks or other investments as long as they are appropriate for your risk tolerance and you understand what you’re buying.
When all you think about is how much money you’re going to make, it leads to poor decisions.
You should expect your investments to make you money – and I’m a big advocate of investing in order to ensure a comfortable retirement. But if you chase the money and it’s the only thing you consider, your efforts likely will end as well as my job in Greenwich Village.
I’m happy to report that my son, perhaps learning from my mistakes, is not chasing the money and will be attending a school he’s excited about and that better matches his academic and extracurricular interests.
I’m thrilled he’s going somewhere he’ll be happy, even though it’s going to cost me a lot more than it would have if he’d made his decision based only on the dollars.