Advice from Peter Lynch

This week on my blog I am sharing little gems of advice that can help you to grow and to protect your wealth as you make one investment after another. Today’s comes from Peter Lynch.

Investor Peter Lynch has been quoted as saying: “Never invest in any idea you can’t illustrate with a crayon.” Basically, the idea is to be careful putting money into a concept that you don’t understand yourself and that you can’t easily explain to others.

Why do I think that this is such great advice?

The fact is that most schools and universities do not prepare you for to be an investor or to be financially free. Instead, they prepare you to be an employee. But when people make up their minds to get out there and to start investing, their lack of education and experience often makes them easy prey for con-men.

When you are given the opportunity to invest in something, ask yourself: “Can I illustrate this idea with a crayon?” Even if there are several moving parts, it is important for you to understand how and where money will change hands, who will benefit, and what the risks will be.

I love my land-flipping business because it is something that I can “illustrate with a crayon” and I know that it is a valid business. I know that I am solving problems with every deal I do and I know the risks and have found ways to minimize them.

Now, I won’t pretend that real estate is the only way to make a buck; I know that there are all sorts of ways to make money out there.

But if you come across an investment opportunity but can’t illustrate it, please be careful. VERY careful. There are a lot of sharks out there and I don’t want you to have a setback in your journey towards financial freedom.

Listen to Peter Lynch and make sure that you understand your investments before putting any money into them.




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