Ramit Sethi lived through the 2008 crash and learned two things: keep a big savings buffer so job loss doesn't destroy you, and hold extra cash so you can buy when markets crater. He made money from both moves.
One lesson I learned during the crash of 08 has made millions of dollars for me, and I wanted to share it. This is an advanced lesson that has a lot of nuance. So let me just tell it to you straight. In 08, people started getting laid off. People started losing their jobs. Same thing happened to me. And I was young, single, living in San Francisco. And for my friends and for me, at first it was fun. We're fun employed and we're going out to the movies. But after a while, it was not so fun. And certainly if you were older, you had a mortgage or a family, it was definitely not a fun time. But the two things that I'm thankful for. First is that I had a sizable savings account. I'm thankful that I was disciplined enough to build a savings account. That's exactly what I want for you. You can use Chapter five of I Will Teach youh To Be Rich, my book. And I had that savings account, so I did not have to scramble for a job. I had money to live off of for a while. The second thing is, I looked at the market going down and down and down, and I'm a young, disciplined investor at the time, and I was like, I wish that I could keep investing and even get more aggressive about investing. That's what a lot of people want right now, particularly young investors. They're like, wait, I want to invest more. Because I know that over the next 20 or 30 years, that will turn into a lot of money. Well, I set a rule for myself that I would never be cash constrained when there's a generational buying opportunity. And so I started building up my cash. Now, this is the nuance. I always hit my investment goals. Always. I had extra cash that I kept in reserve. And that is something that if you are hitting all your goals and you have extra cash that you decide, hey, I'm willing to take the risk and put it in for the long term, knowing that 10, 20 years from now to likely be worth a lot more. That is an opportunity for you personally. I'm not doing that today. I don't think the market has dropped as much as it will, but that's just my opinion. You shouldn't listen to me. You shouldn't even really be a market time.
