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'Post' Columnist: Proper Investing May Be Boring, But It Can Make You A Millionaire

RACHEL MARTIN, HOST:

For the past few weeks, the world watched as individual Wall Street investors rushed to buy shares in the struggling video game retail chain GameStop. It was sold as a chance to punish Wall Street elites, especially those who bet that companies will fail. This is called shorting. GameStop's share values climbed to dizzying heights and then fell again. Virtually all of those market gains evaporated. Washington Post personal finance columnist Michelle Singletary talked about that with Noel King.

NOEL KING, BYLINE: So a lot of newer investors, younger investors are fascinated by the story of GameStop stock, and it has led some of them to get involved, to put their money into the market for the first time. That, on its face, is not necessarily a bad thing - young people investing. But you have some concerns. What are those?

MICHELLE SINGLETARY: You know, I'm not a big fan of using investing like a game. And what's happening with GameStop is really speculation. It's not the tried-and-true way that the average person who's, like, saving for retirement, for example, creates wealth for themselves. They do it slow and steady over decades, really, and with diversification, often through mutual funds, low index mutual funds. And so I know that's not a sexy (laughter) or exciting story for the children or young adults, but the reality of it is that that's how they should be investing.

KING: The mistakes that small investors are making when they jump into the market and scoop up a hot stock or get involved with something like GameStop - what are the pitfalls that you see?

SINGLETARY: So the analogy that I use that I think that they will identify with is it's like when you go to Las Vegas. You know, it's fun to be in the casino, and there are people who are winning. You hear the bells go off in the slot machines. And like, yeah, that could be me. But that's not - investing is not like a casino. Sure, there are going to be winners. Sure, you're going to read the news stories about someone who invested in GameStop and paid off their student loan debt. But for every one of that person, there are so many more who are going to lose money. They're going to invest money that they can't afford to lose, and they're going to walk away not the better.

KING: For your recent column, you spoke to an expert who made what would appear to be a very boring suggestion, but she claims it is not. Christine Benz says buy some shares in a low-cost S&P 500 index fund. And you, the buyer, will see that you are a part-owner of what?

SINGLETARY: So you are a part of Apple, Netflix, Tesla - all the major companies that you are very familiar with.

KING: The exciting ones.

(LAUGHTER)

SINGLETARY: You know, Amazon. The problem is that when you buy a mutual fund, you don't see the guts of it. You know, it's like you're putting together a stew, and you got all the tomatoes and carrots and all that kind of stuff. When you're eating it, it's great, but you're like, what's in this stew? But when you look at the pot, and you see it all, you're like, oh, yeah, there's carrots in there. There's beef in there. That's what an index fund is. When I'm talking about the stock market and investing and having money for your future, I don't look at what the news is hyping. That's like the casino. Why, when you hit it at a slot machine, does the bell go off? Why would I want to let someone else know that I've made money? Because they want to think - they want other people to think they can win, too. But we all know that the house always wins. But the regular people who are not in the casinos, who are maybe just walking on the strip and enjoying the - you know, it's Las Vegas without the gambling. They're investing in what people consider boring, but boring can make you a millionaire.

KING: Michelle Singletary, personal finance column for The Washington Post, thank you so much for being with us. This was great.

SINGLETARY: You're so welcome. Transcript provided by NPR, Copyright NPR.