Save and Invest

3-time Olympic gold medalist Ryan Murphy shares the lasting investing lesson he learned when he was 13

Ryan Murphy of USA celebrates winning the gold medal in the men's 100m backstroke at the Rio 2016 Olympic Games
Jean Catuffe

Ryan Murphy has an impressive swimming resume: In his Olympic debut at the Rio Games in 2016, the American won three gold medals. He was 21 at the time. In 2017, after graduating with a bachelor of business administration from the Haas School of Business at U.C. Berkeley, Murphy turned pro. A year later, he won six medals at the 2018 Swimming World Championships.

But the accomplished swimmer has interests outside of the water, including investing.

Murphy, now 24, has been surrounded by personal finance advice since he was a kid. "I was in seventh grade when my dad took me to the bank to get my first debit card and set up a bank account," he tells CNBC Make It.

Growing up, his dad and grandpa discussed investing strategies at the kitchen table every Christmas after Murphy and his two siblings opened gifts. Murphy was a teenager when he first joined in the discussion, he says: "I was probably 13 the first time I sat down at the table. My grandpa was taking me through his strategy."

His grandpa taught him about market correction and explained the benefits of long-term investing. "He would say, If the stock drops about 10% and you still think the stock is really set up to do well over the next five years or 10 years, you buy more of it. And don't be afraid to buy more of it because you're looking at a long-term lend.

"That was a big tip that I got at a young age: Long term, the market is good."

VIDEO0:4800:48
Warren Buffett's secret to investing lays in the game of baseball

Investing legend Warren Buffett would approve of his grandpa's advice. The Oracle of Omaha chooses companies that he thinks will perform well long term, regardless of how they're doing at any given point. You may know it as the "buy and hold" strategy.

"The money is made in investments by investing and by owning good companies for long periods of time," Buffett told CNBC in 2016.

Murphy is also careful about diversifying his portfolio and makes sure that he's never "overexposed to one company," he says, which is another rule of thumb that Buffett would agree with. The investing legend recommends parking your money in index funds, like the S&P 500. The S&P holds 500 of the largest companies in the U.S., from Google to Disney to ExxonMobil, and allows you to take advantage of the success of major corporations without the risks associated with buying individual stocks.

"The trick is not to pick the right company," Buffett told CNBC's "On The Money" in 2017. "The trick is to essentially buy all the big companies through the S&P 500 and to do it consistently."

Murphy is following sound advice, but "I still get a little bit nervous," he admits. "I'm still relatively new to this.

"I do like to always have money on the side, just in case there's a really large correction and I want to put in more money [in the market]. Right now, about 35% of my cash is uninvested, just because I'm waiting for what I feel like is the right opportunity."

Plus, "I always have a fixed amount of money in an emergency fund," he says. "Then, I've got a little bit for spending, some for taxes and then the rest of it will be going towards working the stock market."

Don't miss: Olympic swimmer Ryan Lochte went from earning millions to living paycheck-to-paycheck—here's what he learned

Like this story? Subscribe to CNBC Make It on YouTube!

VIDEO0:5900:59
Michael Phelps' habits for success
make it

Stay in the loop

Sign Up

About Us

Learn More

Follow Us

CNBC.COM