I’m probably going to offend some people who think investing is a thrill, but I find it really dull and boring. And I think for 99% of us, it should remain so. Here is how I go about it: I check out the reviews of the best online brokerage accounts, pick one based on the fees they charge, the minimum amount required to invest, set up an automatic transfer from my current account to my broker, tell them where to allocate the money, and move on with my life.
Why? Because I don’t know much about it. I know the markets move up and down, so you should be there for the long run anyway. It is a game of patience. I know most managed funds don’t perform as well as index funds. I know fees can have a big impact on your returns. That’s about it.
I don’t want to spend hours looking up stocks, calculating whatever ratios they’re about, only to find out that, like most funds managers, I didn’t beat the market. Sure, I’ll earmark a little money I can afford to lose, to place a few bets on promising companies. But 99% of my investments? B-o-r-i-n-g.
Why would I suggest to do the same? Well because you probably don’t have the first idea about stocks and shares and funds and stuff either. So let’s keep it simple. How do you get started? Well here is a review of Motif Investing that will give you a free $150 if you sign up. Set up a wire transfer and send whatever you can afford on there every month.
$100 per month at 8% will compound to $232,392.25 over the next 35 years.
$500 a month will make you a millionaire in 35 years.
And 8% is a rate you can expect if you can stomach the market’s ups and downs for a few decades and resist the urge to pull your money out during a recession.
So it doesn’t get much easier than that really. Why bother study more?
– Think about your time as your most valuable treasure. You can always make more money, you can’t buy more time. So is studying stocks and investing worthy of your time? If you are passionate about it, by all means, enjoy yourself. But if you read this little blog, you are probably just the average investor. Use your time to go have fun with your family, improve your career, learn a skill, make a chocolate cake. And let a robo-advisor do the rest.
– Being involved in your trading makes you more vulnerable to emotional decisions. When you have your brokerage account tab open in your browser every day, you’re tempted to look, right? And sell that stock that’s been having such a good day. Only the stock is not having a good day, it’s having an amazing quarter, and you’re missing the opportunity to ride it all the way. Same thing when you wait too long to sell at a loss. Just set up your parameters of take profit and stop loss and call it a day. Some brokerage firm had a study about the accounts that performed best over the past decade. You know what? They were the dormant accounts. We are human. We make mistakes. Again, leave it up to a machine and go have fun outside.
– You are in it for the long term. We’re talking 25 to 35 years down the line. You know how you look at your grandparents and get jealous they bought their house for $50,000 half a century ago? Well the same goes with investing. You’ll be able to tell your kids you got that Coca Cola share for a tenth of its current cost a few decades from now. Let the market do its thing.
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