How to be a better investor-do nothing

[tony 0]

 G A M B L I N G  with your money or investing it  is your choice. The wise do what we do here. Index funds. This guy in this essay sums it up nicely. If you're a newbie this essay is for you.

Once you have set up a portfolio with a diversified mix of stocks and bonds, using mainly low-cost index funds, you don’t need to do much more, except periodically rebalance it to make sure the stock-bond asset allocation is still appropriate. Most of the time, in fact, it’s best to do nothing.  Article link:

https://www.nytimes.com/2021/01/14/business/mutfund/invest-stocks-bonds-.html

[sschullo 0]

11 hours ago, tony said:

 G A M B L I N G  with your money or investing it  is your choice. The wise do what we do here. Index funds. This guy in this essay sums it up nicely. If you're a newbie this essay is for you.

Once you have set up a portfolio with a diversified mix of stocks and bonds, using mainly low-cost index funds, you don’t need to do much more, except periodically rebalance it to make sure the stock-bond asset allocation is still appropriate. Most of the time, in fact, it’s best to do nothing.  Article link:

https://www.nytimes.com/2021/01/14/business/mutfund/invest-stocks-bonds-.html

This is standard response to day traders and gamblers: 

Not so smart "investor" Dad: “If you just match the benchmark, you are getting an average return. Why would you ever want to be average?” he asked.

And I like the genuinely smart son's answer which is also decades old: 

Smart Investor Son: “Well, Dad, that still would put me ahead of most active investors.”

Nothing ever wrong with the "average" return over many years. The fact is that the average return from the stock market since the 1870s according to Morgan Housel: United States capitalistic system produces about 6.8% return minus inflation since the 1870s (3.1% average inflation generates a total return of 9.9%). 

Has anybody else read Housels book, the Psychology of Money? Here is my 4 star review on Amazon: https://www.amazon.com/gp/customer-reviews/R30TAIVAFIZBC8/ref=cm_cr_arp_d_rvw_ttl?ie=UTF8&ASIN=B084HJSJJ2

[tony 0]

7 hours ago, sschullo said:

Has anybody else read Housels book, the Psychology of Money? Here is my 4 star review on Amazon: https://www.amazon.com/gp/customer-reviews/R30TAIVAFIZBC8/ref=cm_cr_arp_d_rvw_ttl?ie=UTF8&ASIN=B084HJSJJ2

Steve you write great reviews I must say.

I made my mistakes. I blame the sleazy salespeople but I also blame myself because early on I made some poor decisions based on thinking I knew more than I did.   Plus I watched those cable business news networks feeding me  nonsense on what to do with my money. What was and what was not  cool to own  . I believed the  so called experts because I was  young and naive and trusted the financial industry.  It took a while but I finally got it figured out. Invest in  diversified index funds, rebalance when needed And DO NOTHING!!  except save as much as you possibly  can.   For you newbies, you don't have to make those same mistakes. It's a different age now and with the internet you can find the correct path much easier and quicker than I ever could.  The good news is even if you made mistakes it's never too late to get it right. Why is something as  easy as investing  seem so hard to so many?

"Ordinary folks with no formal financial education can be wealthy if they have a handful of behavioral skills that have nothing to do with formal measures of intelligence."   Amen.
 

[MNGopher 0]

With regard to investing...."Don't do something.  Just stand there!"   -Jack Bogle

 

[tony 0]

22 hours ago, MNGopher said:

With regard to investing...."Don't do something.  Just stand there!"   -Jack Bogle

 

Exactly but we aren't built that way. We are impatient and somewhat greedy so we aim too high, make mistakes and some of us   end up with LESS than average returns.