Don’t make investing different from any other good habit. Just start and you’ll more easily figure out the next step. If you worry about getting it perfect you won’t do anything.
What to Do:
1. Set up automatic savings to go to your low cost brokerage
– You only have to do this once and you get the results every month
– Every time you get a raise, or once a year, bump up your savings amount
2. Set up an account with a low cost brokerage
– Schwab, Fidelity, Vanguard, or others
– Buy something mindlessly good, one of the .5% or less S&P Index funds
3. If you can have a 401k or equivalent, set that up
– Many employers match, so don’t walk past free money
– Don’t get overwhelmed by the choices, get an S&P index fund
What about?
1. I don’t have a lot of time to monitor my investments.
– Fantastic! Investors who could adjust their investments every 5 years made twice as much money as those who could change every month.
2. I don’t have time to do the research to find the next great stock.
– Great! Professional investment managers do poorly at this. If you buy the S&P 500 Passive Index you don’t have to care what happens to any individual stock. Your eggs are not all in one basket.
3. I can’t do enough to make a difference.
– Would you rather build on no progress or some progress?
– By the “Rule of 72“, if the market returns 7%, you double your money every 72/7 years (10 years). If you invest for the long term, your money keeps doubling.
4. Shouldn’t I invest in gold, silver, platinum, or plutonium?
– That’s a gamble, not an investment. See my post on “Not all that is gold glitters“.
