When I decided to start one, I was banking with USAA and spoke with one of their financial representatives.
I told him I would like to open a Roth IRA which required a minimum of $500 to fund and an automatic monthly contribution of at least $50.
I said ok, and in February 2016 I started my Roth IRA.
3. Took Someone Else’s Advice
I trusted whatever the guy from USAA said, not really knowing what I was doing. Once I signed the papers, I was just glad I had started one.
This later turned out to be a big investing mistake.
The person from USAA told me what he thought would be a good investment for me and I took his word for it.
Even though I later found out why taking someone else’s advice was a bad idea, I diligently maxed out my Roth IRA of $5,500 (the contribution limit for 2020 is $6,000).
4. Didn’t Know What I Was Invested In
Because I was young, being somewhat aggressive was important to me. I went with the most aggressive 100% equity mutual fund (so I thought), which was called the USAA Cornerstone Aggressive Retail (UCGAX).
I started tracking my returns over those few years and wanted to understand how it all worked but it somehow always ended up being quite a bit lower than benchmarks such as the S&P 500 or Russell 2000.
Looking back, I honestly had no idea what I was invested in. At least I got started and was putting money into it every month, right?
5. Didn’t Pay Attention to Fees
Fees were not something I considered when I opened a Roth IRA. It was something we didn’t discuss on the phone, I just took the reps word for it.
However, a year or two later, I started learning about fees and the impact they can have on a portfolio over an investing lifetime.
I dug into the fine print of the USAA Cornerstone Equity Fund and figured out how much I was paying in fees (more on that later).
Turns out, companies like to make it difficult to find how much you’re paying in fees and what the long-term impact on a portfolio would be.
6. Bought Actively Managed Funds
While digging into the fine print years later, I discovered I was invested entirely in actively managed mutual funds and was being charged a 1.2% expense ratio!
Meaning, they charged 1.2% of my portfolio annually.
These are high fees! And I didn’t even have access to a financial advisor.
And the fees were even higher when you factored in trading costs, cash drag, etc.
The person on the phone told me, “don’t worry so much about fees because what you’re paying for is someone to actively manage your investment instead of just letting it sit in some boring old index fund.” I thought, “what’s an index fund?”
Here’s what’s funny, I actually believed him. I thought, “of course, if you pay more in fees you’re going to get a higher rate of return, right?”
Over 90% of the time that’s false. Unless you’re Warren Buffett.
7. Left Too Much In Cash
When I first started transferring money from my bank account to my Roth IRA, I was making the mistake of thinking that was all I had to do.
After some time, I realized the cash I transferred was sitting in a money market account which is basically the same thing as a savings account!
The money you deposit has already been taxed. So when you go to withdraw the funds at age 59½ or for qualifying reasons before age 59½, you don’t have to pay taxes on what you withdraw.
How Are Roth IRAs Taxed?
Imagine you’re a wheat farmer. You plant seeds and harvest the wheat.
Would you rather pay taxes on the seed or the harvest?
Your decision is solely based on whether you think taxes will be more in the future.
You’ll pay tax on the seed now if you think taxes will be higher in the future or pay taxes on the harvest if you think taxes will be lower in the future.
I’m a big fan of the Roth IRA, especially if you’re young, even if your employer offers a 401(k) (which you should be contributing to also).
However, if you also open a Roth IRA, instead of contributing more to your 401(k) above and beyond the employer match, you could put that extra money in a Roth IRA.
Why would you want to do that?
Can You Access Money In a Roth IRA?
You can take your contributions out of a Roth IRA anytime you want.
You may withdraw your contributions penalty-free at any time for any reason, but you’ll be penalized for withdrawing any investment earnings before age 59 ½ unless it’s for a qualifying reason such as purchasing a house, education, or the Coronavirus pandemic.
Age 60 may sound like an eternity and who knows what’s going to happen between now and then. Wouldn’t it be nice to be able to access your funds if you really needed them?
I recommend not taking the money out but isn’t it nice to have options?
If you have all of your money tied up in a Traditional IRA or 401(k), the only way you can access any funds before age 59 ½ is paying a 10% penalty or taking out a loan against it. Or if something like the CARES Act comes along.
I Jumped On The Vanguard Bandwagon
After learning about fees, asset allocation, and risk tolerance, I sought out the best investment for myself. I stuck with USAA for about a year and decided to start looking at Exchange Traded Funds (ETFs).
The fees are lower, I could have my target asset allocation, and they’re more tax efficient.
But even the funds I was finding had an expense ratio of ~0.30%.
So after exhausting my options, I decided to jump ship and transferred my Roth IRA to Vanguard.
Vanguard was started by a man named John Bogle in 1975 with the goal of bringing to the individual investor the option to invest in broad-based low-cost index funds.
And as the name implies the company has been a vanguard in the financial services industry. Their average net expense ratio is 0.10% (U.S. asset-weighted fund expenses as a percentage of 2018 average net assets).
Why a Vanguard Roth IRA?
Their core purpose is, “To take a stand for all investors, to treat them fairly, and to give them the best chance for investment success.”
I’m a big fan of Vanguard and when you combine it with the benefits of a Roth IRA, the chances of investment success start to look really nice.
I invested the majority of my funds in the US stock market with a little exposure to the rest of the world.
Now I wake up every morning knowing every person in America goes to work to make me rich. By owning the entire stock market, I own a small share of every publicly traded company in the U.S.
And if you’d like to read the book that opened my eyes to investing and helped me realize all of the investing mistakes I’ve made, it’s called the Simple Path to Wealth.
This information has been presented as general education purposes. I am no longer an investment advisor and have not taken your specific situation into account so please don’t take any of the information presented today as investment advice. Consult with an investment professional if you’d like to learn more about investing for your future.
98% of active managers can’t outperform the market. Perhaps you’ve heard this.
I’ve always told clients not to try and outperform the market because they will almost always end up failing.
But my thinking was challenged.
A few colleagues and I attended the Foundations Conference in Austin, TX in June 2018 to learn about how this company has been trying to outperform the market for 30+ years.
From their website:
“Dimensional Investing is about implementing the great ideas in finance for our clients. We aim to beat the market, not outguess it.”
I’m not recommending Dimensional Fund Advisors. I simply want to present a few things I learned. This post won’t appeal to a majority of my readers but I if you’re in finance or have thought you could outperform the market, it may be applicable.
What is Dimensional Fund Advisors?
Their focus is the wisdom of academics over the experience of active fund managers. The DFA philosophy boils down to using academically sound research to consistently outperform the market. Here are a few things I picked up on while I was there that makes them different.
1. History shows that some riskier stocks — those of small companies and those considered undervalued — produce higher returns on average over time than other types of stocks.
“But on average doesn’t mean every year,” says David Booth, CEO of Dimensional.
DFA employs what’s considered value-based investing. You have two types of stocks. Growth stocks (overvalued in price) and value stocks (undervalued in price). DFA screens out many growth stocks and underweights them so they have more exposure to value stocks that are underpriced.
2. They also overweight small-cap stocks. A small-cap stock is a company with a market capitalization (shares outstanding x price per share) of less than $1 billion.
Small-cap stocks are riskier and because of that, you would expect to earn a higher rate of return by investing in small-cap stocks over a long period of time and underweighting large-cap and mid-cap stocks.
3. Dimensional employs what they call momentum. When they see momentum in the market they take advantage of it, even on a daily basis. If they see movement in certain sectors of the market they will buy and sell to profit from the momentum.
DFA illustrated how they make small trades on a daily basis instead of one big trade every quarter which is what most index and mutual funds do.
4. The other dimension that they try to focus on is finding high profitability stocks. Companies that are generating a lot of cash will potentially have a higher return versus accompany that may be slowing down in their earnings.
When you combine all of these factors to your investments, theoretically what should be able to outperform the market. If you’re investing in value stocks, buying a good price, finding the momentum, and focusing on high-profitability, based on history you should have a higher return than the market.
Index Investing on Steroids
They preach active management can’t outperform the market. They say they’re not active managers, but they are.
We went to dinner one night with Dimensional Fund Advisors and I asked them, “with all of your research and scientific strategies, how do you keep yourself from becoming active investors?” They said, “David Booth, DFA CEO considers them active managers.”
Anytime you deviate from passively investing in a market index by definition you are an active investor.
Learning about DFA’s investing approach challenged my thinking. But I’m not sure I 100% buy into it. Their fees are still a little too high and at the end of the day, it’s really hard to consistently outperform the market.
They have received some heat for the past few years because they haven’t been able to outperform the market here in the U.S. But they’re sticking with their philosophy and only time will tell if they can deliver what they preach in the future.
If you’re just starting out, investing can be frightening and intimidating.
One of the intake survey questions I ask when I meet with someone is, “have you ever calculated or spoke with someone about retirement?” Nearly 90% of the people I meet with say no. Retirement has never really crossed their mind especially when it seems so far away. After sitting with them and discussing the benefits of investing I can see their physiology change when they see how simple it is to start.
When I say retirement I don’t mean stop working, stare at a wall and die. I mean, is your stash of money large enough that you will be able to live off the interest, forever. This will allow you to quit your 9 – 5 job, get off the hamster wheel and do the things that you are passionate about. The ultimate goal when investing should not be to save until you’re 65 and then start enjoying life — but to get there as soon as you can. This is Financial Independence. You no longer live paycheck to paycheck. You no longer have a boss telling to stay until 6:00 pm. You live life on your own terms not worrying about money.
Planning for the future can be a daunting, unfamiliar and boring path. There are so many paths, so many so-called experts and a lot of ways to screw things up. Most know they will eventually start investing but they get stuck in analysis paralysis. The path of least resistance is to do nothing. They keep telling themselves that they will get started one day, later to find themselves in a situation where they wish they would have started earlier. I am yet to meet someone that hasn’t said they wish they would have started earlier after they found out how simple it is.
70% of Americans fear running out of money in retirement more than death itself. Humans have a 100% mortality rate but whether or not your money lasts is a concern. The earlier you get started the better off you will be due to compound interest.
It is my goal, no matter what stage of life you’re in, to get started. I want to simplify investing so you can start today instead of waiting for “someday.” If I can make investing simple, you have a much better shot at getting started.
Financial Independence is defined as 25x your annual expenses. If you spend $40,000 a year, once you reach $1 million in investments, you can comfortably spend $40,000 a year with a safe withdrawal rate of 4%.
When I ask someone, “How much do you need to fund your dreams?” I get numbers all over the place. $100 million, $1 billion, $10 million. They’re actually surprised when they find out they don’t need that much. After your debts are paid off you really don’t need to spend that much money each year.
So before we get into the nuts and bolts I want to share with you a few retirement myths. As a disclaimer, this article is not about real estate investing. This article is aimed at everyone who’s staring at their 401k or Roth IRA in confusion, wondering what the heck they’re supposed to be doing. Unfortunately, most of us don’t learn about investing in school.
7 Retirement Myths
1. You need a lot of money to get started. You may think you need $1,000 or $10,000 to get started investing. This not true. You can get started with as little as $1.00. Before you start, I recommend you do three things first. Have a budget, have some sort of “Oh crap” money in the bank, and all of your high-interest debt paid off. Once you have done those three things, you can start slowly easing your way into an investment until you become more and more comfortable with the idea. Leaving your money in a savings account actually depletes due to inflation. The earlier you get your dollars working for you the better.
2. You’re too young to get started. Are you kidding me? You are never too young to get started. The best time to get started was yesterday. If you’re younger than 30, there is no reason you couldn’t become a millionaire in your lifetime. That is not to say if you’re older than 30 you can’t as well. It’s also never too late to get started.
Someone who invests $25,000 by age 25, with a 12% rate of return, will have more than $2 million by age 65—even if he or she doesn’t add another dollar after age 25. Conversely, if that same person waits until age 30, he or she will have to contribute more than three times as much to achieve the same outcome. The lesson? Compound interest is the best way to grow your money over the long haul—so start while you’re young.
3. You need to know a lot about stock picking. If you think investing is only for the experts who have fancy software, charts and insider information, you’re wrong. These experts might be able to perform decently picking stocks, but you and I both don’t have the time to scrutinize every company’s financials in order to make a decision whether or not to invest. I typically am a DIY kind of guy and I do have some money that I like to play around with picking individual stocks but when it comes to my main source of investing I use online tools created by reputable companies that have made investing simpler. It takes the emotions out of investing. I set it and leave it. Which has been more successful than stock picking and will continue to perform better. If stock picking was the answer I would tell you to learn how. But it’s not the answer. I’ll explain why.
4. Investing is too risky. Not investing is even riskier. When your bank pays you 0.00000025% in interest and inflation is 2% you are losing purchasing power over a long period of time. $100 today will not buy you $100 worth of goods in the future. Take more risk while you’re young, but not any more than you have to.
You may be thinking, “What if I put a bunch of my hard-earned money into an investment and we have another recession?” This is a legit concern seeing how at the time of this post the markets are the highest they’ve ever been. But if the market does crash while you’re young and you keep funneling money into it, you are buying investments at a discount and this will be the best thing to ever happen for you long term. Don’t get caught up in timing the market. No one can predict what’s going to happen. There will be ups and downs but if you leave your money invested for the long haul you will be way better off. Even throughout the great recession of 2008, the market has averaged a rate of return of 12% annually.
5. Fees are a small price to pay. Nothing will erode your investment account faster than fees. You may think, “Oh it’s only 1.5% in fees. That’s so tiny I’m not going to notice.” But when you consider the compounding effect of fees, a 1% difference in fees could mean a triple-digit difference over a 30 year period. It could be the difference between $250k and $1 million.
6. You need to pay an active investment manager. Investing, simply put feels too complicated for the majority of Americans. They prefer not to have to worry about it and would rather pay someone else to do it for them. Many successful hedge fund managers are able to outperform the market in the short term, but most of them don’t outperform the market as a whole in the long term (over a 10 year period). And if they do, you won’t be able to afford to work with them.
When you pay an active investor to invest your money, you are paying them a fee to buy and sell stocks based on their knowledge and research. Each time they make a trade they charge a commission. Anyone that tells you they can outperform the market, or knows who the next Amazon is or has the most sophisticated software for stock picking — run. Most people will trust their hard-earned money to a guy down the street instead of doing what works. Don’t listen to them.
Maybe you’re not concerned about beating the market per say, you just want your money to safely grow. You can do this with low-cost index funds and not have to pay huge amounts of fees. Not only will the guy down the street never beat the market, but fees will also eat away at your investments and you could be missing out on a ton of money. You don’t need to pay someone to actively manage your money. It is better to align yourself with the market through broad-based low fee index funds.
“It’s not about timing the market, it’s about time in the market.”
7. You can only retire at age 65. Why is it that most people work 40 to 50 years and then wait until they’re 65 in order to stop working and finally start “enjoying” life. Even worse, 60% of retirees don’t have enough money to last them 30 years after they retire. They spend their entire lives chasing a big pile of money, only to find out that a large chunk of it is gone to fees and taxes. When they go to retire they stop working, and when people stop working they tend to die. It always makes me sad to hear about someone that is not able to retire because they didn’t prepare in advance and they have to rely on the help of loved ones financially.
Why not reach Financial Independence in your 30’s, 40’s or 50’s? Why wait until the end of your life after living paycheck to paycheck? How you can create an income that will last forever? It’s called perpetuity. When your investments get to a certain point, lets say $850,000 growing 8% annually, you can comfortably withdraw 4-6% annually. That’s $34,000 – $51,000 and the principle will never lose its value. You can live off of it forever. This is the point when you no longer have to work for money because your money is working harder than you. Some people might ask, won’t you get bored not working? Reaching financial independence will allow you to focus on the things that you enjoy. Most people who reach financial independence find a way to do things they love and may end up making money in the process.
6 Savings Strategies
1. Pay Yourself First. Nothing will allow you to save more money to invest than paying yourself first. Most people I meet with pay themselves last. They save money after they pay the government, the landlord, the credit card company and the person behind the latte counter. You will not save consistently if you try and save what’s left after you spend.
2. Savings rate. In order to invest successfully and build up a sizable perpetual money making machine, it comes down to savings rate. How much of your income are you saving? according to a Yahoo Finance article published today the average saving rate in America is at a 10 year low. 2.4%. How are going to get anywhere saving 2.4 pennies of every dollar? If you can start early and find a way to save 30 – 50% of your income, you’re going to be leaps and bounds ahead of your peers. Too many people are looking for the next get rich quick thing. You will not get rich by winning the lottery or picking one stock. You get there by consistently saving a percentage of your income every time it hits your bank account over many years. It’s better to get rich slowly. If you want to reach financial independence, increase your savings rate—it’s that simple.
According to the ASPPA, the largest indicator of retiring with wealth is not your financial philosophy; it’s not your suit-n-tie, slick-talking broker; it’s not even your rate of return—the primary indicator of having money when you retire is your savings rate. That’s right: putting money away—starting today—is the best route to financial freedom during retirement.
3. Round-ups. This is one tactic that proves to be successful for a lot of people because it takes the behavior out of trying to invest. A round-up is when a percentage of your purchase is automatically rounded up to the nearest whole dollar and invested. For example. let’s say you buy your favorite Jamba Juice and it costs you $3.50. An investing app is going to round that to $4.00 and invest the other $0.50 in an index fund. Most people are pleasantly surprised to see their account after a little amount of time. My favorite app for round-ups is Acorns.
4. Employer Contributions. If you work for an employer with a retirement plan that matches a percentage of your contributions, you better find a way to get the full match! If you don’t, you’re leaving free money on the table. The most common 401(k) employer matching contribution is 50 cents for each dollar the employee contributes, up to 6 percent of their pay.
5. Max out accounts. I mentioned the 401(k) but there are other retirement vehicles. The four most common are a Traditional 401(k), Roth 401(k), Traditional IRA, and a Roth IRA. Don’t get confused with the names of these accounts. 401(k) simply comes from a section of the tax code and that is where it gets its name. IRA simply stands for Individual Retirement Account. Roth simply is the last name of the person who invented the concept. If you work for an employer full time you will most likely qualify for a 401(k). In 2018 you are allowed to contribute $18,500 per year not including employer matching. An IRA is what you would open if you don’t have a 401(k) available. The amount you’re allowed to contribute to an IRA in 2018 is $5,500.
The two most common accounts you will see are a Traditional 401(k) which simply means that you are putting money into this account taxed-deferred, meaning you don’t have to pay taxes on it until you go to pull the money out of it at age 59.5 (don’t ask me why its half a year). The other most common vehicle is a Roth IRA. Roth meaning you’re putting money in that you’ve already paid taxes on. Therefore you can pull out your contributions tax and penalty free anytime you want. You just can’t pull out any gains without paying taxes on them. Whichever investment account you have, make it a goal to find a way to max it out each year.
Think of the Roth IRA and the 401(k) as two buckets. They in and of themselves are not investments. It’s what you put in those buckets that will determine how you invest your money. You can put mutual funds into your buckets which are simply a mixture of stocks and bonds or you could put in index funds which are simply a mixture of stocks that mimic one part of the market like Technology, or Financial Services, or the market as a whole. If you want to get the most bang for your buck, I would go with low-cost index funds or ETFs that mimic the market. For example, if you were to purchase a Vanguard index fund which mimics the entire US stock market, you are buying a percentage of every company in America. You now own a small percentage of each public company. You can find investments with an expense ratio of 0.04%. Significantly less than what some actively managed mutual funds charge of anywhere from 1 – 3%. As you saw above, fees have a huge impact on your investments. When you buy an index fund that tracks the entire US stock market you can think of everyone in America waking up early to go to work to make you rich. If you are broadly diversified as the US economy grows so do your investments.
6. Online Investment Tools. How do you get started? I will share with you some of the most common ways to start putting your money to work. Online investment tools are changing the way the next generations invests. You no longer need to find someone on Wall Street with a fancy office and a big cigar to start investing. You can start here.
Vanguard seems to be one of the most common places to start. Jack Bogle, the founder of Vanguard first introduced the concept of index funds nearly 30 years ago. Since then the company has grown to over $2 Trillion (yes that’s a T), under management. Two other companies that I am a fan of are Charles Schwab and Fidelity who can provide some of the same services and options at a low cost as well.
If you’re younger and you’re looking to get started with a small amount of money you might look into other apps that have a simple easy to use interface, educational content directed toward millennials, and a simple way to automate your investing.
Betterment is one that has gained a lot of popularity recently because of how simple it is to get started. The fees are low and changing your portfolio based on your risk tolerance is easy.
Acorns has really caught on with the millennial generation. This app was one of the first to introduce the idea of Round-ups. Started by a father and his son to try and get younger people to start investing earlier. You can get started with $1.00 and it’s free if you’re a college student and then just $1.00 a month after that until you reach a balance of $5,000 then they charge 0.25%. The nice thing about Acorns is you can select your risk level and they invest your money in a Vanguard index fund based on how much risk you want to take. Stocks are riskier. Bonds are less risky.
Stockpile is new and up and coming. Not a lot of people know about this one but you can actually buy fractional shares of companies. For example, if you would like to own a share of Amazon but it is worth $1,299.32 and you can’t afford to pay for the entire stock you can purchase 5 or 10% of it. You can also set up a custodial account for kids that are under 18 if you would like to help them get started investing at a young age and they want to buy a little bit of Disney. Individual stocks aren’t the only thing you can buy. You can also buy index funds. You pay $0.99 each time you make a trade which is way less than what other companies will charge you of $6.95+.
Robinhood is 100% free and one of my personal favorites. I like to have fun with this by trading stocks. About 10% of my investable money is in individual stocks that I believe in. The nice thing about Robinhood is you pay absolutely zero fees of any kind. You can buy and sell as much as you want and you never have to pay anything for it. You can also buy index funds at no cost. The Investor Junkie, who has a huge audience, recently said that after 30 years of being with TD Ameritrade has decided to switch over to Robinhood simply because of the fees. Like mentioned earlier the most successful way of investing over the long run is low-cost index funds. But if you want to have a little fun buying individual stocks of companies you like I would recommend using no more than 10% of your investable assets.
There other apps that are similar out there of which I am a little less familiar such as Wealthfront, Wealthsimple and others that may be worth checking into.
6 Watch Outs
1. Cryptocurrencies. This is the hot topic of 2018. It is the wild wild west of investing. Cryptocurrencies such as Bitcoin, Ethereum, Litecoin, Ripple, etc. are digital currencies that exist on the blockchain. I am a big fan of blockchain technology and it will do for the entire world and the financial services. You may have heard of people who have made millions of dollars with Bitcoin. I would not invest in cryptocurrencies because all it is is pure speculation. However, if you are in a comfortable position and can stomach the risk, have a little fun. Don’t overextend yourself and be aware that you could lose all of your money in one hour. I would not speculate more than 10% of what you have to invest. Put in $100 or so so you don’t suffer from the pains of FOMO. Don’t invest, but have some fun.
If you’re broke and don’t have enough money to even get started in index funds and you’re hoping to strike it big, do NOT invest in cryptocurrencies. The most common and widely used place to buy cryptocurrencies is with Coinbase. As of three days ago, Robinhood announced it will begin offering a wide range of cyrptocurrencies with zero fees. Again, I can’t stress this enough, if you haven’t created a budget, paid off any high-interest debt, started an emergency fund and started a personal retirement account, don’t put your money into cryptocurrencies.
2. Annuities. Many people can get great value out of annuities or else they wouldn’t exist. But too often are they loaded with fees and you would be better off investing your money in other places. Annuities can have a bad rap because they often benefit the person selling them more than the person they are for. Be careful with these.
3. Whole Life or Cash Value Life Insurance. Again, these exist because some people find value and its something that works for them. But, simply because of fees you’re usually better off investing in the market. Whole Life Insurance can provide a lot of peace of mind for some people but don’t forget what you are using it for, life insurance. To provide the means necessary for someone in the event of your death. Paying for term insurance and investing the difference statistically speaking will benefit you more in the long run. You may know some people who own whole life insurance policies and may feel like you’re missing out. They’re only very common because financial salesman love to sell these. They’re able to make a lot of money.
4. Individual Stocks. It’s ok if you want to purchase individual stocks (it’s what one of the most successful investors Warren Buffett does). But, do so understanding the increased risks. If you have all of your eggs in one basket because you KNOW they’re going to be the next Apple and other’s swear it’s going to be the best thing since sliced bread, I’d be careful. Because if the company doesn’t perform, well now you’re in a pickle.
5. CDs. Certificates of Depression, I mean Deposit. These typically don’t pay enough in interest to beat inflation and you should just simply avoid them (things could change in the future).
6. Commodities. Gold, silver and other commodities are worth watching out for. You may believe that a zombie apocalypse is coming and that an Electromagnetic Pulse is going to wipe out the entire internet. I’m not saying it couldn’t happen but the chances are unlikely. I once had someone tell me that the only thing they would invest in is water. That it’s the only constant that will be worth more than money when things get bad. At the same time, he has missed out on one of the best bull markets in history. If you bought $17 worth of silver 10 years ago, guess what, it’s still worth $17 today. I would watch out for these. Silver and gold to tend to be countercyclical with the market. So if the market is doing really bad, you may benefit by hedging your portfolio with commodities.
Invest in yourself. 3 tips to get started
1. Educate yourself. Nothing will bring greater ROI (Return on Investment) than taking the time to educate yourself on investing and personal finance. Warren Buffett told a 25-year old that he would give up all of his wealth if he could trade places with the young man. There is so much to learn and ultimately it comes down to doing what works for you.
2. Automate everything. David Bach in his book, “Automatic Millionaire” says, “if you simply automate your investing over a 30 year period you are virtually guaranteed to become a millionaire.” When you automate you take the behavior out of it. If you never looked at your investments your entire life and you kept socking money away when you go to retire and finally look at your investments you better have a cardiologist next to you because you are going to have a heart attack.
3. Tune out the noise. Avoid bad news and people shouting buy this and sell that! All it is is noise and will get you nowhere. There are plenty of experts on the CNN telling you which stocks to buy that will make you rich. But no one is talking about the most successful way of investing. Slow, boring, set it and leave it investing. Get rich slowly and tune out the news. Have patience and work hard and you will be glad you did.
Conclusion: Best financial advice
There is no single best way to invest. This article is not advice on how to invest because I have not considered your personal situation, it is simply a roadmap to help you work towards financial independence and a secure financial future.
If you take away only one thing from this article, I hope it’s this: start today. Don’t let your crastination turn pro.
I hope that after you have read this you will have some clarity and direction that will allow you to act. I wish you the best of luck on your journey!
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Hi, I’m Scott. Welcome to my website! I’m an Accredited Financial Counselor, husband, and father. I love writing and learning about personal finance, fintech, simple living, and sharing my personal story. I hope you’ll join me on our journey to financial independence!