December 29, 2018
Investing is pretty simple. Buy good companies at a good value, hold for years, collect the dividends, watch the company grow. Between the dividend income and capital gains on the underlying stock you should have a nice return over time.
If you don’t like buying individual stocks, find a good, low cost mutual fund or ETF. I personally use Vanguard.
Of course, just because investing is simple, doesn’t mean it’s easy. Much (most?) of investing is between the ears. How will you react when the market drops 10, 15, 20%?, like it did recently. Will you be content with earning 15% in your index fund while you watch the latest hot tech stock jump 100%?
With those thoughts and question in mind, here are a few excellent articles on the topic of money and investing that made me think.
The essential question and it’s corollary - How much is Enough? Every investor asks him/herself this question. The author goes on to argue for simplicity - no jargon, fancy financial products, questionable historical returns. “Just tell me how this all works if something bad happens. Am I going to be okay?”
The folks at Collaborative Fund write one of the best financial blogs in my opinion. Great storytelling with solid, actionable advice. Sometimes “winning” isn’t as important as being able to sleep at night. A good example is the debt snowball, where you pay off the lowest balance debt first to gain momentum, rather than the one with the highest interest rate, which has the better financial ROI.
Just a terrific explanation of risk, regret, and failure. The truth is, sometimes you can’t account for everything. Favorite line - “taking good risks requires knowing both the odds of failure andhow that failure will affect you afterwards. Which are difficult things to know. Often impossible.”
More on the mindset it takes to be financially adept, plus advice on how to put a system in place to proactively manage personal finances.