I’m here because I want you to succeed. I want you to be rich beyond your wildest dreams. I want you to be able to see $1,000,000 or even $10,000,000 one day in your portfolio.
I hope you don’t mind then that I’m not giving you any stock tips today. This is an intervention.
This is for your own good, so please stay with me.
Nobody gets rich searching the Internet for hot stock tips. The only ones making money in this game are the people selling the products.
I admit, I watch the infomercials too. It’s tempting to want to be that guy who is sipping cocktails on the beach after making $10,000 a month of passive income. However, I have never met one of those people in real life. If you have, please let me know.
Not only do I want you to be rich beyond your wildest dreams, I also want you to live an amazing life. A life that doesn’t consist of searching the Internet for hot stock tips.
Lucky for you, there is a very simple way to get rich that takes very little time. It’s called index investing.
No, not the type of investing you’re used to. I think of that is gambling. I’m talking about investing in the entire stock market over a period of 30-40 years.
This “boring” index approach has made more people rich than any other method of investing. This is in large part to the power of compound interest.
If you don’t want to listen to me about indexing, that’s fine. Listen to some of the greatest minds of investing of all time:
- Warren Buffet – “The best way to own common stocks is through index funds.”
- Peter Lynch – “Most individual investors would be better of in an index mutual fund.”
- David Swenson - “You belong at the other end, with a portfolio exclusively in index funds with low fees. If you’re not going to put together a team [of 20-25 investment professionals] that can make high-quality decisions, your best alternative is passive investing”
- Charles Schwab – “Buy index funds. It might not seem like much action, but it’s the smart thing to do.”
- William Sharpe – Most of my investments are in equity index funds.”
- John Bogle - If the data do not prove that indexing wins, well, the data are wrong.
Where To Go From Here
I would start by learning how real investing is done. I have a couple of posts on this website that might help you out:
- Asset Allocation
- Learning from Past Returns of the S&P 500
- Asset Location
- Principles of Successful Investing
- The Dangers of Market Timing
- Rebalancing
After you have the basics down, pick up a book or two from your local library. Start with the Millionaire Next Door, a book on how people really become millionaires. Move on to some of the better investment books such as:
Thank you for listening.
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{ 7 comments }
Great post, RJ and great lede.
Investing for most of us is so simple and requires very little work. I think you’ve outlined that clearly here. There is no magic trick, no infallible system, no overnight wealth. Yes, somebody struck it rich with one great stock pick…but that was shear luck, it was hitting the lottery. The vast majority who try will fail.
Well done.
-Nathan-
Maybe you haven’t met them because they spend all their time on yatchs, Monte Carlo and private islands and you don’t. Just kidding. Very good post. The “secret” to investing is not much of a secret – you have to save money. Most don’t even do this first step. Then you need to invest sensibly for the long term and avoid speculation and excessive risk.
.-= John Hunter´s last blog ..Retiring Overseas is an Appealing Option for Some Retirees =-.
@Nathaniel Thank you for the comment. Couldn’t agree more. We always remember the stories we hear about the guy who struck it rich. Even if it’s one in a million.
@John Haha. Maybe I should go to Fuji to find these guys. (:
I was wondering by the title of the post what the article was going to be about! Good thing it was actually about common-sense index investing.
.-= Darren´s last blog ..Use Math To Alleviate Fear Of Stock Market Volatility =-.
@Daren – Nope. Still believe in common sense.
I agree with RJ – use your common sense so that you don’t get scammed into believing something that isn’t true. If something has to tell you that it isn’t a scam then you shouldn’t believe it…lol – especially when you’re investing your money!
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