The Most Important Article You’ll Ever Read On Investing

There are few topics that have as much written about them and as much contrasting information as investing.

Just knowing that is enough to scare most people away from investing at all.

Is it really that difficult? Do you really need to devote years of your life to studying the most efficient way to invest?

It would seem that way, but in reality, not at all.

The Most Important Article You’ll Ever Read On Investing

The problem with most investing advice is that someone is profiting (or attempting to profit) from it.

Investing is actually much easier to understand than you may think.

You’re about to learn everything you need to know to be a successful investor…

Stop Trying to Pick Hot Stocks

Turn on any business TV show and you’re going to see all kinds of people touting hot stock picks and attempting to explain the method to their madness. I can assure you, it’s mostly just madness, with some greed on top.

The vast majority of people in the world are terrible at picking stocks. You probably are too. I’m not that great at it.

So should we just give up on the stock market?

Absolutely not! It’s the most efficient way to invest for your retirement.

But picking individual stocks isn’t the answer. Unless you’re willing to devote hours (I’m talking at least 15 or 20 each week) to studying companies and picking winning stocks.

Simple is Better

So what’s the answer? You may have already guessed the answer, but I’m going to let you hear it from Warren Buffett first. When Buffett passes away, he wants his Berkshire Hathaway shares to be distributed to charity. This is what he wants done with the remaining cash:

“My advice to the trustee couldn’t be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguard’s.) I believe the trust’s long-term results from this policy will be superior to those attained by most investors — whether pension funds, institutions or individuals — who employ high-fee managers.”

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Nick Punwani 5 years ago Member's comment

Picking individual stocks is essentially gambling. You may see an initial gain but eventually it will be wiped away. So I completely agree with you on using your money to invest in index funds which is a much safer investment strategy.

Kalen Bruce 5 years ago Author's comment

Thanks for the comment, Nick! Over the long term, index funds are the easiest, least time-consuming option for investing and they tend to outperform actively trading or active mutual funds. I prefer to spend my time making more money to pour into index funds vs trying to pick winning stocks.

Kalen Bruce 5 years ago Author's comment

Thanks, Ayelet! I think people overcomplicate investing, often to the point of not doing it at all. Index funds are a great way to get started. From there, if you find interest in individual stocks, I would recommend it more for the fun or the game, than for the return. You can definitely profit from individual stocks, but when you consider the amount of time you must spend to do so, index funds make more sense mathematically.

Ayelet Wolf 5 years ago Member's comment

Sounds like a wise strategy. Any other tips?