December 21, 2013
Investing wisely seems simple enough, why is it so difficult? What is wise investing?
Investing wisely seems simple enough, why is it so difficult? What is wise investing?
Wise investing is certainly not investing in a single stock or bond. It is also not thinking you are smarter than the market and can perfectly time when to buy and/or sell to make the highest profit. But, wise investing certainly is being aware of those two things and learn the smart tools as to how to invest. So that means, buying no-load index funds and making a portfolio, buying from a place like Vanguard that has low fees rather than the high commission from a stock broker, and holding your investment for a long time and letting it ride the unknown wave to incurr long-term interest on your interest allowing it to compound.
Well said, Alayna. You provided many important points. Let’s recap what is known and what Alayna outlined.
Investing is difficult when you don’t know anything about it (ignorance makes it scary).
Investing is difficult when you go to the wrong teachers (commissioned based salespeople who have a conflict of interest with the information they provide you).
Investing is difficult when you get caught up in the day to day gyrations of the market (speculating as you try to predict the winners and avoid the losers).
Investing is difficult when you think you are the smartest person in the room (the sooner in life you learn to avoid this kind of thinking, the better off you will be). So how do we reduce the difficulty of becoming the wise investor?
Alayna provided plenty of good information. Start educating yourself from some wonderful teachers who are not trying to sell you something. They are educators. Here are a few of my favorites: John Bogle, William Bernstein, Burton Malkiel, and Daniel Solin.
Any book written by these fine gentlemen will help you better understand the world of investing. This will make investing less difficult. Where do you go to invest your money?
Alayna has it right again. Vanguard.com provides you the opportunity to invest at the lowest possible cost (no commissions and very low fees called expense ratios).
Start investing WHEN you know what you are doing. DO NOT jump in just because some crazy man in a pink wig tells you to, but because you know what is in your best interest and you understand what you are doing. Take control!