April 3, 2014
The wise investor must learn to “lock up” their greed if they hope to build wealth over time. Why? How?
The wise investor must learn to “lock up” their greed if they hope to build wealth over time. Why? How?
This deals with chasing performance and trying to always dance in and out of the markets. Someone who is trying to chase performance may move their money around constantly to the new big thing, which could very likely be a bubble or a scam. If you can avoid chasing performance and stick with no load index funds at Vanguard your long term end result will be better off then someone trying to game the system who intern will get gamed. If you stick with the good old index funds you will get a steady long term return that is much better then what someone would make on a bunch of little high commission trades through individual stocks or managed accounts. Its best not to even look at your investments more than you absolutely have to for management reasons such as asset allocation. If you set up a automatic payment to your account to dollar cost average your investments everything is done and you no longer have to bother with your account on a weekly basis like most investors unfortunately do. People should go after low fees and stability not short term returns and the new big and flashy thing.
Great answer, Garrett! Let’s review.
Chasing after the hot investment releases your greed and that will cost you dearly. DO NOT chase performance and that means locking up your greed in the closet and securing the door. Greed is your enemy. Never forget that.
Just as Garrett stated, buy no-load index funds as you allocate your investment portfolio over many types of assets and many countries beyond America. Once you have done that, rebalance once a year or so (get back to where you started by selling your winners and buying your losers preferably in tax sheltered retirement accounts).
Stay the course and ignore people who attempt to feed your greed (using fear as well) by chasing past performance and/or market timing. Believe it and believe it you!