Investing is complicated for many people. The fact that no one knows what the market will do from one day to the next allows many so-called experts to provide their opinion on where the market is headed. Simply search for the term “investment strategies” and you’ll find over 10 million results. Yes, 10 million.
It’s no wonder then why most people choose to do nothing rather than do something when it comes to investing. Classic “analysis paralysis” comes into play. The question is how can you simplify investing? Here is how I go about investing. My approach is quite simple.
I don’t look at the market every day. I don’t do that many transactions in a year (in fact, if I checked, I’m sure the number would be less than 20). I’m also not trying to find the “next big thing”. I don’t care about any of this.
Why don’t I analyze the stock market?
Why don’t I care? I have two reasons:
- I don’t want to spend my free time analyzing investments
- If you look back at the beginning of this article, I have no idea where the market is going to go tomorrow.
Let’s look at each of these in more detail. First, I value my time. I like to play golf and ride a mountain bike. I like to spend time with my friends and my family. If I spent every weekend researching stocks, I’d have less time to do the things I love to do. Also, my performance is fine with how I invest (more on that later).
Then comes the issue of not knowing where the market is headed. Why would I want to spend my free time researching stocks to invest in if there is a 50/50 chance the market will go up tomorrow?
Simple steps to successful investing
This is how I invest and keep things simple. First, I choose low-cost investments. I am a firm believer in passive investing. I’m not paying money to a professional money manager when he or she can’t consistently beat the market every year. I keep what the market gives me.
Then I put money into the market every month, regardless of whether the market is up, down, or sideways. I do not care. I’m investing for the long term, so daily fluctuations don’t matter to me. Although I get excited when the market falls and I can buy more shares.
Finally, as I just mentioned, I continue to invest for the long term. This is vital to being a successful investor. If you’re looking to make money in the short term, you shouldn’t be in the stock market. It is too volatile in the short term. But the long term in hand is another story. In the long term, the stock market tends to go up. If you are looking to make money in the long run, the stock market is for you.
final thoughts
In general, investing is simple. You just have to know how to ignore all the advice you hear every day regarding investing. All of this conflicting advice makes many people think that investing is too complicated. It really isn’t. If you break it down into a few simple and important steps, you will find success with investing.
I have used this method to invest for the last 16 years. That includes 2 wars, 2 recessions, and a major bubble burst. I started with $20 per paycheck on a 401k. Since then I have added a few other accounts and am now approaching a million dollars. As I did? Keeping things in perspective and looking long term when it comes to investing.