Investing is complicated for many people. The fact that no one knows what the market will do from one day to the next allows for many so-called experts to provide their opinion on where the market it headed. Simply search the term "investing strategies" and you will find over 10 million results. Yes, 10 million.
It's no wonder then why most people chose to do nothing as opposed to something when it comes to investing. The classic "analysis paralysis" comes into play. The question is how can you make investing simple? Below is how I go about investing. My approach is fairly simple.
I don't watch the market every day. I don't make that many trades in a year (in fact, if I checked, I am certain the number would be under 20). I don't try to find the "next big thing" either. I don't care about any of this.
Why I Don't 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 clue where the market is going tomorrow
Let's look at each one of these in more detail. First, I value my time. I like to golf and ride my mountain bike. I like spending time with my friends and family. If I spent every weekend researching stocks, I would have less time to do the things I love to do. Plus, my performance is doing just fine with how I invest (more on this later).
Next comes the issue of not knowing where the market is going. Why would I want to spend my free time analyzing stocks to invest in if tomorrow there is a 50/50 chance the market will go up?
Simple Steps To Investing Success
So here is how I invest and keep things simple. First, I pick low-cost investments. I am a firm believer in passive investing . I'm not paying a professional fund manager money when he or she can't consistently beat the market every year. I'll just take what the market gives me.
Next, I invest money into the market every month, regardless if the market is up, down or sideways. To me, it doesn't matter. I'm investing for the long-term so the daily fluctuations don't matter to me. Though I do get excited when the market drops and I can pick up more shares.
Finally, as I just mentioned, I stay invested for the long-term. This is vital to being a successful investor. If you are looking to make money in the short-term, you shouldn't be in the stock market. It's too volatile over the short-term. But the long-term on the hand is another story. Over the long-term, the stock market trends up. If you are looking to make money over the long-term, the stock market is for you.
Overall, investing is simple. You just have to know to ignore all of the advice you hear every day with regards to 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, important steps, you will find success with investing.
I've used this method for investing for the past 16 years. That includes 2 wars, 2 recessions and major bubble bursting. I started out with $ 20 per paycheck into a 401k. I've since added a few other accounts and am now closing in on a million dollars. How did I do it? By keeping things in perspective and looking at the long-term when it comes to investing.