Today is my birthday! I usually post some sort of self-congratulatory post about how much I’ve grown the past year, or some other nonsense. But after a week like we just had in the market, I figured I’d break down exactly what my investments looked like!
It’s important to note that I didn’t actually “do” anything last week. My investments just happen to be worth about $147K more today than they did last weekend. Going forward, my plan is the same. I’ll continue to buy and hold index funds. Whenever I have extra cash, I just dump more into these exact same funds and leave it there forever. No trading. No speculating. No guessing.
This works because owning an index fund is like capturing the growth and profits of ALL of the world’s companies. Instead of trying to GUESS what’s going to happen in the future, I GUARANTEE my fair share of market growth by owning EVERYTHING. The internet is FULL of people telling you how to pick and choose investments, but they’re nonsense. Ignore that noise. Take the guaranteed path.
Even though our long term returns are guaranteed, the gains can come at unexpected times. Last weekend did I expect the following week to look like this? Of course not. I had no idea. But I’m never sitting on the sidelines holding a lot of cash. I’m always buying and holding index funds so I don’t miss these big jumps. Unfortunately, these big jumps aren’t announced in advance. That means any attempt to “time the market” by staying in cash while the market is in turmoil is much more likely to hurt you than help you.
The mantras of the disciplined, optimal investors:
• Buy and hold index fund
• Time “in” the market, not timing the market
• Minimize fees
• Stay the course
• Don’t sell anything until you retire
As always, reminding you to build wealth by following the two PFC rules: 1.) Live below your means and 2.) Invest early and often.
-Jeremy
