I have a vision of the power of buying and holding index funds. When you buy a single target date index fund (like VTTSX), you’re owning a piece of over 10,000 US and global companies contained within. Every day those companies are working, innovating, growing, becoming more efficient, and profiting. And as an owner of each of their stocks, the growth and profits are being funneled directly back to you.
Imagine the global economy bustling every single day with retail, technology, energy, manufacturing, food, health care, shipping, oil, finance, insurance, and more. Billions of employees, from the entry level to the CEOs working every day to grow your wealth. Every one of the billions of transactions those companies make each day is benefiting your target date index fund.
That’s the power of buying and holding index funds. There’s no need to pick and choose stocks or sectors when you can harness it all in one inexpensive package.
Sure the price will fluctuate over the short term as speculators jump in and out with their money chasing news stories. But the disciplined investor knows that investing early and often and buying and holding has nowhere to go other than UP. As all those companies pump profits and growth back to their shareholders, the owners, like you, will be the ones who win over time.
Get in as soon as possible. The only decision to make is how big of a slice of the pie you’re going to get. The more money you plow into your index funds, the bigger your share will be. Don’t wait 40 years and wonder why you never got yours. Get in early and get in often. Stop spending all your money with those companies to make all the other owners rich. Invest your money in them to get your piece back.
As always, reminding you to build wealth by following the two PFC rules: 1.) Live below your means and 2.) Invest early and often.