The only way that I ever did well in school was my ability to delete useless information. I enjoyed my free time and sports too much to simply study all day. I could never try to learn all the birdseed stuff that my fellow classmates revelled in. I always knew that it would never matter for my career.
Investing can be simple if you can ignore the noise.
Here are my basic investment tenets:
- I do not know what the markets will do so I will invest regularly.
- Maintain an asset allocation that my husband and I can live with. But asset allocations are not set in stone.
- Stocks can be very volatile. They call it a “risk premium” because you bear risk to hold them.
- Only invest in equities what you can see drop by 50%. If you can not stomach that you best lower your stock positions.
- Risk is interesting. It is dependent on the amount of assets risked and your current life stage. It is akin to young women who often professed to me exactly how they would behave BEFORE they had their children. I think children are a good reminder of your behaviour and humanity. We all say we will act a certain way until your kid forces your hand and you see yourself acting exactly the OPPOSITE of what your younger self believed.
- It’s great to learn what others can do when it comes to investing. However be honest about what I can and want to do.
- It is okay to admit that you can not adopt certain strategies due to laziness or lack of knowledge/ networks.
- Paper asset returns are based on what you don’t pay for. (ie low MER, low transactions/ trading fees, no AUM)
- Do my best with taxes but do not focus on changing strategies to mitigate this. Do not let the tail wag the dog when it comes to taxes.
How To Save My Investments
- Real Estate- I need to rely on others to do what is needed when a problem occurs. For example, plumbers to fix clogged toilets.
- Equity Assets- When the market drops, buy more if I have money or else just do NOTHING. I realize that I am designed for doing nothing.
Thank goodness for the low cost broad market index funds. I am grateful that Vanguard is in Canada. I don’t believe investing can get any easier than it is right now.
Folks can over complicate this all they want. But I doubt their results will be much better over the long term.
I plan to read less and less financial information. I don’t believe it will move the needle at this point. Once you understand the basics, it is enough.