Don’t Be So Active

One of the fascinating things about investing is how little you need to do to make obscene amounts of money.

Think millionaires are spending hours a week pouring over income statements, yields, price-to-earnings ratios, and derivatives (whatever those are…)?

Hell no.

Millionaires don’t spend their days worrying about their investments.

Or even picking and choosing stocks.

The more passive you are with investing, the better you’ll do.

Don’t believe me? Fine. Don’t.

But the numbers 100% back this statement up.

🎯 CNBC reported that 80% of active fund managers are falling behind major indexes like the S&P 500. That’s pretty incredible, isn’t it?

What does this mean? It’s simple.

Line 10 active investors up in a line, and eight out of 10 are underperforming someone who invests in index funds and ETFs and calls it a day.

I’m writing a book for a major publisher this year, and I’m spending many pages talking about the myth of the “expert investor”. Nobody knows what’s going to happen with the market. And that’s okay, just embrace it.

Sometimes the easy route IS the best route.

I don’t usually give pointed financial advice, but I will in this email.

Here goes: 90% of your money in the stock market should be in simple index funds and ETFs, period. These passive funds outperform actively picking and choosing stocks, and the numbers to prove it are all over the place.

If you want to have a little fun with picking stocks, then become what I like to call a “passive-first” investor.

Passive-first investors invest 90+% of their stock portfolio in index funds and ETFs and have a little fun with the remaining 10% choosing their own investments, buying and selling, and playing stockbroker.

That way, you won’t lose your shirt if that 10% underperforms the 90% you have sitting in passive investment funds.

Boom. It’s simple. It’s easy. It’s fun.

What more could you ask for?

Chat next week!

– Steve