Guiding your life’s biggest financial moments

Better to invest early than to invest perfectly

Of course, you want to get the most out of your money. But don’t be overwhelmed by your options and let decisions cripple keep you from saving now. While it’s important to have a well-researched long-term plan, you should at least contribute to your 401 (k). Why? The magic of compound interest, that property that Albert Einstein called the eighth wonder of the world, where your money grows much faster because you keep earning interest on your interest. To illustrate their strategy, participants often pointed out that a person who starts investing small amounts in their early 20s will be better off than someone who starts later and invests larger amounts later to catch up.

Don’t try to time the market

If you thought investing was about choosing individual stocks, well, you aren’t necessarily wrong. It’s an approach, and there is some drama in making a big bet on a small stock or watching the market fluctuate throughout the day. But for Bogleheads, the best way to play is through passively managed index funds like those launched by Vanguard. This way, even though your investment will rise and fall with the market, you are not a victim of any particular company’s misfortune.

Investing in passively managed funds is a core tenet of Boglehead – and research shows the strategy to be sound. The majority of actively managed funds have underperformed the stock market for nearly a decade, reports CNBC, citing the S&P Dow Jones Indices annual report. In other words, trying to pick the winners doesn’t work; you just have to overcome the ups and downs of the market.

Do not look

Yes, you can check your investments throughout the day to see how they are doing, but is it helpful to you? If you ask the Bogleheads, the answer is no.

At the Bogleheads 2019 conference, a frequent question among attendees was “Are you taking a peek?” That is, are you checking your investments, even if you intend to leave them alone for years to come?

While various Bogleheads just take a peek – every now and then, a few times a year – they know they shouldn’t be reacting to fluctuations in the market. The key is, as one participant told me, to ‘set it and forget it’ – that is, once you know what you’re investing in, leave it alone, leave it alone. walked do its job and try not to worry.

As someone who already feels like I have a lot to fear, it was music to my ears. When I got home from the conference, I made take a look, just once, to make sure my 401 (k) contribution was sufficient and invested in a large index fund. Satisfied with what I saw, I logged out and haven’t been back since.

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