Congratulations! You’ve made it to the final letter in my “Invest Money” series.
What a journey it’s been! Next week, we’ll embark on the “Make Money” series, which will consist of 13 informative letters. After that, we’ll bring the Personal Finance Series to a close.
But for now, let’s recap everything we’ve covered regarding investing over the past 13 weeks.
Why Invest Money?
I’ve delved into this topic in detail before, but there’s an important point I want to emphasize.
As we grow up, many of us question what to do with our income. Common questions include, “How do bills work?” “What about taxes?” and “What’s a 401(k)?”
One truth is clear: the answer is never “spend it all on whatever you want.”
While buying things can bring joy, I’ve encountered many individuals in their 60s and beyond who lament not having saved more money. They’ve often said they wish they had more funds to pursue certain desires.
Chances are, you’ve spoken with people facing similar regrets. Unfortunately, they can’t go back and change their decisions, leading to feelings of remorse—something I find unsettling.
This is why I approach societal mantras like “live for today” with skepticism. While enjoying the present is undoubtedly important (and meditation teaches us this), living solely for the moment can be a trap.
Only a few people agree with my view, but I think it holds significant truth. The individual who prepares while others indulge has a greater chance of weathering life’s storms.
This concept parallels the Stanford Marshmallow Experiment, where kids who delayed gratification for future rewards tended to achieve greater success in adulthood. Ignoring immediate pleasures can pay off, especially in finance.
Rather than spending your money today, focus on investing it for greater returns in the future. This way, when you reach your 60s, you won’t find yourself wishing for more funds to fulfill your dreams. You will have built that financial security.
Summary of Investment Strategies
So, how can you effectively invest your money? Here’s a brief summary of our discussions from the past few weeks:
- Educate Yourself: Familiarize yourself with investment principles. Thankfully, this blog serves as an excellent resource.
- Be Cautious with Financial Advisors: Avoid rushing to hire a financial advisor, as selecting an ineffective one can be worse than navigating without guidance.
- Avoid Imitating Professionals: Understand that the success of seasoned investors arises from various factors. For example, knowing LeBron James’ training regimen won’t automatically make you a basketball star.
- Define Your Investment Goals: The primary goal is to retire comfortably, allowing your money to work for you rather than the other way around.
- Build a Diversified Portfolio: Create a portfolio that aligns with your financial situation. Utilizing Vanguard Index Funds is a straightforward approach, and their support team can assist you with any questions.
- Prepare for Worst-Case Scenarios: Learning to be “Black-swan-robust” can mitigate fears about economic downturns, which are inevitable but manageable.
- The Biggest Threat is You: Maintaining discipline through set rules is essential—one of my own rules is to invest in index funds and refrain from selling for at least 30 years.
While economic downturns will occur, remember that markets will recover. Keep a long-term perspective, viewing your investments over decades rather than days.
- Understand Economic Dynamics: By learning how the economy operates, you’ll better cope with the inevitable recessions that will arise in your lifetime.
And that wraps up today’s discussion!
Thank you for following along through this series. I hope you found it insightful and beneficial.
See you next week! (Make sure to follow the series to stay updated.)
Be well!
Let me know if you need any further changes or additional content!