The Toughest Part of Investing

There is a lot happening right now that may affect your investments. The Covid-19 pandemic is still here and, while it seems to be improving, we still don’t know when it will end. Putin is sending troops to Ukraine and who knows how and when it may escalate. Inflation is the highest in a long time and it surely will impact the markets and economy. Getting through this will take a lot of work as an investor, right?

For the average person, successful investing does not require constant attention and hard work. This seems to run counter to the way our society rewards people. That is, if you work hard and put in the time, you’ll eventually reap the rewards.

Good long-term investors follow this approach: develop an investment strategy, create a diversified portfolio that supports this strategy, keep adding money to it, and, finally, stick to your strategy over the long-term.

If you have done this, it’s this last step that is often the toughest. Jack Bogle, the founder and long-time CEO of Vanguard, once advised investors “Don’t do something; just stand there.” I’d like to remind you that doing nothing is an active decision.

One major caveat here is that it’s important to have a strategy and a diversified portfolio in place first before you do nothing. If you have a loosely assembled portfolio of stocks, bonds, funds, and ETFs without a governing strategy, I’m not recommending sticking to it through thick and thin.  Build a strategy and portfolio first, then stick to it.

It’s hard to not let your emotions drive your investment decisions. It’s human nature to search for the next best thing. The fear of missing out (FOMO) causes investors to make bad judgements. For example, the most frequest questions I get lately involve cryptocurrency investing. I think of this as speculating, not investing.

Investing is not supposed to be fun. However, seeing your wealth grow over the long term is extremely gratifying. Let time and the markets be your friend. And remember, the ability to remain calm and do nothing can sometimes test your limits.

Please feel free to contact me for help in creating your strategy and building your investment portfolio.

Enjoy the Journey!