It is very common for investors to be all over the map with their investing decisions. Main reason for this usually is a lack of knowledge on the topic or they decide to invest based on someone else's recommendation without researching the investment on their own. It's very common for us to throw a wide net when investing, hoping to catch the big fish. So, we end up investing in a bunch of disparate stocks/bonds/ETF's, diluting our investing capital and wasting prime investing years and money. Whereas if we acted as disciplined investors, we would coalesce behind one strategy and invest with an aim.
What are you investing for?
It's a fair question because just like when you're playing a sport, let's pick soccer. The aim of the game is to score goals and win within the allotted time. The important aspect of any game is that your team's endurance has to last until the end of the game. You can't score a single goal and win! Can you? I think not.
Investing is the same way. Preserve your capital (endurance) until the end of your retirement in order to win. Otherwise you're looking at an OMG! Retirement moment, which is the entire goal of this blog.
Having a goal for investing and realizing that you're in it for the long-haul is the whole idea. If retirement is your goal, then you have to pick the right investments that help you balance between preserving capital and capital appreciation. Don't be sidetracked by flashy meme stocks. You need to be investing in a long-term dividend paying basket of stocks, also known as ETFs or Index Funds. There are many choices for ETFs. Please consider the cost of these ETFs before you invest. There are some ETFs that cost .03% per every $1000 invested and then there are ETFs that cost upwards of 1% for every $1000 invested. Believe me, the cost of these financial instruments matter. You can lose serious cash in ETF overhead cost if you're not careful. This overhead is called "load" or "expense ratio". I will do another post on this topic with examples of how much difference ETF expense ratios make over your investing life.
Keep in mind that your current age and when you plan to retire should dictate your investment choices. For example, if you are 25 years old, you can afford to take some risks with your investments. But if you are 50 years old and plan to retire at 60, then your investment decisions should be more conservative. We will discuss in later posts the makeup of a sample portfolio given various age groups.
Later posts will discuss this topic in more detail. This was on my mind and wanted to get it out.