My investment career is limited to my returns, but that’s what I need | Smart Change: Personal Property

(Christy Bieber)

Like many people, I invest money for my future. But it may come as a surprise to see that my mind has chosen an investment plan that limits the returns I can get.

If things go as planned, I should get around an average 10% annual return over many years. And it is perhaps impossible for me to overcome this thought.

This average annual return is less than what some people would do by investing in stocks or other assets such as cryptocurrencies or real estate. But I have no idea. My investment strategy is the best for me, even though I know I don’t have a chance of my assets to be better off the overall stock market. Here is the reason.

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This is how I invest

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The reason I can say with confidence that I will not hit the market is because most of my money is invested in index funds designed to monitor the performance of the market.

I get most of my money S&P 500 reference funds, and some market funds. The S&P 500 is an index built around 500 major US companies. Many people use S&P performance as a barometer of market performance. And of course, my market capitalization is expected to match the performance of the entire U.S. equities market, including large, medium and small companies.

Because I was placed in the “market” and had a very small stake in hundreds of public companies, my returns as a result of the combined work of all these activities. Even if one or ten of them are better than expected and their price goes up, this will not affect my returns much because I have very little responsibility for each business.

In fact, the S&P 500 has generated an annualized average of 10% over the years, and I know the best impact I’ll ever have around those returns is myself – as far as I’m concerned. my money invested for a long time. .

Why is this the right plan for me – and so many others?

While I limit my reasonable returns, I am 100% confident that I have chosen the best path for me, for many reasons.

For one thing, I limited my experience. If the whole of America did not collapse and survive, I would not be able to spend a lot of money on my investments. In addition, since my investments are so long, my returns may not be much lower than I expected. That is, I know how much I can earn by investing so I can calculate how much I need to save each month to finish my desired nest egg. and perhaps I shall not fall. And I don’t have to spend time researching investment options or looking at my portfolio – none of those things I’m happy to do.

My schedule is not suitable for everyone. There are a lot of people who pick each tree and can make more money than I can afford. But it can be the best option for many people who want an easy way to invest without having to have a ton of financial knowledge. That’s why Warren Buffett, one of the greatest investors of all time, learns to invest in index funds for the most part. I will follow his advice, and I believe there will be results.

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