It was only later in life that I embraced a simpler approach for my investments. Over the years I have, at different times, been attracted to stock market timing, stock picking, penny stock investing, real estate, gold, and other “investment” fads that caught my fancy. I found index funds and buy and hold strategies kind of boring. However, the only thing boring were my returns which were dismal and at times a losing proposition. I would say that it was only in my fifties that I adopted those “boring” strategies and as a result was able to build a reasonable and dependable retirement income source.
So, here are some personal investment beliefs based on lessons learned.
Whenever I am drawn to the adventure of “playing” the stock market, personally researching and identifying winners, or timing the market, I set aside some “gambling” money – no more than 5% of my portfolio – for this purpose. I treat this amount really as Vegas money – money I am prepared to lose. I then speculate to my heart’s content. I have discovered that it really is a crap shoot, but have some fun along the way.
I have enough “safe cash” to cover two year’s of expenses beyond what I receive from social security, retirement or annuity payouts. “Safe cash” is distributed in a bank savings account, money market fund, and laddered certificates of deposits.
For longer time horizons, I invest in two index funds – a total market stock fund and a total market bond fund. These funds have very low expense ratios and are available as mutual funds or ETFs (Exchange traded funds). These are allocated according to age and personal and market situations.
A dollar saved and invested today is worth much more in the future (future value of money). The only discretionary spending I do not regret is the money I spent on my travels, education or on wealth creation. The numerous other things and faddish gadgets I bought are now forgotten, mothballed, damaged or lost.
I do have a retirement budget which I keep track of once a week. I use only one or at most two credit cards for all my expenses which makes for easy and convenient record keeping and retrieval.
Educhirp 