Hitch Hikers Guide to Ultimate Investing

This is the ultimate guide to investing.  I have discovered the secret to fulfilling your goals and living the life you want to live.

• Step one stand up and walk into the bathroom.  
• Step two look at the person looking back at you and introduce yourself. This person you are looking at is you. Yes you are your worst enemy when it comes to investing.
• Step three make an agreement with that person in the mirror that next time the market goes down and someone gives you a hot stock tip you will walk into that bathroom and tell that person no. Surprising they will agree with you and tell you no.  😜

I know it is silly, but you can really be your worst enemy to your investments. The point of that exercise is to get to know yourself.  The better you know that person in the mirror the better you will be able to stick the course.

Most people’s core does not change from when they were young to adulthood.  Investing is as much about emotion as it is about knowledge.  I mentioned the above as reflection on one’s self to help understand your short falls.   At my core I am a conservative person I like to hedge by bets.  A perfect example to this is how I played video games when I was younger.  I played games like StarCraft of War Craft II they are RTS games.  The object of the game is to build a base and destroy your opponent’s base before they destroy yours.  The way I played was to build a big enough base with a strong defense and build an army that would overwhelm my opponents defenses.  A very safe approach.  The aggressive approach would be to avoid building defense and build your offense quickly to catch your opponent off guard.  A very aggressive approach.  In short know yourself. This is very important to know about yourself. If you invest against your nature it will not go well and you will constantly makes changes.    If you are a conservative person and you invest aggressively i.e 100% stocks 0% bond when the market goes down you will be checking you phone all the time and will probably sell at the low then buy back at the rebound high.  If you are an aggressive investor, but feel you should be well balanced with bond and invest say 60/40 stock/bond you will always feel like you missed out and probably will keep buying and selling.

I follow the Boglehead/Buffet/FI philosophy which is stick to index funds that capture the stock market and invest for the long term.  I prefer to stick to the 3 fund portfolio for diversification reasons.  I don't invest in individual stock much anymore when I do it is the buy and hold forever. The three fund portfolio is allocation in index funds of  US Total Stock Market, US Bonds, and International.

I will now change your life.  Invest in indexed mutual funds either Total Stock market or S&P 500 100%-60% then bond 0-40%.  If you are aggressive with a long time until FI/retirement then go closer to the 100%, otherwise I think a good bond % allocation is your age - 10. Jake Bogle says you should have bond allocation equal to your age.  I believe that maybe fine for over 60, but for the FI road it is very conservative.   All you need to do it put money in these funds and keep putting money in and ignore everything else.  Don't look at the performance just keep adding.  Then one day in the distant future it will be a whole bunch of money and you will feel like a genius.

The market will fall and the market will go up. It will feel like a roll coaster.  If you know yourself you can stop yourself from making the mistake of buying that hot stock or bitcoin or selling because the world is coming to and end.

Good luck and enjoy the ride.