BuckyBadger wrote:Do I need to get all the details right, or is it enough to nail the basics?
John C. Bogle, in The Twelve Pillars of Wisdom:
, wrote: "Successful investing involves doing just a few things right and avoiding serious mistakes." In more detail:
Pillar 1. Investing Is Not Nearly as Difficult as It Looks.
The intelligent investor in mutual funds, using common sense and without extraordinary financial acumen, can perform with the pros. In a world where financial markets are highly efficient, there is absolutely no reason that careful and disciplined novices—those who know the rudiments but lack the experience—cannot hold their own or even surpass the long-term returns earned by professional investors as a group. Successful investing involves doing just a few things right and avoiding serious mistakes.
"Doing a few things right," as I stressed in my book, included focusing on broad-based mainstream equity funds with wide diversification; evaluating funds relative to peers with similar objectives; ignoring short-term performance in favor of performance over at least a decade; carefully considering the drag of high expense ratios and sales charges; paying careful attention to portfolio quality, in stock funds, bond funds, and money market funds alike; and focusing on an asset allocation that is consistent with your own risk tolerance.
"Serious mistakes," I indicated, included such errors as investing in funds with spectacular records ("no investor ever went broke by failing to invest in a hot new product"), as well as those persistently at the bottom of the deck; excessive reliance on narrowly-based funds (say, emerging market funds); and using mutual funds for short-term trading. As the stock market bubble inflated, some of these dos and don’ts didn’t seem especially necessary. Now, after the fall, their validity has been reaffirmed.
Pillar 2. When All Else Fails, Fall Back on Simplicity....
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.