Single most important investing advice?

thefoggycity · Post by **thefoggycity** » Fri Apr 21, 2017 10:20 am

If you could identify the single most important investing advice you received or carried out, what would that be?

I think mine would be "start investing early".

willthrill81 · Post by **willthrill81** » Fri Apr 21, 2017 10:21 am

Increase your savings rate until it hurts. (That's not really investing advice though.)

Buy stock indexes and hold them for a long, long time.

H-Town · Post by **H-Town** » Fri Apr 21, 2017 10:24 am

thefoggycity wrote:If you could identify the single most important investing advice you received or carried out, what would that be?

I think mine would be "start investing early".

Start with budget, know where each of your dollar goes and save as much as you can.

bluebolt · Post by **bluebolt** » Fri Apr 21, 2017 10:30 am

Set goals, create a plan to meet those goals and adjust as necessary.

Is that a single piece of advice?

pkcrafter · Post by **pkcrafter** » Fri Apr 21, 2017 10:33 am

Discipline. Of course, that assumes you know what you are doing.

Paul

LateStarter1975 · Post by **LateStarter1975** » Fri Apr 21, 2017 10:41 am

"Don't save what's left after you spend; spend what's left after you save". Another way of saying this is "Pay yourself first"

wolf359 · Post by **wolf359** » Fri Apr 21, 2017 10:44 am

willthrill81 wrote:Increase your savings rate until it hurts. (That's not really investing advice though.)

Buy stock indexes and hold them for a long, long time.

Actually, I think that your first one IS investing advice. You can't invest unless you have money to invest.

Investment capital for most people are obtained one of three ways: Reduce expenses, earn more, or borrow more. All can provide excess income that increase your savings rate.

A high savings rate can overcome poor market returns in the short run.

The second piece of advice is about keeping costs low and letting things compound over time. Both are also important, but that first one is the most important. Having lots of money will overcome other mistakes.

Mr.BB · Post by **Mr.BB** » Fri Apr 21, 2017 10:46 am

I wish I had received advice when I was younger and/or middle aged.
Unfortunately I had to learn on my own and through good and bad experiences.
But if I was going to give advice it would be:

1) Start saving early...high school. <---most important!
2) Think long term
3) Be diverse
$) Do not be to conservative when you are young.

EyeYield · Post by **EyeYield** » Fri Apr 21, 2017 10:49 am

Educate yourself to the point of financial literacy so you can take your own advice.

Grt2bOutdoors · Post by **Grt2bOutdoors** » Fri Apr 21, 2017 10:52 am

To invest, one first must save.

willthrill81 · Post by **willthrill81** » Fri Apr 21, 2017 11:07 am

wolf359 wrote:
willthrill81 wrote:Increase your savings rate until it hurts. (That's not really investing advice though.)

Buy stock indexes and hold them for a long, long time.
Actually, I think that your first one IS investing advice. You can't invest unless you have money to invest.

Investment capital for most people are obtained one of three ways: Reduce expenses, earn more, or borrow more. All can provide excess income that increase your savings rate.

A high savings rate can overcome poor market returns in the short run.

The second piece of advice is about keeping costs low and letting things compound over time. Both are also important, but that first one is the most important. Having lots of money will overcome other mistakes.

I recently heard that your savings rate explains about 74% of your total net worth. So yes, it's probably the most important piece of all of this, though what you do with your savings certainly matters also.

avalpert · Post by **avalpert** » Fri Apr 21, 2017 11:08 am

I agree with all the different ways people are saying savings discipline is the most important - it is the one necessary component everything after that is a luxury.

LawyersGunsAndMoney · Post by **LawyersGunsAndMoney** » Fri Apr 21, 2017 11:10 am

Savings rate is really it.

Numerous studies on the efficacy of financial literacy education have shown that it wasn't predictive of positive outcomes. Instead, parental habits and socioeconomic status and savings rate were predictive of positive outcomes. Since you can only control one of these factors - savings rate it is.

NiceUnparticularMan · Post by **NiceUnparticularMan** » Fri Apr 21, 2017 11:13 am

It is hard to choose just one, but I'd say: More money going in tends to help a lot.

And it appears there is a broad consensus on that.

Jack Straw · Post by **Jack Straw** » Fri Apr 21, 2017 11:14 am

You will never get wealthy working for a living!

Therefore, you must have others working for you ..... so you might as well have everyone working for you .... buy a total market index fund... repeat as often as necessary.

teacher · Post by **teacher** » Fri Apr 21, 2017 11:15 am

For me, the single most important advice was learn how to become an independent investor, with the help of my friends at Bogleheads, of course.

staythecourse · Post by **staythecourse** » Fri Apr 21, 2017 11:18 am

Investing begins with saving. Can't generate wealth from no money. Save as much as you can and as early as you can. Everything else you can figure out.

The adv. of that is also your lifestyle going forward will require much less $$$ to support from your portfolio then if you live more lavish in retirement. So it is a double advantage.

Good luck.

marti038 · Post by **marti038** » Fri Apr 21, 2017 1:12 pm

Start now.

telemark · Post by **telemark** » Fri Apr 21, 2017 1:24 pm

Just keep buying.

https://ofdollarsanddata.com/just-keep- ... 31402231c9

deltaneutral83 · Post by **deltaneutral83** » Fri Apr 21, 2017 1:29 pm

Understand that investing is completely counter intuitive from that of your normal daily life where quick decisions and reactions are a requirement. Investing is a marathon, not a sprint, and don't withdrawal from the race until you cross your well thought out, predetermined finish line. Have no emotions whatsoever of your investing, drip drip drip out of the faucet for 40-50 years.

mindboggling · Post by **mindboggling** » Fri Apr 21, 2017 1:32 pm

I don't think LBYM is really investing advice. It's just a way to get money to invest.

For investing advice, I'd say: buy and hold low-cost broad market indexes (or is it indices?)

swimfin · Post by **swimfin** » Fri Apr 21, 2017 1:35 pm

Take good care of your money and your money will take care of you.

willthrill81 · Post by **willthrill81** » Fri Apr 21, 2017 1:39 pm

telemark wrote:Just keep buying.

https://ofdollarsanddata.com/just-keep- ... 31402231c9

That's a truly great post on that blog.

nodenuff2 · Post by **nodenuff2** » Fri Apr 21, 2017 1:40 pm

Start now. Time in the market is what counts. Don't try to time the market!

dharrythomas · Post by **dharrythomas** » Fri Apr 21, 2017 1:49 pm

Read "The Richest Man in Babylon" over and over until you internalize the lessons.

Unless you master the concepts "A part of all you earn is yours to keep" and "Don't eat your seed corn" the rest is a waste of time.

saltycaper · Post by **saltycaper** » Fri Apr 21, 2017 1:54 pm

Assuming the money is already there to invest...

Be willing to admit you're wrong. If you're disciplined with a bad strategy, chance of failure is high.

mrc · Post by **mrc** » Fri Apr 21, 2017 1:55 pm

For my young nieces: bogleheads.org

bondsr4me · Post by **bondsr4me** » Fri Apr 21, 2017 2:06 pm

buy and HOLD a good index fund...and....don't trade.....

check out "Charlie Munger The Complete Investor by Then Griffin...loaded with info and inspiration.

Don

alpine_boglehead · Post by **alpine_boglehead** » Fri Apr 21, 2017 2:07 pm

EyeYield wrote:Educate yourself to the point of financial literacy so you can take your own advice.

+1

Any single piece of advice likely can't be seen standalone ... LBYM and save early isn't worth that much if you can't stay the course and/or are in high-fee investments.

Thus the single best investing advice would e.g. be "Grab a copy of William Bernstein's 'If You Can' (or Bogleheads Guide to Investing) and follow it's advice"

CoAndy · Post by **CoAndy** » Fri Apr 21, 2017 2:32 pm

Set it on auto pilot. Make it automatic.

jasonwebb3 · Post by **jasonwebb3** » Fri Apr 21, 2017 3:09 pm

Contentment and gratitude together are the most powerful principles in personal finance. You never will save or invest if you always have to have more.

Jimmie · Post by **Jimmie** » Fri Apr 21, 2017 3:14 pm

telemark wrote:Just keep buying.

https://ofdollarsanddata.com/just-keep- ... 31402231c9

I read that and realized one thing which I will make my "Single Most Important Investing Advice":

Don't try to time the market.

This applies to so many situations: When to get in, when to get out. I have struggled to find just one method where it just might work, but deeper thought found an explanation why it wouldn't work.

oldzey · Post by **oldzey** » Fri Apr 21, 2017 3:30 pm

Start by investing in yourself (education, vocational, on-the-job training, etc.). Your earnings potential comes first.

Pajamas · Post by **Pajamas** » Fri Apr 21, 2017 3:37 pm

To do it. Even someone who invests and loses money is better off, at least as far as investing, than someone who doesn't invest at all. (You could make an argument that they are worse off for not having spent the money they lost.) Many people don't contribute to their retirement plan at work even if it has a match because they don't understand it. So, the most important investing advice is to invest rather than not invest.

ValueInvestor99 · Post by **ValueInvestor99** » Fri Apr 21, 2017 5:53 pm

Invest in companies that provide the most value to their customers.

pkcrafter · Post by **pkcrafter** » Fri Apr 21, 2017 5:58 pm

willthrill81 wrote:
telemark wrote:Just keep buying.

https://ofdollarsanddata.com/just-keep- ... 31402231c9
That's a truly great post on that blog.

Thanks Will. I had not seen this site before, and yes, the article "Just Keep Buying" is very good. I also found another good article on costs.

on Of Dollars and Data.

Yeah, here's another good one.

Savings is for the poor, investing is for the rich

https://ofdollarsanddata.com/saving-is- ... ae6189698f

Paul

sschullo · Post by **sschullo** » Fri Apr 21, 2017 6:27 pm

Two levels of most important investing advice:

1. Learn the craft: the nuts, and bolts of constructing a simple and easy to understand portfolio, the Boglehead way.
2. Only after number 1 is constructed: Learn thyself, your psychology. Discover your risk tolerance. This is 10x more difficult that you think, but if you get it, you will never have to use an expensive financial adviser.

knpstr · Post by **knpstr** » Fri Apr 21, 2017 6:28 pm

always be buying and never sell.

NYC_Guy · Post by **NYC_Guy** » Fri Apr 21, 2017 6:34 pm

thefoggycity wrote:If you could identify the single most important investing advice you received or carried out, what would that be?

I think mine would be "start investing early".

Mine would be "invest in your earning potential".

My wealth comes from my earning capacity. Everything else (including learning how to save) comes next.

jamrock06 · Post by **jamrock06** » Fri Apr 21, 2017 6:48 pm

Lot's of good ones but mine would have to be:

"Nobody know's nothing".

Tyrobi · Post by **Tyrobi** » Fri Apr 21, 2017 6:51 pm

Simplicity is the master key to financial success.

willthrill81 · Post by **willthrill81** » Fri Apr 21, 2017 8:29 pm

pkcrafter wrote:
willthrill81 wrote:
telemark wrote:Just keep buying.

https://ofdollarsanddata.com/just-keep- ... 31402231c9
That's a truly great post on that blog.
Thanks Will. I had not seen this site before, and yes, the article "Just Keep Buying" is very good. I also find another good article on costs. on Of Dollars and Data.

Yeah, here's another good one.

Savings is for the poor, investing is for the rich

https://ofdollarsanddata.com/saving-is- ... ae6189698f

Paul

You're most welcome.

The savings post is another good one. It definitely reiterates the importance of saving combined with returns.

My in-laws were great savers but poor investors. With even something as simple as a target date fund (didn't exist then, but you get the point), they could have retired with far more, but no volatility mattered more to them. This left them with no more than a quarter of what they would have had otherwise.

For instance, they had a "financial adviser," who didn't educate them at all about stock investing, persuade them to invest $25,000 in a front-loaded aggressive growth fund in 1999. After the tech bubble burst, it took them several years to get back even, but they sold out once they did. Had they left it alone, it would now be worth an inflation-adjusted $80,000.

MEA · Post by **MEA** » Fri Apr 21, 2017 9:18 pm

30 years ago my father advised me to buy and hold low cost index funds. Don't waste money, invest it for the long run. Go 100% stocks when you're young. Pay yourself first. When stocks go down you get more shares for your money. Don't stop buying when the market sells off. Take advantage of a IRA. Every guest on CNBC has a financial position to promote, don't listen to them.

I got good advice. I don't know which one would be the most important. They all go together. I don't see how anyone could pick just one.

MnD · Post by **MnD** » Sat Apr 22, 2017 12:46 am

Pay yourself first and spend/enjoy the rest like happy drunken sailors because you never know if you have even one more day on this earth.

daveydoo · Post by **daveydoo** » Sat Apr 22, 2017 1:33 am

Stay the course. If you're young and earning, a crash is your friend.

Many years ago, my Dad said "You can't go wrong with Vanguard Total Stock Market Index."

Bacchus01 · Post by **Bacchus01** » Sat Apr 22, 2017 7:01 am

oldzey wrote:Start by investing in yourself (education, vocational, on-the-job training, etc.). Your earnings potential comes first.

This is #1 by a long shot for me.

For most of us, the single biggest ROI we will ever see is in our own earning power. It means taking risks, working hard, and sacrificing in many cases.

I remember shortly after my wife and I were married. We had wiped out our savings and bought a house, were maxing out 401ks (about $3k a year at the time) and had saved about $10K in after-tax. We went to see an investment advisor cause we thought we were doing well (we were, but not like we were rolling in it).

Flash forward nearly 20 years and I pull down a $10k check about every two weeks.

The point is, for most of the first 20 years of investing, LBYM, put your investments on autopilot, and invest heavily in yourself and your career.

radiowave · Post by **radiowave** » Sat Apr 22, 2017 7:15 am

Get and stay organized with your finances and investments. It is hard to carry out a well designed investment plan if you don't know fundamental information like what is your asset allocation, expense ratios of funds and total costs per year, etc. Create a spreadsheet with the pertinent data, revise at least every quarter and make decisions based on good data and track your success year by year. If I had done that earlier in my career, I would be much further ahead than I am now.

hoppy08520 · Post by **hoppy08520** » Sat Apr 22, 2017 7:41 am

For me, it was when I was 22 years old, in my first "real job" on Capitol Hill, and the director of the office told me when I started, "This is the form for the Thrift Savings Plan. Fill this out and make sure you save 5% of your salary, and they match you dollar for dollar. It's free money."

I did. I had that job for 5 years. Saved 5% to 10% the whole five years and left with around $18K (of which ~$8K was employer match) which is now around $85K without any further contributions. That experience got me in the habit of saving and investing.

sambb · Post by **sambb** » Sat Apr 22, 2017 7:47 am

Savings rate and asset allocation matter far more than expense ratio.
But expense ratio is talked about way more than savings rate on some forums.

BHUser27 · Post by **BHUser27** » Sat Apr 22, 2017 8:07 am

Live below your means