The Smartest Way to Invest is Also the Simplest

Filed in Money by on August 15, 2013 0 Comments

Business financial graphMost people are overwhelmed with the staggering number of complex and confusing investments that are advertised by investment companies:

  • Buy options and derivatives, they are the key to your financial success!
  • Foreign currency trading—build untold wealth!
  • Whole life insurance will produce returns that amaze your family and friends!
  • Gold will ensure you a golden retirement!

The list is endless, and endlessly bewildering.

Fortunately, you can effortlessly build wealth by using just a couple of simple and easy-to-understand investments: index funds, and their close cousins, index-based ETF’s. For those of you who have some finance knowledge, index funds are very familiar. They are investments that essentially track the performance of the entire market, or some large subsection of the market, and their appeal is low cost, tax efficiency, and diversification.

I can hear some of you more finance-savvy Type As out there groaning already! “Index funds? That’s a lazy man’s/woman’s portfolio! I plan to beat the market!”

Well, I respectfully disagree. It is extremely difficult to beat the market, the attempts at which often only result instead in woefully underperforming the market, and in future articles I will explain why. I will also fully explain how to best use index funds and ETF’s to construct a simple and effective portfolio of investments, whether your savings are in the thousands or millions of dollars. In addition, I will address:

  • How Type As are prone to expecting that hard work always pays off, even though that often is not the case with investing
  • How you can maximize the returns you earn with an index- or ETF-based portfolio, often referred to as a “buy and hold” strategy, by utilizing advanced research in finance called the “Three-Factor Risk Model”
  • How to increase your chances of success with an active trading strategy, if you believe that you might be able to earn outsized returns with your knowledge, experience, and hard work (and some people actually can)

Stay tuned and all of these topics and more will be explored to help you build your wealth simply, consistently, and reliably.

About the Author ()

TIM MCINTYRE retired in 2004 from his position as president of Applied Systems after facilitating a successful sale of the company. At only forty-six years old, he made the unusual decision to fully retire to pursue other interests and simply enjoy free time. As a hard-driving Type A personality, this turned out to be a significant challenge for the Notre Dame and University of Chicago-educated MBA, CPA, and Certified Cash Manager.

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