The unskilled investor can be lucky – by RDQ

I am not nor do I claim to be a skilled investor. I don’t analyze stocks, I don’t pay much attention to expense ratios, I don’t study trends or even read prospectuses. There is nothing I do that anyone else can’t do as well, probably better. 

That’s my point, investing for the future is possible for anyone at just about any income and skill level. In other words, there is no excuse. A minimal effort to learn the basics is sufficient. 

What are the basics for most investors?

• Invest for the long term
• Don’t be a trader – that’s not investing
• Use mutual funds (maybe ETFs) with different goals, etc.
• Mostly use index funds
• Reinvest all capital gains, dividends and interest
• Always have some cash
• Include a bit of International investment.  
• Don’t invest in anything you don’t understand, stay with the basics, stocks and bonds

I’m sure there is more to consider, but the above has served me well.

I probably have too many mutual funds. The underlying investments overlap. My non-index funds I selected randomly have goals of both growth and income. I have several bond funds, including short, intermediate and long term municipal bonds – seemed like a good idea.  I have two individual stocks, both utilities.

So, what did this seat of the pants approach achieve? 

For the three years beginning January 2022 I had a total return of 50% or average of 16.6%. The return on investment of the S&P 500 was  37.84%, or 11.99% per year. Both include dividends (and interest in my case)

Once again, this is not a case of do as I do. My results were more luck than anything else. I have no doubt a more sophisticated approach would have better results. 

Whether investing in measured in hundreds, thousands or millions of dollars, no matter how you define success,  it’s possible.