Maximize Your Wealth In 4 Hours Per Year

One of the best parts of my job is hearing from customers. People who were once stressed about money, and uncertain about the future, after really learning how to budget and focus on their true priorities, find that they aren’t. They’re in total control, going after audacious goals they’d never have thought possible.

They feel like they have more money, and often, they start wondering about investing and building wealth. Such positive, life-changing transformation—I just love it.

Anyway, that’s why I wrote a little guide, Invest Like a Pro, to help demystify investing—so that, when you’re ready, you can dive right in! Or, if you’re more of an “I’ll just YouTube it” type, we’ve been breaking it down over the last couple of weeks here.

So far, we’ve covered everything from why you should invest, to tips for selecting the right investment vehicle. The big takeaways are pretty simple, really:

• Start as soon as possible
• Invest as much as you can
• Focus only on what you can control

If you follow these principles, will you actually be investing like a pro? Well, no. (And that’s a good thing, unless you’ve got 40 to 80 hours of extra time on your hands each week!) But you will see results that are just as good, if not better … and it should only take you four hours per year, give or take a few.

Find the “Fun” in Fund

What’s fun? The financial peace that comes with wealth-building via sound investments. I’m not going to recommend specific funds, but here’s a short list of attributes that you can look for:

1. Extremely low cost
2. Extremely diversified
3. Extremely low cost
4. Extremely diversified

What can I say? I’m a pretty simple guy. And this works. Memorize those four attributes. Then identify an equity fund (stocks) and a fixed income fund (bonds). Choose the right mix for you to create an appropriately diversified portfolio.

A Word on Global Diversification

A lot of people ask about international investments. If you’re proportionately invested in the U.S. stock market, then you’re already holding companies with international exposure. Take Apple, for example. A good bit of their revenue comes from outside of the U.S. This is true of several companies (Apple, GE, General Motors, Exxon, etc.) so it’s pretty much a given that you’ll have some international exposure if you’re playing it smart and investing across the entire U.S. stock market.

Automate Your Investments

I like Betterment, which I mention in Invest Like a Pro. For a very low cost, they’ll consider your investment horizon and make sure that your money is allocated appropriately. Betterment also uses tax loss harvesting, which is beyond the scope of this post—and not really worth getting into at this stage of the game—but trust me, it’s very cool because it saves you even more money.

Resources

If you’d like to learn more about investing, just know this: it should only take a few weeks, maybe a month, to feel pretty good about getting started. Two tips:

• Don't jump on “hot” investments—only invest in things you understand well enough to explain it to your kids, or to a friend.
• Don’t follow market news! It’ll only cause stress, anxiety, doubt and the like. Your time would be better spent whittling small birds out of wood.

For a deeper dive, I highly recommend my friend, Jim Collins. He’s not the Jim Collins (of Good to Great fame), but he’s a great Jim Collins, in my book. His Stock Series is free, and it’s very thorough. Or you can get the book version, The Simple Path to Wealth, which is absolutely fantastic (and a little more curated than the series).

I also recommend The Little Book of Common Sense Investing. It'll give you a deeper look into why index funds, and now ETFs, are the way to go. This book will show you the data behind why your investments will perform better than average when you use a more passive (less stressful and time-consuming) approach to investing.

If you want even more numbers, A Random Walk Down Wall Street is a great read. It will teach you that you can’t choose a stock or a fund—or even a manager to manage that fund—as a strategy for better investment performance.

Your best bet, unless you want to invest full-time, is to diversify across the entire market. Invest regularly, according to your plan (based on age and goals), and then don’t worry about it.

Alright, there you have it. Next week, we’ll get back to my favorite subject: good, old-fashioned budgeting.