I am going to keep this SIMPLE and STRAIGHTFORWARD.

Yes, investment management can get very technical with sharpe ratios, alpha, beta, CAPM, efficient frontiers, etc. However, you do not need to go down these rabbit holes to be a successful investor.  In fact, we don’t even go down them. To be successful, we focus on 5 core principles.

  1. Invest as much as you comfortably can.  Most will recommend saving 10% of your income. We recommend shooting for 15-20% of your income. While it may be hard to not enjoy that money now, you will thank yourself later. With that said, your situation and season of life can vary from year to year. So there may be a year where you need to drop your savings % down. Just don’t make it a habit.
  2. Diversify. We believe the world has an abundance of opportunity out there. And with the proliferation of low cost ETFs and mutual funds, it has never been easier to obtain access to investing in other parts of the world. When your portfolio is properly diversified, asset classes balance each other out, helping keep performance steadier over the long run.
  3. Minimize Costs and Turnover (expense ratios, commissions, turnover, etc.). Invest in funds that have low expense ratios, no commissions, and keep turnover (trading) to a minimum. By doing these things, you will minimize fees and taxes and increase your overall return.
  4. Automate. Our lives are busy. The busier we become, the greater likelihood we put our finances on the back burner.  This is a gamble you cannot afford to take. Automate as much as possible, including your retirement contributions, rebalancing your portfolio, tax loss harvesting, etc. Keep things automated so you don’t even have to think about them. You are likely to see higher returns over the long term.
  5. Stay the Course. Over-trading, market timing, and other bad investor behavior often destroy DIY investors’ returns. Much of your success in investing is about how you behave. Make sure to differentiate between financial advice and financial entertainment. Much of what is on the TV and in the magazines is ENTERTAINMENT and we view this as “noise” that we must block out to become a successful investor.

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