Investing 101


time and investing
Whether it’s having an emergency fund grow in an online savings account or asset allocation within our 401k accounts, successful investing plays a huge part in our wealth building strategies. It’s very important that we lay out a plan based on our true risk tolerance, time horizon, and to stick to that plan.

The Case for Low Cost Index Funds

I’m not the person who will tell you that you have a low chance of beating the stock market benchmarks by yourself because you can, as I’ve done over the years. I’m the person to tell you though that even if you can do it, you should most likely just stick with index funds. For one thing, you probably have a real job where you should focus your energy in because beating the market takes a lot of time out of every single day and energy out of you. Sure, you might be missing an opportunity on the investment end by going with low cost index funds but when you can concentrate more on your family and career, you get so much more.

Housing Related

401k, IRA and Retirement

Retirement should always be on our minds when we make financial decisions. How is this change going to affect me long term? Chances are good that since you are here, you already know a bit about discipline and investor behaviors. Here are some articles on more detailed notes on various situations and retirement vehicles.

Editor’s Note: One of the keys to improving investment returns is to track your progress. Plus, it’s always good to know where you stand on the path to financial independence. With companies such as Personal Capital making it extremely easy to track all the assets you own via its free tools, you have no excuses not to know what your net worth is at any given moment.

Want to give the tools a test drive? Take a few minutes and simply sign up for free here. While you are on their platform, remember to check out their nifty 401K Fee Analyzer that will show you whether you are paying too much in fees, as well as an Investment Checkup tool to help determine whether your asset allocation fits your risk profile. For those trying to build wealth, Personal Capital is worth a look. You can thank me later.

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{ read the comments below or add one }

  • David says:

    No professional can predict the markets. Best way is to make wise investments and learn all their is to it. Knowledge is key!

  • Leapup Edutech says:

    All of the tips which are you mentioned in the post are very helpful. I agree with you as you mentioned all the major financial aid in the blog it more helpful for the reader. Because people always want to learn something from this interesting post. In short, there is a lot of information learned through this blog. Keep learning and keep improving is the rule for the reader. Anyways, that’s an amazing post. Keep up the great work. All the best.

  • Carly M. Fretz says:

    Hi there,
    I dont usually do this but Im very lost.
    My mother recently died and Im her beneficiary.
    I dont know about stocks etc.
    She had accumulation plan through her job.
    They are telling me I cant roll it over because it wasn’t mine, to begin with.
    They have sent me 2 checks.
    My question is how can I turn her retirement into my retirement?
    Moreover, any ideas how I can use this for my future?
    I worked behind a bar my life so I could help out with her needs.
    No profit sharing or retirement slinging booze, unfortunately.
    (I am aware of a savings account that’s really not where I was going)
    Thank you.
    Carly Fretz

    • David @ says:

      Sorry for your loss Carly.

      I would call Vanguard or any other financial institution you are comfortable with and tell her your situation and they should be able to give you detailed instructions on how to open a retirement account, roll over those funds into an inherited retirement account.

      Do it soon because I’m sure there’s a time limit on how long you can keep those checks uncashed.

  • Tristian Young says:

    I would like to know about investing how can i invested what would be a good for first time in investing

  • says:

    Yes, it is important also track the portfolio and to analyse the investment decisions also. I would also add the importance of developing right mindset – it can not be learnt in school, but one can read as many good investing books as possible, practicing and tracking/talking professionals.

  • Aseem Juneja says:

    This is amazing, David!
    Any advise on taxations on gains achieved from capital market investments. I’m looking for an overview when it comes to taxes. Cheers!

  • Matthew Metcalfe says:

    Hey David, this is truly awesome. A wealth of information here and across the site. I think that Index funds are a great way to go, especially if you are not wanting to hire someone and it can save you mobs of time. Nice work.

  • The Lion's Shares says:

    Long term investing is always the best way to go. Although I’m not too fond of index funds, they do allow anyone to participate in the market with lower fees than trading and paying commission.

  • Marvin says:

    I definitely believe through long term dividend investing you can beat the market year after year but it does take some work. I would also like to point out that diversification isn’t always your friend, I think the better option is proper asset allocation, never have all your eggs in one basket.

    • fredjohnson says:

      The problem with using only “asset allocation” is that you are still trying to time the market. You will get burned sooner or later.

  • E Cook says:

    Diversification is key, but even then things can still go wrong. Being over weighted in bonds the last couple of years would really hurt.

  • Mr Ikonz @ Projectikonz says:

    I’m a huge fan of beta investing, using very low cost index funds, like Vanguard ETFs. Saves me a lot of money and means I don’t need to select individual stocks.

    You’re the third blog I’ve read today that mentions building an emergency fund. I really need to get onto it quickly! I keep spending it on unplanned expenses!

  • Jay S says:

    Lol. No expert can predict the stock market. Best strategy is to make wise investments and stick to it for longer term.

  • John U says:

    What happened? No crash?

    • Artist says:

      No crash! Not yet anyhow. The European and US economies still owe vast sums but they seem to be getting them under control. However, the stock market reacts on sentiment and now Putin is the threat. The gold hedge market is drifting down. It is worth watching. When gold goes up in price there is usually a reason.

  • Richy W says:

    I agree. I moved my relatively small investment in stocks towards cash and fixed returns until the crash comes. My adviser says I am mad, but we shall see. Nobody can second guess the market, but this is October when crashes tend to happen and Keith is likely to be right. We shall see.

  • Keith Smith says:

    I have been doing research on the Dow Jones Industrial average for over 10 years. A current stock bubble exists and the index will retest lows in the $11,025 to $12,025 range in the next 6 months. Why? Because these levels haven’t been tested as a base. $10,000 to $11,025 level has been tested and index will not fall below this level again. Most critical period is now thru Nov 30th. I can’t tell you what event will trigger bubble burst but it will happen as sure as the sun will rise tomorrow.

  • says:

    I have access to a 457 plan at work because I have a city job. The plan is very similar to a 401k but in this case has no employer matching money. I can still deposit up to 17k a year and this is in addition to the structured retirement plan that takes 7% of my paycheck every two weeks. If I stick around at my job for another 15 years or so, we should be doing well during retirement.

  • Chad says:

    I agree with the do it yourself approach but make sure you know your investments and your broker and their specialties. I personally choose ETFs for a variety of reasons that I cover on my blog. Additionally I would read up on some technical analysis basics that will help you understand how markets move.

  • Jonathan says:

    You make an excellent point that beating the market is a real time and energy draining investment. Sadly many people think that they can throw a few thousand pounds at the market and they’ll be rich, and when it doesn’t work out they quickly lose interest. In my experience it’s all about medium term investments, which don’t always yield an instant return. It’s about researching your market and knowing how it’s going to respond to a certain situation. Thanks for teaching us that it all boils down to hard work…..

  • Carlos Sera says:

    Like Andrew, I’m a big advocate for index funds, especially if don’t want to hire an advisor. Finding an advisor who will work with small accounts can be difficult. If you can sit through the draw downs of index funds, then you’ll be fine.

  • Andrew says:

    For long term investors, low cost index funds are great. They are also easy in easy out if they want to learn to be a touch more active. I cover more of the trading aspect at but each individual needs to access what there passion is and how much time they have to dedicate to investing. Enjoyable blog here.

    • Gavin says:

      Hi David, Fantastic blog you have here, very informative and well put together. I’d like to echo Andrew’s comments and encourage everyone to check out SeeItMarket, it’s a great site that I visit every day. Another thing investors should think about is learning options trading. I know some people view options as WMFD’s, but use correctly they can really improve your returns and also minimize your risk. There are some simple strategies to protect yourself from selloffs such as we have had recently.

      Keep up the good work, will look forward to your future articles.

  • John says:

    I believe it’s being controlled…just like we all are financially. 401k? Create your own! It’s only 25% tax for awhile, until you stop spending and retire by age 30 or less, then your tax on long term capital gains is 5% or on dividends is 0%. Any money you do make you can then reinvest, spend, or do whatever you want with. What’s with this controlled waiting til age 70+ to retire on YOUR MONEY! F*** 401ks, Roth IRA, Banks, etc. They just want your money so they can loan it out and make fortunes. It’s time you CONTROL your money and YOUR FORTUNES! Spend Less, avoid taxes, Save More, and Invest/loan with your decisions and your rates!!!!!!!! Retire extremely young and have fun and be happy!!! That’s what I am doing now and loving it. Don’t be lazy and controlled by governments and corporations. Make your own governments and corporations!!! The Vatican does it and owns almost everything. Why not follow God’s will? (P.S. Save all your posts and write your own book/blog/podcast/videos/movies/games/etc, create your own websites/apps, don’t let others get rich off of your entertaining posts!!!)

    • mr. mullen says:

      Mr. john you made some great points there and I sort of had an epiphany with what you wrote there at the end! I’m being serious when I say “I want to learn what you have learned”. How can I get in on this free-form out of the box style of creative thought? In addition, what do you believe to be a good starting point for first time investors searching for a safe but lucrative enterprise?

    • fredjohnson says:

      What are you even talking about? Do you even know yourself? 25% tax? On what?

  • david stokes says:

    this is more of a tax question: what can you do to minimize penalty for withdrawing 401k funds used for business expense needs?

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