Investing can feel intimidating. There are so many professional investors out there with a ton of knowledge and expertise. How can we as "regular folk" possibly compete with that? We simply don't have the time or resources to do all of the research and analysis that they do.
Don't worry - you don't have to compete. We aren't playing in the same arena as they are anyway. Professional investment managers - mutual fund, pension fund and hedge fund managers - are competing against each other. And it's intense. They are fighting tooth and nail to outperform the market (and each other) because in this industry, performance is everything.
You don't need to beat the market!
You and I don't have to compete to try to earn better investment returns than the overall market. We can ignore the hubbub. We don't have to do stock research, listen to the economists, or even read the business headlines.
The important goal for us is to earn the rate of return that will allow us to have enough money for retirement. When I build retirement plans for clients, I use a 6% average annual return. This isn't hard to achieve since North American stock markets have earned 8-10% annually on average over the long term.
You don't need to sweat it and try to do better - why put yourself through the work and stress of owning higher-risk investments (be it small tech companies, crypto currency and so on)? You don't need it. (And anyway, it's very hard to beat the market, even for the pros.)
Keep it simple
Readers of my blog might be getting tired of hearing me say this but I will keep saying it anyway: keep it simple. Invest in a small list of passively-managed exchange-traded index funds, buy them when you have the money, and sell them when you need it. Make fewer decisions and you'll make fewer errors.
Stop worry about all of those professionals who know so much more than you. None of that matters for us regular investors. Just aim for a modest return that will allow you to save enough for retirement. Good enough is great.
Take care of yourself (and your money),
Anita Bruinsma, CFA
Clarity Personal Finance
P.S. Check out the video below! I am experimenting with doing a video summary of my weekly blog. Let's see how it goes.
