For those of us without a lot of money or a tremendous amount of knowledge about investment theory, investing can be as boring as….the simile escapes me….there’s nothing more boring than investment theory. That being the case, we still know that we must invest if we want to be better off in our retirement than the 50% or so of Americans who have no investments or savings going into their golden years. Lots of financial advisors recommend a kind of set-it-and-forget-it approach to investment for people like us. I’ll take about it below as one of the options I recommend, because it’s indispensable. But it’s also not very fun or interesting. I have found that in order to maximize your investments, it’s important to find some enjoyment in the process. Here are a couple diversified ways I’ve found to make investment profitable and fun to do.
- Long Term ETFs and Mutual Funds. This is the indispensable thing I was talking about. These are funds that (usually) grow with the national stock market. Basically, your fund manager will pick a whole bunch of stocks and give you returns based on their growth. Because the overall market grows more than it doesn’t, the soaring heights of some stocks overwhelm the losses of flatlined or failing stocks. By casting a wide net over tons of different stocks, you’ll usually grow your money. Funds have the advantage that you don’t have to predict the future of individual stocks. The successes in your basket will generally keep you afloat, and grow a lot over time. That’s why I advocate for most people to make these the cornerstone of their portfolio. ETFs are even cheaper to buy. They’re basically mutual funds that are sold like stocks, saving you a little time and money when it comes time to buy some. This investment strategy can make you a lot of money, but it takes decades. Still, it’s all but guaranteed to be successful, and success is a necessary ingredient for enjoying your investments. So get some of these before you do anything else.
- Day Trading/Spread Bets. This can be a more generally fun way to invest. If you don’t mind a riskier “game” approach to investment, lots of different sites will let you wager upon the value behaviors of lots of different entities, financial and otherwise. Tips for alternative investment ideas often include methods like this. Generally, it’s best not to put many eggs in this basket, if by “eggs” I mean money, and by “basket” I mean your portfolio. Limit high risk bets like this to no more than 10% of your overall portfolio. But because these are high-risk/high-reward investments, you’ll have a lot of fun getting good at this kind of investment. You’ll increase your skill over time and eventually start to make a lot of money. At least most people do. Some lose whatever they invest. So make sure you learn the ropes and no what you’re getting into before you play the spreads. After awhile you’ll figure out the perfect allocation.