What is investing with peace of mind? What does this mean? Is it the same for everyone? Should it be the same for everyone? Hopefully over time we can learn the answers together.
Right now let’s focus on what I believe investing with peace of mind means.
Many believe peace of mind means no risk. If we expect to earn any real return there must be risk. Even if there is no risk of loss of principal there remains a more dangerous risk, a risk we cannot see in our statements and that is inflation risk.
Aside from this I believe investing with peace of mind means avoiding the tactics of the Wall Street bullies.
The Wall Street bullies continue to convince you to gamble and speculate with your money. They do this by bringing out the next great strategy or hot asset class or hot stock.
They make a compelling reason for you to buy right now (or sell right now) or risk missing out on getting rich quick.
If you want to invest with peace of mind avoid the following:
- Stock picking
- Market timing
- Track record investing
There is and has been an alternative to the Wall Street bullies. This alternative is not about predicting the future or ‘betting’ on a future event. Academic and scientific research has taught us that the markets are efficient. In that all the knowable information is in the price of the asset right now.
The Free Markets are Random and Unpredictable.
Admittedly the markets are not perfectly efficient. There are examples of this inefficiency daily. However, it is impossible for anyone to consistently take advantage of the inefficiency and ‘beat’ the market.
When an ‘expert’ provides an example of how they ‘beat’ the market you can be assured that this is a matter of luck and not skill.
During your search for an adviser to help you invest with peace of mind make certain the adviser can articulate their strategy and back it with academic research.
Seek the help of an investor coach to help you determine the correct level of risk for YOU. Develop a prudent portfolio and keep you disciplined through the good and bad times.
Your coach will not sell you the next great strategy of hot asset class or hot stock.
A true investor coach will provide you with the correct information to invest with peace of mind. So that when the markets do go down and they will go down, you can be assured you are invested correctly.
A true investor coach will tell the investor they need to go elsewhere if they insist on gambling and speculating.
By acting as a fiduciary, an investor coach will NOT go after the sale at all costs.
To succeed long term and invest with peace of mind you must:
- Own equities and fixed income
- Globally diversify
You do not have to know everything about investing but you do need to know the right things.