top of page

Keep It Simple

Investing can be really simple.  Here is the core concept about investing that truly makes it all very simple: “Rather than attempting to find the needle in the haystack, buy the haystack”.

You don’t need to learn about technical or fundamental analysis or develop trading strategies.  The fact is that most professional traders lose money and most of the professional managing mutual funds don’t manage to consistently beat the benchmark indexes they compare themselves too.

Recently, University of Chicago professor Harold Pollack has gained acclaim for insisting that all the important financial advice you need can fit on one side of a 4x6 index card. In fact he has written a book recently, “The Index Card: Why Personal Finance Doesn’t Have to Be Complicated”.  I have added a few points to his list, but the point is you can keep your plan very simple.

  1. Get Out of Debt

  2. Invest in ways that are smart.

  3. Accept some reasonable risks for better returns

  4. Diversify

  5. Don’t try to beat the market

  6. Don’t try to time the market

  7. Save regularly

  8. Keep it Simple

  9. Maximize tax advantaged savings

1. Get out of debt

The very best thing you can do for your financial future is to pay off any high-interest consumer debt. One truth about millionaires is they live within their means.

2. Invest in Ways That Are Smart

For some people, trading stocks and other investing is a joy and can be a bit of a rush. I would advise people not to spend all their time and all their money trading. Know that despite what you’re telling yourself, trading is going to cost you money rather than make you money. So if you indulge, indulge in moderation.


Start by slashing investment fees. Pay attention to fees. Avoid actively managed funds. Rebalance once a year. Over the course of many years, avoiding trading costs and annual management fees can add as much as one percentage point to your returns and boost your savings nest egg by 25%.

3. Accept Some Reasonable Risks for Better Returns

All investments involve some degree of risk. You've probably heard the phrase "no pain, no gain", that really helps in summing up the relationship between risk and reward.

4. Diversify

Focus on diversification or what is known as asset allocation, not fund picking.  By investing in a total U.S. Stock market and total U.S. bond market index fund, you’ll own a piece of all publicly traded U.S. companies and a share of the entire investment-grade bond market.  Add a total international stock index fund and you’ll have foreign exposure as well. In short, you’ll tie your portfolio’s success to that of the broad market, not just a slice of it. Investing isn't about big scores — it’s really about consistent returns over time and avoiding big mistakes.

5. Don’t Try to Beat the Market

Simple logic makes it clear why the majority of people can’t beat the stock market. The average return of all investors is equal to the stock market’s return minus taxes, trading costs, and management fees. To beat the market, you’ve got to overcome all three.

6. Don’t Try to Time the Market

Very few investment professionals are able to successfully time the market, meaning buying with the market is lower, holding an investment and selling before the market declines. The simple answer is to invest in a few low-cost index funds that cover the broad stock and bond markets.

7. Save or Invest Regularly

Set a goal, saving some portion of what you earn every month. Consistent savers have the best chance of greater financial independence.  Accumulating an appropriate cash reserve is essential to financial security.  Get in the habit of saving 10 to 20% of your money.

8. Keep it Simple

Investing shouldn’t be all about getting the best returns, it’s better to get steady returns consistently. This means saving a good chunk of your income, investing in a diversified portfolio—some stocks, some bonds, some cash, some domestic and some international—because you don’t know which will do well. It also means minding expenses, which you can do by investing in low-cost index funds. There is no perfect portfolio — yours should emphasize simplicity and shun complexity.

bottom of page