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The Really Simple Investing Philosophy

I believe that every investor should have a philosophy about investing that serves to guide their decisions about where to put their money. The investment philosophy for Really Simple Investing is based on years of research in how to manage money and invest for a secure future. 


It is a philosophy I developed working across the financial services industry as a banker, financial planner, tax preparer, insurance agent, business owner, software development manager and consultant working with Bank of America, Wells Fargo, Citibank, JPMorgan, JPMorganChase, Transamerica, H&R Block and Security Benefits in a wide range of business functions.  


My work supports my belief that investing to capture the best returns over the long term includes doing it at the lowest possible cost.  A consistent, long-term investment approach helps you meet your long-term financial goals and create more wealth.


The Approach

This do-it-yourself approach includes:

  • Avoiding personal debt

  • Living within your means

  • Keeping more of your money invested by using low-cost investment products

  • Capturing reinvested dividends with Dividend Reinvestment Plans (DriPs) 

  • Paying low fees for investment management and advice.  


While that might seem complex, it's really simple.  Start with paying off any debt as soon as possible. You can do that and have money to start investing simply by living within your means.


It is an approach to investing that was influenced by his experience working with local clients with simple investing needs right up to global banks and Wall Street investment firms.  Best of all, you can start all of these investing approaches with just a few dollars a month.


As I did research on investing I was struck by how difficult it is for professional money managers to consistently bet the performance of the indexes they are measured against and the performance the stock and bond markets’ as a whole.


I realized from my personal experience working in the banking, financial planning, investment and insurance industries that the objectives of the financial services industry to profit from commissions, high fees and hidden expenses were not aligned with the individual investor’s goals to increase wealth and save for retirement. 


It was also around this time that I really focused on how many financial professionals were misleading clients and unreliable, resulting in mediocre investment performance for their clients.


The idea that an investor can beat the market by paying a self-proclaimed market guru or investment advisor to make bets on individual securities or managers is a very simply a myth. The truth is exactly the opposite. The more you pay for investment advice and products, the lower your expected return. This is especially true when you consider the fees, commissions, timing issues and investment selection errors. You don’t need to beat the markets when you can simply and more easily match the markets.


Keeping Costs Low

One of the best ways to match the stock and bond market returns is to keep investment costs as low as possible — including the fees paid to an investment advisor.

Based on this principle, I has researched the two most common approaches to investing: active trading vs. a passive management approach utilizing low-cost automated investments tools (commonly called "Robo Advisors"); low cost index funds; dividend investing in a few very select stocks and real estate investing.

The most surprising fact is this:  low-cost, investing that follows the market’s return, outperforms many high-cost, actively managed portfolios in the long-term. 


Active vs. Passive

Aside from cost, the difference between an actively and a passively managed portfolio lies in investment expectations.


Active portfolio management embraces the idea that a person can achieve superior returns over market indices through market timing, tactical asset allocation and selection. There is a large body of evidence to support that active investing, attempting to time the market just simply fails to delivery result over time.


Investors often spend a considerable amount of time and money unsuccessfully chasing hot stocks in pursuit of superior returns. However, investing actively carries significant risks in not meeting your financial goals and often results in below-average investment performance in the long run.

Passive investment on the other hand, aims to match the returns of the financial markets, and is a more efficient and pragmatic strategy.


By combining a few simple investment approaches almost anyone can, over time build a set of investments that will allow them to have more financial security and live a life in retirement not dependent on government assistance.  I has seen too many people reach retirement and need the assistance of family members or settle for a very limited retirement. 


The approaches I suggest include:

  • Using automated investment programs

  • Investing in broad index funds

  • Using Dividend Reinvestment Plans from a limited number of very high quality companies

  • Purchasing real estate or real estate investment trusts

  • Using tax deferred retirement products fully, before investing elsewhere


Almost anyone can create wealth for themselves and family members over time.  These are time-tested proven approaches to managing your money and you can get started with very little money and manage your risks at levels that work for you. 

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