The whole journey to financial independence meant that I had to learn which way of investing would be most successful for me. So I talked to many pros, read up, invested myself and observed what was going on around me. Meanwhile, I have been investing since 2018, and as far as I am concerned, the most successful way of investing is the one I am going to explain in this article.
But beware: if you started in 2018, or later, you’ve been in a bull run. In other words, an up market with unprecedented highs in prices. Quite easy, then, to say: my way is the best way. Not so, I am going to share in this article a piece of historical data plus my own blunders. 1 + 1 = 3, and you can learn from that.
First things first: what is investing?
First, let’s define together what investing means. An investment is a form of investment in which money is committed for a longer or shorter period of time for the purpose of future financial gain. Investing can be done in several ways. Roughly speaking, the 2 main streams are: passive or active investing. Will come back to that in a moment.
The “to gain financial benefit in the future” bit is very important. So by this you are indirectly saying that of course you don’t want to lose financially. You don’t go investing to lose money.
That means that if you’re going to invest, you always want to do it in a way that minimizes risk.
So: bye bye investing in crypto, single stocks, forex and other speculations.
“Ho, Puck, wait a minute. This is not right, I have invested in Tesla and Amazon and have mega good returns, how do you call this speculating!”
Because it is, my darlings!
Let me explain…
Good timing
In the world of investing, there are many large institutional investors, hedge funds and asset managers. All of these million dollar companies employ the smartest financial minds in the world. Some of them do nothing else, day in and day out, but analyze promising investment options. They analyze stocks, consider gold and continually try to optimize their strategy for themselves and can clients.
And yet only a small percentage of these bright minds manage to beat “the market. By market we mean: the entire economy.
So as an individual, who sees investing as a lucrative habit to make more money out of her earned money, it’s pretty ridiculous to think that you happen to be able to do better than the pros. That you do know how to buy the right investment products, at the right time, and then sell them again at the right time.
Speculate
Would you still like to put all your money into Bitcoin, Tesla or Silver because you really did see on TikTok/Instagram/Youtube that you are a sucker if you don’t? That’s possible, but then you’re speculating. Personally, I would rather go to the casino then, I can have a wine with it too 😉
That may be a somewhat lame comparison, because the odds of losing your money in the casino are high, and the odds of losing your money investing in 1 stock are not as high. However, the chances of your money depreciating in value are high. And you don’t want that, because again: future financial gain!
The most successful way to invest: how to do it?
Anyway, but how? Over the past few years, I spoke with an enormous number of pros in the world of investing. Time after time after time I hear the same thing:
- Spread your investments;
- Siege for at least 5-10 years;
- keep your costs down.
But how do you do that? AND spread, AND low cost, AND long term?
After much self-examination (and being stubborn and wanting to invest in single stocks anyway), I know: the best way to make future financial gains is to invest passively in index funds or ETFs.
That’s it. That’s the conclusion.
I myself invest in index funds at Brand New Day. I am very satisfied with this, although the cost is not the very lowest. Every month I automatically transfer money. They do the rest. I only spent 1 afternoon fanning myself (open account and select risk profile, oh and set up an automatic transfer) and they do the rest. You can learn more about Brand New Day here.
I also invest in the Vanguard All World Dividend ETF at BUX Zero. You can also open an account with BUX Zero here.
And I invest in real estate. But those are spicy (read a lot of work + own money) to get that started. If you want to start investing (hello 2022, hello good intentions!) then, with the knowledge I have now, if I were to start over: fund investing or choose 1 or 2 rock-solid ETFs.
And remember ladies: whatever method of investing you choose, it always involves risk. Read up well, gain knowledge (for example, through ELFIN’s Beginning to Invest course) and invest only with money you can spare.
