“The knowledge of how little you can know about the future, coupled with the acceptance of your ignorance, is a defensive investor’s most powerful weapon” – The Intelligent Investor revised edition
For those who prefer a passive portfolio or accept less risk but you desire good performance.
Here’s what you do. “Fill The Potholes”
The idea behind this strategy is taking your emotions out of the situation & leveraging every stock worth buying.
If you are too hands on and it’s detrimental to your profile. Consider this.
The concept here is safety, growth and passiveness. We’ll accomplish this by purchasing, 3 ETFs (Exchange Traded Funds). If you can spare $500 monthly you split this between the 3. Perhaps 50/25/25. You decide. You purchase 1 that follows the total US stock market(or CDN), 2nd holds foreign stocks & your 3rd will hold american bonds.
Any stock worth holding will be in your portfolio, that much is for sure. You will contribute to the portfolio consistently regardless of how the market feels. If it’s up you buy, if it’s low you buy. Benjamin Graham referred to this as “Dollar-cost averaging”. This puts you on autopilot. You no longer care about individual stocks or the next big thing, if it’s truly great you’ll own it.
If you had invested $12,000 in the S&P 500 index Sept 1929, 10 years later your money would be worth $7,223. If you would’ve instead put in $100 and continued to invest $100/monthly by August 1939 you’d have $15,571. This goes back to “Dollar-cost averaging”. Because of the great depression stock prices were at an all time low and you are disciplined $100/month buyer therefore when the recovery came you profited.
It’s a very easy strategy which anyone can use. ETF’s typically have very low fees, they are incredibly diverse & some even will pay dividends. If you’re looking for a simple, smart way to invest. Consider this.