What do you think of when you hear the word “investing?” It’s easy to conjure pictures of suited men on Wall Street. Buying low and selling high!
But in reality, “investing” is just the concept of putting your money into some sort of appreciating asset. It’s often taking a calculated risk to own a piece of something that has current and/or future value.
A continued habit of investing contributes to your ability to become more financially independent. And of course, with more financial security, you are able to live a more simple life.
Additionally, having the ability to invest is an important part of what it means to live in a free society – allowing you to own and operate property as you desire.
So what do you invest in? There are tons of different options out there, and that’s a big part of what makes it so intimidating for many people.
But like everything in life, you can make investing simple as well. Below is how we invest.
Our Investment Portfolio
Cash – We always hold some cash. We have enough to cover our monthly budget, as well as fund some of our mid-term savings goals (vacations, home improvements, etc.). We also keep an emergency fund, which adds some financial security, and enables us to make “riskier” investments without fear of short term losses.
Stocks and Business Equity – A majority of our investing is in stocks. These are shares of companies that we own. Investing in stocks allows you to own the asset of the business itself, and also can pay out quarterly dividends. But instead of trying to bet on individual winners and losers, we invest in everything! The “Vanguard Total Stock Market Index Fund” is the primary vehicle we use, and tracks the entire US stock market index.
Real Estate – As a not-so-handy person, our primary residence is likely the only real estate investing we’ll be doing. I see the benefit of owning our home as the future offset of our housing expenses when we finish paying off our mortgage.
“Fun” – We do put a small amount of our investments, less than 10%, into more fun or speculative assets. Things like Bitcoin or individual stocks assets are not part of our financial plan, but we’ll put a small portion of our net worth into them as they interest us. I don’t believe in get rich quick schemes, and I don’t think it’s ever a good idea to invest more money that you are conformable losing into speculative investments.
What we DON’T Invest In – The above items are what we do invest in. But what don’t we do?
- Bonds – We have no money directly invested into bonds. Why? I hate debt! And owning debt owed by others, be it a business or a government, is not something I’m interested in participating in.
- Annuities/Whole Life Insurance – We don’t touch insurance products that are labeled as “investments”. In nearly every case, those are bad investment products. We only buy insurance as needed to mitigate risk/loss.
- Get Rich Quick Schemes – Wealth takes time to build, and messing arounds with stock options, penny stocks, bad cryptocurrency, etc., are all an easy way to lose money quickly.
How To Keep Investing Simple
Investing plays an important role in living a simple life. Which means it should be intentionally done in a simple way.
Before getting started with investing, you should have the other financial aspects of simple living in place:
- Have a simple financial plan you are working.
- Being in control of your money with a budget.
- Having little or no debt.
Having these in place will build you a strong foundation, and allow you to reap the benefits of investing with less stress.
Once you are at that stage where you want to invest, take time to learn. Learn about how you should be investing, such as through retirement plans, individual accounts, and what platforms.
You especially need to learn about what you are investing in. Talk to investment advisors or experts who are teachers, and help you understand where your money is going. If you don’t feel comfortable with an investment, don’t make it.
And be patient! A simple investment strategy is a lifelong habit that will over time help you build financial security, and live a more simple life.
And when you are making any decision, make sure it is aligned to your core values. Doing so you not only give yourself a greater chance of success, you will worry less and doing so will lead you to improving your quality of life.
All the best!
Thanks for the comment Peter! I absolutely agree with what you said. Taking actions based on values is the most powerful thing we can do.