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I don’t usually watch a lot of TV in my free time. That’s because I have other things that are more important to me such as hanging out with my family, keeping our condo ready to show as we are trying to sell it, and helping others with their finances. When I do watch TV it is usually on Saturday while eating lunch. When I flip through the channels I can’t help but laugh when I see a financial “guru” on an infomercial trying to sell their book or software that will make you millions very quickly in the stock market or real estate. This is through their revolutionary “system” that is taking the world by storm. I, on the other hand, have developed my own “system” on buying investments and today I’ll share it with you at no cost!
What’s my system you might ask? It’s nothing revolutionary or complicated; in fact it’s not really my system as people have been doing it for years with great success. The system is that I set aside a certain percentage of income each month to put into mutual funds that have a good history of performance. That means I buy when the market is at a record high and also when the market is down. I also buy when the economy is roaring and when the economy is in the tank. I make contributions to my 401(K) no matter who the president of the United States is or what the tax rate is on capital gains or dividends. I invest when I’ve had a good month financially and when I’ve had a bad month financially. I still buy no matter what the state of the economy is in Europe or whether gas prices are up or down.
So far the system has worked out for me and my family perfectly. Of course it made me look like a fool five years ago when the stock market dropped in half. But it has made me look like a genius the past few years. In truth, I’m neither a fool nor a genius but the system has benefited me by forcing me to be consistently contributing to retirement and allowed me to buy shares when they were at all-time lows. In addition it has allowed me to take advantage of the power of compound interest, and have helped limit my risk by dollar cost averaging.
If you were expecting to read about some complicated investing system that only an accountant or financial planner would understand, I’m sorry. Often I think we can get overwhelmed with investing and think that it’s some complicated thing that only really really smart people understand. But it really isn’t; the best way to invest is to consistently invest in funds with good history and over time the balance in your account will start to grow. The ability to invest is made easier by getting out of debt first and having an emergency fund. That might not sound too exciting, but that’s the system that I have used that has worked not just for me but for millions of other people.
When it comes to picking and purchasing investments, what’s your system? For some good information on investing for beginners, check out the podcast I did with guest Devin Czech