17 Quick and Simple Investing Tips from a Financially Free 30-Something

Let's just dive right in, shall we?

1. Don't overthink it

Investing does not have to be complicated. Myriad studies have shown that the simplest investment strategies are the most robust and deliver you the best returns.

2. Good enough is good enough

Your portfolio does not need to 50x in a year. You do not need to jump on the hottest stock or cryptocurrency. Leave the FOMO for other people.

3. Start early is good advice. Start now is more useful advice

Yeah, I know I should have started investing when I was 18. But I didn't. There's nothing I can do about that. But I can make a decision to start today.

4. Your risk tolerance is less than you think

When times are good, everyone likes to think they're ok with risk. Until the first time, the markets tank, and they panic as they see the value of their 100% stocks portfolio halve overnight.

If that happens, remember how it makes you feel. It will give you a good indication of what your risk tolerance really is. And it's probably less than you think.

5. Diversification is important but harder to achieve than ever

It used to be that if you wanted a diversified portfolio, all you had to do was buy a US Total Stock Market Index Fund. But with the 5 largest tech companies now accounting for almost 25% of the S&P 500, the level of diversification has reduced as the impact of a handful of companies dominates the overall performance of the index.

To ensure real diversification, you'll need to look beyond a US Total Stock Market Index Fund to other geographies and asset classes.

6. You have to put your money somewhere

This is the quandary of investing - nothing is the perfect investment. Cash gets eaten away by inflation. Stocks are volatile. Bonds have underperformed for years. Real estate is illiquid. Gold has been a terrible long-term investment. Crypto is unproven.

But you have to invest your money somewhere. So choose.

7. "Analysts" and "experts" will always be predicting the end of the world

There will always be a talking head predicting the imminent implosion of the financial universe. Very occasionally, one might even be right.

But too much time listening to doom-mongers will cause you to miss out on opportunities. Try to limit the amount of financial news content you consume.

8. Take more risk earning money and less investing it

A lot of people gamble their hard-earned cash on speculative "investments" with the hopes of getting rich quickly, even though their chances of success are slim and almost entirely down to luck.

Whereas they don't bet on themselves to make a success of a bonus-driven job or an entrepreneurial venture, even though in those situations they can control their chance of success through their actions.

Investing in yourself might be the best investment you ever make.

9. Keep learning

You don't need to be invested in whatever new asset or technology is being hyped today. But you do need to at least be aware of it.

10. New things will always be ridiculed

When Jack Bogle invented the Index Fund in the 1970s, he was ridiculed by the financial establishment, and his fund was dubbed "Bogle's Folly." Now Index Investing is the mainstream, and the financial establishment ridicules Crypto and NFTs.

Just because something is unproven or unpopular doesn't mean it doesn't have a future.

11. "Don't risk more than you can afford to lose" is good but not perfect advice

It's an oft-touted rule of investing that you shouldn't invest any more than you can afford to lose, usually by those advising against investing in a high growth stock or Cryptocurrency.

And as much as I would not advise going all-in on Dogecoin, the thing is that all investments could go to zero. Ok, so some are much less likely to, but it's still possible. Just because something has had a solid decades-long track record doesn't mean it will continue that way.

Those Index Funds being held in the 401(k)s of the very people telling you not to risk more than you can afford? They could go to zero. Even cash could become worthless.

And referring back to #6, you have to put your money somewhere.

12. Don't confuse trading and speculating with investing

Trading looks to make profits on a short-term basis by buying and selling assets. Speculators gamble on finding the next big thing. Investors buy and hold assets for long-term growth.

Leave the trading to Wall Street and the speculating to Twitter.

13. Steady in, steady out

Dollar-Cost Averaging (the simple act of buying investments at regular intervals, e.g., each time you receive your paycheck) is generally a good way to smooth out the bumps in asset prices and avoids the chance of buying right at the top of the market.

But you should take the same approach when taking money out of investments too. Panic selling your portfolio could mean getting out right at the bottom of the market.

If you're concerned about your portfolio, gradually rebalance it by selling assets that are overly risky and buying others that you feel more comfortable with.

But don't cash out the whole lot in one go.

14. Be careful with "buying the dip"

When the markets are down, you'll hear investors preaching, "buy the dip!"

If you believe in an asset and its price drops, it can be tempting and even sometimes a good idea to buy more. But be careful with this way of thinking because it can start to create behaviors where you start trying to time the market. Which, as we all know, leads to worse results.

The markets are incredibly volatile and impossible to predict, so a better strategy is to just keep investing at boring ol' regular intervals.

15. Don't invest all your money

Keeping a cash cushion will help you sleep better at night when the markets are tumbling. It will also allow you to seize opportunities when they come about.

The power a solid cash cushion gives you is more than worth the small opportunity cost of having money on the sidelines.

16. All rules of thumb are just that

Rules of thumb like the 4% withdrawal rate rule can be useful guides but no more than that. Everyone's situation will be different, and you should make your own decisions.

I certainly wouldn't hold 61% of my portfolio in stocks just because of the old "100 minus your age" rule.

17. Don't believe everything (anything) you read about investing

Including this article. There's a reason that every financial article has a disclaimer at the bottom. You should always do your own research and don't trust anyone else to know what's best for you.

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This article is for information and entertainment purposes only. It should not be considered Financial or Legal Advice. You should consult a financial professional before making any significant financial decisions.