{"id":10876,"date":"2016-09-09T12:40:37","date_gmt":"2016-09-09T19:40:37","guid":{"rendered":"http:\/\/www.marketriders.com\/investing\/?p=10876"},"modified":"2016-12-20T13:41:47","modified_gmt":"2016-12-20T21:41:47","slug":"biggest-investment-mistake-make","status":"publish","type":"post","link":"https:\/\/www.marketriders.com\/investing\/biggest-investment-mistake-make\/","title":{"rendered":"The Biggest Investment Mistake You Make"},"content":{"rendered":"

We live in a world that’s predicated on taking action. You want a job, go knock on doors. You find someone attractive, express your interest.<\/p>\n

No pain, no gain, as they say in the gym. But what if the biggest investment mistake you make is the one thing that works in all of your other endeavors in life?<\/p>\n

What if taking action is the problem<\/a>, not the solution?<\/p>\n

\"investment<\/p>\n

There’s a lot of data to back up this idea. As John Bogle, the founder of the Vanguard Group, famously put it, “Don’t do something, just stand there!”<\/p>\n

Bogle is talking about the remarkably high premium\u00a0that gets attached to taking action on your investments when action is not warranted. Truth be told, that’s close to all the time.<\/p>\n

The bulk of the gains you will experience in an investment portfolio will happen whether you do something or not. Stocks have a propensity to rise over time<\/a>. Dividends are paid out quarterly and reinvested with no effort, if you set them up that way.<\/p>\n

If you’re in a workplace retirement plan and use your 401(k) or 403(b) properly, that’s automatic, too. An amount of cash comes out of your check on a pre-tax basis. The company likely adds a matching amount.<\/p>\n

And it gets invested into your portfolio with every pay period, all year. If you buy even dollar amounts, you get the advantage of dollar-cost averaging. When stocks dip\u00a0you get more for your money, essentially.<\/p>\n

Owning the cashflow and growth that comes from the stock market is exactly what Bogle means by “just stand there.” He absolutely detests trading and finds it a huge waste of time and money.<\/p>\n

In part, that’s because of the costs of trading, which sap your total return over time<\/a>. The other problem is the likelihood that you will guess wrong and end up buying at a higher price while selling at a lower price.<\/p>\n

Three simple steps<\/h2>\n

Buy high, sell low. See what’s wrong with the picture?<\/p>\n

The only actions you need to take for long-term investing are these three steps. They are easy and anyone can do them. If you can operate a computer and type some numbers, no need to watch CNBC or hit up your friends for stock ideas.<\/p>\n

In fact, the less you do that, the better. Here are the three steps:<\/p>\n

    \n
  1. Open a tax-deferred IRA<\/a><\/li>\n
  2. Buy a risk-adjusted portfolio<\/a><\/li>\n
  3. Rebalance it periodically<\/a><\/li>\n<\/ol>\n

    And that is it! If you can manage these three steps, you will get a better annualized return than 99% of your friend\u00a0and better than 90% of those highly paid Wall Street traders taking fees out of your account.<\/p>\n

    Couldn’t be simpler or cheaper, so long as you just stand there.<\/p>\n","protected":false},"excerpt":{"rendered":"

    We live in a world that’s predicated on taking action. You want a job, go knock on doors. You find someone attractive, express your interest. No pain, no gain, as … Read more →<\/span><\/a><\/p>\n","protected":false},"author":8,"featured_media":10877,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_wp_rev_ctl_limit":""},"categories":[3],"tags":[],"yoast_head":"\nThe Biggest Investment Mistake You Make | MarketRiders<\/title>\n<meta name=\"description\" content=\"No pain, no gain, as they say. 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