This post is for those aspiring millionaires who want to get rich but do not want to learn about stock market investing. I realize that it can be hard and confusing to study how Wall Street works, learn to review financial statements, listen to management's calls with investment banking analysts, and be able to make sense of investor presentations.
So can one invest in the stock market without learning about the stock market?
Absolutely. As long as you have the capital to invest, and if you absolutely do not want to learn anything, but still want to take advantage of what investing can do to your savings, try these tricks:
- Invest in exchange traded funds (ETF). Do not invest in mutual funds since their fees are very high. In other words you pay a mutual fund manager whether their work makes you money or not. The fees for ETFs are a lot lower since no one is picking stocks for you. It is just a basket of stocks and an algorithm trades automatically without much human involvement. Just to clarify, an ETF trades like a stock (meaning you can buy and sell very easily whenever you wish).
- Try to get as much market coverage as possible. Unless you spend a great deal of time every day studying and analyzing markets and enjoy doing all the things that I listed above, you want to be diversified because you never know which sector will do well. For example, when interest rates are high, the housing sector does not do so well as Americans are less likely to buy homes, but the opposite happens when interest rates go down.
- Some of my favorite ETFs are (though, this does not constitute investment advice -- these are ETFs where I have parked a bulk of my investments):
- Vanguard Total Stock Market Index Fund (VTI): With a fee as low as 0.03% a year (meaning you will pay only $3 for each $10,000 invested), this ETF basically tracks the whole stock market. Extremely low risk investment and you still get exposure to great companies like Apple, Microsoft, Amazon, Berkshire Hathaway, Johnson & Johnson, ExxonMobil, etc.
- iShares Core S&P Total US Stock Market ETF (ITOT): With a fee of also just 0.03% this ETF also gives you exposure to some of the best companies and you never have to trade. Just buy and forget till you are ready to withdraw when you are in retirement.