Get ready, because this is about to be the best news you’ve heard all day.
You can do as well in the stock market after three minutes of work as the people who spend 80 hours a week studying it.
No, this is not a scam. It’s simply based on the fact that no one can predict the future, regardless of how many times you think that your horoscope has been “dead on.”
A common way to invest your money, for those of you who don’t know, is through a mutual fund. This is a person who decides to invest your money in a bunch of different companies, and it’s common because you think that this guy must know what he is doing because it’s his job.
Even though he gets paid an exorbitant amount of money to make these investments for you, the odds that he beats the average performance of the top 500 companies over 5 years in a row is 0.02 percent.
Those are not the odds that I want when I’m dealing with the already paltry fund I have in college. So why stress over picking a mutual fund and worry whether or not it’s beating the market, when you can choose the market and win every time? (Well, not every time, but 99 percent is still pretty solid).
The smartest move you can make in the stock market is realizing that you are, in fact, not smarter than everyone else. I came to terms with that sobering thought a long time ago and it has made my life much easier and surprisingly richer.
So, if you didn’t understand a word of this article, take away this one piece of advice: when you set up a retirement account (hopefully a ROTH IRA, but I’ll get to that later) invest in the S&P 500 index fund. It’s that simple.
If you are confused and would like to know something more specific about the stock market, email me at bussj14@ufl.edu for any questions you have. If you have questions about another topic you would like clarified because high school didn’t prepare anyone for the financial decisions adults have to make, email me and I just may write about it next week.
