Investors Church

Be Consistent

Invest the same amount in the same investments every month. This strategy is called dollar-cost averaging and it protects you from 'buying in at the wrong time'. Most brokerages allow you to setup an auto-deposit to invest the same amount each month. If you choose not to auto-deposit, an alternative is to setup a calendar reminder to do it yourself each month.

Be Boring

Passive investing is about sticking to the basics. The What to Invest In section explains a the fastest and easiest way to build a diverse portfolio (spoiler, it's by using index ETF). Diversifying across many stocks is less risky than only owning stock in a few companies because the chances of a single company going out of business are far greater than all the companies in the index going out of business. Focus on investing to build wealth for retirement and next major purchases. Betting on the next big crypto currencies is something to do with your gambling money, not your nest egg.

Be Cool

The only way you can lose money is if you sell your investments at a loss. If you don't sell, you don't lose money. The stock market goes up and down but trends upward over the long run. If your investments are doing poorly, but you've followed the advice to Be Consistent and Be Boring, all you need to do now is Be Cool. Down turns are temporary. It could take months or years for your investments to recover and reach new highs, but it will happen. In the meantime, continue to Be Consistent with your monthly contributions to take advantage of buying in when stocks are cheap!

Which Account

The more you invest, the more money you'll have in the future. So when you get some extra money or a raise, try to level up the amount you invest rather than your lifestyle. Below are the account types you should fund in the order that you should prioritize funding them.

1. Bank Accounts: The typical recommendation is to keep enough to cover 3-6 months worth of expenses. This can cover hardships like car accidents or losing your job (on average finding a new job takes 3-6 months).
2. 401k Retirement Accounts: Many employers offer a 401k retirement plan. Contributions lower your taxes, and employers often provide matching e.g. for every dollar you contribute, the company will contribute x% to your account! When you leave the company, you keep your money in the plan or you can roll it over into your own IRA tax free. There's an annual cap to the amount you can invest. You should contribute as much as you can to this plan.
3. IRA Retirement Accounts: You can create your own Traditional and Roth IRAs through a brokerage like Fidelity. 401ks are superior if there is employer matching, but IRAs are the next best thing. So if you have a 401k available to you, max it out before you consider funding an IRA. There is an exception to that rule in the Minimizing Taxes section that may be worth considering. Just like 401ks, there's an annual cap to the amount you can invest.
4. Non-Retirement Brokerage Accounts: You should contribute to non-retirement accounts when you've already contributed the annual maximum to your retirement accounts OR you think you'll need the money before retirement age. Remember that the stock market goes up and down, and if you don't want to be forced to withdraw during a down year, don't contribute any money you'll need within the next 5 years or so.

Which Investment

Investment choices include stocks, corporate bonds, gold, U.S. treasures, crypto currencies, real estate, etc. Choosing the right investment mix can be deeply personal for some people, but to get started without being overwhelmed, investing in stocks is a good choice.

Index ETFs are an investment option that give you ownership in a large number of stocks without having to buy them individually. Having the bulk of your money in two to four Index ETFs will give you good diversification without decision fatigue.

Below are some popular ETFs to consider.

• VTI (Vanguard Total Stock Market Index Fund ETF): Covers the entire US stock market.
• VOO (Vanguard S&P 500 ETF): Tracks the 500 largest US companies.
• MDY (SPDR S&P MidCap 400 ETF Trust): Tracks mid-sized U.S. companies.
• VONG (Vanguard Russell 1000 Growth ETF): Tracks large-cap U.S. growth stocks.
• QQQ (Invesco QQQ Trust): Tracks the 100 largest non-financial companies on the Nasdaq.
• IWM (iShares Russell 2000 ETF): Tracks small-cap U.S. stocks.