Investing for beginners: Don’t be sexy and exciting, be dull and boring.

I know in most circumstances this would be terrible advice, but when it comes to investing, personally I think dull and boring is the best strategy.

I am not a financial adviser so this is just my opinion and not advice. But to me, sexy and exciting investing would be buying the latest individual hot stock, random crypto currencies or any new ‘get rich quick’ investment thats been shared on TikTok. For some people these things might be ok to dabble in now and again, but for a long term investing strategy that is going to grow your wealth over time (say 10 plus years) I think dull and boring is the way to go.

In dull and boring I mean some kind of low cost global index fund.

What is a global index fund?

A global index fund enables you to buy a slice of the worlds economy. Each index fund varies in size depending on what market it is tracking but there will usually be hundreds if not thousands of different companies in it. When you buy shares in the index fund you are buying every company in it. And not just any companies, some of the biggest and best most profitable ones throughout the world (think Apple, Amazon, Meta, McDonalds, oil companies, pharmaceuticals etc) An index fund just tracks the whole market. For this reason its called a passive fund and usually has cheaper fees. There are no highly paid active fund managers trying to beat the stock market.

It will still go up and down in value day by day and year by year, but if you are in it for the long run (decades rather than months or years) you will hopefully get rates of return higher than you would in just a savings account. For example historically the US S and P 500 stock market has on average returned around 10 per cent per year before inflation.

As in my previous post pay yourself first, rather than buying the latest Apple gadget or having a daily McDonalds, you could use that money to buy a part of the business instead via the global index fund. This is the path to your wealth and financial freedom.

Not sure where to start with buying global index funds? Well don’t worry we will look at this in the next post.