Sponsored by

Hello Aspiring Chillers,

Where to Invest:

1. Education

2. Retirement Accounts

3. Stocks

4. Real Estate

5. Crypto

6. Buying a small business

7. Starting my online business

Quick Definitions:

• S&P 500: The Standard & Poor's 500, or S&P 500, is a stock market index that measures the performance of 500 of the largest companies listed on stock exchanges in the United States. It is widely regarded as one of the best indicators of the overall health of the U.S. stock market and the economy.

• Index Fund: An index fund is a type of mutual fund or exchange-traded fund (ETF) that aims to replicate the performance of a specific financial market index, such as the S&P 500. It provides investors with broad market exposure, low operating expenses, and low portfolio turnover, making it a cost-effective option for long-term investment.

It's hard to disagree with Warren on something like this. In my estimation, there are four types of people who invest in the market:

• Internet Day Trader:

  • These people do not make their money trading. They make their money selling you their courses. You will not win in the long run as a day trader. If you do, you were probably a professional trader before that. I do not want to crush dreams; I do want to save your money.

• Retail Investor:

  • Where all of you should be. These are people who want to get the benefits of having money in the market but have other jobs, skills, and responsibilities that keep you from being a professional.

• Professional:

  • They spend every working hour of the day obsessed with this need to win a zero-sum game. They also have a proven background of wins and losses. They make pennies at a time and do that thousands of times over.

• Not in the Market:

  • This is probably the worst case. The only reason to be in this bucket is if you are investing in your education, you are a professional investing in real estate or you are a business owner.

  • Even those people can and probably should have some skin in this game but in index funds.

Why Index Funds?

This is pretty easy. They are built for people who do not have time to spend all day picking stocks. This is the most "passive" income you will ever make. I have tried pretty much everything. Guess what the least amount of work I ever did to make money was? Invest in FXAIX. This is where 90% of my stock portfolio lives. It is a low-cost index fund that tracks the S&P 500 from Fidelity. It took me 20 minutes to set up an account, and I auto-send money to it. About as passive as it gets.

Fidelity (FXAIX) - Why That One?

Another easy one. That was the one I opened when I was 23. No other reason; you can use Vanguard or whoever really, as long as they are low cost and track the S&P 500.

Why Not Day Trade?

Loads of people ask me this when they hear about my background. Probably the number 1 follow-up question. I change the words, but the message is always the same. It goes a little something like this…

Not what people generally want to hear; they all want a tip on a hot stock. If it's so hot you know about it, then it might be too late in the game and probably is not a good long-term play.

Other Reasons:

• Picking Individual Stocks Is Hard: Everyone loved Sears, and then Sears didn’t exist 5 years later. The same can be said about hundreds of other blue-chip companies.

• Blue Chippers Fail: Maybe you don't remember Sears. What about Blackberry? Had 20% of the smartphone market share in 2009; by 2015, less than 1%, and now, did you know they still make phones? When companies fall, it’s fast.

• Algorithms: This is how I traded for years. It’s how all true professionals trade. You are too slow.

• Fees: This one is the silent killer. Even if you figure out how to win at trading, you will pay so much in fees to the broker that you are just making them money and not you.

My Best Advice

Please stop looking at your brokerage accounts. The ups and downs (volatility) are going to kill you and make you do something that will cost you money. If you are putting money in the market, you should have a minimum of a 5-year time horizon. It's best if you have 20+ years, though. At no point in the US stock market have you lost if you just kept your money in the market for 20 straight years without touching it.

Steps to Success:

1. Take the apps off your phone.

2. Set up auto-transfer to the account.

3. Set up auto-invest cash into FXAIX (or equivalent).

4. Set up auto-reinvest dividends.

5. Confirm this is working for a few months.

6. Only look at it once a year on your annual budget-building day.

Anything more than that is too much watching the market, and that can trigger you to make an emotional decision that you will regret; that is the one promise I can make to you regarding investing.

As I have stated many times in past articles, I believe there are better investment opportunities than the stock market. That said, when it comes to passive income, this is far and away the best. Anyone who tells you real estate is passive...haha...is a liar. I cannot wait to talk about it next week.