Are you ready to invest better? The Motley Fool is raising awareness with Invest Better Day.
I firmly believe that investing does not have to be complex. Indeed, with all of the tools available to us today, it’s possible for almost anyone to start investing. For years, The Motley Fool has been one of the voices advocating better investing. And today, September 25, The Motley Fool is launching Invest Better Day, along with a new Invest Better product.
I spoke with Jim Mueller, Motley Fool Stock Advisor, about today, and what ordinary people can do to improve their investing.
How Can You Invest Better?
“The purpose of our company is to help the world invest better,” Mueller told me. “The idea of Invest Better Day fits in with that.” He also pointed out that there is a great deal of confusion out there, particularly with regard to the types of products that Wall Street types like to push. “Many of the possibilities out there, particularly those pushed by Wall Street, are not the best for many ordinary investors.”
Mueller pointed to managed mutual funds as one of the biggest offenders. “Managed mutual funds tend to underperform the market,” he said. “Many of the managers go with the herd. They don’t want to stand out. Plus, fees are higher, and transactions are more common. These transaction costs are then passed on to the customer.” He also said that many — but not all — of the people running the money on Wall Street don’t have interests that align with regular investors.
Because I am familiar with The Motley Fool, it was no surprise when Mueller said that low cost index funds are the way to go. I tend to agree. A low cost fund can provide you with a simple way to begin investing, and it doesn’t take a lot of time or money to get started. “A lot of better investing is a focus on the long term,” Mueller said. “Too much of the time, financial media and investors are too focused on the short term. They look at next quarter, two quarters from now, or at most 12 months away. Those who actively trade their accounts tend to underperform those who wait.”
Instead of actively trading, Mueller suggests that investors look to start with low cost funds, and then begin looking to other investments where they can find value as they learn more about investing. “Investing is not supposed to be exciting,” he continued. “It should be more like watching paint drying than skiing downhill. Investing is very boring when done for the long term, but it’s one of the best ways to build enough wealth to retire on.”
What Should You Do Next?
The Motley Fool would love it if you visited InvestBetterDay.com to watch streaming videos and sign up for the Invest Better product, which starts out with some educational information and offers to help you select your first three “Foolish stocks.”
Even if you don’t head over to the Motley Fool, Mueller still has some advice for would-be investors. “To quote Nike, ‘Just do it.’ Yes, it’s scary, and yes, you can lose money. But moving carefully and slowly, starting up with a low index fund, you can be successful. Next, start looking at companies, start noticing what’s going on around you. Learn how companies make money, and how you can invest and make money alongside them.”