In my effort to get back into it, I've got a few guest posts. Thanks to Jeremy for providing this on investing. Good luck with your own efforts.
Investment isn’t something that most people participate in. If this doesn’t make sense to you, remember when you were a child and investment news would come on the radio. How did talk about the S&P’s behavior or point values of indices make you feel? You probably felt like you would have felt at graduate level physics lecture, that what was being discussed was so complex that it was likely forever beyond your level of comprehension. As an adult you may have realized that not all investment pathways are actually that complicated, but many people have not realized this.
Fear and ignorance of investment keep most people uninvested. Even beyond this, there are certain realities to public perceptions about various market complexities. Good investment isn’t for slouches. Lots of people feel they simply don’t have what it takes to invest with real skill. They feel that if they were to invest, they’d be like monkeys with handguns. Much of this has to do with the differences between the last generation of investment brokerage and the current generation.
For the everyman, let’s say that Vanguard represents the last generation. It was (an is) a place where investors new and old can buy shares in companies at the lowest possible price. In some ways, you could compare Vanguard’s model to open source operating systems like Linix, say. Linix users are known for their knowledge and expertise, and also their commitment to value. Vanguard users had to learn the ropes on their own, but once they did, they were able to put together investment portfolios that were lean and efficient.
The thing is, most people don’t work this way. They don’t want to take the time to learn the finer points of investment theory. They’re busy and they want results that work. That’s why so-called Robo-advisors like Betterment have emerged in recent years. Betterment puts together truly efficient portfolios based on investment theory that individuals might apply to their individual portfolio purchases with Vanguard (if they were to do the learning necessary to make those decisions).
Similarly, Personal Capital offers management services to higher level investors, according to a different theory of investment capital. Vanguard is anti-management in many ways. Their index-based ETFs are beholden to the growing power of economies as a whole, not the insights (or lack thereof) of individual investment experts. Many times, Vangaurd’s index funds have superior returns to individual investment managers’, with far less in the way of annual cost. But there are exceptions.
In either case, there is a robo-advisor who can get you started with investing, without requiring you to become an expert in small scale investment theory. This is not to say that you shouldn’t learn. Another great aspect of these services is that they do so well at facilitating learning. Both examples (among the many now available on the market) have amazing graphical tools that show you what is happening with your money. This is much easier to comprehend than the same information contained in pure text. Whatever you do, now is the time to start investing. There is no excuse not to.