📈 Investing Basics
Learn the basics of building wealth via investing using a few simple principles.
- Buy and Hold - Buy investments knowing you're going to hold them for years or decades.
- Diversify - Don't try and cherry pick individual stocks. Reduce your risk via a fund or ETF to buy thousands of companies at once.
- Invest regularly - Put money into your investments every month, even if it's a small amount. Over time contributions compound to be worth significantly more.
- Minimise costs and fees - Use ETFs and platforms that don't incur large fees. Even small fees compound over time to eat into your pot.
- Accept you can't beat the market - Don't attempt to predict how the maket behaves, matching its average performance leads to significant gains over time.
- Be patient - Stick to an investment plan and avoid emotional reactions to market fluctuations.
Long-term Growth: Buy and Hold Strategy
Growth of $10,000 invested over 30 years (1994-2024)
Patient investors who stay in the market despite volatility achieve significantly higher returns than those keeping money in savings accounts.
Diversification Reduces Risk
Risk comparison: Individual stock vs. diversified index fund
Diversified portfolios have lower volatility while maintaining competitive long-term returns.
Dollar Cost Averaging: Invest Regularly
Growth of $500 monthly investments over 20 years
Regular monthly investments reduce the impact of market volatility and eliminate the stress of trying to time the perfect entry point.
The Power of Low Costs
Final portfolio value after 30 years with $10,000 initial + $500/month contributions
A 1% difference in fees can cost you over $100,000 in a typical retirement account over 30 years.
Time in Market Beats Timing the Market
Comparison of investment strategies over 20 years
Missing just the 10 best days in the market over 20 years can cut your returns in half.
Most Active Funds Underperform
Percentage of actively managed funds that underperform over long periods of time
Over 90% of active funds fail to beat their benchmark index over 15+ years.
Markets Recover: Stay Patient
S&P 500 through major downturns and recoveries
Every major market downturn in history has been followed by recovery and new highs for patient investors.
Created by @iwootten. Not financial advice.