I get asked investing questions A LOT. I don’t mind it. I love talking to people about investing. It’s also a topic most of us aren’t ever taught growing up. With that in mind, I thought it might be useful to give you all a quick synopsis of my personal investing philosophy. Not because it’s the “right” way or what I think everyone should do, but because this is the method that works for me and my family.

My hope is that’ll you’ll learn something from my strategy or you’ll simply realize investing doesn’t have to be difficult, it just needs to be consistent and disciplined. I’m a big believer in keeping it simple.

I’m in this for the long haul

I invest for the long-term. This means years and decades. I do not buy and sell based on news headlines. I do not buy and sell based on my emotions (good or bad). I invest based on my personal goals (retirement, putting kids through college, having enough to afford a certain lifestyle in my 40s, 50s, and beyond). To win at investing you must train your brain to think in terms of several years.

A few simple index funds

I divide my investment portfolio into two categories: serious money and fun money. 90% of the portfolio is serious money to fund my goals. I invest the serious money in low cost index funds. I mostly buy a few funds tracking the S&P 500 and international markets. That’s it. I picked the funds based on their reputation for closely tracking the index, their low expense ratios, and because they are well diversified. That’s it. To research index funds, I use a tool called “GOOGLE”. That’s it.

Prioritizing, consistency, and automation

My investing strategy starts with our tax-friendly retirement accounts. We contribute to and invest in those first. Our retirement accounts are 100% serious money. We invest them fully in index funds. Then we also have a joint taxable account. Most of our taxable account is also serious money, but I do allocate a portion of this account for our fun money. With the small amount of fun money, I like to research and choose stocks I think will do well over the long-term. These are riskier investments because I’m not a psychic. You don’t have to pick individual stocks to grow wealth. You can fully become wealthy through index fund investing. I pick individual stocks with a small portion of our money because I think it’s fun and I like to pretend I’m Warren Buffett’s protege. I only dabble in stock picking for fun.

Next, we contribute consistently and automate as much as possible. You’re probably already doing this with your 401(k). You can take it a step further and automate contributions to all of your savings and investing accounts. I think this is the way to go because it eliminates self-sabotage and keeps you working toward goals without having to think too much about it. That’s it. Truly.

Allocation

You’ve obviously heard the saying “don’t put all your eggs in one basket”. I generally follow that rule in my personal investing philosophy. Most of my invested money is in the stock market, but I’m a big believer in allocating some funds to cash for emergencies and short-term goals. I also have a small amount in bond index funds, not a lot though because I’m young (lol - okay, young-ish) and have a higher risk tolerance than most. So I’d say I’m somewhere in the ballpark of 90% equities (stock-based index funds and individual stocks), 10% cash and bonds. This is probably more aggressive than most. Feel free to tone it down to 80-20% or even 70-30%. If you’re retired already, then perhaps even 65-35% would be right for you. Everyone is a little different. I also don’t freak out if my allocation skews a bit. I generally rebalance it once a year. Since our portfolio is mostly index funds (baskets of many, many stocks), I feel I’m pretty well diversified. Eggs spread out. Chicken (me) happy.

Other investments

Outside of our traditional stock market portfolio held in our retirement accounts and taxable account, we have a few other alternative investments. First, I own part of an off-Broadway show. Has it made me any money yet? Absolutely not. Hopefully soon.

I also plan to one day purchase real estate as an investment (no, I do not consider my primary home an investment — this will be a rant for another day lol). My alternative investments are a small part of my overall portfolio. I prioritize investing in the stock market first and foremost.

Lastly, I believe we should always continue investing in ourselves. Our ability to increase our income is the largest determinant of wealth. How do we increase our income? By investing in our own continuing education, skill building, and coaching. Remember, you can only cut so many expenses, but the cap on increasing income is limitless (in theory).

Are you bored and looking for the tl;dr? Okay, here are my general rules of thumb for investing:

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