fredag 1 januari 2016

Index investing, boring but effective and efficient

There will always be a number of people who claim success in picking stocks successfully. One of these are Warren Buffet, but apart from that I am not aware of too many others who can successfully do this over time - not even with my ego!

As my name implies (EGOn) I thought I was a real stock picking guru, but when I one day sat down and critically analyzed all the effort going into this stock picking, buying and selling I realized that I would have been batter off putting my money into a fund which simply followed index (in my case the index of 30 largest companies on Stockholm exchange, i.e. OMXS30). It is possible to track this index using very low cost (free!) funds from two at least providers in Sweden, Avanza and Nordnet.

Admittedly this is a bit boring compared to the thrill of picking stocks and following their ups and downs, getting a dividend etc. I have actually come to the conclusion that investing should actually be boring - as opposed to speculation which can be very exciting (but disastrous).

What I do now if that I have a base portfolio in which I purchase different (low cost) funds on a monthly basis. My idea is to keep doing this as long as I have a paid job and re-balance once per year. Any additional money is put into a separate portfolio in which I have carefully picked a few stocks into which I intend to keep "forever" unless I really need the money somewhere else.

How do you invest?

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