Do you worry about your financial future? 

Do you feel overwhelmed by the complexity and unpredictability of the stock market? 

Do you wish you had a simple and effective strategy to grow your wealth and achieve your goals?

Let’s talk about that.

Time tested, or washed up?

I’ve been rereading learn A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing. This book is a classic.

Perched on the shelf of every trader and commodities guy on the street. A Random Walk is a go to gift for the eager college kid off to business school.

But the ideas are old. I wanted to test the durability of Burton G. Malkiel financial advice in 2024.

Funds today build algorithms and employ AI to make hundreds of thousands of trades a day.

Brokerages fight over milliseconds like sprinters trying to shed a decimal off their personal bestt.

Can this book still show you how to take advantage of the random nature of the market?

This book is a Blue Print to financial freedom and peace of mind.

Burton breaks down the basics of stock valuation, portfolio theory, market efficiency, and newer edition adds a bit on behavioral finance. But A Random Walk Down Wall Street isn’t just a trading guide.  

So what’s the promise?

You can achieve your financial dreams.

You also hear about the common pitfalls and myths that plague many investors.

But how can we avoid them in today’s fast paced market?

Don’t let your fears and anxieties hold you back.

Burton based his knowledge on decades of rigorous research and practical experience.

But I am going to sum it all up for you in ten minutes and 3 key take aways.

1,626 words and 9 minutes read time to be exact.

The first big takeaway is to invest in low-cost, broad-based index funds. The book’s central message is that the stock market is efficient but unpredictable.

So what does that mean for you?

It means most active investors and fund managers cannot consistently beat the market average. It makes more sense, for you and I, to invest in low-cost, broad-based index funds that track the whole market’s performance.

This is a way to diversify your risk.

Companies like Black Rock and Vanguard both offer this type of product. You can invest and buy into their Exchange Traded Funds (ETFs) on moomoo or webull.

The best feature of these indexes is that you can save on fees, taxes, and trading costs, and enjoy the long-term growth of the market. 

Even a 3 percent fee is a killer over a couple decades.

Fees are affected by compounding. A small percentage multiplies over time. These fees eat away at your hard earned savings. 

When I started investing, I was tempted by the flashy ads and promises of high returns from actively managed funds. I bought NFTs, and options and meme stocks.

I thought I could time my picks. And yes, I chose a few winners that beat the market.

But I lost money trying to short sell Tesla. I also bought and sold and bought and sold Snapchat stock three different times. Not wise.

What I didn’t realize was that I was getting taxed by trader fees every single time I made a buy or sell.

Worse, I missed out on dividends and compounding.

I should have parked my money and forgot about it. Caught up on sleep.

But I was a slow learner.

It took me years, before I realized that you can’t win a fight with Wall Street.

I was speculating. You don’t want to gamble away your future. 

After reading a ton, and learning from blogs like Mr.Money Moustache, I decided to switch to index fund investing.

I was amazed by how simple and effective ETFs made investing. I just chose a few funds that matched my risk profile and goals. Then I let the index funds do their work.

Now I don’t have to worry about timing the market.

I don’t pick stocks.

I don’t even follow ups and downs in the news.

I check my portfolio once or twice a year to rebalance the risk.

But I can teach you more about that later.

Tip:

If you want to invest in index funds, you can use a low-cost online broker. It’s easy to create and manage your they’ll automatically manage your portfolio using an algorithm. 

Finance is quickly being disrupted by new tech and AI.

Robo advisors don’t necessarily give you an edge on the market. But the low fees save you money over the long term.

Another option is a target-date fund or a lifecycle fund. These will decide where your money goes based on your age and retirement date.

Start saving and investing early and regularly. Like now.

My 2nd big take away?

The book emphasizes the power of compounding. Your money grows exponentially over time as you earn interest on interest.

The earlier you start saving and investing, the more time you have for your money to compound and grow. 

Burton says to set up a savings plan that automatically deducts a portion of your income and invests it in index funds. This is a kind of nudge. Behavioral economics at work.

But the real benefit of this strategy is dollar-cost averaging your buys over decades.

What’s dollar cost averaging?

It’s simple. You invest a fixed amount at regular time intervals regardless of the price swings. This eliminates the noise of the markets day to day ups and downs. 

There is also a huge psychological benefit to dollar cost averaging.

It takes the worry and angst out of the purchase, automates the decision and timing, and erases buyer’s remorse.

You no longer have to drain your brain thinking about price fluctuations. 

When I was in my twenties, I didn’t think much about saving or investing. I spent most of my income on rent, food, entertainment and travel.

But my balances were totally out of whack.

Even though my rent and food was basically the same every month. I had fixed costs of about $1500.

But I didn’t save. Even when I managed to generate more income, my accounts hung around at 0.

I had multiple income streams. I worked at my college. I worked nights in a restaurant. I had a newspaper gig freelance writing and photographing.

But any extra income I generated went straight into the trash bin of disposable income. I was addicted to big, impulsive pay day purchases.

I viewed the extra cash as a bonus. So I immediately plunked into my belly or on some vanity crap.

When I landed in my  thirties, it hit me that I had missed out on a lot of opportunities to grow my wealth.

A friend of mine who also worked at the restaurant had saved fifty thousand dollars in cash. Tax free. She invited me over one day and showed me the huge pile of money under her mattress.

She asked me for financial advice. I told her to buy a condo.

Luckily for both of us, it helped make her a millionaire.

But I knew I had missed out. Opportunity costs had finally caught up with me.

I had probably blow a down payment on my house by drinking and partying a couple times a week throughout my twenties.

So I decided to start saving 10% of my income every month and invest it in index funds. I was surprised by how quickly my savings accumulated.

This one choice made a huge difference on the way to early retirement.

Tip: Download a free Notion template. A financial tracker will help you track your income and expenses, and help you set a budget.

You can also use a retirement calculator to estimate how much you need to save and invest for your future goals.

Avoid emotional and irrational decisions at all costs

Don’t spend on your vanity and ego. It’s too easy.

You’re trying to validate all your hard work and your insecurities about money. But one big purchase on payday won’t fix the past. 

Burton warns you and I against these and other pitfalls of behavioral economics.

What are behavioral economics?

Our human psychology and emotional default settings often interfere with the rational decision-making in investing.

Investors are prone to overconfidence, confirmation bias, loss aversion, herd mentality, and other cognitive errors in thinking.

These mental blocks lead to poor financial decisions. Don’t lose your money.

Burton advises you and I to avoid chasing fads, bubbles, and hot tips. Stick to your long-term plan based on sound principles and evidence.

Trends and one time paydays don’t build wealth.

Simple habits over time lead to a rich life

 

When I was first getting started investing in actively managed funds, I often made emotional and irrational decisions.

I bought high when everyone was optimistic about brand name stocks, like Tesla and Disney.

I sold low when everyone was pessimistic and stressed out by the big crash in 2008.

I followed the advice of pundits and gurus on television who claimed to have secret insights or formulas to time and beat the market.

And I ignored the basic facts and data that contradicted my own irrational beliefs.

The worst part wasn’t just losing thousands of dollars of hard earned income.

I lost confidence in myself and let my fear affect my financial management.

To avoid the emotional and irrational mistakes of my past, use a checklist or a journal to help you evaluate your investment decisions objectively and rationally.

Write out your thought process. Weigh pros and cons.

You can also use a mentor or a coach. They will help you stay disciplined and accountable to your plan.

🌊 My mission: I will teach you how to do LESS.
I believe everyone can learn to earn, save, and sleep well with financial freedom.

Thanks for reading.

I write copy & content. I teach courses. I show up everyday.

But I do LESS. Learn. Earn. Save. Sleep.