2014
I’m no expert on investing. However, I know enough to know that if you must save for your own retirement via a 401k or IRA, you won’t reach your goal by investing only in bonds or fixed income funds, something many workers find attractive because of perceived safety. You also won’t meet your goal trying to time the market, checking your funds every days and constantly making changes in your investments following the market.
On the other hand, there is one person who is an expert on investing, if you are struggling with your retirement savings, consider this advice from Warren Buffett’s letter to shareholders.
Most investors, of course, have not made the study of business prospects a priority in their lives. If wise, they will conclude that they do not know enough about specific businesses to predict their future earning power.
I have good news for these nonprofessionals: The typical investor doesn’t need this skill. In aggregate, American business has done wonderfully over time and will continue to do so (though, most assuredly, in unpredictable fits and starts). In the 20th century, the Dow Jones industrial index advanced from 66 to 11,497, paying a rising stream of dividends to boot.
The 21st century will witness further gains, almost certain to be substantial. The goal of the nonprofessional should not be to pick winners — neither he nor his “helpers” can do that — but should rather be to own a cross section of businesses that in aggregate are bound to do well. A low-cost S&P 500 index fund will achieve this goal.
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