Is Investing Really That Hard?
It's as hard as you want to make it
There is a myth out there that I feel like I need to debunk. It’s the one that says investing is scary, complicated, stressful and intimidating. So because of that, sadly many people don’t ever invest at all.
The truth is, investing can be as hard as you want to make it, or as easy as you want to make it.
Now if you’re going to try and pick individual stocks, investing becomes hard. If you’re going to try and find the next Apple, Amazon or Nvidia, expect it to be very challenging.
That kind of investing is hard. It takes time, research, skill, and luck. Even then, most people who try it fail to beat the market. Most professionals can’t even do it.
But you don’t have to pick individual stocks. You can just buy the market.
An S&P 500 index fund lets you own a slice of the 500 of the biggest companies in the United States. No effort required.
You don’t have to know which company is going to beat earnings this quarter or which CEO just got fired. You don’t even need to check the news.
You can just continually buy the market every month regardless what’s happening in the world and go live your life.
When I think of the S&P 500 index, I think of these two lines from Warren Buffet.
A low-cost S&P 500 index fund is the best investment most people can make.
My advice to the trustee couldn't be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund.
Why don’t more people listen to this advice from the world’s greatest investor?
The problem is most just choose not to listen to this simple advice. They think it has to be harder. But really it isn’t.
Of all the success I’ve had picking stocks through the years, the smartest investing move I’ve ever made is listening to that advice.
When I was teenager, I started investing in a S&P 500 index fund and have continue to add every single month since.
The historic average return for the S&P 500 from 1926 through 2024 is about 10% per year. That includes price appreciation and dividends.
Since 1926, the S&P 500 has had positive returns in about 73% of calendar years. That means roughly 3 out of every 4 years, the market finishes higher than it started.
Sure there is volatility along the way. Crashes, bear markets and pullbacks all occur. When it occurs once every 4 years or 27% of the time, it isn’t fun.
But you’ll look back on each of those times as a buying opportunity. You’ll say, I should have bought back then, or I should have bought more.
Just look at the volatility that we have experienced so far in 2025. A 19% drop was then followed by a 22% rally from the low on April 7th to today.
It’s ironic to believe that on December 31st the S&P 500 finished 2024 at 5,881. At the close today after all that has happened in 2025, the S&P 500 is at 5,881.
If we zoom out over the past 13 years, you’ll notice that this is yet another speed bump along the stock market road.
If we zoom out even farther you can see all the major selloffs throughout history dating back to 1970. They all were just small blips along the way.
How about even farther back. Here is the Dow going back to 1900. Think of all that has happened over the past 125 years. Over the long term for the stock market, it hasn’t mattered. The grind higher continues.
I think you can now see how investing really isn’t that hard. Focus on the long term and invest for the long term. Investing really is as hard or easy as you want to make it.
Invest accordingly.
The Coffee Table ☕
This was a great piece from Conor Mac called "Not Financial Advice" Handling requests for advice from friends and family. Like Conor, I’ve always said giving financial or investing advice to friends or family is always a lose-lose scenario. It does a great job on showing how to deal with friends and family who ask for financial advice. And if you’re in the business, they usually want it for free. So you can relate to this article.
I loved this visual that Dividend Growth Investor tweeted out. How many times have you thought of this after all the hard work you did for something, only for people to say, you got lucky. Next time they do, show them this.
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