I Have a Lot of Money Invested and Never Have Any Idea What the Stock Market Is Doing. Here’s Why
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Over the years, I have put a lot of money into taxable brokerage accounts and retirement accounts to save for my future. I invest because doing so can help me to earn the kinds of returns I need to grow my wealth.
Despite the fact I have hundreds of thousands of dollars in the stock market, I have no idea what the market is doing at any given time — nor do I want to know. Here’s why that’s the case.
You don’t need to be a stock guru to invest successfully
I am not interested in checking on the performance of the market, despite the fact I have a lot of money invested, for two simple reasons. The first is that stocks just don’t really interest me too much and I don’t want to spend my time looking at how the market is performing. And I’ve been able to set up my investments so I don’t need to.
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I found one of the best brokerage firms for ETFs, then I used the screeners the broker offered to find some exchange-traded funds that tracked the performance of the stock market as a whole. ETFs are traded like stocks, but your money is pooled. Depending on the ETF, the money is often used to buy a small ownership stake in many companies that make up a financial index or that track the performance of specific industries or specific kinds of companies.
Since my money is spread around hundreds of the largest U.S. companies, my risk of big losses is minimal and my likely returns are very predictable. I don’t need to care what the market is doing on a day-to-day basis, because I’m confident that this is a sound investment strategy.
If you’re like me and not interested in the market, or even don’t understand it, you shouldn’t let that hold you back from investing. Buying an S&P 500 index fund that tracks a financial index with 500 of the largest U.S. companies is a pretty safe and easy investment and one likely to earn you 10% average annual returns over the long haul. It’s about as easy as it can be to put your money into this type of fund and start earning generous returns.
Checking the market too often can backfire
There’s also another reason why I don’t care what the stock market is doing. I’m invested for the long term and I don’t want to make decisions based on short-term trends. See, as the table below shows, while the S&P 500 earns 10% average returns over the long haul, it doesn’t earn 10% returns consistently every year. Some years, you could make a lot — and others, you could lose a lot.
Year | Annual Percentage Change |
---|---|
2023 | 13.98% |
2022 | (19.44%) |
2021 | 26.89% |
2020 | 16.26% |
2019 | 28.88% |
2018 | (6.24%) |
2017 | 19.42% |
2016 | 9.54% |
2015 | (0.73%) |
2014 | 11.39% |
2013 | 29.60% |
Data source: Macrotrends.
Since I don’t invest any money I’ll need in the coming five years, I don’t want to be tempted to take action if I think the market is crashing or believe a recovery is inevitable. I know it’s too hard to time the market and I’ll increase my chance of losing money if I’m buying and selling too often.
Since I don’t pay attention to the market, I don’t have to stress about whether I’m having a bad few months or even a bad year. I can just leave my money alone to do its thing over time and I’m likely to earn the 10% average annual returns I’m expecting.
If you are confident in your investment strategy and you’ve chosen to invest in ETFs for the long term, you also don’t need to stress about what your stocks are doing on a day-to-day basis — or even a month-to-month or year-to-year basis. Just invest regularly and let your money work hard for you to build wealth over time while you focus on other things in your life that may be a whole lot more fun than watching the financial news.
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