I was reading several articles on a great site called Wallet Hacks today, and found this question and answer particularly interesting.
Q. If someone wants to invest more but feels like buying an index fund is boring, what would you suggest they do? (or not?)
This is what I would do: every period – divide your investment into “serious fund” and “fun fund”. Invest the “serious fund” in index fund – set the weights and forget it for quite some time. Index funds are not boring – allow you live a rich life if you are smart!
Take the “fun fund” money to any of the investment platforms that allow you to analyze fundamentals, technical trends, set filters… Invest into over/undervalued stocks where you have a reasonable trust they are over/undervalued for a reason. Slowly educate yourself along the way. Maybe take a valuation class… You will not always win, and becoming knowledgeable takes time – but the potential for gain is enormous (and ultimately will help you manage even your “serious fund” better)Wallet Hacks: How To Invest Your First $1,000
This is exactly what I am doing.
As I have mentioned in some of my previous posts, I am investing heavily in my 401(k) for the long-term, but I wanted to take a more proactive and aggressive approach with short term investing in individual stocks.
Now to me it’s all “serious”, but I get the idea being shared in this article.
The larger point is to be sound in your strategy. Don’t put all of your money into the next stock someone says is going “to the moon” like we saw with AMC and Gamestop earlier this year.
The odds of not royally screwing up are much more in your favor if you take a balanced approach with well-thought-out calculated risks.