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A note to my past self about stock market investing

Below is not investing / financial advice and may not be accurate.

  • Read JL Collin’s book on a Simple Path To Wealth. It decomplexes investing.
  • Max out employee 401k contributions. It’s free money.
  • Do not try and beat the market. Stick with index tracking securities (VT,VTI, VXUS,VOO,BND,BNDX).
  • Put money into the market every month. Setup your broker to invest automatically to make it easy.
  • Beware of fees (commission, account maintenance, expense ratios, etc.).
  • Holding ETFs generally trigger less taxable events, compared to mutual funds. Some mutual funds appear to be setup to avoid these taxes, such as VTSAX. (*Note in 2021, Vanguard had a high capital gains distributions for target date funds. People who had these funds in taxable brokerage accounts got hit had to pay significant taxes. https://www.whitecoatinvestor.com/vanguard-target-retirement-distribution-disaster/)
  • It possible to own a fractional share of ETFs and Mutual Funds. Mutual funds allow you to put in any dollar amount, after having the minimum necessary to join the fund. This is useful if you want to contribute $X a month. You can own a “fractional share” of a mutual fund. Some brokers allow buying fractional shares of stocks/ETFs. This was one benefit of mutual funds before fractional shares became a thing.
  • Look for a broker that allows for automatic dividend reinvesting.
  • The stock market WILL go down and WILL go up. Do not panic sell when the market is down! Avoid emotional decisions.
  • It’s better to over save than under save.
  • Vanguard and Charles Schwab look like good brokers. Vanguard doesn’t ofter fractional shares at this time (outside of dividend reinvesting).
  • Watch out for new brokers. Their services have gone offline in times of high market volatility, due to badly coded software.
  • Just because an account is SIPC insured, doesn’t mean it will be easy to get your money back from a broker if it goes bankrupt. The SIPC has limited funds, and may not cover everyones amounts anyways.

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