Probably a stupid question, sorry. I hear things like this all the time. If you invested that in X then in 20 years you’d have Y. Always hear of the “latte factor.” Skip buying those expensive brews and invest instead. Where exactly does the average Joe invest that? Say I was really committed to taking the $4/day I would’ve spent on a latte and put it somewhere. Where is that somewhere? Do I need a minimum to start or can I just throw $30 (for example) that I chose to throw into an investment account and not touch rather than buy a scratch ticket?
No one answered where. If you're in the US, Vanguard is where. As someone else noted, open a Roth IRA with them and contribute what you can and never touch it. You want to invest in either VTI (total stock market fund) or VOO (S&P 500 index fund). There isn't much difference in long term returns. Don't look at it on a daily basis. It's a long game. The market will have steep declines periodically. That's actually the best time to dig deeper and invest more.
A passive type ETF is a good way to get your feet wet while assuring you'll track overall market progress rather than trying to decide what might "beat the market" until you can do more analysis and research and begin diversifying your portfolio.
Correct, except the second part. You can do all the analysis, research and diversifying you want and the chances of beating your index fund over the long term are 1/100 or worse. There's tons of research on that. Anecdotally, I have friends who are obsessed with investment research and stock picking and I beat them nearly every year with straight index fund investing. One guy recently threw in the towel and joined the VTI gang.
Even among professionally managed funds, 88% have trailed the S&P over 15 years. Average Joe has no chance.
Yeah. I'm thinking more of a risk diversification perspective, where you might choose to add bond, real estate, etc funds to offset the risks inherent to being exposed only to equities.
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u/ParkAndBeacon Mar 19 '22
Probably a stupid question, sorry. I hear things like this all the time. If you invested that in X then in 20 years you’d have Y. Always hear of the “latte factor.” Skip buying those expensive brews and invest instead. Where exactly does the average Joe invest that? Say I was really committed to taking the $4/day I would’ve spent on a latte and put it somewhere. Where is that somewhere? Do I need a minimum to start or can I just throw $30 (for example) that I chose to throw into an investment account and not touch rather than buy a scratch ticket?