I have been planning my retirement since I was in high school. Now that I am in my 40s I can safely say that I am glad I have learned as much as I did and have stuck to a few basic principles that I want to share with others.
You may of heard the basic rule of thumb when it comes to investing your 401k (or whatever type of retirement account you have) is to put it into a low cost index fund. Who said that? Why Warren Buffet, one of the greatest investors of all time. Why did he say it? Because investing in an index fund, specifically the SP500 has consistently over the long term beat most financial advisors and other funds. And he is correct. It’s the easiest/best way for ‘most’ investors to invest.
From the time it was started, the SP500 has gained an average of 10% per year (just under 8% if you start counting when it included a full 500 companies). Sure some years its up and some years its down but on average that is the return.
Why is it easy? Because you literally just put your money into a fund that tracks the SP500. And all of the major brokerages where your companies 401k plan is will have one. Yep they have 50 other funds but just choose that one!
Why is it the best? Because the other funds don’t beat it in the long run when comparing it over long durations (ie 15+ years). Neither do financial advisors. In fact, most financial advisors want you to invest in high cost funds that help them make money (not you). This is why if you are choosing a financial advisor choose one that you pay per visit, not one that you pay a % to unless they are beating the SP500 by at least that %.
So my advice and the advice of many others, from bogleheads, to the FIRE community, and Warren Buffet – Passively investing in an SP500 index fund is your best bet. See my video on the topic: