By: Tim Butt
“Simplicity is the ultimate sophistication.” – Leonardo de Vinci
All too often, investors are convinced by their financial advisor or investment firm that an investment strategy must be complex to provide any opportunity to achieve financial success.
I believed the same was true until I realized that by following the advice of ‘professional’ financial advisors for years, the value of my portfolio continued to go down while the financial services industry generated enormous profits and paid huge bonuses to those working in it…including my advisors. That made no sense to me, so I set out in 2003 to understand how this could be. What I learned was that investment complexity worked to the direct benefit of the industry…not the investor. That was cause for immediate change.
Having learned that lesson the hard way, I sought a contrarian investment strategy completely outside the financial services industry that leveraged simplicity. I sought advice and truths from those individuals and companies whose purpose and passion was to serve the best interest of investors. I didn’t have to look long or hard before I was convinced that an investment strategy based on simplicity was far superior. This new strategy was a winner’s game for investors and a game simple enough for anybody to play regardless of their investment knowledge, available time, or level of wealth. The most important thing I learned about investment simplicity over the past eight years is that it prevails consistently over the long-term. So, with that being said…
Do This – Seek truth, simplicity, and self-empowerment when it comes to your investment strategy
Not That – Accept carte-blanche what your financial advisor recommends regardless if they’re fee-only, fee-based, commissioned, or flat-fee
(If you would like more information about any of this, read yesterday’s Mad-as-Hell blog as it might change your mind regarding whether or not you think your advisor truly has your best interest at heart.)
Tomorrow, as we end this week’s blog series focused on ‘investment simplicity’, we’ll list the simple characteristics defining various investment strategies including, buy-and-hold, market-timing, and aggressive growth.