What you invest in is of secondary importance; first, you just need to invest

This might be hard to accept, and it’ll turn some readers off, but hear us out.

In general, on the whole, it matters less what you actually invest in, and more that you invest at all. Personal investors, like us and like you, sometimes put a lot of effort into thinking about which assets to invest in at a given time. But we think a lot of this is wasted effort at best, and even worse it could actually be damaging to your wealth-building goals.

Professional active investment teams with hundreds of analysts, decades of experience and a lot of resources struggle to consistently add value by picking individual assets. They often underperform their respective benchmarks. The risk that an investor destroys value relative to a passive benchmark is called ‘active risk’. From a personal investment perspective, trying to pick your own individual stocks, bonds, etc. amid the huge universe of available investments means taking on big active risk.

We would argue that more important than what you invest in, is investing at all. Investing – in its simplest, passive form – takes very little effort indeed. Simply getting into the habit of regularly putting away some of your income into your investment account, using passive index trackers, is the most powerful way to build wealth. Then, if you wan to add some excitement around the edges, we’re certainly not against doing some active research and picking individual assets. The approach of maintaining a no-nonsense passive core portfolio and then layering on a few active satellites is known as ‘core-satellite’ investing. We have also called it ‘undiversifying’; you start with a no-nonsense, broadly diversified portfolio, and then add on a few special guests that provide you with the excitement.

So, as silly and counter-intuitive as it might sound, stop worrying too much about trying to find the best stock, bond or other asset, and start building a habit of putting money to work in the financial markets. The latter is what reliably builds wealth, which we think is probably most of your objectives.