When I was growing up, one of the worst things that could be said about you was that you were a quitter. But being a quitter has gotten a bad rap. I'm here to speak up for quitters everywhere, letting you know that quitting can be a good thing!
After all, it's good to quit doing bad things, right? It's only bad when you quit doing good things. That seems clear. Where it gets murky is discerning which things are good and which are bad. This can even be quite problematic in the area of investing. Fortunately, I'm here to save you from hopeless confusion.
Here are a half-dozen things that are definitely in the "bad" camp.
If you haven't quit doing them already, you can immediately do the following:
Quit standing on the sidelines. Compound interest is a powerful engine of growth, and it runs on the fuel of time. You want all the time on your side you can possibly get. Of course, you also want good returns. Based on 100-plus years of history, we know the best returns come from owning well-managed, growing businesses.
For the average person who wants to grow his or her surplus capital at a rate that exceeds inflation, stocks are still the best option, despite occasional bear markets. Even if you think you don't know enough about investing, it's time to become a part-owner of corporate America.
Quit waiting for a low-risk entry point. It's doubtful you're going to recognize a "low-risk" entry point when one arrives because capital risk tends to be low when emotional risk is high. That is, when the economic news is worrisome, stock prices are lower. Buying at lower prices reduces your capital risk.
Actually, every day offers a low-risk entry if you're invested in a diversified stock fund portfolio and you're committed to at least a five-year holding period. The likelihood, based on long-term stock-performance trends, is that 89 percent of the time you'll break even (at worst) and make up to 20 percent per year (at best).
Quit looking for a reason to sell. Ignore the gloom-and-doom scenarios. Even in the best of times, there always are pundits with scary things to say. The biggest risk to your future financial security isn't a bear market. It's inflation. Inflation eats away the buying power of your dollar.
The way to beat inflation is to make a significant long-term commitment to common stocks. Stock prices have gone up in seven of every 10 years since 1926. When you pull money out of your stock funds in anticipation of a bear market, you're going against a very powerful long-term uptrend.
Quit making things needlessly complicated. You don't need to read financial magazines, economic forecasts, technical analysis, or annual reports. Many of our Sound Mind Investing members simply follow Just the Basics, a straightforward, easy-to-use strategy. Others use Fund Upgrading, a only slightly more advanced strategy that has a solid track record over the years.
Just pick one of these basic strategies and follow the road map we give you. There's always more you can do, but you don't have to do more to get inflation-beating long-term results.
Quit obsessing over your short-term results. Frankly, you'd be better off if you don't even know what your short-term results are! Tracking your holdings online so you can get a daily or weekly update on your portfolio's value is a terrible idea. It breeds impatience, leads to temporary emotional highs and lows, and stimulates a desire to trade more than you should. In short, it makes it much harder to stick with your long-term plan.
Look at it this way. If you received constant feedback on your home — what it was worth, how its value changes monthly in relation to national trends, and detailed reports on how it compares to your neighbors' houses in style, comfort, and amenities — you would eventually become disenchanted with your home.
The reason you don't need to know these things is that you consider your home to be a long-term investment. You should view your portfolio with the same healthy perspective.
In short, then, stop procrastinating, get in the game, stay in the game, keep things simple, and think long-term.
Quit worrying. After all "God has not given us a spirit of fear, but of power and ... a sound mind" (2 Timothy 1:7, NKJV). So, honor God, apply His principles, trust His sufficiency, give generously, and rest in His peace.
Austin Pryor is the founder of Sound Mind Investing, America's best-selling investment newsletter written from a biblical perspective. SMI helps people manage money well so they can truly live well and give generously.
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