We live in a tense period on the "investment" side, it gets on your nerves, mine included. I will not pretend that I have fun looking at my investment statements.
Despite the sight of my wallet that is backing up, I'm relieved not to have to deal with it! If I held the reins these days, I would be wondering every other morning about the need for an intervention. And after giving in to the temptation of a maneuver, I would still wonder if it was appropriate.
In investing, it is better to maintain a certain distance with your portfolio.
If it's not with the help of a trusted manager, I see only one solution: to put yourself on automatic pilot!
Don't ask yourself any more questions
Readers of this column are already familiar with my favorable bias for low-cost passive management, the most accessible investment approach for the average saver who does not have access to the best services of a manager. The fees are minimal, and no need for large sums of money to invest. It requires little time and requires no knowledge of the markets, or very little.
Just buy index exchange-traded funds (ETFs). As they replicate the market, no analysis is required. They can therefore be acquired with eyes closed, an essential condition for the "automatic" approach.
Buy at regular intervals
The central element of this philosophy is based on an investment calendar which must never be deviated from, regardless of market conditions. It can be every two weeks, every month, every quarter, we acquire new fund units while keeping the rhythm with a pre-established amount.
We must not think or trust our intuition, we must not listen to our emotions! We imitate the regularity and apathy of a clock.
Bear markets showcase the virtues of this method. The systematic purchase of shares of index funds outperforms the others during descents. It is the investments made today that, in the long term, will prove to be the most profitable. They will compensate for purchases made at full price (last year) and reduce the average cost of its investments.
As automatic as possible
Ideally, this should all happen on its own to keep the "human factor" to a minimum. It's not always easy with ETFs, it all depends on the trading platform used and the type of portfolio chosen.
If he has concocted his own portfolio from a few index funds, the investor can automate part of the process (from his bank account to his investment account), but he will often have to intervene to conclude his transactions. The fewer the funds, the simpler the task. This is why asset allocation ETFs lend themselves well to this investment approach, since a single fund acts as a portfolio.
It is still on the side of mutual funds that you can most easily program regular investments. But the management fees for these products are much higher. For me, these costs are a barrier, unless they provide access to a good advisor. This is rarely the case when one holds few assets. Better to look for the ETF trading platform that offers the highest level of automation. And some of the mitten work, if necessary. Imperturbably.
AUTOMATE YOUR FINANCIAL LIFE
A friend of mine (hi André!) has become a master at automating his finances. When his pay is deposited in his account, there is no trace of it the next day. The money was distributed among various purposes and functions, without any intervention on his part. Here are the operations to plan:
