It's easy to feel overwhelmed by the 24/7 financial news cycle. Between the fear of missing out and the pressure to pick the "next big thing," you might feel like you're already falling behind. Take a deep breath, because successful investing isn't about outsmarting the world. It's about understanding your own values and sticking to a process that supports them.
Your roadmap is the foundation
Before you buy a single stock or bond, you need a financial roadmap. Think of your investments simply as tools to help you reach your most important milestones, whether that's a worry-free retirement, a good education for your children, or supporting a charity you love.
The best way to build this foundation is by answering four specific questions.
- What is the goal you want to achieve?
- When do you want to achieve it?
- How much money do you need to have at that time?
- What level of risk are you willing to accept?
Once you have those answers, you can choose an investment strategy that makes sense for you. Before you commit any capital, always ask yourself what this money will allow you to do in the future. This clarity helps you stay the course when things get choppy.
Participate in the market instead of fighting it
The global economy is a powerful engine for wealth creation. Your goal should be to participate in that growth through US and international stocks and bonds, rather than trying to beat the market by picking individual winners.
We call this "investing broadly" or diversifying. It allows you to capture the growth of the entire market while avoiding the concentrated risks of betting on a single company.
The data on picking winners
You might wonder if it's better to hire an expert to pick stocks for you. The data suggests otherwise. According to the 2024 SPIVA Scorecard by S&P Dow Jones Indices, 92% of US professional money managers failed to achieve returns that were greater than the index they were trying to beat.
These professionals charge high fees to try and pick winners, yet the vast majority underperform a simple index. If they can't beat the market, we don't believe it's worth paying them 1% to 2% in fees. A winning strategy is one that lets the market work for you.
Why lower fees equal more freedom
It's not just about how much you make. It's about how much you keep. Investment fees act like erosion. You might not notice them day-to-day, but over 10 or 20 years, they can wash away a significant portion of your wealth.
Let's look at the math on a $500,000 portfolio to see the impact.
The high cost of 1%
Imagine you invest that money with a total cost of 1%. If the market rises by 8% per year, you would pay approximately $83,000 in fees over 10 years. Over 20 years, that number balloons to over $250,000 in lost money.
The advantage of low costs
Now, let's say you invest that same $500,000 in a low-cost investment with a fee of only 0.10%. Assuming the same 8% return, you would pay only about $8,000 over 10 years and about $25,000 over 20 years.
That's a massive difference. Lower fees mean more of your money stays invested and working for you. Keeping your costs low is one of the most reliable ways to help your wealth grow.
*These examples are hypothetical, for illustrative purposes only, and do not represent the performance of any actual investment. They assume a constant rate of return, which does not reflect actual market volatility. You cannot invest directly in an index. Actual results will vary.*
Time in the market beats timing the market
We often hear people talk about moving in and out of the market to avoid downturns. However, history shows that time in the market is far superior to timing the market.
We can't time markets accurately or consistently. When you try, you risk missing the best days of performance, which often happen right around the worst days. Missing those rebounds can devastate your long-term returns.
The cost of missing out
Let's look at a hypothetical example. Suppose you invested $10,000 in an S&P 500 Index fund on January 1st of 1980.
If you left that money alone and stayed invested through December 2024, you would have almost $1.7 million.
However, if you tried to time the market and missed just the 5 best days over that entire period, you would only have $1,080,917.
That's a drastic difference caused by missing just five days. The lesson here is to start early, invest consistently, and let time do its work. You'll see ups and downs, but historically, investors have been rewarded for staying put.
*This hypothetical example is for illustrative purposes only and is based on the historical performance of the S&P 500 Index from January 1, 1980, to December 31, 2024. It does not represent the performance of any actual investment. The analysis assumes the reinvestment of dividends and does not reflect the deduction of any advisory fees, transaction costs, or taxes, which would reduce returns. You cannot invest directly in an index. Past performance is not a guarantee of future results.*
Managing your mindset
This brings us to the human element. We're emotional creatures, and we often act irrationally when it comes to money. When you mix a 24/7 news cycle with a dash of FOMO (fear of missing out), you get a recipe for bad decision-making.
The best thing you can do is avoid being "human" in the moment. Remain disciplined. Focus on what you can control, such as your savings rate, your diversification, and your costs. Ignore the noise you can't control.
The Facet difference
At Facet, we believe your financial life is about more than just investment returns. It's about how your money supports the life you want to live. That's why you'll work with a CFP® professional who looks at your entire financial picture.
We don't charge asset-based fees that eat away at your returns. Instead, we operate on a flat membership fee. This helps align our advice with your best interests and keeps us focused on helping you achieve your personal milestones. We help you build the roadmap so you can invest with confidence and clarity.
