My best investing advice for someone just entering the workforce is to put in an index fund and focus on turning in a stellar performance at your job, day in and day out. Don’t spend time analyzing the market, don’t read about esoteric investments, don’t scrutinize financial statements, don’t listen in on earnings calls, and don’t research SEC filings. Don’t do any of that stuff because you won’t get the same return as if you spent that time knocking your boss’s socks off.
The only exception to this rule is if you absolutely love this stuff, which is not as uncommon as you think. If you love poring over financial statements and calculating ROI, ROE, and other fun acronyms, then ignore what I said. You’re researching it because it’s fun, not because it’s work. That changes the equation.
When you start working, your stock market investments will be a very small part of your total net worth. Your job will be the single largest “asset” you have because it’ll give you the most return on your time out of anything you do. If you’re spending hours trying to squeeze a couple percentage points out of a $1,000 stock portfolio, you’re losing. You’re losing because those hours are better spent doing a kick-ass job at work so you can get a raise and contribute even more to your nest egg.
The equation changes as you get older though. As your nest get gets into the five and six figures, time invested in analyzing stocks has a much better return. However, at that point, you’ll probably have other demands on your time and the ROI in spending time with friends and family is infinite. Let the market do the work and enjoy life!
Imagine you had a time machine and could give yourself just one good piece of advice after you graduated college, what would it be?