On this page, I will boil down what I feel is the very best form of investing into the fastest, easiest little set of instructions.
We’ll get into the usual details and disclaimers below, but first let’s get to the core.
- Set up an investing account.
- Buy shares of a huge, reliable, low-fee index fund (my personal favorite: the Vanguard fund called VTI)
- Every time you have spare money, repeat step 2.
Step One: The Investing Account
There are so many options here that many people just give up before they even begin. But what we’re looking for is a reliable, registered brokerage which allows us to buy and own shares of stock (a category which includes index funds).
I’ll list a few more options below, but because this is the simplest possible investing tutorial, I’ll use the simplest* brokerage that I’m aware of, which is Robinhood.
To test it out, I’ll create a new account for myself right now, and step through the process of pulling in $1000 of my own money, then investing it into shares of the VTI index fund.
Robinhood Investing
TBD – at this point I would have some screenshots of either the phone or the desktop version (recommendations?) with commentary and tips on what is happening during account setup and funding.
Step Two: Buying Your Index Funds
TBD – here I would have a few more screenshots of what it takes to perform a simple market-order of some VTI index funds, along with further explanations about automatic deposits, eventual selling, dividends, etc.
Then the rest of this page would contain the following additional info on the unanswered questions I set up in the intro section.
*Why is Robinhood Simpler Than Other Options?
I think the simplicity comes from the fact that this is a newer company, optimized around the user experience and without the baggage of a decades-old website that can be daunting to people who didn’t grow up reading finance textbooks on a recreational basis (as I did for some reason).
A few other options that I have used.
- Vanguard Brokerage (as well as their children’s custodial and retirement accounts)
- eTrade
- Interactive Brokers
- Betterment.
An explanation of the pros and cons of different platforms, emphasizing that any of them will work.
If you are interested in trying Robinhood Investing, you can do so here (affiliate link)
Simple vs. Complicated Investing
How can investing be this simple? And if it is that simple, why are there so many thousands of stock analysts and fund managers and investment gurus who have made a whole industry of spouting complicated things?
The quick answer is that it’s a mix of genuine expertise and mass delusion. There are real experts out there, and fake experts, and a lot of people who get lucky temporarily and look smart. But the key as an individual investor is that you can never really know in advance who is right.
Twenty years down the line, some of today’s high-flying stocks and funds will be bankrupt and forgotten, while other companies that you haven’t even heard of yet will be worth hundreds of billions of dollars. Nobody can reliably separate the winners from the losers in advance, but what you can be reasonably certain of is that the human race will continue to work hard and innovate, which creates profits and dividends over the long run. And that by owning shares in a large, established index fund like VTI, you will continue to own a slice of that long-term prosperity.
For more on this investing philosophy, you might enjoy The Simple Path to Wealth, by my long-time friend and writing colleague JL Collins, or any of the books by the late but always great Vanguard founder John C Bogle.
More updates to come, but for now good luck on your start in investing!
Please feel free to ask and answer more questions in the comments section below.
