The World's Simplest Investment Strategy Revealed

About this Video

• Video Title: The World's Simplest Investment Strategy Revealed
• Channel: Tae Kim - Financial Tortoise
• Speakers: Tae Kim
• Duration: 00:16:41

Introduction

This video presents a straightforward investment strategy: buying and holding a total US stock market index fund. The speaker emphasizes the power of simplicity in investing, arguing that this approach, while requiring discipline and patience, offers significant long-term benefits due to its ease of understanding and adherence. The video also promotes the speaker's Financial Tortoise community.

Key Takeaways

1. Simplicity in Investing: A simple strategy (buying and holding a total US stock market index fund) is advocated for its ease of understanding and adherence, ultimately leading to better long-term results than complex strategies.
2. The Power of Self-Cleansing: The market's self-cleansing mechanism automatically adjusts the portfolio's weighting based on company performance, removing underperforming companies and increasing the weighting of successful ones.
3. Betting on American Innovation: Investing in a total US stock market index fund is essentially a bet on the continued innovation and growth of American businesses, which have historically delivered strong returns despite economic downturns.
4. Fund Options: The video suggests VTSAX (Vanguard), VTI (Vanguard ETF), FSKAX (Fidelity), and SWTSX (Schwab) as suitable total US stock market index funds, highlighting their low expense ratios.
5. Hard Truths: The strategy requires a strong stomach for market volatility, a long-term investment horizon (not suitable for short-term needs), and the discipline to resist the temptation of more complex, potentially riskier, investments.