Investing 101: Not Gambling
Investing isn't stock picking or day trading. Index funds, compound interest, asset allocation, and how to grow wealth without becoming a finance bro.
“The stock market is a device for transferring money from the impatient to the patient. The less you touch it, the more it grows.”
What you'll learn
Index funds > individual stocks. VTSAX, VTI, or any low-cost total market index fund beats the majority of actively managed funds over 10+ years. Expense ratio should be under 0.10%.
Compound interest is the eighth wonder of the world. $500/month invested at 8% average return = $300k after 20 years, $950k after 30 years, $2.8M after 40 years. Time in the market beats timing the market.
Asset allocation: (100 - age) in stocks is the classic rule. 60% US stocks, 30% international, 10% bonds is a common diversified starting point. Rebalance annually.
Dollar-cost averaging beats lump sum psychologically but loses about 2/3 of the time mathematically. DCA only if you need to sleep at night — otherwise, lump sum and forget it.