Well, not everything but certainly all the fundamentals. Here is my primer on investing in four charts.
- Don't be afraid to invest. If you keep all your savings in cash, you might sleep well at night. But you might wake up 20 years from now and realize that your money, in terms of spending power, is only worth 1/2 to 1/3 of where it started out. This chart shows what happens if you keep all your money in cash compared to the growth of investing in the other major asset categories.
- Be patient. Your returns are not going to come easily, quickly, or necessarily consistently. However, as this chart shows, over time your average returns will certainly show a degree of consistency and growth if you remain patient.
- Asset Allocation. Strict asset allocation has been the foundation of successful investing for decades. No one can predict which asset classes will go up in any year nor the degree of growth (or loss). But if you follow a strict asset allocation model, you'll always be "buying low" and "selling high". This chart illustrates how hard it is to predict in advance the performance of each asset class, which is why asset allocation (and diversification) is so important.
- Stay Invested. Don't try to time the market and don't bail out at the first sign of a downturn. In today's world of instant news and stock market volatility, most investment gains come over a very small number of days, as displayed in this chart, and if you "miss" those days, you could affect your returns for years to come.
Hopefully, you are now really excited and ready to read on! But if not, you likely have the fundamentals that you need.