“A wise person should have money in their head, but not in their heart.”

– Jonathan Swift

I’ve always been interested in money.

Not in a selfish way…more in a desire to learn as much as I can, so I can make the best decisions for myself and family.

I’ve learned a lot. The world of finance is endlessly complex and ever-changing; you could spend your entire life studying it and never understand how all of it works. Many people have.

But you don’t need to understand how ALL of it works.

In fact, sometimes the more you think you know, the worse off you are.

It’s easy to get caught up in the complexity. But I’ve found that there are seven fundamental truths that every investor MUST understand if they want to be successful.

It isn’t flashy—but it works.


1. Boring Isn’t Bad


As you start to accumulate wealth, it’s easy to develop ‘Big Shot’ syndrome.

Suddenly the money that’s been sitting in your brokerage account, growing slowly and steadily for years on end, becomes kind of boring. You’re a pretty savvy investor, you think, and you’re looking for a challenge.

One that will make your money grow faster than that snoozer of an index fund.

So you start to look at investing in things like oil wells, real estate, a close friend’s new business…the list goes on and on.

Have I done this before? Yep. And did it work out?

Sometimes it did, sometimes it didn’t. When it did, I felt like even more of a big shot; when it didn’t, well, let’s just say I tried not to think about it much.

What I discovered is that the ‘exciting’ side of investing is a real pain. And the risk of failure is often far greater than a bunch of ‘boring’ stocks and bonds sitting in a brokerage account. As Paul Samuelson said:

“Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas.”

I couldn’t agree more. If you have an appetite for big risk, only use as much of your portfolio as you can afford to miss.  Keep the rest in a diversified, well managed portfolio. 

And of course, if a potential investment sounds too good to be true, it probably is.


2. Market Timing is (Almost) Always Impossible…


The day you think you’ve figured out how to time the market is the day you become a dumb investor. 

Sure, an informed investor can guess right sometimes, or maybe even the majority of the time, but that one time you are wrong can kill your returns.

Let’s be honest. Most cases of market-timing have nothing to do with economic fundamentals, federal reserve policies or presidential election cycles; they’re based solely on greed, or fear.

When the tickers turn green, everyone wants to jump on board.

When they turn red, it’s every man for himself.

Don’t read signals from the market as confirmation of your fears or desires. Create a balanced, well diversified strategy, and stick to it, in spite of what others might be doing.

In fact, it’s usually best to do the opposite of what others are doing.


3. …But Recognizing a ‘Sale’ Isn’t


One of my jobs as an advisor is to be there when the market goes down.

Whenever markets get a little jittery, I’m sure to get phone calls from equally jittery clients who want to abandon ship. It’s my job to tell them, calmly and confidently; ‘This isn’t the end of the world. This is an opportunity.’

I remember in the 2000-2002 timeframe, when the S&P was down three years in a row.  The market dropped more than 10%. After 2000, I bought in to the market big time.

I then watched my account value plummet as the market continued to fall in 2001.  Rather than panic, I took a deep breath….and bought again. The sale was continuing, and I was going to take advantage of it.

2002 came around, and the market dropped one more time. 

I could have been depressed over my poor timing, but instead, I knew things were really on sale. My time frame was long. I bought again.

Guess what the market did in 2003? That’s right, it started moving up.

I had no idea when the market was going to rebound. I could have been stuck for 5, 6, even 10 years with bad returns. But even though I didn’t know when the rebound would happen, I knew that eventually it would, and my patience would be rewarded.

Don’t let terms like ‘Bear Market’ and ‘Correction’ scare you. Instead, consider buying when the market is cheap and plan to hold your investments long enough to see them return.


4. Don’t Be Concerned About Short-Term Returns


A stock price can have short-term moves based on things that don’t directly relate to the performance of that company.

If you watch financial news you know exactly what I’m talking about. Every minute quiver of a stock’s price is analyzed and overanalyzed until it seems like a company can go from world-changing to bankrupt in the course of a week.

Most of this is over-hyped. Frankly, worry and alarm sells better than calm perspective—and does a better job of keeping us glued to our phones for never-ending market updates.

Buy stocks for their long term potential. Short term movements that are not based on the fundamentals of the company probably don’t matter as much.  

As long as you don’t need to tap your money right away, keep a long-term perspective on things which will help you “keep your hands off” when short term swings drive your values down.


5. Stuff will happen. Be prepared.


Life will always throw you a curve ball.

Your fridge will go out.  The air conditioner or furnace will need to be replaced.  You will need a new roof, new car, or medical procedure. 

These curve balls will happen each and every year of your life. Be prepared by building an emergency cash reserve of at least three months of your expenses.

The biggest challenge here is just finding ways to save a little extra money. Thankfully, it doesn’t have to happen all at once. Start by looking for ways to cut unnecessary expenses, and funnel the savings back into your emergency fund.

Keep adding a little to this stash every and soon you’ll be prepared for all those minor emergencies life throws your way.


6. Automate Your Investment Program


The more you set on autopilot, the smaller the likelihood that your behavior will mess things up.

Automate your savings by setting up a payroll deduction or monthly movement from cash to investments. 

Automate your investments by hiring someone to keep track of them or using mutual funds or money managers. 

Take advantage of your company 401(k) or other qualified retirement plan.  This one is the most important when it comes to planning for retirement, and the one that could provide the most bang for your buck.

In all cases, once you’ve made the decision to save, get things rolling and then leave it alone. 

Don’t get in the way of your own success!


7. Life Isn’t About the Money


At the end of the day, money is just a tool. It allows us to solve problems, live the life we want, and most importantly, help others.

I’m a self-described workaholic, who at the beginning of this article admitted to a fascination with money. If anyone who understands how money can become a driving factor in one’s life, it’s definitely me.

But it shouldn’t be. Rather, there is something about having a mind frame and action behind it of helping others that helps to put everything else into perspective. 

The more I focus on returns and market performance, the worse off I am.

The more I give back, focus on my family, and let my investments take care of themselves, the richer my life is.


“The real measure of your wealth is how much you’d be worth if you lost all your money.”

– Anonymous


Having wealth is about so much more than money. 

Our relationships, our values and the legacies we create during our lifetimes will impact more people than our dollar bills. 

We do, however, need to be good stewards of our money, and I hope my seven tips make a difference in your life as an investor.




CLICK HERE to become an Insider! Join my Email Insider Group to receive weekly tips and tricks on finance, education, home buying, insurance, Social Security and everything in between. Byron W. Ellis, CFP®, CLU®, ChFC®, CRPC®, is a CERTIFIED FINANCIAL PLANNER™ professional and Managing Director United Capital Financial Advisers, LLC, a Financial Life Management firm. The information contained in this article is intended for information only is not a recommendation, and should not be considered investment advice. Please contact your financial advisor with questions about your specific needs and circumstances.

© Byron Ellis