success key

It’s been a little while since I last posted (been sick part of this time), and my last few posts have been a little heavy, or involved, or however you want to describe them. So, to get back to the basics and just keep it simple, here’s a simple reminder of what personal finance is all about.

At the end of the day, it’s all about you, not a number in your bank account(s). It starts and ends with you. You hopefully work at a job that you like, and that makes you some amount of money that’s more than you need to spend. With the money left over, you put some of it into a checking or savings account. As that amount grows, you move some into a retirement account or into an investment account. Both will use index funds as an investment option, and later on down the road, at retirement, or when you buy a house, or make some other purchase that needs this money, you cash out.

That’s it. That’s the whole system easily summed up in one short paragraph. You could get a little more detail on the index fund question, but you go out and buy the whole market. Don’t mess with the extra costs, risks, and complexity of doing it any other way. Maybe you tweak how you buy the whole market, and include different allocations of bonds and equity such as with a mix of US and foreign equity, but you’re not picking and choosing winners and losers. You’re picking a very competitive market return (a better return than from active mutual funds, or picking stocks yourself) with low costs and an easy conscious.

The hardest part of this is planning your future. What do you want to do, and what do you need to do it? Your money only supports your lifestyle, it doesn’t choose it. You can easily make this more complex, but why? That really is all you need, and maybe you have one index fund period. That makes where you put your money beyond easy, it’s brain dead. And then you really focus on being able to save and invest in that one fund. You worry about what you’re planning on doing with the money, and not what your money does. That is simple, elegant, and beautiful.