We’re taught that nothing of value comes easy. In financial planning, though, it’s the easy answer that is often the right one.
Don’t believe me?
What’s easier: Investing in broad market index funds that return, historically, 7% versus researching different stocks, hoping to hit it big with one timely sell?
What’s easier: Spending less, which will keep expenses down, reducing your target retirement number versus having a lavish lifestyle, and doing all you can just to afford the endless stream of expensive dinners, exotic trips and large homes?
What’s easier: Automatically contributing a portion of your paycheck into a retirement account, ensuring you never have to adjust to less take-home pay or trying to catch up later in life with exorbitantly high savings rates in hopes you can retire?
What’s easier: Fixed interest rates on any loan so you know exactly how much you owe versus variable interest rates, which can double, triple or more during the life of the loan?
What’s easier: Only spending what you have versus racking up thousands of dollars in credit card debt, which has to be repaid with an average interest rate of 15% or more?
What’s easier: Paying hardly any fees for simple products with proven results versus paying significant fees for financial “experts” or exotic strategies to provide you with above average returns, without historical proof it will work?
Yes, we were taught wrong. With your money, embrace the easiest solutions.
They’re (almost) always the right answer.