There is no way to optimize your investments. You don’t have a crystal ball. You can’t see the future. The optimal portfolio will only be known in retrospect. There are however three things you can do that will help you down the road.
- Save. You can’t invest if you don’t save. As Christine Benz at Morningstar writes: “But ultimately, your boring pre-investing choices–like your savings rate and how you balance debt paydown with investing in the market–will have a bigger impact than your investment selections on whether you amass enough money to pay for retirement or college.”
- Get started. No matter how small your portfolio is today, there is only one way to grow it. As I wrote a couple days ago: “The point of this is to get started. No matter how small. Compound your knowledge and experience, while you compound your portfolio.”
- Choose from good options. As noted earlier you don’t need to overthink the investment process. Sweating the details among a list of already low cost, broadly diversified index funds isn’t going to add a whole lot of value. As Mike Dariano at The Waiter’s Pad writes: “All that matters is choosing from good options. With hindsight one option will be better than the others, but that prediction is impossible.”
We can’t predict the future. All we can do is put in place resilient systems that will help us navigate life’s vicissitudes. Don’t let the minor details derail you from getting underway.