When it comes to investing your money, the dead have the right idea.
See, there’s this funny story getting passed around on Wall Street. As the story goes, financial giant Fidelity’s chief bean counters one day did this big study of what types of investors did best. And they found that the accounts with the highest returns were classified as “dead or inactive”.
In other words, dead people do better than living people on the stock market, and that’s because dead people don’t always fiddle with their investment accounts the way living people do.
The only problem with this cool story is that there is no evidence that it ever really happened. Google results provide many stories about this supposed “study” – but not an actual study.
Apparently it’s an urban legend from Wall Street. But hey, that doesn’t mean the point isn’t still there. As most people will tell you, time and patience are the most important things working on an investor’s side. Trying to time the market, panic selling, or buying on FOMO will almost never outperform long-term investment returns.
So, real or not, these dead investors are ready for something. Here are four things the dead can teach us about investing:
1. Buy and hold
Dead investors are the ultimate buy and hold investors – in this case we mean they just stick with it. Dead people are usually really consistent in their behavior.
We asked Robin Hartill for advice on the stock market. She is a certified financial planner and financial advisory columnist for The Penny Hoarder. She recommends budgeting a certain amount of money every month, no matter what.
“The S&P 500 has achieved inflation-adjusted returns averaging about 7% per year for the past 50 years,” she said.
Not sure where to start? It’s easy to set up automatic transfers so you can start investing regularly using an app called Stash. You can choose from hundreds of stocks and funds to build your own investment portfolio. It makes it easy by dividing them into categories based on your personal goals.
2. Don’t try to time the market
The dead know better than anyone else that the passage of time is the most important thing. This also applies to investing.
In other words, don’t try to time the market. It is a stupid task to try to anticipate the various booms and crashes that the stock market will inevitably go through. Instead, start investing as early as possible and focus on the long term.
“The timing of your investment is much less important than the time you have to invest,” says Hartill. “The cost of waiting for the perfect time to invest is high. You’re missing out on long-term growth. “
All the more reason to sign up for Stash, where you can get started for as little as $ 1. *
3. Take out life insurance; Prices start at just $ 16 / month
There are two types of dead investors: dead people who had life insurance policies to help their loved ones they left behind; and dead people who wish they had life insurance.
Have you ever thought about how your family would do without your income in your absence? How are they going to pay the bills? Send the kids through school? Now is a good time to start planning for the future.
You are probably thinking: I don’t have the time or money for that. But your application can take minutes – and you could leave your family up to $ 1 million with a company called Bestow.
Prices start at just $ 16 per month. Knowing that your family is being cared for is priceless.
If you’re under 54 and want a quick quote on life insurance without a medical exam or even getting up from the couch, get a free quote from Bestow.
4. Don’t think too much
Dead investors are great at not rethinking things. They just plug it in right away and do their thing without a fuss. This is why their investment portfolios do so well.
When it comes to investing, be like dead people. Don’t think about things.
Hartill’s advice: The stock market makes you money if you give it the time, so it’s better to start sooner rather than later.
“If you were hoping to make money quickly in the stock market, now may not be a good time,” she says. “But real investing is not about making quick money. It’s about growing your money over time. “
If you sign up for Stash now (it takes two minutes), Stash will give you $ 5 after adding $ 5 to your investment account. Subscription plans start at $ 1 per month. **
Mike Brassfield ([email protected]) is a senior writer at The Penny Hoarder. He is not dead.
* For securities priced above $ 1,000, fractional share purchases start at $ 0.05.
** You will also bear the standard fees and expenses reflected in the prices of the ETFs in your account, as well as fees for various ancillary services charged by Stash and the custodian.