The Most Important Lessons in Investing

Over the last 10 years I have spoken to thousands of individual investors about their investments and financial plans while working at PWL Capital, and I have interviewed some of the smartest people in finance, economics, and psychology on the Rational Reminder podcast.

This is what I have learned. These are all lessons that investors will learn eventually, though many will learn them the hard way.

0:29 1. You’re not that smart (relative to the market).
0:42 2. This time is always different.
1:03 3. The market is forward-looking.
1:20 4. Market forecasts are not useful.
1:34 5. Time in the market beats timing the market.
1:47 6. Most funds do not beat the market.
2:12 7. Incentives matter.
2:26 8. Expected economic growth and stock returns are unrelated.
3:12 9. Good portfolio management does not make up for bad financial planning.
3:27 10. Risk and expected returns are positively related.
3:42 11. The risk-expected return trade-off has a term structure.
3:58 12. Fees and taxes matter.
4:12 13. Complexity and costs are positively related.
4:27 14. There is no single optimal investment strategy.
4:44 15. The best investment strategy for you is the one that you can stick with.
5:00 16. There is no such thing as a “passive” investment.
5:14 17. Wealth does not give you access to market-beating investments.
5:30 18. Diversification is (still) the only free lunch in investing.
5:44 19. Investments should be evaluated on process, not outcome.
5:58 20. Investing has been solved.

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[superkebabi]

This is the kind of thing you save and come back to every year to keep your head on straight. Thanks Ben.

[luiscunha]

A short Masterpiece. Thank you so much.

[TheWealthyBarber]

Hey Ben, it's Dave Chilton, The Wealthy Barber. I enjoy your videos and podcast, especially this one! You're well-informed and very genuine. It's clear you really want to help people. Well done!

[spartan]

Ben, you are precise and perfectly paced. The advice is articulated simply and comprehensively.

Your channel is invaluable In a world of ever-increasing jargon, excess information and incentivised bankers and finance influencers.

[santiagoeguren]

you are one of the few who speaks based on evidence!!!

[me]

I said it before on another one of your videos, but I'll say it again.

One of my business professors in undergrad told my class that unless we plan on joining a big name hedge fund with lots of powerful research tools available, don't day trade. Just dollar cost average into a broad market index fund, and take the time you would have spent looking at charts, and spend that time learning three things. One thing that's useful, one thing that's interesting, and one thing that's just plain fun.

[terryadams]

Ben, you are a national treasure. I hope Canada appreciates you as much as your friends below the border do!

[haroldspanier]

Best advice yet from Ben Felix. A true pro willing to share his knowledge and experience. Thank you!

[dimon]

Way too many good advices for single short video! Much appreciated.

[WolframSCHROEDER]

Excellent contribution: full of common sense, pragmatic and simply announcing the basic rules. Thanks a lot.

[bulalirozani]

Its rare that you find content creators who are clear concise and provide information without ulterior motives, "Incentives Matter" the financial services industry still has along way ti go in offering and catering to the needs of consumers rather than the needs of the suppliers, this is despite regulation.

[jugzster]

Investing into your or other people's happiness is also important. Sometimes those can even give you more satisfaction than seeing your net worth go up. Whether it be on improving yourself, going on experiences with family/friends, donating, or buying that small dessert

Another valuable video as usual, thanks Ben!

[kylebeggs]

I would like to request a video on your background and career journey. As a mechanical engineer who has become more interested in finance, I find it intriguing that you began as an engineer and ended up here. You have quickly become my favorite financial resource and I suspect it is because you approach and explain things that make perfect sense to me. As you would suspect, I believe it is due to our similar backgrounds. Keep up the great work!

[Martin_Edmondson]

"The stock market is a device for transferring money from the impatient to the patient." - Buffett.
Having a long term mindset was what helped me the most in growing my money. It's hard to do especially when you are young, but it is absolutely astonishing how much difference it can make.

[KnowArt]

Another big one I've heard: Financial markets are much more efficient than you think, non-financial markets are much less efficient than you think.
That one opportunity you see in the stock market is bs, while that opportunity you don't act on in the real world because "if it was a good idea someone would've already done it" is actually a huge loss.

[ryanlee]

Was just reviewing my index investments and this video popped up. You've got a new subscriber. Going to keep this video saved to come back to so i can stick to the plan lol

[jsh]

I agree you should write a book. A lot of the principles remind me of the book “The Intelligent Investor” I really like that book but the issue with it is that a lot of the data it cites is pre 2000.

[mdalie]

I appreciate your transparency, it's makes you one of the only people creating investment advice that I find trustworthy. You're a finance advisor you who tells people they don't need to pay high fees on mutual funds or even finance advisors. The solution is a boring but smart strategy of investing in low fee ETFs with realistic expectations for returns.
When it comes to investing, boring advice is sensible unlike a lot of other sensationalist takes.

[marek]

Thank you, Ben. Just thank you. You've had the biggest impact on my investment decisions and me and my portfolio are grateful.

[wendynoble]

This! I'm going to have to listen a few more times.