When you start to consider investing your money for the future, you’ll find a wide range of advice. Whether you ask for it or not, you’ll see investment advice that ranges from sound to downright scary.
Luckily, I received a great piece of investment advice early on from my grandfather.
The best investment advice I’ve ever received
Several years ago, I hadn’t seriously considered investing in my future. As a new college graduate, I was still coming to terms with making a budget work to easily manage my rent payments and other minimal financial responsibilities. However, that didn’t stop my grandfather, Bop, from offering me the best piece of investment advice I’d ever receive.
My grandfather advised me to invest in an S&P 500 stock market index fund. My grandmother, Nana, chimed in to point out that when investing in this type of fund, I’d need to leave my money there for the long-term.
On top of that, they recommended that I save as much as possible and stick to a modest lifestyle. This would allow me to save and invest for the future without sacrificing anything that really matters. Together, they offered the best investment advice I could have received.
Although I didn’t dive into investing until a little bit later in my personal finance journey, I remembered their words of wisdom. When I decided to start seriously investing for my distant retirement, their advice helped to shape my strategy.
Sticking to a long-term mindset
Although it can be difficult to stick to an investment strategy for the long-term, I decided early on that I would not touch these invested funds for decades.
Of course, I’ve been tempted to pull out funds from my taxable investment account on a variety of occasions. Two temptations really stand out to me:
- Honeymoon luxury. I wanted to pay for a luxurious honeymoon to Scotland, but then decided to try a travel rewards strategy instead.
- Market crashing. When the market tumbled in March 2020, like so many others, I felt the panic of taking a big hit to my net worth overnight. The idea of selling at that point crossed my mind, but I was ultimately able to stay the course.
Before diving into a long-term investment strategy, it is important to know your priorities in advance. The temptation to sell will always be there. But hopefully, it will be easily overruled by your reason for starting on this investment path in the first place.
Personally, I decided that I wanted to start tucking away funds for retirement now so that I have less to worry about in the future. The idea that this money will continue to work for me in years to come keeps me on track — even when there are bumps in the road.
How my investment strategy is working out so far
I started investing as soon as I could afford to. Although it took some major discipline to slash my grocery budget and find ways to keep my discretionary expenses low, I eventually had money left over each month. Once I built an emergency fund to a comfortable place, I was ready to dive in.
Personally, I’ve chosen to invest in a low-cost index fund through Vanguard that mirrors the S&P 500. Over the years, my husband and I have been able to build a six-figure net worth. I’m 25, and my husband is 31, so we are very happy with our progress so far.
Of course, the market has been performing very well in recent years. I expect that we will encounter some major dips along the way. But since my grandparents encouraged me to focus on the potential long-term growth of this investment strategy, I feel prepared to ride the ups and downs of the market into the next several decades.
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