My investment habits have shifted over the years.
Today, most of my money goes into ETFs (exchange-traded funds). I still keep a system I trust for picking individual stocks from time to time, but the bulk of my portfolio—around 75%—is in broad index funds and ETFs. The rest is a mix of early stock picks I’ve held onto and a handful of companies that my system has flagged as promising.
The Hidden Cost of Complexity
When I first started investing, people told me I could do better than the S&P 500. That my portfolio could “outperform.” Once I dug into the numbers, I realized how misleading that idea was. Roughly 80% of active fund managers—people whose full-time job is buying and selling stocks—fail to beat the S&P 500 over time.
That means most of us, without insider knowledge or decades of experience, don’t stand a chance. Even legendary investors like Warren Buffett and Peter Lynch remind us that unless you have expertise, you’ll probably lose money trying to pick winners. And if you had that expertise, you wouldn’t be reading this—you’d be running a hedge fund.
Another issue: industry leaders are always shifting. Just look at the history of the S&P 500—companies rise, companies fall. What seems like a “forever stock” today may be forgotten tomorrow. Even buy-and-hold isn’t bulletproof if you’re clinging to yesterday’s giants. The video below visualizes that clearly.
Then there’s the literal cost of complexity: commissions, spreads, and taxes on every trade. The more you churn your portfolio, the harder it is for your returns to keep up.
Wealth doesn’t come from clever tricks. It comes from patience. Time is your ally; safety is what lets you sleep at night. Sure, you can gamble occasionally, but even then, do your homework.
And don’t fall for the social media gurus promising “5 steps to beat the market.” If their magic worked, they wouldn’t be busy posting TikToks—they’d be quietly compounding wealth.
As Steve Jobs said: “Simplicity is key.”
A Recipe That Works
One of the most popular frameworks is the 3-fund portfolio:
- A total U.S. stock market index fund
- A total international stock market index fund
- A bond index fund
It’s boring, but it works. It’s diversified, resilient, and almost effortless to manage.
Personally, I spice it up. I hold:
- QQQ (tech exposure)
- SPY (the S&P 500 itself)
- SCHD (for dividends and income)
- VT (global exposure)
- MCHI (a small bet on China)
This way, I combine growth, resilience, and income streams. Of course this is not an investment advice. You can even buy ETFs of certain sectors you think will flourish in the coming years (alternative energy, electric cars, AI, etc.)
The “Set It and Forget It” Mindset
The hardest part of investing isn’t choosing the funds—it’s managing your own behavior.
Do your budget, allocate money to investments, and keep adding regularly. Don’t try to time the market. Don’t panic when things fall. And never invest money you’ll need in the short term.
When markets drop, see it as a discount—your money buys more shares than before. Think decades, not days. Investing isn’t about getting rich fast; it’s about quietly, steadily building wealth.
Peace comes when you realize you don’t need to chase every opportunity. You need a simple system, the discipline to stick with it, and the patience to let time work its magic.
The Monk of Abundance 
Leave a comment