On Regular Investing（Xiaolai Li）Day 1

Warning

Investing is risky, so make your decisions carefully!

“There are old investors, and there are bold investors, but there are no old bold investors.”——Howard Stanley Marks.

Don’t be so naïve as to believe that you can turn into a superman just because you learned something new yesterday. Translating knowledge into meaningful action takes much more time than you’ve ever imagined. Relax, take it easy, and don’t rush. You can lift a very heavy weight, but without proper training you can hurt yourself.

Preface

Solving the single most important problem can directly avoid the problems that so many others face.

Actually, most problems in life are due to failing to resolve the most important problem right from the start. If you can handle the most important problem in the beginning, then even though there will still be many other difficulties, they won’t be the eternal problems that so many people face.

So what’s the most important concept in the area of investment? Long-term.

There is a huge gap between knowing and doing, and long-term practice is the only way to cross this gap. A strategy of regular investing is the simplest way to practice investing, as all you have to do is regularly purchase a set investment over the long term. However, simple itself doesn’t necessarily mean easy.

The strategy of regular investing is correct, but the target investment must be chosen by each individual investor. In this book I will provide you the tools to make your own decision about what to invest in. I will do so by showing you what I’m regularly investing in, and explaining the reasoning behind that choice.

We should solve the most important problem at the very beginning, and not let it take root and grow into a problem tree that gives us a plethora of persistent troubles to deal with. This might be the single most important piece of wisdom in life.

Before long, you will discover that the strategy of regular investing is not only applicable to investing. Actually, it’s applicable to most areas of life, including study, work, and personal relationships. These are all areas in which the strategy should be used from the very beginning.

Part One: Regular Investing

1.1 The Strategy and Results

Regular investing is quite simple:

Regularly invest a set amount in a particular investment over a long period of time.

With regular investing, even if you start at what seems like the worst time, such as just before a market crash, your overall investment will become profitable before the market recovers.

The reason why regular investing is effective is that it matches up with the following reality of markets:

Bear markets are much longer than bull markets.

With regular investing, your profits essentially all come from the bear market!

In fact, the strategy of regular investing is not only applicable to trading markets, it's useful in almost all important areas of life, whether it be study, work or family. "Lifelong learning" is essentially a regular investing strategy, isn't it? If you could draw a "price curve" for an individual's learning, it would look a lot like the S&P 500. Even though it increases substantially over time, it goes through long periods of flat growth or even drops. Often when you are investing time in learning something it feels like you would be better off not learning it. The "bear market" is long, isn't it? This explains why so few people are able to become true lifelong learners. The reason is the same: everyone wants to make money quickly in the bull market and then leave.

Those who follow the regular investing strategy also continue to buy at regular intervals over the long term, and hold the asset throughout the process.

Because nobody wants to get rich slow.This the a reason why few people become reach.