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What Successful Investors Focus On (Hint: It’s Not the Returns They Earn)

Here’s an interesting article from MoneyWatch about knowing the difference between what you can control and what you can’t control and focusing on what you can control

They recommend using passive investing techniques using broad market index funds.  My approach is to use passive investing techniques, but I use a slightly different set of passively-managed funds, which puts more of your money in small and value funds.

I think this is a great article with lots of good food for thought.

Call or email if you have comments or would like to discuss it.



I wanted to depart a little bit this week from my usual themes to address a topic that Felix Salmon and Megan McArdle have written about recently, which is — essentially — the importance of knowing what you can control in investing, and what you cannot.

The vast majority of investors spend an enormous amount of time and effort in an attempt to maximize their returns, but in reality that should be a secondary concern. It’s true that the difference between an annual return of five percent and seven percent is enormous when compounded over many years, but the fact of the matter is that it’s simply not realistic to expect that your best efforts will add two percent to the return you earn over the long term. Indeed, the evidence is strong that your efforts are far more likely to detract from your long-term returns than add to them, which is why so many of us here at MoneyWatch advocate the use of broad market index funds to ensure that you capture whatever returns the market ends up providing.

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