The Most Important Lessons in Investing
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- Опубліковано 5 лют 2025
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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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I have $160k in a HYSA earning 4.6% p/a, but I'm worried about inflation. I want to invest in stocks to safeguard my nest egg. As a beginner, what's the safest approach?
investors like you should be cautious of the bull run, its best you connect with a well-qualified adviser to meet your growth goals and avoid blunder.
True. I’ve been investing in the stock market for 11 years now, last 5 years with the help of a financial advisor. Through this period of advisory support alone, I've been fortunate enough to achieve a 10x return compared to my previous efforts as a DIY investor, summing up nearly $1m roi as of today. My best so far.
Impressive! I admit I'm scared about retirement as I turn 60 on my next birthday. I need to ensure I have enough money to survive on. How can I consult your advisor? My retirement account isn't performing well.
I've stuck with ''ZAREEN GRACE CHURCH'' since the covid-crash of 2020, and her performance has been impressive to date. She’s quite renowned in her field with over two decades of experience, you can simply look her up.
I copied her whole name and pasted it into my browser; her website appeared immediately, and her qualifications are excellent; thank you for sharing.
This is the kind of thing you save and come back to every year to keep your head on straight. Thanks Ben.
This is the kind of things you save and come back to every time you see a bear or when your emotion gets the better of you!
A short Masterpiece. Thank you so much.
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.
write a book Ben
i would read.
Two versions please. A dummies version for me
I would read too
indeed
YOU write a book.
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!
Hey Dave! Thanks so much. That means a lot coming from you.
I saw the new initiative you’re working on. I’d love to contribute. Don’t be shy to reach out.
@@BenFelixCSII have to disagree on increased wealth not giving you access to better investments. If you have a hundred million dollars, or even ten million you can bailout an investment by giving the bus a loan to keep the business operating, until they can hit market. Mostly relevant to biotech investments.
@@zerphase I would differentiate between running your own business and investing...if you have millions on the side to bail out a struggling business, fine. But it does not make you a better investor to have millions on the side, when you are investing in low cost index funds. It actually likely means you are a poor financial planner and your investment strategy is lacking depth.
Hey, I have your book at home!
"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.
you are one of the few who speaks based on evidence!!!
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.
Best advice yet from Ben Felix. A true pro willing to share his knowledge and experience. Thank you!
Ben, you are a national treasure. I hope Canada appreciates you as much as your friends below the border do!
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.
It’s more than rare, he’s unique
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!
Way too many good advices for single short video! Much appreciated.
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!
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
Excellent contribution: full of common sense, pragmatic and simply announcing the basic rules. Thanks a lot.
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.
I try to read the papers which you mention, those papers do give a lot of insight into results and time frame of methodology applied. Truly amazing videos you put on
This! I'm going to have to listen a few more times.
I would add: these most important lessons are also applicable, relevant and appropriate to investors living in south equator countries like me. Thank you very much, indeed Mr. Ben Felix.
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.
Thank you, Ben. Just thank you. You've had the biggest impact on my investment decisions and me and my portfolio are grateful.
I have to say I had doubts about you when I watched my first video of yours earlier today. I thought you sounded a bit simplistic and suffering from recency bias. But I now think of you as a) very grounded b) very knowledgeable and well-read c) excellent communicator who doesn't dumb it down (though also good at 'normalising' jargon and hard concepts for ordinary viewers) and d) as such, a 'force for good'. Excellent stuff! Given my belated determination - after a decade of now embarrassing-looking investing mistakes - to move from picked stocks and a few managed funds to index trackers, consider me subscribed....
Love your content! Your and James Shack's videos really educated me about investing in the last couple of weeks. Finally started to invest in the MSCI World SRI :)
and a complement of your point about incentives: apply this not only to content you consume, but also any advice you get, from anyone. if someone gives you an advice, they're doing it for a reason. and it might not be a selfish reason trying to take advantage of you, but something as simple as "I'm telling you to do X because I was once in a situation I think is similar to yours, and I did X and it 'worked out' for me". once you know why that person is giving you that advice, you can ask yourself better if that advice applies well to you or not.
Great summary! Need these on a poster. Important corollary to the risk discussion that I do find is often missed: higher risk does not always mean higher expected returns. Only compensated risks do that.
I really appreciate that you are so clear and concise! Thank you!😊
Ben I do not pretend to be an expert but over the past 40 years I have found out the following: not nearly enough attention is given to time, secondly statistics plays a much more important role than generally recognized and three years ago I bought a book entitled “Against the Gods, the remarkable story of risk”. To me the book mentioned is a real eye opener, it is now my foundation in this area. Finally thanks for all of your help in this field, it has been helpful even though I am not Canadian.
Man this is gold, is like summing up a huge part of your videos! Commenting so you get to know it is much appreciated and so it gets the algorithm to show it to more eyeballs
It’s amazing that people will see this video and still opt to take the advice of a UA-camr telling them to buy a hyped up stock that has already run up massively
Best Ben Felix video ever. Actually, if you ever write a book, just use this lecons for chapters and I'll be the first one to buy a copy.
To the point. You are the best. Keep it up!
Excellent summary of investing everyone can learn from.
This video is pure gold.
We want more!
Ben, thank you so much for publishing the content you do. Recently, I have been looking into ways to invest some money, and if I hadn’t stumbled across your channel, I think I would have made some decisions that probably wouldn’t have paid off. I really appreciate the references and evidence-based approach.
Thanks for sharing. A lot of wisdom for both new and experienced investors 👌 As Ben nicely pointed out "For most people, investing in a portfolio of low-cost, total market index funds is good enough, even if it is not perfect". 👏
I would even go so far as to say that investing in low cost index funds is close to perfect if we take profitability and ease of management into account. The alpha you may miss out on by investing in low cost index funds is very low compared to a relatively more complex factor portfolio that may not even win, anyway. Also, if it's easier to stay invested by buying and holding index funds, then that's a tangible benefit over more complex strategies. I say this as someone who holds significant positions in factor funds like AVUV. Index funds are one of the greatest financial inventions of the 20th century.
Great video. Great points and totally agree with all of them.
The best lesson by far is that whatever information you have is already built into the price.
The second best lesson is understanding that there is a difference between investing and gambling and to learn how to distinguish the two.
Just wanted to say thanks.
Your videos leave a lot of value (and not the factor) and consciousness to investors.
Really, a lot.
One lesson I would add is "investing should be boring". Excitement is for day traders, and day traders don't get wealthy.
Just discovered your channel, love the straightforwardness and no bullshit beating around the bush. Keep it up! Got yourself a new sub
Briliant video to keep being reminded of our place, thanks Ben
You're the best Ben and obviously the main influence to my investment philosophies.
dang, i haven't watched ben's videos for a while now. good to know he's still the blink champ. thanks ben!
Wow this is an incredible amount of high quality information in such a short time. My brain is exploding cataloging all of this and confirming what I already knew. Thank you Ben! I am saving this for later and to share to my friends. What a great video!
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.
Thank You Ben. Great video as always. 🙂
This is awesome, Ben - well done 😊
Your best summary video. This is my new default link to share to family/friends that ask about the basics of investing.
You really are the Michael Jordan of personal finance for the millennials and gen z's!
insanely good content on this channel. thanks, ben!
Woah. Many problems have been solved. It doesn’t make them any easier. Great vid and lessons 🤙
You are absolutely the best.
The videos compresses a lot of information and is still short. Well done. "This time is always different" is a bit odd. The well known narrative I know that is not true is "everything is different this time" when people think old knowledge is no longer true and then suddenly a bubble pops. Your combo of the theme changes but the playbook is the same is aiming for the narrative I mentioned just in a somehow confusing way :)
If there were a ratio for financial wisdom delivered per unit time, this one would be almost impossible to beat.
As always, great advice. Thank you, Ben
This is great! So much info in what is basically bullet point format to make it quick and easy for people to digest. Then if they want to dig in any deeper on any one point then they can.
Only additional point I would make is part of "You're not that smart" and "Incentives matter". Basically, that all these investment gurus you see on social media also aren't smarter than the market, and (like so much of social media) are usually trying to manipulate you for their own profit. Even some of the ones who may think they that are well-meaning and just helping others by educating them by doing some research into stocks/funds for them are still trying to build an audience which in turn affects the content they focus on. That content can still lead people to feel better about making not-so-good decisions. So they'll talk about things like high-flying tech funds/stocks, or covered-call ETFs to get really high yields where they might tell you how QYLD is actually bad, but hey JEPI is a lot better! So people buy JEPI instead of QYLD when really they should not be buying either one.
Thank you for the practical exercise at the end, Ben. As a financial advisor, you'd end on the importance of financial planning, as that is where your incentive is. You even told us you'd do that during the video! Thanks again.
BTW what do you think of the "second free lunch": volatility prediction? It's allowed by the EMH.
I wanted to send the Rational Reminder video to several friends, but was not sure because it is too long. This is a great summary!
Thank you Ben, for your great insight...
Excellent. Maybe you could mention how important margin of safety is. When you lose money, it gets harder to get back where you were. Also Munger's words, investing in good companies at fair price is better than investing in mediocre companies at low price in the long run.
I have a lot of respect for you. Absolutely great work. Thanks a lot.
Fantastic video! Thanks for the quality information.
Bravo Ben - this is a great summary that deserves to be listened and listened again!
As a mistake maker along the journey of investing I am very grateful for you to pointing them out. The hard facts are not easy to listen to but necessary for better outcomes.
Thank
Great video as usual!!!
Great video! Related to financial planning, an investor needs to know their goal and their risk tolerance.
Here's one that I learned: Someone's confidence level when they speak about the market does not necessarily correlate with their success rate. High confidence does not mean the personal will end up being right more than anyone else with an opionion about the market.
Thank You Ben for these invaluable lessons.
I love the last one :) Call me Boglehead but I will stick with my low cost index fund :)
Very insightful as always
My portfolio is still mostly stock picking for mostly one reason: I simply enjoyed making decisions myself, so my goal wasn't market beating performance but similar to long term market return. But my retirement fund was 70% total market ETF, 20% US market ETF and 10% in savings.
Thanks Ben for making it all simple for us.
Excellent list, well stated and summarized!
Thanks as always for the great content. Would love for you guys to do an episode with someone from BlackRock😁 or Dimensional on all the detailed steps of launching and trading an (index) ETF. Say for example a new WorldWide fund with the Fastest Growers.
-What are all the (legal, administrative, sales, listing, etc....) steps that need to be taken to get this WWFG ETF listed. How would the first price be set. How does the redeeming / trading of the underlying work with the brokers etc.. ..and what would be a success...or when would it fail.
Anyway ...just an idea ! Thanks again
Only thing I disagree with is that wealth doesn't give you market beating opportunities.
Private equity, angel investing - ok it's not passive and more like an active job of scouting promising startup but a non-wealthy individual cannot reach startup kind of returns.
Also, to the extreme, pick any billionaire. They can use stocks as their collateral for loans and never pay them back by taking another loan just postponing the expiry date. Something that again a standard investor could not do.
Btw, well done Ben, love your videos, always!
Everyone seems to have said the things I want to say ... So I'll just say ... THANKS! I really mean it!
I agree with all your lessons, except one. I AM smarter than the market. ;)
Excellent video, Ben (as usual).
Any chance you can create a series out of this and expand more on each topic?
Thanks for all the effort you do to educate and share resources for the public!
Thank you for the interesting lessons!
Investing in yourself can be one of your greatest assets. Learning a new skill and being able to sell that in the form of a product or service can yield far greater returns than market average.
This is a really interesting thought that I'd never considered, thanks! We've got tons of research on the value of college, but I'd love to see videos about the relative value of all sorts of 'self-investment'
Thank you very much for your work and this video too.
Nice one Ben. Cheers.
Great content, Ben!
Impressively concise! I wish all UA-camrs could deliver information this way!
Help them
Love your videos! Can you please link up books/research papers in description 🙋♂️
They’re usually in there. This one I am still working on compiling them all.
You should add a donate button 💰💲so we can support you. We absolutely love your unbiased highly informative videos. Everything else on UA-cam is just financial click bait entertainment to get views. Your videos are well researched and proper investment fundamentals .
Great! Thanks a lot.
Important lesson: think critically when getting advice from anyone, especially r/pfc
What's pfc lol
personal finance canada subreddit
Only trust wsb
@@tomlxyz what's wsb?
Great lessons! I do think not all indexfunds are alike. There are enough etfs with good returns.
Would be great to see a RR interview with Robert Shiller!
VTI or equivalent and chill for a few decades. International exposure 10-40% if you want. That's it.
thank you
This is so true. I am 100% into this.
Love it, thanks for sharing!
I'd add one more lesson: you cannot separate out finances from emotions. All financial plans need to account for how people will actually respond on an emotional level; the greatest value-add a financial advisor can have is understanding their client well enough to create a plan that they can follow, rather than the mathematically ideal one.
My biggest learning is that everything is correlated. Diversification might be the only free lunch, but it's very hard to find uncorrelated assets. Even stocks and bonds have been very correlated in the last few years.
Short-term correlations matter less than long-term correlations for long-term investors. There are lots of long-term diversification opportunities out there.
@@BenFelixCSIBro, can you please do a masterclass like video on how to invest in SnP500 with a long term outlook, say upto 20 or 30 years. What I wanna know is the different strategies and stuff to get that 10% yearly return over a long time say 20 or 30 years. Thanks in advance.
Re incentives matter: when buying a house, it's a little absurd that the buyer's agent would be paid a percentage of the sale price. If we're just looking at incentives, that might push the buyer agent to suggest more expensive homes, or to put terms in the offer that pay them more, but might not lead to an offer being accepted. Fortunately the recent NAR ruling will help with that a bit as buyers can now work with flat-fee realtors.
Shut up.
I've watched your videos for a year now and coming as far from asking on Ben Graham's asset allocation advice to understanding index investing. I've concluded this might've been the best finance channel I've come across so far... There is just one thing I have in my chest that I'd appreciate if you'd like to answer Ben...
Question : Isn't factor investing more psychologically demanding than market cap weighted index fund investing? If so, by how far? Is it worth the trade off for the psychological aspect of say, seeing your AVDV or other factor tilted index etf lose to VTI or VXUS and the extra volatility that comes with it? This comes after watching one of Strongman's Personal Finance UA-cam channel suggesting that factor investing is somewhat unnecessary and we should stick with market cap weighted index ETFs instead.
Thank you in advance Ben.