02-05-2022, 12:25 AM
This is an age old discussion, and I believe the only true answer here is that it depends on you. Many view the market as some sort of a race or a competition, where they need to be better than the guy next to them. This might be true for the big boys on wall street because they are essentially fighting against each other for the chance to play with our money. But when it comes to individual investors, I find this to be an absolutely flawed concept.
Everyone has their own lifestyle, their own goals, their own risk tolerance. These are what need to guide our decision making, and these are what we need to be comparing our results to. This is why I shy away from comparing my portfolio to an index as much as possible. I have different goals and a different risk tolerance than the SP500. I only take a peek when we have these days/weeks/months when the markets tank properly. And the reason I look? It's that risk tolerance thing. I know I want to have less risk than the SP500. So when the risk materializes, I check to see if I reached my goal.
Not surprisingly, I am focusing the large majority of my portfolio towards producing income. Sure, I could be flipping cryptocoins with 300% leverage instead. But I chose DGI and it's not because I'm obsessed, it's not because I ignore other options. It's simply because DGI gives me the things I want, which are regular cash flows which is growing faster than inflation and relative safety compared to the rest of the markets.
Everyone has their own lifestyle, their own goals, their own risk tolerance. These are what need to guide our decision making, and these are what we need to be comparing our results to. This is why I shy away from comparing my portfolio to an index as much as possible. I have different goals and a different risk tolerance than the SP500. I only take a peek when we have these days/weeks/months when the markets tank properly. And the reason I look? It's that risk tolerance thing. I know I want to have less risk than the SP500. So when the risk materializes, I check to see if I reached my goal.
Not surprisingly, I am focusing the large majority of my portfolio towards producing income. Sure, I could be flipping cryptocoins with 300% leverage instead. But I chose DGI and it's not because I'm obsessed, it's not because I ignore other options. It's simply because DGI gives me the things I want, which are regular cash flows which is growing faster than inflation and relative safety compared to the rest of the markets.