Alain Guillot

Life, Leadership, and Money Matters

7 rules that brought me to financial independence, Alain Guillot

7 rules that brought me to financial independence

I studied finance and the stock market for decades, and though I was a day trader analyzing every movement of the stock market tick by tick, I never had amazing returns. When I look back at all the hours I dedicated to studying charts, reading financial reports, and staying up to date with the news, I realize I could have taken up oil painting or yoga classes and made more money. However, after more than a decade of wasting my time, I discovered these simple rules that brought me to financial independence. Now I devote my time to photography or website building.

  1. Don’t jump into the latest financial trend. Instead, continuously invest in boring, broad-based index ETFs.
  2. Don’t try to understand the ups and downs of the market, just invest every month.
    If you spend a lot of time trying to figure out the market, over time, if you count the time invested, transaction costs, and taxes paid unnecessarily, there’s a big chance that you’ll end up underperforming the market and wasting time that you will never get back.
  3. Stick to a routine. For example, invest more money at the beginning of every month or transfer money from taxable accounts to nontaxable accounts (TFSA) at the beginning of every year.
  4. Don’t try to time the market. Stick to a routine and buy regularly regardless of what the market or economy is doing.
  5. Have a diversified portfolio. For example, a portfolio consisting of 1/3 Canadian index ETF, 1/3 U.S. index ETF, and 1/3 international index ETF.
  6. Real estate is not an investment, it’s a job. It requires time, money, and mental energy and is not as diversified as a stock portfolio.
  7. An emergency fund is not as important as people make it out to be. Prioritize paying off debt with interest rates over 4% and start investing immediately, creating an emergency fund as a last step.

If you follow these simple rules, you will out perform 80% of expert money managers and you will free up time to spend oil-painting, doing yoga, or whichever other leisure activity you like to perform.

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