I recently spoke to students at the University of California, Berkeley. Here’s what I told them.
Save 15%-20% of your gross salary, starting with your first paycheck.
Invest your savings in Vanguard’s Target Retirement 2065 Fund.
Then I told them about the Solin 5-year rule.
They could only look at their portfolio once every 5 years.
You can learn from this advice.
There are two factors that really impact your success as an investor.
- Your behavior
You want to keep your costs as low as possible.
You can do this by limiting your investments to low management fee index funds, ETFs or passively managed funds.
That’s the easy part.
Paying attention to your portfolio every 5 years is difficult.
Doing so will permit you to ignore short-term news and much of the financial media.
The financial media often works to harm investors by generating fear, anxiety and greed.
Following my rule insures you don’t fall into this trap.
The next time someone asks you how your portfolio is doing, here’s how I want you to respond: “I don’t know. I only check it every 5 years. I follow the Solin 5-year Rule.”