Ten Simple Rules to Improve Your Investing

by Dean on December 8, 2025
Posted in Investing, Personal Finance
  1. Control the controllable. There are three things you can control when you make an investment (unless you are operating a business you buy): the price, the fees/costs, and the taxes. For 99% of the investing public, after tax returns will be maximized by buying passive investments that provide broad exposure to major indexes via ETFs with low fees that are tax efficient.
  2. Baseline numbers/probabilities are critical. To tell if an investment is a decent place to allocate capital you have to have some understanding of the baseline level of returns/risk associated with the asset class. Real returns: stocks 4-7%, bonds 2-4%, real estate 2-7%. Take the real return and add inflation of 2-3% in the USA. Volatility: stocks 16-20%, bonds 8-10%, real estate 15-17%.
  3. Understanding people is critical to investing. Investing is not a faceless, nameless endeavor, it is about understanding the behavior of people and systems that we as a society have built to allocate capital in our economy.
  4. Nuance matters. Investing is part science and part art. What may be true at one point may no longer be true.
  5. Markets are mostly efficient. Although markets do not incorporate all information and outperforming markets (alpha generation) is possible, it is difficult and requires time, effort, skill, and a dose of luck. 
  6. Capital markets usually go up (have positive returns). It is hard to make money betting on something going wrong (shorting) as overtime markets go up.
  7. Market timing is nearly impossible. Your returns will be higher by not panic selling when markets fall. Trying to choose when to buy and sell based on macro themes/indicators is exceptionally difficult and only a few investors have ever successfully done it.
  8. Free lunches only exist if there is a catch or a limitation. There are some cases where you can get excess returns (such as odd lot tenders or exchange offers), but they exist because they are small or there is a good reason large institutions cannot arbitrage them away.
  9. There are riches in niches. There are still tons of inefficient markets around the globe and even in your backyard (real estate, small businesses, etc.), but they are in small niches that require expertise, patience, and practice.
  10. When all else fails…buy the S&P 500. It is really hard to beat the S&P 500 over time after fees. In the last decade roughly 90% of large cap managers failed to outperform the S&P 500. As long as America remains in its current structure (still an if) it will be hard to replicate US returns on capital elsewhere over the long-term.

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