Is investing long-term worth it?

Is it just me or does long-term investing kinda suck? You have to control your spending for 35 years. Plus you need to avoid selling your investments, to enjoy the money or when the market is crashing. You have to take a risk that you might lose when a recession hits. You have to exit the market sometime, but when? How do you time it? All of this makes it seem like investing is more trouble than it’s worth.

There are basically three key steps to investing, in my opinion:

Research options based on what you want to accomplish.
Come up with a financial plan.
Stick with the plan.

While these three steps involve a bunch of work up front, the good news is almost all the difficult parts of the process happen at the start. After you have a plan and start investing, everything pretty much goes on auto-pilot and you can mostly forget about it.

Most of us invest so that we can retire someday and still afford to have food, shelter, and medical care. There are other reasons to invest, but these are the popular goals. Usually investing for retirement means putting a small amount of money away monthly into a savings plan, either a tax free savings account (TFSA) or registered retirement savings plan (RRSP). Funds in these accounts are usually invested in a mutual fund or index fund. I won’t get into the details of what these are now, but this is usually the general plan you’ll set up with your bank or financial advisor.

Early on you’ll need to work out approximately how much you need to save each month or year in order to retire. Then you can set up an automatic monthly payment and, at that point, you can pretty much stop thinking about the whole experience. It’s a good idea to check in with your account once every year or two to make sure it’s working properly, but otherwise you should be able to “set and forget” your investments and they’ll just go to work accumulating value for you.

The “forget” part of “set and forget” is important. Once your plan is in place, one of the best things you can do for yourself is to stop thinking about it. Don’t try to study the ups and downs of the market, don’t try to hop between funds to squeeze out a little more money in the short-term, don’t watch the stock market charts and panic sell. Just leave the investment account and your monthly payment alone.

This is the part people tend to struggle with. They see the market shoot up and want to go into debt buying more, or they see the market dip and want to sell everything. If your investment plan is solid at the start, you won’t need to make any big adjustments or impulse buy/sell, you can just leave it alone to work on its own. It’s important to trust the plan, trust the process.

When you retire, then you can start pulling money out of your investment account as needed. Usually you wouldn’t withdraw it all at once. Don’t try to time your exit from the market to maximize your return. Chances are fine-tuning the timing won’t work out or make much of a difference. Just pull the money into your bank account as needed.

I think, for most people who view investing as a hassle, the issue is they see investing as something they need to actively manage. They want to time it, optimize it, juggle their stocks, time their exit like they’re account managers in The Big Short. Most of us can invest in a few mutual funds or index funds and then forget about investing. The money automatically gets paid out of a savings account each month and we can ignore it until it’s time to retire and start collecting a little bit as needed.

I would also like to point out that while it can be some up front work to make an investing plan and then some discipline is required to save money each month, investing is usually better than the alternative. People who do not invest typically either need to keep working well into their golden years or find themselves unable to afford basic necessities. Either way, the bit of effort required to start investing in the beginning is much easier than dealing with a lack of funds later in life.