It sounds wonderfully inclusive to say that everyone can succeed at investing by approaching it in whatever way they’re most comfortable. In reality, this just isn’t true.
One elderly couple I know has been living off GIC interest for many years. Even worse, they’ve just been accepting the interest rates offered by big banks instead of seeking out the best rates. They now have very little left and are forced to live extremely modestly. Given the large nest egg they started with decades ago, they could still be living a middle class lifestyle. But they stuck with what made them comfortable.
I’ve known two people well who tried to make money with stock options. Both lost all the money they devoted to the effort. They didn’t like the idea of making money slowly and went for some big scores. So much for seeking success investing in their own way.
Many of my colleagues over the years have invested their money trading individual stocks. This was particularly true during the tech boom in the late 1990s. It can be tricky to learn people’s true returns because they usually don’t know themselves how they’ve done. They tend to boast about their successes, but you can get them to moan about their losses if you ask right. I’m willing to guess that few of these people managed to do as well as market returns.
I was comfortable with stock-picking for many years. However, if we eliminate the spectacular returns I got on one stock in 1999, my stock-picking record was underwhelming. If I had continued stock-picking with this level of underperformance instead of switching to indexing, by today my portfolio would be smaller by about the value of my house.
It makes so much sense to seek out friends and activities that make us happy and comfortable, but this doesn’t apply to investing. It pays to reason your way through deciding how to invest your life savings.