A few further comments about jobs vs a career: we just had a small epiphany. Jobs are to mutual funds as careers are to individual investing. When you have a job, you leave most of your autonomy at the door.
Someone else is looking after you. All you have to do is what’s in the job description and you get money at regular intervals. Of course, there is risk. The company could go out of business. The boss could fire you. But those benefits are great!
Similarly, with mutual funds, you leave your investing decisions up to experts. You just park the dollars at the door, sit back and wait for the money to come in at regular intervals.
Yes, there are risks and complexities. Maybe you need an advisor about which mutual fund(s) to buy. You pay the advisor (either directly or through the expenses noted in the fund prospectus) and the fund manager, but you are taking risk out, right?
The problem with so much of the investment management industry, however, is that they are paid to “do something.” And their mandates typically say that they must be “fully invested.” So, as money keeps pouring into mutual funds, fund managers have to buy things.
However, as an individual investor focused on absolute returns, as opposed to returns relative to a benchmark index, you have the luxury of being able to do nothing.
With Staermose’s comment, let’s return to our main theme and look at careers and individual investing.
You direct your own career activities, you are responsible for growing your income and reputation, you reap all the rewards and risks with no one standing between you and success. You select the benefits that you prefer. Our personal bias is against insurance, for example, though we do buy some under protest.
As long as you keep your activities relatively simple in accounting terms, you can even do your own taxes. You can do much of your own legal work as well, thanks to the Internet. We changed our name back to our birth name a few years ago and saved hundreds of dollars and hours of time. Doing it yourself not only saves money, it’s money you don’t have to earn to pay for the service.
As the old Vermont joke has it: Q: There seems to be a lot of poverty up here, how do you get by? A: On lack of expense.
Finally, the entire thesis of this blog has been to do your own investing, so we won’t elaborate here. But the same principles apply – you take responsibility, accept the risk, and reap potentially much greater rewards.