Professor Charles D. Ellis of the Rebalance Investment Committee offers his most essential advice for investment success. More tips from experienced retirement pros.


When people ask, “What’s your investment philosophy and how’d you get it?” I think it’s important to recognize I’ve had little over 50 years of the most extraordinary educational opportunity anybody ever had. Yeah, I did go to Yale. And I did go to Harvard. And I did do a Ph.D. at night at NYU. That’s not what I’m talking about.

I’m talking about spending hours and hours and hours and hours day after day after day, year after year after year with the most extraordinarily gifted people anywhere in the world, those people who are involved in investment management, and watching and seeing how terribly difficult it really is to do better than the best of them. And it’s impossible to figure out who is going to be the best of them.

So I’ve come to a very sensible, I think, realistic, I think, deeply usable by anybody, I am sure… and that is don’t play games with trying to beat the market. Play down the middle. And don’t expect to be able to do something clever and imaginative. Play it “quote, unquote” safely. Do something sensible. The worst thing you can do is try too hard. But go ahead and be a long-term investor. And don’t let day-to-day froth or changes bother you. Stay with a long-term program.

But then again figure out what that long-term program ought to be. And the test of a long-term program is I could write it down on one side of one sheet of paper, give it to you as a professional investor with a lot of experience, and know in my heart of hearts that you would do right by me because you would follow the instructions on that one page. They’re not too tricky, and they would take you and your investing right down the path I want to have for my investments. Terrific.

I believe in that. And if you believe in that you very quickly find yourself saying, “Okay, then indexing makes a lot of sense because I can control fees. And I want to get away from high fees. That’s going to give me market rate of return, no more than market level of risk, at very low fees. Terrific. I keep most of the profitability of investing for myself.” Fine.

The second thing is, what is your horizon — time horizon? And if you’re investing for the long term, your own retirement, or your children’s education or your grandchildren, whatever it is, if you’re investing for the long term you really ought to be investing almost entirely in equities, particularly if you have a job.  Because a job has a steady income that’s an awful lot like what you would get if you invested in bonds.

And that basically is it — try to avoid mistakes. It’s the same way how I drive an automobile. I do not want to be the fastest car on the road. I do not want to do clever dodging in and out of lanes. I want to be sensible, plain, vanilla. I want to get to the destination. And I’d like to get there whole, happy and everybody in the car comfortable that we drove safely.

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