My 12 Investing Principles That Will Make You Rich

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I realised I haven’t wrote an article about my investing principles. As my readers know I am heavily invested in index funds (and real estate through the apartment I live in).

Here are my 12 investing principles:

1) Dollar-Cost-Averaging: Invest aprox. 3.500 USD $ every month (30.000 NOK) in index funds. This sum will be adjusted yearly based on my income, wage-increase etc.

2) Diversification: Invest 70% in MSCI World and 30 % in MSCI Emerging Markets. I don’t know how the markets will perform in the future, but this is what I feel comfortable about.

3) Leverage: Use 1,25:1 leverage. In theory this will increase my annual return in the long run from 7% to 8,6 %. How the markets actually will behave is unknown. Read more about why I use 1,25:1 stock leverage here.

4) Ignore market noise: I’m in this game for 20+ years, and what happens daily is irrelevant.

5) Don’t checks stocks daily: I only check my brokerage account on the last day of the month. Why?

1. To buy more index funds
2. To update my monthly net worth report.

6) Never sell stocks: Even if the market collapses. I don’t let feelings cloud my judgements. Read my post about what to do if the market collapses.

7) Rebalancing: Rebalance the  index funds to the original 70/30 distribution at the end of every year.

8) Never try to time the market: Time in the market beats timing the market. Enough said.

9) Remain Focused on Goals during Periods of Volatility: bull markets are more fun than bear markets. When the markets are “unfriendly”, try to focus on your real values in life instead, eg. family, friends, interests etc.

10) Remember how markets works: Expect markets to fall 10% once a year, 20% once in couple of years and 30% fall at least once a decade. This is unavoidable. Have patience. Resist the natural human bias to act.

11) Boring is good: Index investing should be boring. If you want a thrill, go to Las Vegas and bet 1000 $.

12) Stay strong: Stick to this plan no matter what the market conditions are. Humans will have a far greater emotional reaction to a financial loss than to a financial gain of the same amount. This is irrational. Stay where you are!

Read all my posts in chronological order here: Archives

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5 Replies to “My 12 Investing Principles That Will Make You Rich”

  1. Great principles! I follow most of them too – except leveraging which is a bit too risky for me. I am also considering adding a new principle of only investing in ethical index funds 🙂

    1. route2fi says: Reply

      Thanks, Carl! What is your definition of ethical index funds?
      Sounds like a great idea 😀

      1. That would be index funds with ESG screening. Some have more strict criteria than others, but I like funds that exclude companies violating human rights or destroying our planet 🙂 I’m considering shifting my investments to ethical funds only, but haven’t done so yet.

  2. Reverse The Crush says: Reply

    I like your investing principles, Route 2 FI! I especially agree with 1,4,6, 8 and 11. Very good principles that will definitely lead you to FI. Thanks for sharing!

    1. route2fi says: Reply

      Thank you, RTC! 😀 What is your investing principles?

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