Connect with us


How To Become A Good-Enough Investor: Lessons Since 1996

You don’t need to be a great investor to make lots of money. You just need to be a good-enough investor. Once you’re good enough you’ll be able to ride an almost constant tailwind toward financial independence. Further, you’ll learn to no longer blow yourself up and lose all your progress.

One of my favorite things about investing is that it is a relatively meritocratic activity. You don’t need a fancy college degree, a good personality, or be of a certain race or sex to invest. So long as you have internet access and at least $10, you can get started.

My Investing Background

I’ve been investing since 1996 when I opened my first Ameritrade account while still a student at The College of William & Mary. Back then, I would day trade like a banshee between classes. It took me about seven years to realize day trading is a waste of time and money.

I studied Economics, got my MBA at Cal, and worked at Goldman Sachs and Credit Suisse for 13 years before retiring in 2012. I continue to be an active investor with 20% – 30% of my portfolio.

Since 1996, I’ve lost plenty of money during the Asian Financial Crisis, the 2000 Dotcom bust, the 2008-2009 global financial crisis, and now the 2022 post-pandemic letdown. From making too concentrated bets in single stocks to buying a vacation property I didn’t need, I’ve made plenty of errors.

However, despite all the mistakes, I still managed to accumulate a million dollars by 30. At 45, my investment portfolio has grown large enough to provide enough passive income to take care of a family of up to five in expensive San Francisco.

How To Become A Good-Enough Investor

If you can get your investments right at least 51% of the time and avoid blowups, you’re going to come out ahead. Ideally, if you can get to a ~70% win rate or greater over the long run, you will likely accumulate way more money than you’ll ever need.

1) Start with the objectives

To become a better investor you first need to understand why you are investing. List all yours reasons. Some common ones include:

Characteristically, bad investors do not invest with a clear purpose. Instead, they invest for the thrill of trying to make more money for money’s sake. When this happens, they tend to lose discipline and turn into gambling addicts full of investing FOMO. Once you’ve adopted a gambling addict’s mentality, your risk parameters get thrown out the window.

As soon as you’ve identified your key reasons for investing, you will reverse engineer how you will get there and take action. A good-enough investor is a rational investor who will take the steps necessary to achieve his or her results.

For example, you have a newborn who you’d like to go to college in 18 years. You estimate college will cost $500,000 for four years by 2040. Therefore, you will calculate how much you will need to earn, save, invest, and return to accumulate $500,000.

Next, you will learn about the 529 plan and the Roth IRA to save and invest for college. Finally, you will make a decision within 18 years whether paying 100% of your child’s college expenses is a good idea or not. A good-enough investor plans for the future.

2) Understand your risk tolerance

The hardest thing about becoming a better investor is understanding your risk tolerance. It takes at least two bear markets to truly know. During your first bear market, you will have likely underestimated your risk tolerance as you may feel worse than you thought you would be about losing money.

During your second bear market, you will also still feel bad losing money. However, the shock won’t be as painful because you likely made some adjustments to your asset allocation to better match your risk tolerance. Further, you’re likely making a higher income to better be able to recoup your losses.

By the time the third bear market comes, 15-30 years later, you will already be a grizzled investing veteran. You’ve adjusted your asset allocation further to get as close to your true risk tolerance as possible. The key to quantifying your risk tolerance is to translate potential losses into lost time.

Knowing what you don’t know is hard, which is why I’ve offered net worth allocations by age, work experience, and personality types in my book, Buy This, Not That. The people who blow themselves up investing are those who have significantly mismatched investments.

You cannot afford to listen to investing advice from someone who has not experienced at least two bear markets. I know it’s easy to market yourself as an expert in anything nowadays. But please spend time understanding someone’s track record and background before spending any money on them or their products.

Historical Bull And Bear Market Cycles

3) Have enough skin in the game to feel some pain

There’s an insulting saying from George Bernard Shaw’s 1905 play, Man and Superman, “Those who can, do; those who can’t, teach.” One translation of the quote is to have enough skin in the game to matter.

We can pontificate all we want about an investment. But to become a good-enough investor, we need to invest enough money in an asset to make it sting if things go wrong. If there is not enough skin in the game, you won’t care enough to do your due diligence.

Rationally, the more you believe in your conviction, the more you will invest. The more you invest in a particular asset class, the more research you will do before investing. You’ll also pay lots more attention to protecting your investment.

A good investor invests enough to pay attention. Then presses once they have a solid grasp of the investment thesis. A bad investor either invests too little or too much based on their risk tolerance or doesn’t invest at all.

Real Estate Investment Case Study

I first became interested in real estate crowdfunding in 2016, The idea of investing in my favorite asset class without having to deal with tenants and manage maintenance issues was enticing. Further, I wanted to diversify away from my expensive San Francisco real estate holdings.

Due to my lack of knowledge about real estate crowdfunding and commercial real estate at the time, I decided to start with a $10,000 investment. I read all the quarterly reports, filed my taxes according, and then did a post-mortem analysis of the successful real estate investment.

A $10,000 investment was enough to keep me interested, but not enough to keep me up at night. During the investment experience, I also realized it would take too much time to assemble a meaningful portfolio of individual investments and track them. Therefore, I decided to invest $250,000 into various private real estate funds instead. I was happy to pay a committee to invest in deals for me.

In 2017, I wanted to invest a greater amount in private real estate because I had sold a San Francisco rental property and needed to reinvest the funds. My son was born in April 2017 and I wanted to simplify life and spend more time with him. Further, I had a strong conviction in my heartland real estate thesis which I came up with in 2016.

Investing Enough To Make A Difference

In total, I ended up investing $810,000 in various private real estate funds and deals. I would have invested more, but one of the early real estate platforms went under (not the investments), COVID beat up commercial office real estate, and I had to recalibrate my risk exposure.

Now that I’ve received over $624,000 in distributions back, I will be increasing my risk exposure to private real estate investing again in 2023 and beyond. I think the timing is right as real estate slows. Heartland real estate is a 20+-year investment thesis for me.

private real estate investment dashboard

4) A good investor knows baseline returns and valuations

As a stock investor, you know the historical annual return of the S&P 500 since 1926 is about 10%, with dividends reinvested. A good-enough stock investor also stays on top of valuations versus historical averages.

A good-enough stock investor understands historical valuation averages

Every good investor knows it is impossible to consistently outperform the S&P 500 index over the long term. Hence, every good investor knows to invest the majority of their assets (80%+) in low-cost index funds.

A good-enough real estate investor knows that historical annual returns are about 2% above the annual rate of inflation. Good-enough real estate investors also know what an area’s historical cap rate average is versus the current cap rate average.

A good investor also understands past performance is not indicative of future results. Past performance only provides clues into the future. From there, a good-enough investor has to decide how the future will change.

Historical asset class returns

An Example Of A Change In Future Baseline Returns

In August 2020, I came out with my post suggesting retirees lower their safe withdrawal rate to about 0.5% at the time. Alternatively, employees should strive to accumulate more capital before retiring.

The idea was to incorporate a dynamic safe withdrawal rate to match with the volatile times. A good-enough investor is able to see things for what they are and change when variables change.

A lower safe withdrawal rate or accumulating more capital not only would better protect you if we were to fall back into the abyss (another bear market), it would also benefit investors if the markets continued to rally. And rally we did in 2021 with most asset classes having banner years.

Then a year later, in 2021, Vanguard came out with its 10-year median forecast for U.S. stocks, U.S. bonds, and inflation. At the time, the return forecasts looked to be overly conservative.

Vanguard 10-year return forecast for stocks and bonds

But if you believed in these new baseline return assumptions, you would have adjusted your investments accordingly. In 2022, the stocks and bonds forecast is now looking prescient. However, not so much for the inflation forecast.

This leads us to another lesson on how to become a better investor.

5) Don’t be delusional and attribute the results to your wrong reasoning

Although the dramatically lower return forecasts for U.S. stocks and U.S. bonds are looking right for Vanguard so far, its reasoning could be off.

For example, Vanguard assumed inflation would move even lower, meaning the risk-free rate would also move even lower. With a lower risk-free rate, returns for stocks and bonds may decline since investment returns are relative to the risk-free rate. Total returns = risk-free rate + risk premium.

However, the risk-free rate (10-year Treasury bond) went way up because inflation skyrocketed. The pace and magnitude of rate increases caught investors by surprise, thereby bringing about a bear market.

In other words, Vanguard got its call directionally correct, but for the exact wrong reason. A good-enough investor knows whether the results were due to his original investment thesis or not. A bad investor confuses the two.

How to become a good investor or good-enough investor. Don't be delusional and suffer from Dunning-Kruger Effect

Examples Of Confusing The Result With Your Thesis

Example #1. You got into an elite university because you thought you have superior intelligence. In reality, you were a legacy admit and your parents bribed your way in as revealed in Operation Varsity Blues. 20 years from now, you might end up depressed and confused about why your career or business never took off. Only when you recognize your merit was an illusion will you find peace.

Example #2. For my buy heartland real estate thesis in 2016, things were muddling along in 2017, 2018, 2019, and 2020, as indicated by Fundrise’s Heartland eREIT returns. Then in 2021, the returns exploded higher due to the pandemic. More people started relocating to the heartland and buying up cheaper property.

My investment thesis turned out right. But it took a while to significantly outperform. I have to be careful confusing brains with luck. If the pandemic didn’t happen, 2021 might have shown a more normal 9-15% return versus a 41.7% return. Nowhere in my original heartland investment thesis did I have a pandemic accelerating such a dramatic demographic shift.

Although the Heartland fund is closed, all of Fundrise’s funds are predominantly focused on Sunbelt / Heartland real estate.

Fundrise Heartland REIT returns

6) Become a better investor by inviting dissension

We all have had high-conviction investment ideas go wrong. Bad results are why post-mortem investment analysis is so important. We don’t want to make similar logical but incorrect assumptions in the future.

Having blindspots is extremely dangerous when it comes to investing. As a result, good investors ask others with differing points of view for feedback. They ask other people to highlight what they may be missing.

As an investor, it is easy to develop groupthink. Groupthink is common in corporate management, team sports, personal finance, social media, etc. Eventually, you might find yourself in one big echo chamber driving off a cliff. Be careful! If you’re mainly interacting with people who look like you with the same socioeconomic background, you are likely suffering from groupthink.

Are you being contrarian for contrarian’s sake? Or are you really seeing something others are not? With my Series I Bond interest rate decline bullish thesis, it seemed to me like other investors were not connecting the dots. The bullish thesis seemed obvious, which made me wonder what the hell was I missing?

Luckily, I have a platform that invites open commentary. In addition, you or anybody can read Financial Samurai for free and comment as well.

Adopt Emotional Agility

Based on experience gained since 2009, when Financial Samurai started, I can now usually tell who is likely not a good investor from their dogmatic responses.

The angrier and nastier a commenter is, the more likely the person is less educated about personal finance. In addition, I’ve noticed the longer you spend time in school (e.g. PhD) the more rigid your are in your investing analysis. Academics has a way of boxing in your thinking.

For example, some folks raged against my thesis that families need to earn $300,000 a year to live a middle-class lifestyle in a big city. I can understand their anger if they are earning much less. However, these folks probably don’t live in a big city with kids. They are incapable of imagining a cost-of-living lifestyle different from their own.

It’s hard to know what you don’t know. Listen to other viewpoints with as open a mind as possible. Meet new people from different cultures. Travel the world. Get out of your echo chamber.

The more emotional agility you have the better the investor you will become. Having too much emotion kills investment returns. Ideally, you want to invest like a disciplined robot. Unfortunately, none of us are emotionless.

If you find yourself getting easily angered by the news, social media, or even blog posts, please work on your emotional issues first before making large investment decisions.

7) A good-enough investor is the man or woman in the arena

Do you know who never wins? It is the person who never steps into the arena and fights. Instead, they sit in the cheap seats and criticize people for doing while not being willing to do anything themselves. Be the man or woman in the arena.

Yes, it may feel embarrassing if you get your investment thesis wrong. Yes, people may make fun of you for failing and losing gobs of money. But who are they to criticize?! After all, it was your money at stake. Don’t look back at your life with regret having never tried!

The people who try to make you feel bad are those who are unwilling to try themselves. Conversely, the people who are supportive after you’ve failed understand what you’re going through because they’ve been there themselves. Failure is an inevitability. Embrace it!

You will learn from your mistakes and make more optimal decisions going forward.

8) A good-enough investor knows when to take profits

If you never take profits then there is no point in investing. Yes, the ideal holding period for the S&P 500 and real estate is likely forever. But do you really want to be 92 years old and be worth over $100 billion like Warren Buffett? Maybe for a month.

Instead, it’s better to have a smoother consumption curve. Not only will you enjoy your wealth more, you’ll also save yourself a lot of time and stress as a younger person trying to accumulate such wealth. I’m confident the majority of Financial Samurai readers will die with too much money, hence why decumulation is eventually in order.

If you are a growth stock investor, selling stock from time to time is important. Given growth stocks tend not to pay dividends, you must occasionally extract some of the value of your investments by selling. Bear markets destroy capital gains in a hurry.

When valuations get to one standard deviation above trend, it’s best to reduce some risk. When valuations get to two standard deviations above trend, you may want to sell your entire position.

One of the biggest mistakes bad investors make is extrapolating good times for too long into the future. I did this in 2007 when I bought a vacation property for too great a percentage of my net worth. I had made the most money I had ever made in 2007 and thought my income would just continue to go up. Oh how wrong I was.

Mean reversion is real. A good-enough investor takes profits when valuations get out of hand.

A good investor knows to take profits
ARK Innovation ETF gives up all its pandemic gains

9) Never stop studying the markets

If you really want to be a good-enough investor, you have to treat investing like a second job or at least a side hustle. The larger your investment portfolio, the more you should pay attention. If you don’t take investing seriously, you could quickly lose a boatload of money.

In 2009, I lost 35% – 40% of my net worth that had taken me 10 years to build. That year of pain was enough for me to right-size my asset allocation and pay more attention. If you’ve lost a lot in the latest bear market, don’t let the pain go to waste.

Conduct quarterly reviews of your net worth and investment. Subscribe to investment newsletters from people with experience. Read books and blogs about personal finance. Good investors immerse themselves in finance, economics, and the ways of the world.

But you know what? Having a second job as an investor is also damn tiring, especially during bear markets. Therefore, do you really want to be a good investor or just a good-enough investor? I choose the latter.

A Good-Enough Investor is Good Enough!

It takes decades to become a good investor. Even after investing since 1996, I still don’t think I’m very good at all. Instead, I’m a good-enough investor who generates enough passive income to live my desired life.

Unless you want to become an investment professional, there’s no need to be a great investor. Heck, even great investors can’t outperform their respective indices over the long term, so why should you bother trying? Instead, focus on the things you’re good at as a DIY investor.

Your investments are meant to operate in the background so you can live your ideal lifestyle. If your investments are sucking joy out of your life, you likely need to recalibrate your risk exposure. The same thing goes for if you feel high after every win.

Be aware of who you are. You don’t have to be a great or even a good investor to get ahead. As with most things in life, being good enough is good enough!

Readers, do you think you are a good investor? What are some other recommendations on how we can become better investors over time?

Resources To Help You Become A Better Investor

Personal Capital is the best free tool to help you become a better investor. With Personal Capital, you can track your investments, see your asset allocation, x-ray your portfolios for excessive fees, and more. Staying on top of your investments during volatile times is a must.

Buy This, Not That is an instant Wall Street Journal bestseller. The book helps you make more optimal investing decisions using a risk-appropriate framework by age and work experience. Arm yourself with the knowledge you need so your money will work harder for you.

For more nuanced personal finance content, join 55,000+ others and sign up for the free Financial Samurai newsletter and posts via e-mail. Financial Samurai is one of the largest independently-owned personal finance sites that started in 2009. 

How To Become A Good-Enough Investor: Lessons Since 1996 is written by Financial Samurai for

Continue Reading


IRS Out For Blood More Than Doubling Penalty Interest

IRS taxes increase

In a blatant act of financial tyranny, the IRS is intensifying its assault on hardworking Americans by shamelessly jacking up the interest penalty on underpaid taxes from a pitiful 3% to an exorbitant 8%. This calculated move, recalibrated quarterly, serves as a stark reminder of the insatiable appetite of the IRS, an oppressive behemoth relentlessly extracting every last penny from citizens already shackled by burdensome taxation.

Specifically targeting non-corporate taxpayers, the IRS demands the federal short-term rate plus an additional three percentage points, a blatant money grab that directly targets struggling self-employed individuals, independent contractors, and gig economy workers. These individuals, already grappling to make ends meet, find themselves in the crosshairs of a government voraciously hungry for more of their hard-earned wages.

For those daring to resist this blatant financial coercion and falling short on their payments, brace for the punitive underpayment penalty. There’s a meager concession – if the amount due is under $1,000 after begrudgingly considering credits and other tax factors, citizens might receive a temporary reprieve from the claws of the taxman.

This audacious maneuver puts the self-employed and independent contractors in the IRS’s oppressive grip, coercing them to make quarterly estimated tax payments under the looming threat of severe financial retribution. The January 16, 2024 deadline for the fourth quarter of 2023 is fast approaching – a date that casts a dark shadow over those grappling with the suffocating weight of government overreach.

While the regular W-2 employees might momentarily sigh with relief as taxes are conveniently siphoned from each paycheck, tax experts issue a stern warning against such complacency. Joseph Doerrer, a CPA and financial planner from New Jersey, challenges individuals to scrutinize their tax situation, posing the provocative question, “Are you where you should be?” A question that echoes as a stark reminder of the government’s overreach into the pockets of hardworking Americans.

One taxpayer, Sameet Durg, found himself blindsided by an underpayment penalty reaching into the thousands – an unwelcome surprise that serves as a chilling testament to the relentless demands of the IRS. Durg, a marketing executive, now watches his finances with unwavering vigilance, refusing to endure a hefty hit come April.

As the IRS unabashedly cranks up the interest penalty, taxpayers are left grappling with the heavy-handed tactics of an agency that seems insatiable in its quest to confiscate more of their hard-earned money. This move underscores the urgent need for citizens to vehemently resist the oppressive tax regime, actively defy the IRS’s overreach, and reclaim sovereignty over their wages.

Continue Reading


GUILTY! Sam Bankman-Fried Faces Over 100 Years in Prison

GUILTY! Sam Bankman-Fried Faces Over 100 Years in Prison

( – Sam Bankman-Fried has been found guilty of all charges related to the collapse of his Bitcoin exchange, FTX.

“A New York jury in Manhattan federal court agreed with prosecutors that Bankman-Fried defrauded investors, customers and lenders in connection with the collapse of his crypto empire,” reported Fox Business.

“Prosecutors accused Bankman-Fried, who founded and controlled both FTX and sister hedge fund Alameda research, of misappropriating and embezzling billions of dollars in FTX customer deposits, scheming to mislead investors, and instructing other executives at his businesses to do the same,” it added.

Bankman-Fried was charged with five charges of conspiracy and two counts of wire fraud in the first two criminal trials.

The maximum sentence for each crime was 110 years in prison.

The hearing for Bankman-Fried’s sentence has been scheduled for March 28.

The Southern District of New York’s U.S. attorney, Damian Williams, commended the decision and said that Bankman-Fried “perpetrated one of the biggest financial frauds in American history.”

“The cryptocurrency industry might be new, the players like Bankman-Fried might be new,” Williams said. “But this kind of fraud, this kind of corruption, is as old as time.”

NBC News gave some background information and historical context before the decision:

“FTX and Alameda quickly collapsed in November 2022 after some of their financial liabilities were exposed.

The fact that Alameda had taken billions of dollars from FTX’s customers and that much of Alameda’s balance sheet was comprised of digital currency assets it had created was central to the case against Bankman-Fried.

Unnerved by disclosures about the firm’s financial position, many of FTX’s customers tried to get their money back. That set off the equivalent of a bank run.

The value of Alameda’s investments crashed, and FTX couldn’t return much of that money because it had been given to Alameda. Some went to the fund’s lenders, and billions were spent on sponsorships, commercials, and loans to top executives. That, too, was a major part of the case against Bankman-Fried.”

Following the collapse, more FTX and Alameda executives were prosecuted, including former CEO of Alameda Caroline Ellison, co-founder of FTX Gary Wang, and chief technology officer of FTX Nishad Singh.

All three pleaded guilty, agreed to cooperate, and testified against Bankman-Fried.

In exchange for their cooperation, they will receive less severe punishments.

In his defense, Bankman-Fried stated that he never intended to deceive anyone and that, following the failure of FTX and Alameda, the government had been searching for someone to blame.

“Mr. Bankman Fried maintains his innocence and will continue to vigorously fight the charges against him,” Mark S. Cohen, counsel to Bankman-Fried, said in response to the verdict.

Williams stated that he hoped the conviction would be an example for others.

“It’s a warning, this case, to every single fraudster out there who thinks that they’re untouchable, or that their crimes are too complex for us to catch, or that they’re too powerful for us to prosecute, or that they could try to talk their way out of it when they get caught,” Williams said. “Those folks should think again.”

Copyright 2023.

Continue Reading


Brutal ‘Bidenflation’ Has 1 in 6 Retirees UNRETIRING

Brutal 'Bidenflation' Has 1 in 6 Retirees UNRETIRING

( – According to an analyst, “Bidenflation” may be a long-term issue, leading one out of every six pensioners to contemplate retiring early.

It will undoubtedly persist if Biden wins re-election.

In the far-left USA Today, Patrice Onawunka laments the possibility that the “financial insecurity” brought on by inflation—which was brought on by “reckless federal spending”—will last forever.


“People have connected the dots between ill-advised government policies and harsh economic outcomes. Spending nearly $2 trillion on government transfers to almost every household during supply-chain disruptions and exacerbated labor shortages caused inflation to accelerate. Putin’s invasion of Ukraine and other production disruptions worsened it.

The Biden administration and congressional Democrats passed a climate change bill that they falsely labeled the Inflation Reduction Act in hopes of fooling Americans, especially seniors.

The bill never addressed rising food, housing, or energy prices — households’ most basic and critical needs. Any climate savings would take years to come to fruition and could be offset by new costs for families — tens of thousands of dollars — on new electric vehicles.

Meanwhile, the green subsidies cost more than three times what the law’s supporters claimed.”

What could be crueler than adopting a law that does the exact opposite and is titled the Inflation Reduction Act?

55 percent of those who have already had to un-retire claim it was because they needed more money.

The White House and corporate media continue to lie to us by promising that the inflation issue will pass quickly, yet nothing ever appears to change.

Everything’s cost is skyrocketing especially housing. Meanwhile, Joe Biden is exerting every effort to keep inflation high. The federal government spends like a drunken sailor, which cheapens money.

Even worse, Biden has permitted countless millions of illegal immigrants to enter our nation, which raises the price of housing by increasing demand for limited items like housing.

Housing is a necessity, Onwuka tells us, unlike other discretionary expenses. Rent costs in America are rising, disproportionately affecting older folks and those with low incomes, especially those on fixed budgets.

In addition, she states that “10 million households headed by people aged 65 or older spend more than a third of their income on housing, and half of these pay more than 50%.”

See what happens when you factor millions of illegal immigrants into the housing problem.

Biden punishes Americans who have lived by the book, paid their taxes, saved money, and worked hard. He is putting the interests of millions of illegal aliens—who raise demand for everything and drive up prices for everything—above the interests of those Americans.

“In a little over four years, I intend to retire. I’ll never be wealthy, but since I started my first 401K in 1994, I’ve been setting money aside for that moment. I enjoy both my job and my coworkers.”

That isn’t the problem. The dream is the problem… the desire to live out your third act with the freedom and resources to do whatever you want.

Similar actions are taken by many working Americans who save money and forgo immediate enjoyment to prepare for their elderly years. As a result, I find it difficult to understand what it must be like to enter a dream before having it destroyed.

The anguish of coming out of retirement, returning to the grind, and facing Monday mornings all over again escapes me.

The only idiots, child abusers, and masochists vote Democrat.

Copyright 2023,

Continue Reading