Just Keep Buying by Nick Maggiulli

Just Keep Buying by Nick Maggiulli

Just Keep Buying quick summary

The critical takeaway of Just Keep Buying is this: Just keep investing as much as you can in index funds, starting as early as possible, and let the markets and time take care of the rest. This strategy will account for 90% of your investing success while freeing you to spend your time on the things you value.

Just Keep Buying full summary

  • If you have little money saved, focus on saving (and investing) more.
  • Everyone falls along the Save-Invest continuum. Save for your future goals but not so much that your present life becomes joyless.
  • Incomes are becoming more unstable and less reliable. Instead of saving a regular, fixed amount, save what you can - when you have more, save more, and when you have less, save less.
  • Your rate of savings is primarily determined by your level of income.
  • Money is one of Americans’ top life stressors.
  • We always feel like we could or should be saving more.
  • Despite the fear of running out of money in retirement, most people die with money in the bank. You probably need to save less than you think.
  • Diet tends to have a more significant impact on body weight than physical activity.
  • Having more money tends to make people happier, up to a point. Beyond that, each additional dollar contributes less and less to our happiness due to diminishing marginal utility.
  • It’s like eating a pizza - the first slice tastes excellent, but each additional piece tastes less and less great until you don’t even want anymore.
  • Unlike pizza, we never get “full” of money and stop desiring it. Instead, we always want more, even if more money brings no additional satisfaction.
  • Saving at a lower income is more difficult because a greater percentage of your income goes toward necessities like rent, transportation, and food than for those with a higher income.
  • Studies show that most people remain stuck in poverty due to a lack of initial wealth, not a lack of motivation or talent.
  • “The most consistent way to get rich is to grow your income and invest in income-producing assets.”
  • 5 ways to grow your income:
  • Sell your time/expertise
  • Sell a skill/service
  • Teach people
  • Sell a product
  • Climb the corporate ladder
  • “Those who know, do. Those that understand, teach.” - Aristotle
  • The 2x Rule: Anytime you want to splurge on something, invest the same amount.
  • For example, if you buy a $300 pair of headphones, invest the equivalent, or $300, in stocks. The 2x Rule helps to free you from purchase guilt.
  • In Daniel Pink’s book, Drive, he proposes three critical components of human motivation and satisfaction: autonomy (self-direction), mastery (improving your skills), and purpose (connecting with something bigger than yourself).
  • Money’s purpose is to help you create the life you want. The challenge is figuring out what life you want.
  • Lifestyle creep is the idea that the more money you make, the more you tend to spend. Your goal is to keep your “lifestyle creep” spending to 50% or less of your additional income. Spending more than 50%, and you risk your retirement.
  • Plants practice “bet hedging,” which means they always save some seeds now to ensure they can make it through difficult times. The intention is not to maximize offspring in any year but over time.
  • Debt may be considered for two reasons: 1) To reduce risk and 2) To generate a return greater than the cost to borrow.
  • Studies show that college graduates tend to earn more money over their lifetime after accounting for tuition.
  • Studies show that mortgage debt causes the least stress, while payday loans, credit cards, and loans from family and friends cause the most stress.
  • The difference between good and bad debt is mostly a matter of choice. As you’d expect, those who are forced to use debt tend to be worse off than those who choose debt.
  • Transaction costs associated with buying a home ranges from 2%-11%.
    Anyone who puts down less than 20% of their home’s value typically has to pay for private mortgage insurance (PMI), and that’s in addition to homeowner’s insurance.
  • Most experts recommend budgeting 1%-2% annually for home maintenance expenses.
  • To be considered a qualified buyer (i.e., lower risk), your debt-to-income ratio must be less than 43%.
  • If you plan to make a large purchase within three years, save cash rather than investing your money. If your purchase is beyond three years, invest your money.
  • William Bengen discovered that retirees can withdraw 4% of a 50 / 50 (stock/bond) portfolio annually for 30 years without running out of money. This was true, even when the withdrawal rate increased 3% annually to account for inflation.
  • The 4% rule states that the average retiree will need to save 25x their expected spending in their first year of retirement.
  • Retiree spending tends to decrease by about 1% per year.
  • “The crossover point,” or finding where your monthly investment income exceeds your monthly expenses, is another way to determine when you can retire.
  • The author is not a big fan of the FIRE (financial independence retire early) movement because retiring at 35 has its downsides and is not for everyone.
  • 3 primary reasons for investing:
  • To save for your future self.
  • To preserve your money against inflation.
  • To replace your human capital with financial capital.
  • Studies show that saving for retirement tends to cause us to save more than saving for children, vacation, or a home.
  • Due to inflation, prices tend to double every twenty to thirty years.
  • Owning assets that grow their purchasing power over time counteracts the effects of inflation.
  • Human capital is the value of your skills, knowledge, and time.
  • The discount rate is the present value of future cash flow.
  • Human capital and financial capital are interchangeable.
  • As your human capital diminishes with age, you want to offset it with financial capital.
  • “By investing your money, you are rebuilding yourself as a financial asset equivalent that can provide you with income once you are no longer employed.”
  • Stocks are one of the most reliable ways to build wealth because they represent ownership and a claim against a business’s future free cash flows.
  • “The real return [after inflation] on [U.S.] equities has average 6.8 percent per year over the last 204 years.” - Jeremy Siegel
  • You should expect the following declines in stocks:
  • A 50%+ decline about twice per century
  • A 30% decline once every four to five years
  • A 10% decline at least every other year.
  • “Time is an equity investor’s friend.”
  • REITs are legally required to pay out 90% of their taxable income as dividends to their shareholders, so REITs are one of the most reliable income-producing assets.
  • The Lindy Effect states that something’s popularity in the future is proportional to how long it has been around in the past.
  • “It took years of blogging before I started earning any significant amount of money, but now new opportunities are always popping up.”
  • “I’ve since given up picking individual stocks, and I recommend that you do that same.”
  • Most investment professionals fail to beat the market, so why should a layperson like you expect to beat the market?
  • It takes years to see stock-picking results, and even if you are successful, luck plays a significant part, so it’s difficult to prove how skillful you are.
  • “Most stock markets go up most of the time.”
  • The best strategy is to take advantage of the market by investing in stock index funds.
  • The simplicity of indexing allows you to focus your time and energy on more fulfilling activities than the daily movement of stock prices.
  • Timing the market is a fool’s game. Instead, start investing today through Dollar Cost Averaging or on a regular schedule, regardless of equities or markets.
  • “When deciding between investing all your money now or over time, it is almost always better to invest now. This is true across all asset classes, time periods, and nearly all valuation regimes. Generally, the longer you wait to deploy your capital, the worse off you will be.”
  • Just Keep Buying is a statistically better strategy than saving up cash to buy the dip.
  • “You should invest as soon and as often as you can.”
  • If you want the upside of building wealth, volatility and periodic declines are just part of the process.
  • Don’t save cash for a dip, but if you happen to have inevitable funds during a market correction, it may be one of the best buying opportunities of your lifetime.
  • If you’re too timid to jump into the market, you will likely get left behind, and it will be even harder to get in later.
  • “Fear has a greater grasp on human action than does the impressive weight of historical evidence.” - Jeremy Siegel
  • “Choosing when to sell can be one of the most difficult decisions you ever make as an investor.”
  • The reason is two-fold: fear of missing out on the upside and losing money on the downside.
  • There are three cases for selling:
  • To rebalance
  • To get out of a concentrated (or losing) position.
  • To meet your financial needs.
  • “Buy quickly, but sell slowly.”
  • Rebalancing can be used to reduce risk. It’s imperfect but recommended to rebalance your portfolio on a set schedule.
  • Avoid selling and triggering unnecessary investment taxes.
  • A traditional 401(k) gives you more control over when and where you pay your taxes and is preferred over a Roth 401(k).
  • Unless you live in a low tax state and plan to retire to a higher tax state, a Roth 401(k) likely doesn’t make sense.
  • Always contribute to your 401(k) up to your employer match because the employer match is free money.
  • Maximize your wealth by putting your highest-growth assets in tax-sheltered accounts (e.g., 401(k), IRA, etc.) and your lowest-growth assets in taxable accounts.
  • You can always make more money, but you can’t make more time.
  • Happiness tends to be highest in our early twenties when life is full of possibilities. It drops in our late twenties because life has failed to live up to our expectations. Then it bottoms around age fifty and begins to climb back up.
  • “Fund the life you need before you risk it for the life you want” This is the most important quote from the book, in my opinion.

Related Resources

Here is a list of resources, including authors, books, websites, podcasts, and concepts mentioned in Just Keep Buying, which may be helpful for further learning.

People

  • Case Neistat, YouTuber
  • Roman Atwood, YouTuber
  • Drive by Daniel Pink
  • William Bengen, financial expert
  • Julian Shapiro, digital marketer and blogger
  • Jay Girotto
  • Ted Seides
  • Brent Beshore
  • Sam Altman
  • Tucker Max
  • Warren Buffett
  • Charlie Munger
  • Hedrik Bessembinder
  • Michael Kitces
  • William Bernstein
  • Jeff Bezos
  • David Geffen
  • Ray Dalio
  • Ken Griffen
  • Saez and Zucman, researchers
  • Peter Attia, physician and longevity expert
  • Hannes Schwandt

Books and Publications

  • Portfolios of the Poor
  • Your Money or Your Life by Vicki Robin and Joe Dominguez
  • How to Retire Happy, Wild, and Free by Ernie Zelinski
  • When Money Dies by Adam Fergusson
  • Stocks for the Long Run by Jeremy Siegel
  • Wealth, War & Wisdom by Barton Biggs
  • Financial Analysts Journal
  • RoyaltyExchange.com
  • OfDollarsAndData.com
  • SPIVA report
  • Everybody Lies by Seth Stephens-Davidowitz
  • Factfulness by Hans Rosling
  • The Click Moment by Frans Johnson
  • The Review of Economics and Statistics
  • The Human Network by Matthew Jackson
  • The Happiness Curve by Jonathan Rauch
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