Index funds, asset allocation, costs and behaviour: how long-term investing works, and how to recognise advice that serves the seller. Education only; no tips, no picks.
What this topic answers
The questions we are working through, in your words.
- What is a sensible way to start?
- Why do costs matter so much?
- How do I judge advice and who pays the adviser?
- What should I ignore?
Read in this order
Guides first, then the pieces that explain, then essays and stories.
A doctor’s first money plan
Your first stipend or salary, in the right order: know your numbers, build a cushion, protect what you cannot afford to lose, deal with expensive debt, then invest simply for the long term.
The case for boring money
Index funds, term insurance and an emergency fund will never make a good story at dinner. That is rather the point: the dull decisions are the ones that buy you choices later.
In preparation
Commissioned and being written. They appear above when they are ready.
Work it through
Tools and references for this topic. Every assumption is visible; nothing you enter leaves your browser.
How much freedom do my savings buy, and how could that grow?
Terms to know
From the money glossary.
- Index fund
- A fund that aims to match a market index rather than beat it, usually with low costs. A common choice for simple, diversified, long-term investing.
- Expense ratio
- The yearly fee a fund charges, taken from the fund’s value as a percentage of your money. Small differences compound into large ones over decades, so it is worth checking.
- Asset allocation
- How your money is divided between kinds of investment, such as equity, debt and cash. It drives most of the risk and return of a portfolio, and should follow your goals and timeline rather than recent performance.
- Direct plan
- A version of a mutual fund bought directly from the fund house, with no distributor’s commission built into its cost.
- SEBI-registered investment adviser
- A person or firm registered with the Securities and Exchange Board of India to give investment advice for a fee. SEBI has cautioned the public to take advice only from registered advisers; registrations can be checked on SEBI’s website.
Related topics
How do I turn income into freedom rather than a bigger lifestyle?
1 published
Where do I start with money, and in what order?
1 published
What do I owe, and what am I missing?
In preparation
The Handover
New writing on this topic, every Sunday.
One considered letter a week, with the best new writing across every topic.