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last updated 09/06/2022

The KISS Principle And Investing

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Are you a beginner investor? You should learn to keep it simple. 

Starting early and investing while you’re young is one of the best ways to grow your wealth fast.

Investing as early as possible lets you take advantage of compound interest more effectively which can help you accumulate a fat nest egg with less money than if you started investing later in life. Unfortunately, not many people do it because they just don’t know where to start.

Investing can get complicated and all the strategies as well as terms out there can really scare off someone just starting out.  

That doesn’t have to be the case. It shouldn’t be the case.

If you’re a beginner who wants to start investing, you should learn about the “KISS” principle and how it can help you become a great investor. What’s the “KISS” principle? Read on to find out!

What does KISS actually mean?

In this context, “KISS” is an acronym for “keep it simple, stupid”. 

The KISS principle basically preaches that the goal of a design should be simplicity and any unneeded complexity should be avoided completely. Most systems work best when they’re simple and are harder to deal with when they’re complicated according to the KISS principle.

The acronym was made by Kelly Johnson, an engineer at Lockheed Skunk Works. KISS has been a design principle in the U.S. Navy since 1960 and is popular in military fields as well as software engineering. That being said, KISS can be used in investing as well.

As an aside, the story that’s most attached to the KISS principle and Kelly Johnson is pretty interesting. Johnson made his team of engineers design an aircraft with a handful of simple tools in mind.

This was because he wanted the aircrafts they made to be able to be repaired by regular mechanics with “simple” tools no matter how “stupid” the damage done to the aircrafts were. Hence, “keep it simple, stupid”.

How can you apply the KISS principle to investing?

You can apply the KISS principle to investing by using the simplest methods out there to start investing. There are numerous investment strategies out there that are needlessly complicated for the sake of being complicated that will only help you lose your precious dollars.

Avoid that if you’re just starting out by using these KISS principle abiding investment strategies.

  • Investing in company matches and 401ks.

This is at the top of the list for a reason. It’s simple and if you set it up correctly, it’s completely automatic.

A lot of companies these days offer automatic retirement investments and company matches to their workers. This means that you get your pay deducted automatically for investment purposes while getting extra money from your company just because you invested.

If you set this up correctly, you make extra money from your company and make money from your retirement investments while everything happens automatically.

Now that’s simple and effective. 

  • Dollar-cost average investing.

Dollar-cost average investing or DCA investing is one of the simplest investment methods out there.

Basically what you do is that you take a set amount of money every month and invest it into an asset that you think will grow at the same date every month.

You don’t try and time the markets or obsessively trade your stocks. You just take a set amount of money every month and put it into your chosen asset.

If that sounds extremely simple, it’s because it is extremely simple. Choose your asset, set aside money to invest in it every month and invest in it on the same date every month. 

As long as you invest in good assets, DCA investing will help you reap a bountiful harvest much faster than you’d expect. Another benefit to DCA investing is that it’s much less stressful than active trading where you try to time the markets.

  • Investing in ETFs. 

Investing in ETFs (exchange-traded funds) is another simple way to get started investing.

When you invest in ETFs, you’re investing in a company’s portfolio of stocks instead of a single stock or asset.

This means that you don’t have to pick and choose assets by yourself which means you can skip over most of the research you’d normally need to do when picking an individual stock. This helps keep things… nice and simple.

The thing about ETFs is that while you don’t choose individual stocks, you can still choose an ETF that suits your needs.

Do you want a safe bet that gives you steady but not so impressive returns? There’s an ETF for that. Do you want an ETF that’s a bit riskier but has potential to give you a better yield?

There’s an ETF for that too. Do you want an ETF that only contains companies that are environmentally conscious? There’s actually an ETF for that too!  

  • Dollar-cost average investing into ETFs.

This might sound like a joke but it’s actually a valid investment strategy.

Investing into one ETF is simple enough but you’re putting all your eggs into one basket. So instead, you might want to choose two or three ETFs that suit your needs and DCA into those.

Doing this is a good strategy because it’s simple to pull off and you decrease your risk of losing money if one of your ETFs goes through a rough patch.

Choose your ETF or ETFs and then automatically invest a set amount of money into them at a set date every month. It’s that simple! Combining two different investment strategies can still be simple but extremely effective.

  • In crypto, just buy BTC and ETH. 

Now, investing into cryptocurrencies is risky business but the potential returns are definitely tempting. So instead of telling you to run away from crypto, it’s a better idea to tell you about a relatively safe crypto investment strategy.

Just buy Bitcoin and ETH. Dollar-cost average a set amount of money you wouldn’t mind losing every month into those two crypto assets and forget about them.

They’ll more than likely grow and give you a pretty nice return. And if they don’t, you only lost an amount of money that you were comfortable with losing.

BTC and ETH are the safest bets that you can make with crypto. That means you probably won’t get a million percent returns on investing in them… but you’re also not likely to get rugged. Keep in mind that you still might lose some money though!

There are other investment strategies out there that are pretty simple and would definitely fall under the KISS banner.

However, the five investment strategies above are all reasonably safe and simple bets apart from the crypto investment strategy. Investing in cryptocurrencies is never completely safe but dollar cost investing in BTC and ETH is the safest crypto play that you could possibly make.

Why should you apply the KISS principle while investing?

Simply put, because doing something simple is better than doing nothing at all. Applying the KISS principle will get you started on your investment journey while making sure you don’t do anything too risky.

Investing is a deep and complex topic which makes many beginners get themselves stuck in a never-ending loop of:

  1. Reading up about the latest and greatest investment strategies.
  2. Getting ready to apply the latest and greatest investment strategies.
  3. Never applying what they learnt because they read about yet another revolutionary investment strategy that’s sure to give them incredible amounts of growth.
  4. Going back to step 1.

The above is often called “analysis paralysis” or “shiny object syndrome”. “Analysis paralysis” is when you get stuck and can’t make a decision because you over-think about your problem so you go consume as much information as you can instead of actually tackling your problem.

“Shiny object syndrome” is when you can’t stay focused enough to solve a problem because you keep trying to jump on trends and use the latest, newest thing when you’re trying to get anything done.

These two things will get you stuck in place forever if you let them.  

Luckily, applying the KISS principle can help you solve this problem.

Here’s why applying the KISS principle while you’re investing can help solve “analysis paralysis” and “shiny object syndrome”.

  • Applying the KISS principle when you’re investing means you quickly choose the simplest investment method. This will get you started quickly and not give you any room to hesitate or get stuck.
  • Applying the KISS principle means you mostly ignore the latest, “revolutionary” investment methods available since the majority of them are needlessly complicated or gimmicky.
  • Applying the KISS principle will help keep you from being overwhelmed by preventing your investment strategies from becoming too complicated. KISS means “keep it simple stupid”, remember?

While there are downsides to applying the KISS principle to investing, it’ll at least get you to start. The single greatest mistake you can make in investing is to never get started. Using the KISS principle helps you avoid this mistake.

Where should you start?

Applying the KISS principle in investing doesn’t just stop at investment strategies and tools. It also applies to other things like what site and company that you use to invest.

These companies have a proven track record of being good enough for beginner investors who want to get their feet wet in investing.

  • If you want to invest in stocks, invest using eToro. Applying simple investment strategies is easy with eToro and you don’t need a lot of money to start. On top of that, if you just flat out don’t have an investment strategy, eToro lets you directly copy other people’s investment strategies. You shouldn’t blindly copy other people’s investment strategies but it is an option.
  • If you want to invest in cryptocurrency, invest using Coinbase. They do not offer the latest crypto coins out there but they have a decent track record of keeping their customers happy. They also have all the main cryptocurrencies you’d want to invest in available on their site which is what you’d want to invest in if you want to keep your crypto investments simple.

Closing

Starting out in anything is a daunting task and this is especially true for investing. However, if you use the KISS principle and follow through with a simple yet effective plan, you’ll be fine! Just starting puts you in a much better position than if you were stuck doing nothing.

So please get started!

Good luck on your journey into investing! Hopefully this article was helpful and helps you build a nice, big nest egg!

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