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Book Summary: Just Keep Buying – Proven ways to save money and build your wealth

If there was just one factor you could use to guide your investment decisions, it should be: Most markets go up, most of the time.

Book Summary: Just Keep Buying - Proven ways to save money and build your wealth

In the last one hundred years, despite a great depression, two world wars, the threat of nuclear war, and a great financial crisis, the stock market in the United States increased 160,000% from 1922 to 2022 after adjusting for inflation. With such a robust and consistent increase in the value of the stock market over time, there might be no better investment advice than “Just. Keep. Buying.”

But for most people, continually investing in a volatile stock market is terrifying. As the famed financial author Jeremy Seigel said, “Fear has a greater grasp on human action than does the impressive weight of historical evidence.”

Content Summary

Genres
Fear #1: The market has peaked, and it may never recover!
Fear #2: The market is crashing! I’ll wait for things to get better before I buy…
About the author
Table of Contents
Overview
Read an Excerpt
Review/Endorsements/Praise/Award
Video/Podcast/PDF Preview

Genres

Finance, Money, Business, Investment, Wealth, Economics

Fear #1: The market has peaked, and it may never recover!

A common counterargument to the “just keep buying” investment philosophy is Japan’s stock market performance over the last 33 years. If you invested a thousand dollars in Japan’s stock market in 1989, it would only be worth $690 today. However, if you just kept investing $1,000 in Japan’s stock market each year for the past 33 years, your $33,000 would be worth approximately $59,000 today. Not a great return, but it beats keeping your money in cash and watching it get eaten away by inflation!

The market has peaked, and it may never recover!

But you don’t need to settle for mediocre returns (like Japan’s stock market returns over the last 33 years) if you don’t wed yourself to one market. Remember, MOST markets go up, most of the time, not one market goes up until the end of time.

In any 30-year period, 88% of markets around the world make new highs. Therefore, if you invest in several markets, the chances of your portfolio recovering from a crash in 30 years is almost 100%. An easy way to invest in most markets is to buy a large world stock index like the Vanguard Total stock index ETF (ticker symbol: VT). The total world stock index ETF is a collection of 9,551 stocks in every investible market in the world which automatically replaces dying companies with thriving companies, so you don’t need to manage it. When you diversify in a world index of stocks like VT fund, you’re no longer reliant on one region or one economy succeeding. Instead, you’re investing in human ingenuity and our ability to make businesses and products that earn money over time.

But even in the most diversified stock indexes, you will encounter substantial volatility (huge price swings throughout the year). The S&P 500 (the 500 largest stocks in the US – which makes up the majority of the world index stock holdings) had an average intra‐year price decline of 14% over the last 50 years. However, despite the large intra-year declines, the S&P finished positive at the end of 40 of the past 50 years.

You must tolerate some volatility if you want to grow your wealth, but author Nick Maggiulli says you should not tolerate more than a 15% decline in your entire investment portfolio. History shows that if you avoid a 15% decline by dedicating a portion of your portfolio to income-producing assets like long-term Treasury bonds and specific stock market sectors like energy, consumer staples, and utilities (which have historically risen as the overall stock market declined), you will outperform the overall stock market over time.

Fear #2: The market is crashing! I’ll wait for things to get better before I buy…

When the stock market portion of your portfolio crashes below 15%, it can feel like your money is being incinerated and it is hard to just keep buying. But if you can find the courage to keep buying stocks when stocks are getting massacred, the money you invest will enjoy supercharged returns when the stock market recovers. If you invest during a 20% decline and the market recovers, you don’t make a 20% profit; you make a 25% profit. Likewise, if you invest when the market is down 33% (like it was in March 2020), you don’t make a 33% profit when the market recovers; you make a 50% profit when the market recovers.

The market is crashing! I’ll wait for things to get better before I buy…

The greater the decline, the greater the upside, and the longer you can wait for the stock market to recover. During the Great Financial Crisis in 2008 and 2009, the market was down 55%. If you bought when everyone else was panicking, you could have patiently waited ten years for the stock market to recover and enjoyed an 8% annual return for ten years. But the market didn’t take ten years to recover, it took four, and those who kept buying as the market bottomed enjoyed a 22% annual return over the next four years.

If you hold off buying, or worse, sell your stocks and get back in the market later, you will likely miss the bottom and need to buy back your stocks at a higher price. Even in a prolonged bear market, like the 1970s, if you missed the ten best days between 1970 and 1980, you would have endured a ‐20% return. But if you stayed invested, you would have received a positive 17% return. And if you were out of the market and holding cash throughout the 1970s, inflation would have eroded your purchasing power by 17%.

About the author

Nick Maggiulli is the Chief Operating Officer and Data Scientist at Ritholtz Wealth Management, where he oversees operations across the firm and provides insights on business intelligence. He is also the author of OfDollarsAndData.com, a blog focused on the intersection of data and personal finance. His work has been featured in The Wall Street Journal, CNBC, and The Los Angeles Times. Mr. Maggiulli graduated from Stanford University with a degree in Economics and currently resides in New York City.
Nick Maggiulli | Website
Nick Maggiulli | Twitter

Table of Contents

Introduction
1. Where Should You Start?
I. Saving
2. How Much Should You Save?
3. How to Save More
4. How to Spend Money Guilt-Free
5. How Much Lifestyle Creep is Okay?
6. Should You Ever Go into Debt?
7. Should You Rent or Should You Buy?
8. How to Save for a Down Payment (and Other Big Purchases)
9. When Can You Retire?
II. Investing
10. Why Should You Invest?
11. What Should You Invest In?
12. Why You Shouldn’t Buy Individual Stocks
13. How Soon Should You Invest?
14. Why You Shouldn’t Wait to Buy the Dip
15. Why Investing Depends on Luck
16. Why You Shouldn’t Fear Volatility
17. How to Buy During a Crisis
18. When Should You Sell?
19. Where Should You Invest?
20. Why You Will Never Feel Rich
21. The Most Important Asset
Conclusion: The Just Keep Buying Rules
Acknowledgments
Endnotes

Overview

Everyone faces big questions when it comes to money: questions about saving, investing, and whether you’re getting it right with your finances.

Unfortunately, many of the answers provided by the financial industry have been based on belief and conjecture rather than data and evidence—until now.

In Just Keep Buying, hugely popular finance blogger Nick Maggiulli crunches the numbers to answer the biggest questions in personal finance and investing, while providing you with proven ways to build your wealth right away.

You will learn why you need to save less than you think; why saving up cash to buy market dips isn’t a good idea; how to survive (and thrive) during a market crash; and much more.

By following the strategies revealed here, you can act smarter and live richer each and every day. It’s time to take the next step in your wealth-building journey. It’s time to Just Keep Buying.

Read an Excerpt

“Make it a habit to invest your money like you make it a habit to pay your rent or mortgage. Buy investments like you buy food — do it often.” – Nick Maggiulli

Review/Endorsements/Praise/Award

“Nick has a genuine gift – while he uses rigorous empirical evidence to make his case, he also manages to tell the story in such a way to keep the reader’s attention and give them practical, actionable advice. In addition, he has just enough of a mischievous streak to challenge some long-held assumptions about investing, but in a manner that makes the empirical data a fresh, interesting story. Investors, new and old, will benefit from Nick’s practical approach to investing.” – James O’Shaughnessy, Founder and Chairman, OSAM LLC, and New York Times Business and BusinessWeek bestselling author, What Works on Wall Street

“Nick Maggiulli clearly delights in flouting the received wisdom about how people should manage their money. The end result is a book that’s full of both aha moments and practical takeaways. As a fellow writer about personal finance, I felt a creeping sense of jealousy in what I was reading. Nick takes the tired topics of how to save and invest well and managed to make them utterly fresh and even quite a bit of fun.” – Christine Benz, Director of Personal Finance, Morningstar

“The first time I read Nick Maggiulli’s writing I knew he had a special talent. There are lots of good data scientists, and lots of good storytellers. But few understand the data and can tell a compelling story about it like Nick. This is a must read.” – Morgan Housel, bestselling author of The Psychology of Money

“Just Keep Buying is the ideal combination of thoughtful and actionable. Maggiulli not only uses evidence to guide his suggestions, but he is also among the best at boiling everything down into ideas that are easy-to-understand and apply.” – James Clear, #1 New York Times bestselling author of Atomic Habits

Review for Just Keep Buying - Proven ways to save money and build your wealth

Review for Just Keep Buying - Proven ways to save money and build your wealth

Review for Just Keep Buying - Proven ways to save money and build your wealth

Review for Just Keep Buying - Proven ways to save money and build your wealth

Video/Podcast/PDF Preview

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