D.I.Y. Investing and the Art of the Home Run

reggie jacksonWhat do baseball and DIY Investing have in common? Not much but I did have a connecting moment recently when I saw a picture of the great New York Yankees hitter Reggie Jackson. Reggie is one of the all-time greatest home run hitters in Major League baseball. He hit 563 home runs and this made him quite rich and famous in the 70’s and 80’s.

What we tend to forget about Reggie is that he also struck out 2597 times. Reggie was hired to hit home runs. How many he hit and when he hit them was all the really mattered. Lucky for him, he had a knack for hitting them in key games during the playoffs and that’s how he earned the nickname “Mr. October”.

What does all this have to do with DIY Investing? I was thinking that as great as Reggie was at hitting home runs, he probably is not a good role model for DIY Investing.  Successful DIY investing is not about trying to hit a grand slam. It’s more about being in the game as long as possible and taking small steps forward to reaching your retirement goals.

Practically, that means forgetting about finding the next Google or Facebook and instead purchasing low-cost diversified index funds like Vanguard’s VCN, VXC and VAB.

As exciting as it sounds, when it comes to retirement savings, the risk of striking out is too great and the benefit of getting lucky and finding that obscure company before any one knows about it doesn’t warrant the risk. I’ve seen in older members of my family, once you have a certain amount of money to live comfortably in retirement, the value of extra money diminishes.

Compare that to the risk of betting, losing big, and then not having enough to retire comfortably. No comparison. I know it’s tempting to bet big once in a while and everyone knows someone who did and was successful. What you won’t hear about are the strikeouts that invariably occurred along the way.

Leave a Reply

Your email address will not be published.