I love America and feel very much at home there. But get in a car and I instantly become your typical Englishman abroad. No, it’s not driving on the wrong side of the road that bothers me, or forgetting that I’m allowed to turn right on red. I’m even getting used to the road signs; Xing, it transpires, means crossing (how did I not see that?) and turnpike is in fact an old English word, dating back to long before the Pilgrim Fathers. Investing.
No, my problem with American motoring is the automatic gearbox. I know how silly I’m being — automatic cars are supposed to make driving easier — and that’s why, when picking up my rental car from Los Angeles Airport last week, I resolved to put mind over matter and just get on with it. Guess what? It worked. Not once did my left foot stray towards a non-existent clutch, and apart from the obligatory LA traffic jam, I actually enjoyed the ride.
Investing automatically is not unlike driving an automatic car. You calculate your capacity for risk, build a portfolio that maximises the return you can expect for the level of risk you decide to take, and then, apart from occasional rebalancing, you do absolutely nothing. No more fretting about volatile markets; and no need to scour the money pages for the latest tips or listen to that nonsense on CNBC.
For more on the joys of passive investing, stay right here on The Evidence-Based Investor.