##Rise of the ‘dead investors’
How does investing become as effortless as choosing a great fit? By setting it and forgetting it, Sethi says.
Carrying the ghoulish slang of “dead investors,” these wealth builders are actually passive investors who leave their money untouched for long periods of time. These are the people who buy diversified index or target-date funds and automate their contributions, then forget about it for years.
No day trading. No spreadsheets. And no stress tied to timing the market and the potential for emotional and poor decision-making, not to mention all those buying and selling fees.
Passive investors, on the other hand, benefit from diverse portfolios that spread out risk over time, growing wealth steadily and relatively stress-free. Research backs it up: A University of California study found that investors with higher portfolio turnover significantly underperformed the market, lagging by as much as 6.5% annually due to the “frictional” costs of frequent trading, such as taxes and fees.
Sethi himself adopts the buy-and-hold strategy. “What I do is I create a vision, I put my money [aside], I set it up to go automatically where it needs to go, and then I get the hell out of the spreadsheet.”
Start early
The sooner you invest, Sethi says, the more time your money has to grow through compound interest. “Time is one of the most powerful allies to live a rich life and grow your investments,” Sethi told Fortune.
He doesn’t hide the fact that he was privileged enough to have a father who emphasized the importance of financial security and who helped Sethi set up an investment account where he put small amounts of money from his job as a teen. Even just $50 a month, when started young, can go a long way with compounded interest.
But if Sethi is telling Gen Z to start small, avoid meme stocks and not get swept up in complicated investment strategies, where should they put their cash?
The answer may be boring, but that’s the point: Sethi recommends target date funds, a mutual fund tied to your desired retirement age. The strategy, he says, is “literally easier than brushing your teeth.”
“You pick that fund, you automatically set your account up to send money every month, and it invests for you, and that's it. You certainly do not have to pick stocks. You just set it up once and forget it.”
Let’s say you want to retire around 2060. You select the fund you would like tied to that estimated retirement year — numerous such target-date options exist at firms like Vanguard, T. Rowe Price, and Fidelity, and many 401(k) plans offer them — and then the fund begins to invest. It starts aggressive but then shifts to more conservative allocations as you approach 2060. This is known as the “glide path” strategy.
The best part: The fund does all the shifting and rebalancing of itself over time, meaning you don’t have to do any adjustments or monitor the fund — exactly what Sethi recommends.
“Timing the market is for suckers. The best thing you can do is treat your investments like a Thanksgiving dinner. Put the turkey in the oven, close it and let it cook for the next 30 years.”
His advice to young investors racing to “buy the dip?” Slow down. Building wealth isn’t a sprint.
“For the Gen Z people who feel so proud, ‘I bought the dip bro,’ you might want to consider actually bolstering up your emergency fund,” Sethi recommends. “That money might be a little bit more valuable right now sitting in a high-yield savings account, just in case you get laid off five months from now.”
The richest 1% use an advisor. Do you?
Wealthy people know that having money is not the same as being good with money. Advisor.com can help you shape your financial future and connect with expert guidance . A trusted advisor helps you make smart choices about investments, retirement savings, and tax planning.
Try it now
