10 Rules of Successful Investing Should we just buy and hold or wait and see when real estate and stock prices are at all-time highs, and those paper losses are a lot more problematic than we’re being told? Did you know that homeowners are worth 38X more than renters, or that investing well is the only way to escape the rat race? Consider the difference between saving and investing in the chart below. We’ll talk more about how to make a successful investment in our home in our Real Estate Masterclass, and there is an entire section on real estate in The ABCs of Money, 6th edition. I encourage you to check out both of these resources because buying high or purchasing more than we can afford can cause a financial nightmare that lasts for years. (You can only “build equity” when prices increase; if they plunge, you could go underwater on the mortgage, which causes our FICO score to plunge and other significant problems.) Below is a step-by-step guide for the liquid (cash, paper) side of our wealth plan. This time-proven plan is literally as easy as a pie chart when we follow the 10 Rules of Successful Investing that are listed below. 2023 and 2024 were gangbuster years for equities, with gains of 24.23% and 23.31%, respectively in the S&P500. If you started with $100,000 in large cap stocks in January 2023, you might have had $124,230 at the end of 2023 and $153,188 at the end of 2024. Of course, it’s also important to know that the S&P500 lost -19.44% in 2022, which is why an age-appropriate, diversified plan needs to be rebalanced 1-3 times a year. This is a buy low, sell high plan that takes the emotions out of investing and keeps us on the right side of the trade. Some of the best performers of 2021 (another gangbuster year on Wall Street) were the worst of 2022, including the Magnificent 7 companies*. *Alphabet (Google), Amazon, Apple, Meta (Facebook/Instagram/WhatsApp), Microsoft, Nvidia, Tesla. You’ll also see that in 2022, long-term bonds lost even more than stocks, with losses of -26%. Bonds lost again in 2024. These “paper losses” are far more problematic than our broker/salesmen might be telling us, which is why we really must know what is safe in a Debt World. While public debt of $36.2 trillion is what we hear about in the media, corporate debt is double what it was before the Great Recession and total debt of $100 trillion is in the nethersphere – at unprecedented levels. 10 Rules of Successful Investing 1. Tithe 10% to your Buy My Own Island Fund. 2. Keep a percent equal to your age safe, not in stocks. 3. Overweight or underweight safe based on market conditions. 4. Know what is safe. 5. Diversify into 10 funds. 6. Underweight the bailouts & vulnerable companies or industries. 7. Get hot. 8. Rebalance 1-3 times a year. 9. Use limit orders to capture gains, not stop losses. 10. Be the boss of your money. Bonus Tips: Real Estate Fix the Roof While the Sun is Still Shining And here are more details on each step. 1. Tithe 10% to your Buy My Own Island Fund Remember to put 10% of your gross income into tax protected retirement accounts. (Rich people don’t put money in jars.) We want our investments in retirement accounts so that it grows without us having to pay capital gains taxes. These plans are also financial predator proof. (Debt collectors can’t put a lien on your retirement accounts). It’s been reported that billionaire Peter Thiel has $5 billion in a Roth IRA. Match our employer’s contribution in the 401(k) or RSP, but not more, IMHO. The employer’s contribution is free money. The bad news about employer-sponsored retirement plans is there is not very much freedom of choice. That’s why it’s important to also contribute to our Health Savings Account (Americans), our own IRA or TSFA (Roth, SEP and/or traditional), our kids’ college or dependent IRA funds, etc. (The college funds should be coming out of our education fund. Learn more about that in the Thrive Budget section of The ABCs of Money, 6th edition.) Self-directed IRAs typically have freedom to invest in the universe of stocks and funds. This is where you can add in hot industries and countries that might not be found in your employer-sponsored selections. I put the best performing funds (hots) in my Roth IRA. Name your funds with goals. That will make it more exciting to do our regular rebalancing, as we see just how much progress we are making toward the desired destination. 2. Keep a percent equal to your age safe, not in stocks. The rule of thumb is to always have a percentage equal to our age safe, not in stocks, equity funds, mutual funds, etc. Most people have far more at risk than they realize. The last two recessions have lost investors more than ½ of their at-risk investments. Simply keeping the proper amount safe protects our wealth from these devastating drops. Of course, in a Debt World such as we are experiencing in 2025, it’s also important to know what’s safe (#4 below). 3. Overweight or underweight safe based on market conditions. In 2025, the U.S. economy is expected to grow at 2.1% GDP. That’s significantly slower than 2024’s 2.8% GDP growth. No recession is predicted for 2025. However, economists are lousy at forecasting recessions, and tariffs are a wild card that could impact growth. When the economy is expected to contract, overweighting safe is a good idea. (This is something we encouraged before the last three recessions. Yes, the data is that reliable.) Today, there is an added risk of equities being very expensive, which means if there is a shock or recession, the plunge could be hard and fast. During the pandemic, equities lost almost 40% in just one month. In our sample pie charts, we are overweighting 20% safe. During years like 2021 when the economy was expected to outperform (GDP growth of 5.9%), it can be smart to overweight into equities (stocks). There are other considerations, including valuations. However, the important point is that we don’t want to wait until a shock happens. When we wait for headlines, we’re late. Basing our strategy on data is far better than running with our emotions, such as those risk tolerance questionnaires that many broker salesman will give us. Our emotions are rarely our friend in investing, particularly at the beginning of our journey. Most people have a lot of risk tolerance when stocks are high. Market tops are when we want to capture gains (sell high) and make sure we protect our wealth (while remaining age-appropriate and diversified). Few people have any tolerance for risk at the market bottom because they feel that we are in an Apocalypse. Often, they’ve already lost a lot of money and must hope and pray to recover losses, rather than having any ability to buy low. However, the market bottom is the time when we could be thinking about leaning into risk, particularly if the recovery is looking strong. 4. Know what is safe. We live in a world of debt, where many things are very highly leveraged. That adds credit risk to the “safe” side of the traditional retirement strategy. At the same time, bond durations have become quite long – creating duration risk. So, even though interest rates might get cut a little in 2025 and 2026, we still have credit and duration risk in bonds. Bonds are traditionally thought of as safe. However, today they are vulnerable to capital loss, and they can also be illiquid. (Look again at the 2022 losses chart.) Also, the higher the yield, the higher the risk of losing principal. Investment grade bond funds often allow for up to 20% junk bonds (below investment grade). The safest investments, which were yielding above 4% as of the publishing date of this blog, are ones that many broker/salesmen are not incentivized to sell us. So, if we say we want a conservative plan, we might actually be loaded up with risky investments that are very vulnerable to capital loss -- many which we can't get rid of easily. Getting safe in 2025 is so tricky that we spend one full day on it at our Investor Educational Retreat. If you have a lot of bonds and wonder if you might be more vulnerable than you know, then I strongly encourage you to read the What’s Safe section of The ABCs of Money (6th edition). Consider getting an unbiased second opinion from me personally or attending April 25-27, 2025 Investor Educational Retreat. We host retreats at least three-four times a year, so check out the NataliePace.com homepage for an upcoming retreat. Call 310-430-2397 or email [email protected] for pricing, testimonials and additional information. 5. Diversify into 10 funds. Diversifying into 10 funds makes our investment strategy as easy as a pie chart to manage. 10 funds are all we need for proper diversification. If we have pages and pages of holdings, chances are we only have 2-4 slices, rather than the 10 funds. (That many holdings is a red flag.) What are the 10 funds we should be diversified into? Small, medium and large, value and growth, and four hot industries or countries. See the sample pie chart below. FYI: the target date retirement funds are not well-diversified, are a Buy & Hope product, and typically underperform the market index (or even lose money). They do not allow us to rebalance regularly, which is an essential strategy in today’s world. 6. Underweight the bailouts & vulnerable companies and industries. Over half of the S&P500 is at or near junk bond status. There are companies that have very strong revenue growth, almost no debt and a boatload of cash (such as Nvidia, Google, Meta and many other large cap growth technology firms). There are also companies that have been borrowing from Peter to pay Paul for a very long time, have credit ratings that could be cut to junk, have more debt than the company is worth, and are either losing revenue or have flat revenue growth. Boeing, Ford, many U.S. banks, and other companies that were founded more than 50 years ago can be prone to one or more of these challenges. General Electric, Boeing and many CRE companies are proof of what happens when we invest in highly-leveraged companies for the dividends. So be careful of our value and dividend funds, in addition to bond funds. We address that as well at the Investor Educational Retreat, where we discuss using international funds for higher dividends and sometimes even higher credit ratings. 7. Get hot. Have you been tempted to leap into the crypto craze, or the Magnificent 7, AI, or quantum computing, particularly after seeing the spectacular gains over the past two years? We all know the market aphorism, “Buy low, sell high.” However, our emotions always want us to join the party when prices are high and avoid the crash when prices plunge. Whatever we think is going to Shoot the Moon this year, whether it is crypto, gold, electric vehicles, artificial intelligence or the nascent field of quantum computing, add a hot slice or two to our strategy, but don’t bet the farm. It’s always a great idea to have four hot slices in our diversified wealth plan. However, as we’ve seen with Nvidia losing half a trillion in market capitalization (and investors who purchased at $153.13/share just a few months ago losing 1/3 of their investment) after China’s DeepSeek AI caused ripples of fear in the U.S. domination of this industry, capturing gains when equity prices are elevated and having a plan to purchase without buying high are both important. This is where the pie chart system and dollar cost averaging put us on the right side of the trade. (Even with the pullback, Nvidia’s P/E is 47.) Hot slices in our nest egg can increase performance and wealth. However, because shooting stars can drop back to Earth, the pie chart system and regular rebalancing prompts us to do the right thing. If our slice of Bitcoin becomes 5-6 slices, as it might have done over the past few years, the pie-chart system is prompting us to sell high and trim your overexposure back to one or two slices, keeping that money. This affords us the opportunity, liquidity and emotional fortitude to buy more at a lower price, if the asset value tanks (and we still think it’s hot). Each Bitcoin fever has been followed by a Crypto Winter. Gold has a very volatile price history. As I mentioned earlier, the Magnificent 7 were actually the Terrible Tech losers of 2022. 8. Rebalance 1-3 times a year. Rebalancing 1-3 times a year is one of the most important things that we can do. Every year we get older and should have more on the safe side. In a bull market, our wealth increases. Most of our stock slices swell in size. In recessions, the slices become slivers. When we compare a sample pie chart of what we should have with what we do have, rebalancing becomes easy and quite visual. If the slice is bigger than it should be, it is prompting us to sell high. Conversely if a correction has plunged prices and our slices are slim, they are prompting us to buy low. In this way, the system puts our emotions on the right side of the trade, whereas brokerage statements do quite the opposite, with losses in red (Stop! Look how much you have lost!) and gains in green (Go, go, go! You’re winning!). The safe side (with overweighting) protects us from a rout on Wall Street. Market timing doesn’t work. When we feel like selling, that’s usually the best time to buy, and vice versa. As I’ve mentioned previously, rebalancing regularly is a buy low, sell high plan on auto-pilot. It’s important to remember that the reason people don’t buy low is that they cannot buy low. If they have suffered massive losses, they have no liquidity – no money on hand to take advantage of opportunities. (They might have a boatload of other financial challenges as well, which could include trying to rescue a home.) When we keep an appropriate amount liquid, as the pie chart system instructs us to do, we have the capital to buy low when no one else is doing it (or can do it). 9. Think “capture gains,” not stop losses. Think capture gains, not stop losses. A lot of people think they should be using stop losses to prevent themselves from losing money. Because of the volatility in equities, bonds and real estate, if we set stop losses we will be losing over and over again. Our best protection from a correction is keeping a percent equal to our age safe. Overweight a little more (act older than we are) if we think the economy is weak. If we simply changed our strategy to a “capture gains” system, which is what an age-appropriate, properly diversified plan with 1-3 times/year rebalancing is all about, then every time the markets shoot the moon, we’re selling high. Every time stocks tank, we’re buying low. Having the right mindset is key to this process. We talk about this at the retreat as well. 10. Be the boss of your money. Our accountant should be well-versed in tax strategies. Our broker-salesman should be helpful in setting up new accounts, answering questions, helping us to make a contribution or roll over a 401(k) into an IRA, and other brokerage transactions. Be careful getting stock tips or strategies from “financial advisors” (who are most often hired as salesmen and are selling what they are told to sell) or accountants (who should be buried in tax strategies, not equity analysis). There are still a lot of brokerages and broker-salesman that adhere to the last-century Buy and Hope strategy, which has been a disaster in 21st-Century recessions. Be the boss of your money and realize that these professionals work for you (not vice versa). Now is the time to know exactly what we own and why, and to take ownership of our investments and wealth strategy. Adhere to the time-proven 21st-century strategy of proper diversification and 1-3 times a year rebalancing. Our financial team works for us. It’s our money and our future at risk, not theirs. Once we know what a healthy nest egg looks like, we can take charge, rather than having blind faith that someone else is doing the right thing for our money. Select our financial team as if our life depends upon it because our lifestyle does. Real estate is part of your wealth, but not part of your liquid assets (nest egg). When we are constructing our sample Nest Egg Pie Chart, do not include the equity we have in our home or any other hard asset in the line that asks for our liquid assets. Real estate and other hard assets are an important piece of our wealth. However, we want liquidity (savings, stocks, bonds) and stability (hard assets), rather than being property rich and cash poor (or vice versa). Owning our own home is one of the best ways to build wealth – unless we purchase at too lofty of a price or buy more than we can afford. For important real estate strategies, read the Real Estate section of The ABCs of Money. This is also covered in our Investor Educational Retreats. My June 14, 2025, Real Estate Master Class will feature:
Fix the Roof While the Sun is Still Shining We wouldn’t wait for the rain to see whether our roof was leaking. We want to make sure our house is secure before any natural disasters occur. The same holds true for our financial home, particularly in a world where financial and natural disasters are occurring regularly. Stocks and real estate are at all-time highs. It’s very easy to be complacent when everything is going well and wait until something is broken to fix it. However, that means that we could lose up to half of our wealth and take years to recover. Stocks and real estate can’t keep shooting the moon forever. Recessions are a normal part of a business cycle. In the 21st-century, the corrections sink swiftly and deeply – long before the headlines that the economy is in trouble. (We’re already using extraordinary means to pay bills in the U.S.; the next headlines about the Debt Ceiling will happen in spring or summer.) So, make sure that your wealth is properly diversified, hot and protected now. Fix the roof while the sun is still shining. Bottom Line Buy & hope is a last-century strategy that has lost more than half in 21st Century recessions. On this plan, investors have to use the bull markets to make up losses, rather than build their wealth. That is not a financial plan; that is a Wall Street rollercoaster. The easy-as-a-pie-chart nest egg strategy with annual rebalancing earned gains in the last two recessions and has outperformed the bull markets in between. It’s less time and less money. It’s easy and logical. It works. You can personalize your own pie charts using our free web apps. Simply go to NataliePace.com and click on the app badge. Or you can email [email protected] with the subject line, “I want my free web apps.” Many people are losing money on the safe side, so it's important to know what's safe in a Debt World, in addition to capturing gains and getting age-appropriate on the at-risk side of our wealth plan. This will make more sense if we take the Rebalancing IQ Test and the Investor IQ Test, and attend the next Financial Freedom Retreat to learn the life math that we all should have received in high school. FYI: Your friends and family can get the best price for the April 25-27, 2025 Retreat when they register by Feb. 28, 2025. Request testimonials at [email protected]. You can also view some on the flyer page of the retreat. Join us at our online Spring Financial Freedom Retreat April 25-27, 2025 (online) and our Stock Masterclass (learn the strategies that earned me the ranking of #1 stock picker) on May 3, 2025. If you'd like a life-changing adventure of a lifetime, be our guest at a royal manor house in Cornwall, England, March 12-19, 2027. Only nine rooms are available. Call 310-430-2397 or email [email protected] to learn more. Learn how to: * Invest in hot industries, such as Nvidia, artificial intelligence, and quantum computing, * Hedge against a weaker dollar, * Invest and compound your gains, * Green your retirement plan, * Easy and efficacious nest egg strategies, * Get hot and diversified (including in artificial intelligence, quantum computing and crypto), * Evaluate stocks, * Avoid capital gains and financial predators, * Keep an age-appropriate amount safe, and, * Know what's safe in a Debt World. You'll even discover how to save thousands annually with smarter big-ticket choices. Yes, it's a complete money makeover. Email [email protected] or call 310-430-2397 to learn more and register. Learn the 15+ things you'll master and read testimonials in the flyer on the home page at NataliePace.com. Register with friends and family to receive the best price. "Ten minutes into the first day I was already much smarter about investing than I ever thought I would be in my life and I knew I was in exactly the right place at this retreat. I am amazed at how EASY and FUN it is to make my money work for me and those I love. I think this kind of information should be compulsory in schools. I wish I'd learned this sooner." CM If you’d like an unbiased 2nd opinion on your current wealth plan, email [email protected] for pricing and information. ![]() Join us for our Online Spring Financial Freedom Retreat April 25-27, 2025. Email [email protected] or call 310-430-2397 to learn more. Register by Feb. 28, 2025, to receive the best price. Click for testimonials, pricing, hours & details. ![]() Join us for our Restormel Royal Immersive Adventure Retreat. March 12-19, 2027. Email [email protected] to learn more. Click for testimonials, pricing, hours & details. Register now. There are only 9 rooms available. This retreat includes an all-access pass to all of our online training for a full year for two, and three 50-minute private, prosperity coaching sessions. Much more affordable than you might think. Email [email protected] to learn more. (2025 is sold out.) ![]() Natalie Wynne Pace is an Advocate for Sustainability, Financial Literacy & Women's Empowerment. Natalie is the bestselling author of The ABCs of Money and The Power of 8 Billion: It's Up to Us, and is the co-creator of the Earth Gratitude Project. She has been ranked as a No. 1 stock picker, above over 835 A-list pundits, by an independent tracking agency (TipsTraders). Her book The ABCs of Money remained at or near the #1 Investing Basics e-book on Amazon for over 3 years (in its vertical), with over 120,000 downloads and a mean 5-star ranking. The 6th edition of The ABCs of Money and the 2nd edition of Put Your Money Where Your Heart Is are the most recent releases of these books. Follow her on Instagram. Natalie Pace's easy as a pie chart nest egg strategies earned gains in the last two recessions and have outperformed the bull markets in between. That is why her Investor Educational Retreats, books and private coaching are enthusiastically recommended by Nobel Prize winning economist Gary S. Becker, TD AMERITRADE chairman Joe Moglia, Kay Koplovitz and many Main Street investors who have transformed their lives using her Thrive Budget and investing strategies. Click to view a video testimonial from Nilo Bolden. Check out Natalie Pace's Substack podcast on Apple and Spotify. Watch videoconferences and webinars on Youtube. Other Blogs of Interest Quantum Computing. Paper Losses. Another Warning About Long-Term Bonds! 2025 Investor IQ Test. 2025 Investor IQ Test Answers. Apple iPhone Sales Plunge in China. Indonesia: Rich in Nickel with Ambitions of Becoming an EV Battery Hub. RoboTaxis. AI. The Magnificent 7. Charitable Giving. Nonprofits that are Worthy of Supporting. The DJIA Plunged 1100 Points After the Dec. 2024 FOMC Meeting. Why Are So Many Safe Investments Losing Money? A Bargain-Priced AI Company. Canadian, Australian and U.S. Banks. Are Any of Them Safe? Ireland. Rich in Technology, Biotechnology and Agribusiness. Black Friday and Cyber Monday Sweepstakes. Robo Investing and AI. No, They are Not Foolproof. Stocks Soar as Nvidia Joins the DJIA. Copper. Peru ETF Outperforms the S&P500. 4 Ways to Celebrate World Sustainability Day, Oct. 30, 2024. Will There be a Santa Rally or will the Election Ruin Everything? The Chips are Down. ASML, Intel and Super Micro Computer Plunge. Is Nvidia Next. Will Insurance Companies & Homeowners Weather the Hurricanes? 9 Money Secrets of the Ultra Wealthy. Housing & Budgeting Solutions. Will Boeing Be Booted Out of the Dow Jones Industrial Average? Arkansas Sues Temu for Data Theft. We Must Be the Boss of Our Money. Why? Fast Fashion. Fossil Fuels. Plastic Clothing. Atacama Desert Waste Dumps. Can Crowdstrike Recover from its Colossal Catastrophe? Featuring a Cybersecurity Overview. Fintechs and Brokerages that Fail are Not FDIC-Insured. Stocks Keep Hitting New Highs. Are You Thinking "Capture Gains?" 5 Green Tips for Clean Beaches Week. So, You Think You Want to Be a B&B Owner... Retiring Soon? Start Planning Now. 2024 Rebalancing IQ Test. Answers to the 2024 Rebalancing IQ Test. May is National Bike Month. Paris and Amsterdam are the Stars. Vacations that Color Our World Forever. 9 Inflation, Budgeting, Debt Reduction and Investing Solutions. China & Russia Double Their Gold Holdings. 2024 Investment of the Year? Bitcoin Sets a New Record High. The Importance of Rebalancing. Uh. Oh. More Bank Trouble. Housing. Unaffordable. What Works? Case studies and creative solutions. The Underperforming DJIA, Full of Fossil Fuels and Forever Chemicals. The Best ROI* (Almost 40%!) & 7 Life Hacks That Save Thousands. Portugal Eliminates Tax Advantages for Ex-Pats. WeWork's Bankruptcy. Half-Empty Office Buildings. Problems in our Personal Wealth Plan. Cruise Ships Give Freebies to Investors. Should You Take the Bait? Should You Take a Cruise? Bonds. Banks. The Treacherous Landscape of Keeping Our Money Safe. 7 Rules of Investing 13 Lifestyle Choices to Reduce Waste, Pollution & CO2 & Save a Boatload of Dough. China Bans Apple 11-Point Green Checklist for Schools. 10 Wealth Secrets of Billionaires and Royals. Bank of America has $100 Billion in Bond Losses (on Paper) Fiat. Crypto. Gold. BRICS. Real Estate. Alternative Investments. BRICS Currency. Will the Dollar Become Extinct? Are There Any Safe, Green Banks? 7 Ways to Stash Your Cash Now. Lessons from the Silicon Valley Bank Failure. Which Countries Offer the Highest Yield for the Lowest Risk? Why We Are Underweighting Banks and the Financial Industry. Save Thousands Annually With Smarter Energy Choices Is Your FDIC-Insured Cash Really Safe? Money Market Funds, FDIC, SIPC: Are Any of Them Safe? My 24-Year-Old is Itching to Buy a Condo. Should I Help Him? The 12-Step Guide to Successful Investing. The Bank Bail-in Plan on Your Dime. Important Disclaimers Please note: Natalie Pace does not act or operate like a broker. She reports on financial news, and is one of the most trusted sources of financial literacy, education and forensic analysis in the world. Natalie Pace educates and informs individual investors to give investors a competitive edge in their personal decision-making. Any publicly traded companies or funds mentioned by Natalie Pace are not intended to be buy or sell recommendations. ALWAYS do your research and consult an experienced, reputable financial professional before buying or selling any security, and consider your long-term goals and strategies. Investors should NOT be all in on any asset class or individual stocks. Your retirement plan should reflect a diversified strategy, which has been designed with the assistance of a financial professional who is familiar with your goals, risk tolerance, tax needs and more. The "trading" portion of your portfolio should be a very small part of your investment strategy, and the amount of money you invest into individual companies should never be greater than your experience, wisdom, knowledge and patience. Information has been obtained from sources believed to be reliable. However, NataliePace.com does not warrant its completeness or accuracy. Opinions constitute our judgment as of the date of this publication and are subject to change without notice. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument.
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AuthorNatalie Pace is the co-creator of the Earth Gratitude Project and the author of The Power of 8 Billion: It's Up to Us, The ABCs of Money, The ABCs of Money for College, The Gratitude Game and Put Your Money Where Your Heart Is. She is a repeat guest & speaker on national news shows and stages. She has been ranked the No. 1 stock picker, above over 830 A-list pundits, by an independent tracking agency, and has been saving homes and nest eggs since 1999. Archives
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