Why I don’t invest in . . .

Zachary Zwillinger

Sep 30

4 min read

Welcome to the seventeenth post of The Invested Counsel—thoughts about financial planning for young lawyers.

In the last post, I detailed my family’s investments, which are basically just low-cost index funds/ETFs and cash (or cash-equivalent investments). In turn, I listed all of the things that we’re not invested in, including:

No individual stocks
No mutual funds or ETFs, except passive, total market index funds and ETFs
No individual bonds or bond funds
No options, futures, or other derivatives
No commodities
No gold or other precious metals
No collectibles
No personal real estate
No investment real estate (including investment properties or REITs)
No private equity (unless you count ZZ Planning itself)
No hedge funds
No limited partnerships
No venture capital
No investing with margin
No sports betting
No day trading
No prediction markets
No crypto
No art (except the copyright to my wife’s own plays)
No cars
No other alternative assets I can’t think of right now

As I mentioned in the last post, I don’t invest in anything above, because I don’t think I need any of it. That doesn’t mean that it’s wrong to invest in any of the stuff above. I’ve invested in real estate in the past (i.e., I owned my apartment and invested in REITs), and bonds (through a mutual fund), and stocks (I bought a few shares of Goldman Sachs when I was a 1L, during the financial crisis). And I may want to invest in some of the things listed above in the future. But none of them are mission critical.

Over time, I’ll likely discuss each of the investment options above, and explain why I think you either should or shouldn’t invest in them. But this post is more general than that.

But doesn’t that mean you aren’t well diversified?

I don’t think so. The index funds that I own basically cover every aspect of the global economy in some way—basically every public company, big or small, in every country, in every part of the economy. That is an enormous amount of diversification.

Of course, I could be invested in a lot of other stuff, which might make me even more diversified. But I don’t think the benefits are worth the costs and hassle.

Couldn’t you make even more money if you were invested in some of these other things?

Maybe, maybe not. The index fund strategy has been very good to me so far, and over the very long term, it is very likely to be very good to me in the future. I’m happy with what I’m getting from the markets.

It seems sort of lazy, though. Couldn’t you do better if you worked harder?

Maybe, maybe not. I’m positive I could work a lot harder on my investments than I’m working now. But I’m not positive I could do better than what my existing investments will do on their own.

While index funds require some thinking and some work, they are one of the least work-intensive investments you can make. I don’t need to read a 10-K, or listen to an earnings call, or keep track of the non-farm payroll numbers, or respond to a text in the middle of the night about a flood in the basement, or anything like that.

As a young lawyer, you’re probably already busy with work. The fact that index funds don’t take much effort or thought makes them an especially attractive investment to young lawyers.

And it’s not like there is nothing else for you to be doing with the time you devote to your finances. There is still a lot to learn about and think about in financial planning that matters a lot more than just your investments. Deciding what you want to do with your money, and how you will get there, given the myriad ways to get there, while protecting yourself from catastrophe and taxes and the other things that can derail your plan, is a lot of work. And it is a lot of work that matters a lot. Focus on that.

Wouldn’t it be better to get some really smart, really hard-working people to help decide how to invest your money?

Maybe, maybe not. Really smart, really hardworking people in finance are competing against other really smart, really hardworking people in finance to make the most money. I’m skeptical that I can pick the ones that are going to do better than the rest. And because those really smart, really hardworking people don’t work for free, you need to pay them a lot of money to do what they do. So to make it worth my while, they not only have to do better than my index funds—they have to do better than my index funds, plus all the fees I need to pay them to be so smart and hardworking. That’s very hard to do, especially over a long period of time.

It seems sort of boring, though.

That is true. My index funds are nothing to talk about at a party.

But like me, boring is good.

That’s all for now. Have a wonderful week.

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