30-Minute Money Solutions: A Step-by-Step Guide to Managing Your Finances

Part VI. Invest in an IRA

Back in september 2008, I attended the Vanguard Diehards conference with a couple of my Morningstar coworkers. As you may remember, stocks were dropping like a stone during that period, as it became clear that what we had been calling "the subprime crisis" was really a global economic catastrophe.

Amid the turmoil, the Diehards—who favor the low-cost, no-nonsense, index-fund investment strategy of Vanguard founder Jack Bogle—were the very picture of Zenlike calm. My colleague David Chung shot a video of me asking the Diehards how they were changing their portfolios in the wake of the crisis, and their responses went something like this:

Diehard 1

"I'm staying the course, obviously."

Diehard 2

"I'm not doing anything. I'm comfortable with what I've got."

Diehard 3

"Staying the course."

Diehard 4

"Just sticking with my plan."

After the 26th Diehard responded to my question with some version of "I'm staying the course," we decided that our video was too boring to run on Morningstar.com.

That experience illustrated that the Diehards have mastered one of the key tenets (perhaps the key tenet) of successful investing: Know what you can control and what you can safely tune out.

The direction of the economy, interest rates, inflation, and the dollar? Clearly in the "out of my hands so might as well tune it out" category.

By contrast, you have some or a lot of control over the securities that you select for your portfolio, the price that you pay for them, how much you trade, ...