Investing for retirement can be intimidating. Money often is for most people. In this post, I share my personal investing story with the hope that you can avoid my lesson learned. I also share my personal investing approach and holdings to get you to think about your investing strategy for early retirement.

Years ago, the prospect of striking it rich quickly and retiring early swept me off my feet. Stories of others who have made a fortune in the stock market filled me with a false sense of confidence. How hard could it be?

Thus began my dangerous game with a risky and aggressive investment approach: pharmaceutical stock picking.

Pharmaceutical stocks had a special appeal. You can make a fortune in a matter of minutes following good trial results or FDA approval of a novel drug, the holy grail of the industry.

I have witnessed stocks shooting up 80% within minutes of a favorable announcement. Some of these stocks went on to massacre the market with unreal growth.

Of course, the price of exponential growth always lied in the high grass, waiting to strike with cruel indifference. Unfavorable trial results or FDA rejection can bankrupt a company within days – taking with them your hard-earned money.

Major pharmaceutical companies are typically protected from these huge swings. They are shielded because they already have a formidable lineup of drugs to keep making money for research and development.

Smaller startups sometimes only have one shot to take a drug into market. The appeal of high potential that these startups presented drove me to invest in this segment.

Reality sinks in

It was the worst 8 months of my life.

Days of darkness followed exuberant ones, replacing each other like runners on an Indian run. I spent all my waking hours checking the market, calling into investor meetings to hear disappointing trial studies results, and losing all appetite for life beyond the tickers that flashed across the screen.

It was the worst 8 months of my life.

The folly of a younger me was the foolish belief that I, apart from the countless others doing the same thing, could beat the market.

I lost a lot of money and my sanity. However, I gained a valuable lesson: shortcuts often get you lost.

Investing for the long term

My investment game now is one that has been preached by many, and I hope my story helps you avoid the costly lesson I learned.

Low-cost indexed funds tend to outperform short-term gains in the end. Since the funds buy the entire market or targeted segments, you skip having to pick stocks yourself.

Let me be clear (for the vast majority of you out there): you suck at picking stocks. So don’t even try.

Let the indexed funds ride the emotional rollercoaster in your stead. Let them weather the storm, climb the snowy pass, and find the valley with all the spring flowers for you.

My retirement investment

As I’m investing for long-term retirement, I focus on slow and steady growth with lower risk funds. My portfolio now consists of a number of low-cost indexed funds. While they work for me, I continue to look for more specialized funds to truly diversify my nest egg.

If you are new to indexed funds, the plethora of information can ease you into it. If you would like to know my personal strategy, here they are:

  1. Invest in the broadest indexed funds with the lowest cost first. The core nest egg will include funds that buy the entire domestic and international stock market and bonds market.
  2. Diversify further by buying indexed funds that target a particular industry. My favorites include healthcare, real estate, and basic consumer goods – not a glamorous bunch.
  3. I allow 1% of my investment funds to buy companies I really like.
  4. Don’t touch these funds unless you absolutely need the money for an emergency.

As I learn more about other possibilities for retirement income, I will update my strategy. I still have not personally covered my recommendations yet so will hold onto future investments for later.

As to whom you should invest with, that is a personal choice; though, I trust Vanguard and Schwab for the array of products and outstanding reputation.


The funds I’m currently holding (I’ll update these over time) are (in no particular order).

Schwab funds:

  1. SCHH (US REIT ETF) [0.07% expense ratio]
  2. SNXFX (1000 Index) [0.05% expense ratio]
  3. SWISX (International Index) [0.06% expense ratio]
  4. SWPPX (S&P 500 Index) [0.03% expense ratio]
  5. SWSSX (Small Cap Index) [0.05% expense ratio]
  6. SWTSX (Total Stock Market) [0.03% expense ratio]

Vanguard funds:

  1. VTIBX (Total International Bonds Index) [0.15% expense ratio]
  2. VGTSX (Total International Stock Index) [0.18% expense ratio]
  3. VTSMX (Total Stock Market Index) [0.15% expense ratio]
  4. VWNFX (Windsor II Fund Investor Shares) [0.33% expense ratio]
  5. VWINX (Wellesley Income) [0.22% expense ratio]

How about you? What are your retirement investment strategies? What are your favorite funds? I would love to hear your ideas as I’m always looking for great funds to invest in.