The Value of Simple: A Practical Guide to Taking the Complexity Out of Investing by John Robertson

On Exponential Growth, Bunnies, and the Future
 Introduction
 Choosing to keep things as simple as possible will help
 maximize your chances of success. Complexity leads to
 indecision, an increased chance of making mistakes, and a
 loss of confidence. There is value in simple. This is as true
 for investing as it is for any other aspect of your life.
 Learning any complex physical skill is difficult at first,
 with lots of conscious thought required to make anything
 happen, and you will make lots of errors. But it gets easier
 and more accurate with practice, because as you work at it
 processes in your cerebellum and spinal cord take over
 many of the individual muscle controls – you build "muscle
 memory." These processes and automation are an
 important evolutionary feature for managing complexity -
the skills and movements of your body are just as complex,
 but the processing burden on your brain is reduced by
 breaking the movement down into simple, automatic
 components.
 In investing, we do not have the luxury of taking multiple
 attempts at it and suffering repeated failures to build
 internal skill. Fortunately, we can use processes to help
 automate some parts of investing, and incorporate the
 lessons learned by the past. Much of the complexity can be
 ignored in favour of focusing on just the few factors that
 truly matter and can be controlled.
 Good processes are critical. Investing is something you
 will be doing for the rest of your life, but it shouldn't
 become your life. Once set up, your processes will help you
 stay on track without a lot of ongoing effort.
 Your car has thousands of moving parts, yet you get
 where you want to go by focusing on just three simple
 controls. Many of the parts and fluids wear out and need to
 be maintained or replaced before they fail. Each has its own
 individual expected lifetime, but the engineers have
simplified maintenance procedures into just a handful of
 options on a menu at regular mileage intervals that are
 good enough for most cars in the fleet. Complexity can be
 effectively managed by non-experts with the right tools and
 processes – and to extend the metaphor, with the
 occasional expert check-up.
 There are lots of books on finance and investing in the
 world, and I won't pretend that they don't exist. However,
 they do miss one important aspect: how are you supposed
 to take the information they give and actually start
 investing? It is the question I've been asked time and again
 after people read other leading investing books yet still
 aren't clear on how to take the general, somewhat academic
 information they contain and move on to implementing a
 financial plan. The reason I sat down to write this book was
 to fill in those gaps in implementation and walk you
 through the process of investing.
 It was important to keep the book short: ideally you
 should be able to plow through it, devise, and then
 implement your financial plan while you're still on a kick to
 do it and while all the information is fresh in your head.
 Short is also important because a major barrier that
 prevents people from getting started in investing is a lack of
 time. The passive (or "index") investing approach I will lay
 out requires minimal effort to maintain: likely just a few
 hours per year.
 However, those very benefits mean that you're likely to
 forget many of the finer details between your yearly check-
ups. The processes and lessons in this book are designed
 so that you won't need refreshers at all because it will just
 simply work. Though just in case, you should place the
 book in a hallowed and handy spot on your bookshelf for
 the quick refreshers to come.
 When you develop your process you have to keep in mind
 that your future self may be years or decades removed from
 having done all the reading and research you're doing right
 now. This book will help you set things up to be easy-to-
manage, with explicit instructions to your future self. On

The Value of Simple: A Practical Guide to Taking the Complexity Out of Investing by John Robertson