How to start cooking for yourself

I’ve often mentioned that being able to prepare your own food is a key financial skill. I’m finally going to put my money where my mouth is– or my mouth where my money is?– and offer some super easy, basic recipe ideas to inspire those who almost never cook to start making a few more meals at home.

I’ll break these down by meal times, but there’s nothing wrong with breakfast food for dinner or vice versa!

selective focus photography of pasta with tomato and basil
Mmmm… a home-cooked meal!


Dinner is probably the meal that most people go out for or get takeout. You’re tired, you don’t want to think, and you’re hangry after a long day of work. Pasta is a great answer here.


The sauce

Get a jarred pasta sauce, or plain tomato sauce (29 oz can per 1 lb dried pasta), 1 lb of dried pasta, 1 lb ground meat, and any fresh veggies or spices that you feel like adding. Fry the sliced veggies (diced onion, say) in oil on medium/med-high, then add the ground meat. Cook the meat until no longer pink, then add 1-2 minced/pressed garlic cloves and your spices (dried basil, oregano, or garlic powder if you didn’t add any fresh garlic), fry another couple minutes, add a splash of red wine if you have it open, then dump in the pasta sauce. Simmer for at least 10 minutes on low.

The noodles

While you’re frying the sauce, boil a few quarts of water in a large pot and dump in the dry pasta when it comes to a boil, boiling it per the package instructions. Taste a noodle to make sure it’s the doneness you like, then drain it in a colander or strainer.

Serving the pasta

Either plate the noodles individually and ladle the sauce on top, or if your frying pan/Dutch oven is big enough, toss the cooked pasta in the sauce and service it on a hot pad on the table and let guests grab their own with tongs or a large fork and spoon. If you wanna get fancy, serve with grated Parmesan or pecorino romano cheese. I get these in whole wedges from Costco and then grate them finely with a food processor, cheese grater, or microplane zester. You can use the pre-grated stuff found in the grocery store, but it’s pretty tasteless.

That’s it! Package the leftovers into individual serving size tupperware for lunches at work or home the next day. The sauce will taste even better the next day, so feel free to make it in advance. It also freezes very well, so make a bunch and save yourself some future effort!


Tacos are a staple at our house. You can combine virtually any meat or veggies you have on hand with a starch like rice or tortillas, and make tons of different Mexican-inspired combos to suit everyone’s tastes. I recommend soft corn tortillas like these, but use flour if you prefer.

Pre-cooked grocery store/Costo chickens are really convenient for tacos. Just slice or tear off the meat and serve. You can spice it up with some garlic, powder, chili powder and ground cumin. Diced a white onion, then rinse it, and dice some cilantro for the traditional topping. Top with shredded cheddar cheese and sour cream as well for that extra gringo flavor :). Diced tomato or thinly sliced cabbage or lettuce also makes a great topping.


Easiest, no-cook options – Sandwiches and salads

Bread, sliced up meat or lunchmeat, mayo, mustard, lettuce/tomato/cucumber, BOOM = Sandwich! Just omit the bread and add more lettuce and some dressing to make it a salad :). Costco chicken is again a great choice for salads or sandwiches.

Suzanne’s Thyme Salad Dressing

Store-bought salad dressings are universally awful, so make your own in 5 minutes:

  • Blend together either 3 large OR 5-6 small/medium garlic cloves with
  • 1/4 cup bottled mustard (country dijon is my favorite),
  • 3/4 cup vinegar of any kind (I use plain white vinegar; the original recipe called for white wine vinegar)
  • 2 cups vegetable/Canola oil (don’t use all olive oil because it will be bitter)
  • 1 1/2 teaspoon (tsp) salt
  • 1 1/2 tsp ground pepper
  • 1 Tablespoon (Tbsp) dried thyme (or rosemary, or the herb of your choice– triple the amount for fresh herbs)

Leftovers make a great lunch

Leftovers packed into individual tupperware are my go-to when taking lunch to the office. Tacos work too, especially if you just microwave some cubed up meat from a prior dinner and serve with any of the fixings described above. Or, sub rice for the tortilla to make an easy-to-eat-at-work taco bowl.


Easiest, no-cook options – Cereal and smoothies

Some milk and a bowl of cold cereal is easiest. Looks for store brands and sales of your favorite boxes. Quick-cooking hot cereals like quick cooking oats or cream of wheat are also easy to do in the microwave or on the stovetop. Add cinnamon and brown/white sugar as you like. Dried fruit like raisins or apples are nice additions, or sliced or chopped nuts.

Plain yogurt with fruit or made into a blended smoothie with banana and other fresh or frozen fruits of your choice (plus a couple ice cubes if using fresh fruit and you want it colder) is a good grab-and-go option.

Breakfast cookin’ – Eggs, bacon, and more!

For the weekends, buy some eggs and fry them over-easy, adding a little oil to a non-stick pan, gently cracking the egg into the pan so as not to break the yoke, frying for a minute or two on medium-high heat until you can flip it over and fry the other side. Serve with fried bacon, sausages, or vegan ‘sausage’ patties like from Morningstar (available at Costco.) I like to slice a tomato or two in half and fry it in the bacon fat, or fry some thinly-sliced cabbage in it as a veggie side.

Fried eggs go great with rice too if you want a Filipino-style breakfast like we often make. (Bonus points if you use longganisa sausage as your meat of choice, available at many Asian supermarkets. Spam is also great.)

There you have it, a couple menu ideas for every meal of the day. Get cooking and save big!

Scare yourself to sleep with 12 free spooky audio shows

I listed twelve of my favorite horror stories for fall & winter, but if you need something in your headphones to scare you to sleep instead, try my favorite audio versions of some terrifying tales.

two jack o lantern lamps
You might have to sleep with the lights on tonight.
  1. Hands Off, a Nightfall show about a lab-grown serum that makes animals aggressive. Very aggressive. Not to be confused with the popular new radio series Nightvale, Nightfall was a Canadian public broadcasting show from the 1980s and the best horror audio show I know of. Try out several and I’m sure you’ll hit at least one that gives you chills. All of them are excellently produced, scripted, and acted. They often contain adult themes and occasional profanity, so they’re not for children!
  2. The Darkness from WKBW’s 1973 Halloween show. The entire show is excellent and includes several great takes on some classic horror tales like the Monkey’s Paw.
  3. The Dunwich Horror. An H.P. Lovecraft tale adapted for radio by the famous Suspense Old Time Radio (OTR) show.
  4. The Thing on the Fourble Board. A very creepy tale about a thing deep down on a drilling platform. It’s from the OTR program Quiet, Please!
  5. If you have Spotify, Nelson Olmsted does an excellent reading of several Tales of Terror by Edgar Allen Poe including the evil murder story The Cask of Amontillado.
  6. Dark Benediction, a play about a disease outbreak with a twist– adapted by Sci-Fi Radio— an excellent collection of sci fi story radio adaptations.
  7. Chicken Heart from stella OTR program Light’s Out by radio virtuoso Arch Oboler is under 8 minutes long and unusually chilling for the bizarre plot line. Many other Light’s Out programs are excellent as well.
  8. Sorry Wrong Number is another famous Suspense OTR show starring Agnes Morehead as the (very) hysterical protagonist trying to prevent a murder being plotted.
  9. Dracula. Bram Stoker’s tale adapted by Orson Welles’ Mercury Theatre in 1938. Welles– who plays Count Dracula here– often tried very ambitious productions on his Mercury Theatre. This version of Dracula works very well. Welles’ classic War of the Worlds is a chilling tale in itself too, but about an alien invasion.
  10. Speaking of Dracula, what if Sherlock Holmes tried to catch him? Well, it would be this 85-minute 1981 BBC radio play– Sherlock Holmes v. Dracula— which actually works quite well despite the ‘what-if-Superman-fought-Batman’-style premise. The voice acting is excellent with superstar BBC radio voice actor John Moffat (of Hercule Poirot fame.)
  11. Speaking of Poirot, this 90 minute Agatha Christie detective caper–Halloween Party— takes place at a children’s party. There is murder afoot, and only Belgium’s most famous detective can crack the case! All the Poirot radio plays on this album are very good.
  12. The Ghost Train— a 90-minute BBC 4 adaption of a 1923 play– is a light, comedic spooky story for those who don’t want to have to sleep with the lights on. Many shorter BBC 4 Ghost stories are found in the same collection as well.

The most underused tax-savings vehicle: the Health Savings Account (HSA)

In summary

Health Savings Accounts (HSAs) let you save on taxes (like a 401k) when you contribute to them. They grow tax-deferred (also like a 401k/IRA), and if you use them for approved health costs*, the earnings are also tax-free! Unlike an FSA, the account is yours to take with you and the money never ‘expires’ (think of it like a healthcare spending IRA), and best of all, if you don’t use it for healthcare by the time you’re 65 years old, you can take it out with no penalty and just pay income taxes on it as those it were a 401k/IRA!

You must have an HSA-eligible health insurance plan to contribute (but not to use) an HSA, so check if your employer provides one and if the coverage makes sense for you (for most healthy people it does!)

Either open the HSA through your employer, or if you need to roll over an old HSA or you want to open one on your own, I highly recommend (and use) Lively, which has no fees, great customer service & website, and great investment options via a linked TD Ameritrade brokerage. (Yes, you can invest your HSA balance so that it can grow tax-free just like a retirement account! I keep a couple thousand for just-in-case health expenses in cash and invest the rest to grow for future needs for me or my family, since they can also use ‘your’ HSA.)

*out of pocket expenses, including on over-the-counter stuff like aspirin or feminine products, dental, and vision like contacts & contact solution). Generally you can’t pay for insurance, but if you’re on unemployment benefits or continuing your employer insurance with COBRA, you CAN pay for those premiums with your HSA.


As health care costs in America continue to soar, so do health care insurance premiums.  The fortunate ones have access to quality, affordable, employer-sponsored group health insurance.  Those that are not so lucky?  Well, let’s just say your affordable options are somewhat limited (assuming you’re not independently wealthy and don’t want to “self-insure.”)

What does a “normal” health insurance policy cost for an individual?

A quick search on returns several plans with a wide range of premiums, coinsurance percentages, out-of-pocket maximums and coverages.***  The search I performed assumes that the policy holder (the person who’s buying the insurance) is a male non-smoker who lives in North Seattle and is 25 years old.  (Premium prices for a person who is 55 are in parentheses right next to our sample 25 year-old’s monthly premiums.)

Our sample person would pay $226 ($431) per month for a policy with a $500 deductible, 20% coinsurance after the deductible, and an out-of-pocket maximum of $4,500 (including deductible.)  The first 1-5 per year office visits to a primary doctor or specialist are exempted from the deductible.  All our person would have to cover is the $30 copayment (or “copay”, a typically small payment towards your health care per office visit.)  Also, prescription drugs are covered at a $20-$40 copay.

Health insurance is expensive!  How can I lower my premiums?

If that $226 ($431) monthly premium sounds pretty hefty to you (adding up to $2712 ($5172) per year), there are alternatives.  The easiest way to lower any kind of insurance premium is to increase your deductible.  This means that if you do use your insurance, more of the upfront costs will be born by you.  The benefit is that if you’re relatively healthy, you may not pay much out of pocket for health care, saving yourself the difference in premiums.  High-deductible health insurance is also referred to as “catastrophic” health insurance.  I.e: this type of insurance doesn’t pay much if anything for the small stuff, but if something terrible happens to you and you wind up in the hospital for a few days, you won’t be wiped out financially.

If we run our male 25-year old (55 year-old) search for high-deductible plans we find one with a $2,000 deductible, 10% coinsurance after the deductible, and an out-of-pocket maximum of $5,100 (including deductible.)  However, we don’t find any deductible exemptions for office visits on this policy.  Also, prescription drugs aren’t covered at all (which may be a consideration for our sample 55 year-old person.)

What’s the upside to the higher deductible (and out-of-pocket maximum) and the reduced benefits on this catastrophic policy?  Premiums are less than 30% (40%) of the lower-deductible policy at $65 ($168) per month.  Comparing our lower deductible and high-deductible policies, those premium differences amount to $1,932 ($3,156) per year in savings.  If you rarely go to the doctor, that could make a pretty big difference to you over the years, especially if you’re investing the difference and earning returns on that money each year.

Health Savings Accounts – how HSAs can help those considering high-deductible health insurance

The government has created a tax-advantaged device that might make high-deductible health insurance even more attractive to you.  This vehicle is called a Health Savings Account (HSA.)

The idea behind a Health Savings Account is fairly simple:

Step 1) An individual or family purchases a high-deductible (greater than $1,400 for individuals in 2021; $2,800 for families) health insurance option from any carrier they like (including your employer.)  The minimum deductible does NOT apply to preventative services.  Thus, you could have a plan that waives its deductible for routine office exams and immunizations that still qualifies for an HSA.  Also, the out-of-pocket maximum for an HSA-eligible plan must be less than $7,000 (for an individual in 2021;  $14,000 for families.)

Step 2) The same individual or family opens up an HSA, into which they can contribute up to the annual amount stipulated by the IRS.  For 2021, those annual limits are $3,600 & $7,200 for individuals & families respectively, with an extra $1,000 ‘catch up’ contribution for those who are 55 and up.

Note that a family can never contribute more than the family limit with all their combined employee + employer contributions. For example, if each spouse has their own HDHP + HSA, and one spouse is covering children on theirs, they can NOT contribute $7,200 to the kids+spouse plan and $3,600 to the individual. Each spouse can only contribute the $3,600 to each HSA.

Benefits of an HSA – Triple tax-advantaged!

– You can deduct contributions that you make to the HSA from your taxes** (without having to itemize.)  Also, you can invest in whatever you want, similar to an IRA.  In theory, any provider of IRAs is eligible to offer HSAs.  In practice, however, I haven’t heard of any brokerages or mutual fund houses that offer HSAs directly (but hopefully that will change as the HSA becomes more popular and widely known.)

** State tax treatment of HSAs varies. Depending upon the state, HSA contributions and earnings may or may not be subject to state taxes.  See THIS for information on your state.]

– Your contributions remain in your account from year to year until you use them (unlike Flexible Savings Accounts which are often “use it or lose it” for a given year.)

– The interest or other earnings on the assets in the account are tax free.

– Distributions are tax free if you pay for documented qualified medical expenses.  These expenses can include medical/dental/vision/chiropractic services, over-the-counter and prescription drugs, medical hardware like eyeglasses and hearing aids and long-term care insurance premiums (however, generally you cannot treat insurance premiums as qualified medical expenses for HSAs.)

Who’s covered?

The qualified expenses can be for you, your spouse, or any of your dependents (i.e.: children.)

What’s covered?

From the IRS, “the costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and the costs for treatments affecting any part or function of the body. These expenses include payments for legal medical services rendered by physicians, surgeons, dentists, and other medical practitioners. They include the costs of equipment, supplies, and diagnostic devices needed for these purposes.

Medical care expenses must be primarily to alleviate or prevent a physical or mental defect or illness. They do not include expenses that are merely beneficial to general health, such as vitamins or a vacation.”

A large list can be found HERE, and includes all the ‘normal’ medical expenses one might think of (exams, hospitalization, treatment, lab fees, vaccines, surgery (NOT cosmetic!, medicine), as well as acupuncture, dental treatment & hardware (dentures, braces – but teeth whitening is NOT covered),  birth control, chiropractor bills, contact lenses (including saline solution), glasses (for vision correction), eye exams, laser eye surgery, hearing aids, and nursing homes & services.

There is also a list of things NOT covered, which includes cosmetic surgery, hair removal or transplant, funeral expenses, gym memberships, nonprescription medicine (e.g.: aspirin), and nutritional supplements (e.g.: vitamins).

What about insurance premiums?

In general, insurance premiums (the cost you pay to maintain your insurance) are NOT covered, since they aren’t direct payment for medical care.  However, you CAN use HSA money tax & penalty-free if you’re paying for 1) Long-term Care insurance (up to certain limits), 2) health care continuation coverage (COBRA), 3) insurance while you’re receiving unemployment benefits, and 4) Medicare premiums once you (or you AND your spouse if you’re covering your spouse) are 65 or older.  See Pub 969 for details.

What if you DON’T use the money for qualified medical expenses?

If you use the money for something else, you will pay a 20% fee on the money and income taxes (so DON’T do that!)  However, if you are 65 or older or disabled, you can withdraw the money for whatever you like and only pay regular income tax (avoiding the extra penalty, making the HSA similar to a Traditional IRA or 401k.)  After 65, you continue to withdraw your HSA money tax-free to pay for medical expenses.

Additionally, unlike Traditional IRAs and 401ks, there are NO Required Minimum Distributions (RMDs) for HSAs, so the money can continue to grow tax-free while you’re in retirement.

Furthermore, if the policyholder ends their HSA-eligible insurance coverage, he or she loses eligibility to deposit further funds, but funds already in the HSA remain available for use (1).  Your HSA is also “portable” in that it stays with you if you change employers or stop working.

In order to qualify for an HSA, you must be enrolled in a high deductible health plan (HDHP), you can’t be enrolled in Medicare, and you can’t be claimed as a dependent on someone else’s tax return for the year you enroll/contribute.  In 2014, a HDHP must have a MINimum annual deductible of $1,250 for an individual ($2,500 for a couple) and a MAXimum out-of-pocket maximum (INCLUDING the deductible) of $6,350 ($12,700) for ‘in-network’ coverage, if your plan is a in/out-of-network plan.  HDHPs MAY cover preventative care without requiring the deductible.

Your health insurance provider, and health care search engines like, can tell you whether your plan qualifies as a HDHP so that you (or your employer) can contribute to an HSA.


Health insurance can be tricky and somewhat complicated.  Besides looking at the financial side of things (premiums, coinsurance, out-of-pocket maximums) you need to be especially careful at reading through a potential policy to understand everything that’s covered, and more importantly, what isn’t.

HSAs are one way that a person might be able to save on health care costs.  However, to benefit you should be healthy (i.e.: need the doctor rarely in the future), in a tax bracket where the tax savings will give you a nice benefit, and making enough money and have the discipline to invest in your HSA.  Doing so successfully could result in significantly lower health insurance premiums, while allowing your HSA to grow tax-free until you either need it for medical expenses down the line, or you use it like a 401k/IRA after you turn 65.

Regardless of which health care option you choose for yourself or your family, make sure you understand it and make sure you enroll in one of those options!  Due to the high cost of health care, and the likelihood that something can happen to you at any moment, you can’t afford NOT to buy health insurance.  You may feel young and invincible (I sure do!), but all it takes is a car wreck or a sports accident to lay you up.  Often times these circumstances are completely beyond our control.  Your entire savings and assets could be wiped out (and you could accrue significant debt) by a few days stay at a hospital.

So, stay healthy (both physically and financially)!  Eat right, exercise, invest early and often and make sure you have health insurance to protect yourself and your family.

[To learn more about HSAs, check out the IRS’s Publication 969.]

***”Coinsurance” is the % of your covered health care costs that YOU will pay for AFTER you pay costs up to the amount of the deductible. (Therefore, if your coinsurance is 15%, you pay 15% of the costs after you pay the deductible amount and your health insurance company pays the balance of 85%.)

The policy’s annual “deductible” is the amount of health care costs that you will have to incur (per year) before your insurance company will help pay some of them.

The annual “Out-of-pocket maximum” is the total amount of money that you might be liable for, in one year, should you have to pay that much in health care costs that year.  This number sometimes includes the deductible and sometimes does not.

The monthly “premiums” equate to the amount you must pay to maintain your health insurance coverage.  For a given policy, premiums generally go up as you get older, as it becomes more likely that you will incur health care costs that your insurance provider will have to cover.

Here’s an example to show how all these parts of your health insurance policy work together: Let’s say Joe N. Shured has a policy which features a $1000 deductible and 20% coinsurance after that, with an out-of-pocket maximum of $5000, which includes the deductible.

In 2008, Joe goes in for a routine checkup which costs $250.  Since this amount is below his annual $1000 deductible, Joe pays for the whole $250 out of his own pocket.  Later in the same year, Joe breaks his arm skiing and has to go in for X-rays, a cast, etc.  His total bills for the broken arm are  $6750.  Since Joe had already paid $250 towards his deductible, the first $750 of his broken arm bills also goes towards the $1000 annual deductible (which he pays all himself.)  Now that Joe has paid health care costs in 2008 equal to his deductible, the coinsurance of 20% kicks in.  Joe therefore pays 20% of the remaining $6000 balance, which equals $1200.  His insurance company picks up the tab for the remaining $4800 (assuming his policy covers those types of medical expenses; always read your policy carefully!)

To date, in 2008 Joe has paid $1000 for the deductible plus $1200 after the coinsurance kicks in for an out-of-pocket total of $2200.  His insurance company has paid $4800 (for a total of $7000 in medical bills in 2008.)  Let’s say that Joe, the clumsly being that he is, falls down a flight of stairs later in 2008 and breaks both legs.  These leg bills come to a total of $20,000, after a couple days stay in the hospital.  At 20% coinsurance, you might think Joe would have to pay $4,000, but notice that Joe already has paid $2,200 out-of-pocket medical expenses this year.  Because Joe’s policy has an out-of-pocket maximum (including deductible in our example) of $5,000, Joe only has to pay $2,800 of the leg bills out-of-pocket.  (Because $2,200 + $2,800 = $5,000.)  His insurance company must pay the remaining $17,200 of bills.

Joe finally makes it out of 2008 without anymore scrapes.  However, on Jan 2nd of 2009, Joe celebrates State U’s touchdown a little too violently and gives himself a hernia.  His hospital bill for this is $225.  Since Joe is in a new calendar year, his deductible has reset to $1000 again, so Joe must pay the whole $225 himself.  (Joe’s annual out-of-pocket maximum is also back at $5000 for 2009.)


How to start investing profitably in individual stocks

So even after reading my warning, and despite all the ease, simplicity, lower risks and excellent returns of target date index funds, you still want to pick your own stocks, huh? Ok, keep reading, but don’t say I didn’t warn you!

Stock-picking Acid Test: do you have at least $100,000 in stock index funds? Have you paid off all high interest debt like credit cards? Are you on track to retire by at least 60-65? If not, go back to the basics first before you consider buying individual stocks!

I recommend keeping at least 75-90% of your portfolio in index funds such as a Vanguard Target retirement fund, and only allowing yourself to pick stocks for the other 10-25%.  That way, if you lose your shirt, you’ll still have plenty of assets to fall back on.  Alternatively, you could designate your retirement funds as index-only, and stick to taxable accounts for any stock picks.  I do this, since I don’t want to screw up my age 60 retirement accounts (401k & IRAs), but am willing to take a little more risk on my ‘early retirement’ accounts.

Also, diversification– owning several different stocks of different sizes in different industries– helps you lower your portfolio’s risk.  The right index funds give you that diversification so that you don’t have to worry about it as much when you’re picking individual stocks.

Quick start guide to picking your first stock

  • Start small (cap.) small investors have better chances beating the market than large investors when it comes to the sizes of companies they can profit from. Choosing a small cap company with a market cap between $500 million to $2 billion means you’re competing with far fewer institutional investors.
  • Learn how to read financial statements. Get your company’s latest 10-Q (quarterly report) and 10-K (annual report) and read it from cover to cover, skimming as needed.
  • Have the right attitude about valuations. The market’s prices are there to serve you, not to inform you. Every single company, which is what a stock represents, is undervalued at one price, appropriately valued at another price, and overvalued at yet another price. You’re investing in a partial ownership of a business enterprise; you’re not playing a casino game. As Ben Graham famously said, “in the short run, the market is a voting machine but in the long run, it is a weighing machine.”
  • Understand how you can be fooled by randomness, and understand why ‘value investing‘ (<– famous Buffett essay)– broadly interpreted as trying to get more business value than the cash you give up in buying a stock– is the ONLY way to invest with a hope of beating the market.

Educate yourself

Peruse investing education websites like the Motley Fool (which unfortunately has a lot of link-baity junk too; but you can still find some good stuff on investing like this, or this.)  MoneyChimp is a great site too, with many investing (and general personal finance) calculators available.

Read superinvestor Warren Buffett’s ‘Letters to Berkshire Hathaway shareholders’ for free online (or consolidated in a much easier format in this book.)  The best book I’ve read to get a feel for the correct general investing philosophy is Roger Lowenstein’s Buffett biography.  I recommend this as a must-read for any would-be investor to learn the correct investing temperament, which is even more important than  learning how to value stocks.

Read Benjamin Graham’s classic ‘The Intelligent Investor’, or at least the chapters on ‘Mr. Market’ and the Margin of Safety concept (Chapters 8 and 20.)  Graham was Buffett’s teacher and, together with David Dodd, pioneered value investing with ‘Security Analysis’.

Peter Lynch’s One up on Wall Street and Beating the Street are also good. Philip Fisher’s Common Stocks and Uncommon Profits is excellent too, especially for the notion of ‘scuttlebut’; picking up (legal) insider tips on your own.

A less dense and very useful ‘just get started investing’ primer is the Motley Fool’s Million Dollar Portfolio book.

One word of caution: if you ever come across ‘technical analysis’, otherwise known as ‘charting’, run the other way as fast as you can!  Technical Analysis is a stock picking method akin to voodoo (and just as scientific.)  It involves looking at the past patterns in past price data (random movements in the market) for a given stock.  Supposedly, patterns like ‘head and shoulders‘ (I’m not making this up) are ‘buy’ indicators, whereas the ‘rounding top‘ pattern is something to fear.  If you think trying to divine future stock movements from random patterns in past price data sounds crazy, you’re right; don’t give this garbage any space in your brain.

Do your homework

Once you find a company you’re interested in, start looking at their financial data and business model. I use Yahoo! Finance for a quick look at financials and to track companies I’ve already bought or am considering buying in the future. Download annual reports (10-K’s) and quarterly reports (10-Q’s) from the Investor Relations section of a company’s website. Do whatever valuation techniques you like, but at a minimum compute some ratios (PE, PEG, Current, Quick, etc) and do a Discounted Cash Flow (DCF) analysis on a company’s Free Cash Flow (FCF.)  Valuation matters!

Plan to buy and hold a company… forever!

Warren Buffett is often quoted as saying his favorite holding period is forever.  What he means is that if you do a thorough job in steps 1 and 2 above, you should have found a company worth holding for a very long time.  Ideally, that great business would continue to be a profitable investment for years to come, so why wouldn’t you keep the stock?  There are some legitimate reasons to sell, maybe the business has changed, or maybe you overlooked some glaring issue at the time you purchased.  Maybe the all-star CEO has left and you’re not comfortable with her replacement.  Or, maybe you finally need the money.

Other than these reasons, plan on holding for a very long time.  Buy and hold investing forces you to do your research up front.  It also keeps you from trading too much, which incurs large costs and lowers returns dramatically.  Not only that, but the IRS tax code favors investors who hold their investment gains as long as possible (this last consideration doesn’t matter for retirement accounts that are tax-advantaged, like 401ks or IRAs.)

Track your portfolio’s performance against an appropriate benchmark index

Here’s the easiest way to do this, which is what I do to track my performance casually and easily.

Knowing your performance against a relevant benchmark. If you can’t beat the market benchmark, picking stocks is detrimental to your wealth AND a waste of your time. I recommend keeping your brokerage account that you use for individual stocks separate from the rest of your investments (i.e.: your index funds, bonds, and cash reserves.)

After you calculate your total return, calculate what your total return would’ve been if you’d made the same investments (amount and date of investment) in an index fund like the Vanguard Total Stock Market index fund (ETF ticker: VTI.)  Ideally you would like as long a time period as possible, as random fluctuations in your portfolio can make you lucky (or unlucky) in the short term.  Check your portfolio’s return against a benchmark at least every 6 months to a year.

If you can outperform the market for 3 years or more by a 1-2% each year, you’re doing very well. If you’re doing better than that, you’re crushing it compared to most investors. That might not sound like much, but it is when you can keep up that performance year over year. You might also compare the dollar gain vs the time you’re spending on it.


It’s very difficult to gain the knowledge, emotional attitude and discipline to be a successful stock picker. By using the resources about you’ll have a better chance than most, which still may not be enough. Stock picking can be fun, but make sure you’re giving yourself constant reality checks by measuring your entire portfolio’s performance against a major stock market index fund like the S&P 500. Use a buy and hold strategy with a long-term (5+ years) holding period. Thoroughly investigate the pros and cons of every investment before you buy. Good luck!

Final word of caution and advice

Be brutally honest with yourself: if this all sounds like too much work, or if you know that your initial excitement to do the work will lose steam in a few months, just buy broad low-fee index funds. Just ‘buying the market’ will result in huge compound returns over time, and beats the vast majority of professional money managers (because of their fees + taxes they generate from more frequent trading), not to mention all your friends.  Not only that, but target date index funds require practically ZERO work and maintenance, allowing you to ‘set it and forget it’ and get on with the rest of your life.