Just Keep Buying

The Book in 3 Sentences

Just Keep Buying presents a straightforward approach to building wealth through consistent investment in the stock market, regardless of market conditions or timing. The book argues that while saving is essential for lower-income individuals, investing in income-producing assets is the key to building wealth for those with higher incomes. It provides practical guidelines for personal finance, including the “2x Rule” for guilt-free spending and saving 50% of raises.

Impressions

This is a refreshingly practical and data-driven take on personal finance that avoids the typical motivational fluff.

Maggiulli’s writing stands out for its clear, actionable advice backed by research and historical evidence. I particularly appreciated how he addresses both the mathematical and psychological aspects of investing, though some might find his “just keep buying” message oversimplified.

I really really liked this book, it was a very intersting way of thinking. Similar to A Random Walk Down Wall Street, it makes it very simple and adresses the core issue at hand, you are not better than the market.

All these things are financial toolsl such as debt, stocks, bond. We need to understand them in a good way.

You should invest as soon and as often as you can. This is the point, invest invest invest. Do not cover, do not obverthink, just do and let the marked handle the rest.

My Top Quotes

• To build wealth it didn’t matter when you bought U.S. stocks, just that you bought them and kept buying them. It didn’t matter if valuations were high or low. It didn’t matter if you were in a bull market or a bear market. All that mattered was that you kept buying.

• More simply: saving is for the poor and investing is for the rich.

• This is why the best savings advice is: save what you can.

• Increases in income aren’t followed by similar increases in spending.

• Of course, you may know someone who has a high income and spends it all. I’m not saying these people don’t exist. The important point is that the data suggests that these individuals are the exception to the rule. In aggregate, higher income households spend a smaller percentage of their income than lower income households.

• “Those who know, do. Those that understand, teach.”

• As Aristotle once said, “Those who know, do. Those that understand, teach.”

• The first tip is what I call The 2x Rule. The 2x Rule works like this: Anytime I want to splurge on something, I have to take the same amount of money and invest it as well.

• If we also assume that each investor needs 25x of their annual spending to retire comfortably, then Annie requires 1.25 million, while Bobby will require 2.25 million to retire.

• Despite all the complicated theory, assumptions, and analysis shown above, I suggest that you save 50% of your raises simply because this is what will work for most people most of the time.

• Debt. It’s a topic that has been debated since biblical times. As Proverbs 22:7 states, “The borrower is slave to the lender.”

• Debt, regardless of the type, is a financial tool like any other. If used properly, it can work wonders for your financial situation. If not, it can be harmful.

• The right time to buy a home is when you can meet the following conditions: You plan on being in that location for at least ten years. You have a stable personal and professional life. You can afford it. If you can’t meet all of these conditions, then you should probably be renting.

• Bengen found that retirees throughout history could have withdrawn 4% of a 50/50 (stock/bond) portfolio annually for at least 30 years without running out of money. This was true despite the fact that the withdrawal amount grew by 3% each year to keep up with inflation.

• The beauty of Bengen’s 4% rule was that it provided a simple solution to an otherwise complex problem. Figuring out how much you could spend during your first year of retirement was no longer a stressful decision, but an elementary calculation.

• When J.P. Morgan Asset Management analyzed the financial behavior of over 600,000 U.S. households, they found that spending was highest among households aged 45–49 and dropped in each successive age group. This was especially true among households in retirement age.

• “I retired for three years. I was bored out of my mind. Working is not just about money. People don’t understand this very often until they stop working.

• Individuals who saw the older versions of themselves allocated about 2% more of their pay (on average) to retirement than people who didn’t see such photos.⁶¹ This suggests that seeing a realistic older version of yourself may be helpful in encouraging long-term investing behavior.

• “Americans are getting stronger. Twenty years ago, it took two people to carry USD 10 worth of groceries. Today, a five-year old could do it.”

• Despite all the praise that I have just given to stocks, they are not for the faint of heart. In fact, you should expect to see a 50%+ price decline a couple times a century, a 30% decline once every four to five years, and a 10% price decline at least every other year.

• I prefer owning index funds and ETFs over individual stocks for a host of reasons (many of which will be discussed in the following chapter), but mainly because index funds are an easy way to get cheap diversification.

• Bonds tend to rise when stocks (and other risky assets) fall. Bonds have a more consistent income stream than other assets. Bonds can provide liquidity to rebalance your portfolio or cover liabilities.

• REITs Summary Average compounded annual return: 10%–12%. Pros: Real estate exposure that you don’t have to manage. Less correlated with stocks during good times. Cons: Volatility greater than or equal to stocks. Less liquidity for non-traded REITs. Highly correlated with stocks and other risk assets during stock market crashes.

• Small Business Summary Average compounded annual return: 20%–25%, but expect lots of losers. Pros: Can have extremely outsized returns. The more involved you are, the more future opportunities you will see. Cons: Huge time commitment. Lots of failures can be discouraging.

• The Lindy Effect explains why people in the year 2220 are more likely to listen to Mozart than to Metallica. Though Metallica probably has more worldwide listeners today than Mozart, I am not sure this will be true in two centuries.

• For this reason, the bulk of my investments (90%) are in income-producing assets, with the remaining 10% spread out among non-income-producing assets such as art and various cryptocurrencies.

• It’s different for income-producing assets, though. While perception does play a role in how these assets are priced, cash flows should anchor their valuations, at least in theory. For this reason, the bulk of my investments (90%) are in income-producing assets, with the remaining 10% spread out among non-income-producing assets such as art and various cryptocurrencies.

Asset Class	Annual Compounded Return	Pros	Cons
Stocks	8%–10%	High historic returns. Easy to own and trade. Low maintenance.	High volatility. Valuations can change quickly.
Bonds	2%–4%	Low volatility. Good for rebalancing. Safety of principal.	Low returns, especially after inflation. Low income in low-yield environment.
Investment Property	12%–15%	Higher returns (especially when you include leverage).	Managing the property can be a headache. Hard to diversify.
REITs	10%–12%	Real estate exposure that you don’t have to manage.	Volatility greater than or equal to stocks. Crashes when other risk assets do.
Farmland	7%–9%	Lower correlation with traditional financial assets. Good inflation hedge.	Less liquid + higher fees. Requires “accredited” status to participate.
Small Businesses	20%–25%	Extremely outsized returns. More involvement creates more opportunity.	Huge time commitment. Lots of failures can be discouraging.
Royalties	5%–20%	Uncorrelated with traditional financial assets. Generally steady income.	High seller fees. Tastes can change suddenly and impact income.
Your Own Product(s)	Variable	Full ownership. Personal satisfaction. Can create a valuable brand.	Very labor intensive. No guarantee of payoff.

• The one piece of information that can guide your investing decisions is: Most stock markets go up most of the time.

• As a result, the best market timing approach is to invest your money as soon as you can. This isn’t just an opinion of mine either. It is backed by historical data across multiple asset classes and multiple time periods.

• Buy Now: The act of investing all of your available money at once. The amount of money being invested is not important, only that the entire amount is invested immediately.

• Average-In: The act of investing all of your available money over time. How you decide to invest these funds over time is up to you. However, the typical approach is equal-sized payments over a specific time period (e.g., one payment a month for 12 months).

• To be more precise, Average-In underperforms Buy Now by 4% in each rolling 12-month period, on average, and in 76% of all rolling 12-month periods from 1997–2020.

• When deciding between investing all your money now or over time, it is almost always better to invest it now. This is true across all asset classes, time periods, and nearly all valuation regimes. Generally, the longer you wait to deploy your capital, the worse off you will be. I say generally because the only time when you are better off by averaging-in over time is while the market is crashing. However, it is precisely when the market is crashing that you will be the least enthusiastic to invest.

• You should invest as soon and as often as you can.

• Someone who was an incredible investor (who beat the market by 5% annually) would have made less money than a terrible investor (who underperformed by 5% annually) simply because of when they started investing. This example is cherry-picked, but demonstrates how skilled investors (outperformers) can lose to unskilled investors (underperformers) simply because they were invested during a difficult market environment.

• As financial expert Michael Kitces discovered, “In fact, a deeper look at the data reveals that there is remarkably little relationship between returns in the first year or two of retirement, and the safe withdrawal rate that can be sustained in the portfolio… even if retirement starts out with a market crash.”

• Adequately diversify with enough low-risk assets (e.g., bonds).Having a large bond portion as you enter retirement may be able to provide enough income to prevent you from selling equities at depressed prices.

• After seeing this data, at what level of decline would you choose to sit things out?

• How conservative should it be? What size drawdown should you avoid if you want to maximize your wealth? The answer is 15% and above.

• How conservative should it be? What size drawdown should you avoid if you want to maximize your wealth? The answer is 15% and above. Investing in bonds in years when the market declines by 15% (or more) and investing in stocks in all other years would maximize your long-term wealth.

• Consider the wisdom of Charlie Munger, Warren Buffett’s long-time business partner: “If you’re not willing to react with equanimity to a market price decline of 50% two or three times a century, you’re not fit to be a common shareholder and you deserve the mediocre result you’re going to get.”

• The 18th century banker Baron Rothschild reportedly said, “The time to buy is when there’s blood in the streets.” Rothschild made a small fortune using this motto in the panic that followed the Battle of Waterloo. But how true is it?

• Most market crashes won’t provide such 3x opportunities, but many of them do provide a 50%–100% upside. Where does this upside come from? It comes from a simple mathematical fact—every percentage loss requires an even larger percentage gain to get back to even.

• Losing 10% requires an 11.11% gain to recover, losing 20% requires a 25% gain to recover, and losing 50% requires a 100% gain (a doubling) to recover. You can see this exponential relationship more clearly in the next chart.

• As Friedrich Neitzsche once said, “Ignore the past and you will lose an eye. Live in the past and you will lose both.”

• Jeremy Siegel, the famed financial author, summarized it best when he wrote: “Fear has a greater grasp on human action than does the impressive weight of historical evidence.”

• Unfortunately, choosing when to sell can be one of the most difficult decisions you ever make as an investor.

• Because selling forces you to face off against two of the strongest behavioral biases in the investment world—fear of missing out on the upside and the fear of losing money on the downside. This emotional vice can make you question every investment decision that you make.

• Can only find three cases under which you should consider selling an investment: To rebalance. To get out of a concentrated (or losing) position. To meet your financial needs.

• As a result, I recommend an annual rebalance for two reasons: It takes less time. It coincides with our annual tax season.

• Fund the life you need before you risk it for the life you want.

• Will your effective income tax rate be higher now (while working) or later (in retirement)?

• “It don’t matter if you win by an inch or a mile. Winning’s winning.”

• Though you can always earn more money, nothing can buy you more time.

• Saving is for the Poor, Investing is for the Rich

• Focus on Income, Not Spending

• Cutting spending has its limits, but growing your income doesn’t. Find small ways to grow your income today that can turn into big ways to grow it tomorrow.

• Use The 2x Rule to Eliminate Spending Guilt If you ever feel guilty about splurging on yourself, invest the same amount of money into income-producing assets or donate to a good cause.

• Save at Least 50% of Your Future Raises and Bonuses A little lifestyle creep is okay, but keep it below 50% of your future raises if you want to stay on track.