The Greatest Financial Advisor You Never Knew You Had

Tyler Gardner (0:00)

Just stop checking your stuff. The single greatest advantage the index has over you is that it doesn't have a phone, it doesn't know what happened today. Every study of investor behavior points the same direction. The more often you look, the worse you're going to do.

Hello, friends. This is Tyler Gardner, welcoming you to another episode of Your Money Guide on the Side, where it is my job to simplify what seems complex, add nuance to what seems simple, and learn from and alongside some of the brightest minds in money, finance, and investing. So let's get started and get you one step closer to where you need to be.

Quick note before we start, September's pre-order bonus for my book, Real Wealth, is something I've wanted myself for years and never been able to find. So I created it. It's called the Real Wealth Money Calendar. 12 months, 5 action items per month, all on one page because most people I know already know what to do. They just don't necessarily know when and they don't have accountability. So this is your 2027 on one page, 60 moves in the month you actually need to make them. Pre-order Real Wealth at tylergardner.com.com. Let me know you did and your money calendar will be in your inbox in early October. This week, I want to start by telling you about the best financial advisor I've ever worked with. They've never called me during dinner. They've never invited me to a steakhouse to discuss a rare and privileged opportunity. They have never worn a quarter zip with a company logo on it, never said, let's circle back, and have never once sent me a holiday card featuring their family and matching flannel on a hay bale.

They charge me about $3 a year for every $10,000 I give them. They fire their own underperforming employees without me having to ask, and over the last several decades, they have beaten the overwhelming majority of professionals who charge 300 times more than they do.

If you've been with me since the beginning, you know where I'm going with this, folks. This episode is all about my personal financial advisor, the S&P 500, and they don't even know that I exist. Now, I did a version of this episode about a year ago, but a lot of you are new since then, and this one deserves not only an annual reminder, but also a refresher in the way that flossing and checking your beneficiaries deserves annual reminders and refreshers. We're going to break this into two sections today. First, why simply owning the S&P 500 is one of the most brilliant financial decisions available to a normal human being. Second, we'll specifically address some of the objections that always follow. Well, fine Tyler, but investing is only half of it. What about the psychology? What about the other complex stuff? Isn't that what I'm paying an advisor for? We'll cover all of that in the next half hour. And, familiar ask before we get into it, if this show has been helpful to you in any way, if you'd consider leaving a review, I would be and already am eternally grateful. It genuinely helps new listeners find the show, and more selfishly, it helps me know I'm not alone in here talking to a microphone in the Vermont woods while a bloodhound sleeps next to me, and you might hear her snoring throughout this episode. Now, let's get into it and talk about why the S&P 500 is the single greatest financial advisor you never knew you had.

Part one, the machine that cleans itself.

Let's start with a thing almost nobody understands about the S&P 500, which is what it actually is.

Most people think it's a list of the 500 biggest American companies. It isn't. It's a curated index, hand selected by a committee at S&P Dow Jones Indices, who meet, discuss, and vote. There's literally a room. There are people in that room. And I find this delightful, because the most successful investment strategy in modern history is essentially a very disciplined book club.

Now, to even be considered, a company has to clear a set of hurdles. It has to be headquartered in the United States. It has to be listed on the New York Stock Exchange or the NASDAQ. And as of the most recent update, it needs a market capitalization of at least $22.7 billion, a number that gets revised upward over time, which is its own legitimate commentary on the state of the market. It also needs enough of its shares actually available for public trading, so it can't include a company that's 90% owned by its founder's nephew. It needs genuine liquidity.