Reasons for Individual Investors to Be Grateful in 2021

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In his TED Talk, David Steindl-Rast makes the case for happiness being directly tied to gratitude. The monk and interfaith scholar says that people who are more grateful tend to also be happier.

I’m referring to it not only because it is a great talk (to be fair, I’m a fan of TED Talks in general), but because today is Thanksgiving. (Happy Thanksgiving!) Today is supposed to be a day for being thankful. With this in mind, I’m going to list things we individual investors should be grateful for but may overlook. It is an evolving list, with changes made every Thanksgiving. 

The Reopening—Globally, economies continue to reopen, and people are reengaging in pre-pandemic activities. The ride is still bumpy—because of the delta variant, supply chain bottlenecks and disparities in vaccination rates—but the overall trend is positive.

Having a Portfolio—Stocks have enjoyed a strong bull run since bottoming in March 2020. Investors who have maintained an allocation to equities have benefited. Are there concerns about inflation being more sticky than transitory, interest rates rising, valuations being too high and the contentious political environment? Absolutely. But if you’re worried about one or more of these potentially affecting the value of your portfolio in an adverse manner, be grateful. I realize this seems counterintuitive but consider the bigger picture: You have wealth to worry about. No matter how large or small your portfolio is, it’s money you do not have to spend today. Not everyone has this luxury.

Never Having to Report Performance—An advantage that we individual investors have over professional money managers is never having to report our performance. I cannot stress enough how big of an advantage this is. It gives us the ability to stick to strategies proven to work over the long term—even when they are out of favor on a short-term basis—without ever having to worry about keeping clients happy.

Being Able to Invest in All Exchange-Listed Stocks—In addition to not having to report performance, we individual investors are not restricted in what we can invest in. This gives us the ability to invest in stocks whose market capitalizations are too small for institutional investors to even consider because of their investment objectives and/or the sheer amount of money they have to invest. The flexibility also allows us to take full advantage of the size, value and momentum premiums (and other return anomalies) identified by academic research. Our ability to invest in smaller companies is a big advantage.

Decreasing Costs—We’re continuing to see expense ratios decline for both exchange-traded funds (ETFs) and mutual funds. There are now approximately 200 ETFs with expense ratios of 0.09% or lower. That equates to a mere $0.90 (or less) for every $1,000 invested. This trend, along with the popularity of indexing, has put pressure on mutual fund fees. Add in the elimination of commissions on stock and ETF trades by most online brokers and investors are keeping more money in their portfolios than ever before.

Compounding—There is no greater friend to investors than compounding. As many of you know, compounding takes a dollar’s worth of assets today and turns it into far more than a dollar’s worth of assets tomorrow. This is why the elimination of commissions and the downward pressure on mutual fund and ETF expense ratios are beneficial: Every dollar you save is a dollar you get to keep investing.

Being a Proactive Manager of Your Wealth—If you’re reading this, then you are a person who has chosen to be in control of your finances. Regardless of whether you do everything yourself, work with an adviser, use index funds or actively pick stocks, you have made the decision both to be engaged and to continue learning. Be proud of yourself for doing so and be grateful that you have the ability to do so.