Hey there, Individual Investor!

Investing in the market doesn’t have to mean settling for average returns.

Many investors believe that consistent growth is out of reach, especially when the market seems unpredictable. They’re frustrated by the constant ups and downs, and the advice to simply "ride it out" feels more like settling for mediocrity than pursuing real financial success.

But here’s the problem: Most investors set goals that are too conservative, limiting their potential right from the start. They aim for a modest 6-7% return because they’ve been conditioned to believe that outperforming the market is impossible.

This approach not only restricts growth but also leaves them vulnerable to losses that could have been avoided with a more proactive strategy.

There’s a better way.

3 Powerful Goals for Index Fund Investors

Let’s break away from the status quo. Here are three powerful goals that can help you maximize gains and avoid catastrophic losses with your index fund investments.

1. Aim Higher with Loftier Performance Goals

Don’t let the market dictate what’s possible. Instead of settling for a 6-7% return, set your sights on 15%.

Achieving this kind of growth is entirely possible with the right strategy.

Start by analyzing historical performance and understanding the factors that drive higher returns. Use this knowledge to adjust your portfolio and push beyond the limitations of average expectations.

For instance, the 100-year average return of the S&P 500 is 10% and you can easily achieve this by investing in an index ETF like SPY, but did you know you could do better by simply investing in an index a more tech heavy index fund like QQQ?

QQQ is an index ETF that mimics the Nasdaq. Over the past 10 years, the Nasdaq composite has delivered an average return of 13.8% vs the S&P’s 12.58% return. That may not sound like a lot but consider what that would have done for your portfolio over the last 10 years.

If you invested $100K in the S&P (SPY) for 10 years at 12.58% with no additional contributions, you would have $327,048.00.

However, if you invested in the Nasdaq (QQQ) instead, then you would have $364,269.00.

That’s a difference of over $40,000 just by switching the index fund you’re invested in.

What if you were able to achieve a 15% return?

Then you would have $404,555.00 a difference of $77,507.00!

2. Implement a Simple Market Timing Strategy

Timing the market isn’t just for day traders.

A straightforward approach using moving averages can provide clear signals for when to enter and exit the market.

For instance, buy a 50% position in your Nasdaq index ETF (QQQ) when its price crosses above the 200-day moving average, buy the other 50% when it climbs above the 50-day moving average and selling 50% when it breaks the 50-day moving average, then sell the other 50% more when it breaks the 200-day.

This method isn’t about predicting every turn of the market, but about making informed decisions that align with long-term growth.

A simple back test of this strategy using the Nasdaq ETF QQQ showed that it outperformed a buy and hold S&P index strategy by 44.5%

S&P 500 Buy and Hold Strategy - 97.5% Total Return (18.93% Annualized Return)

Nasdaq (QQQ) Moving Average Strategy - 142.84% Total Return (24.65% Annualized Return) 

PS. If you would like the trade log and investment results, just email me and I will send them to you. 

3. Establish and Enforce Loss-Cutting Rules

Protecting your gains is just as important as achieving them.

One of the most effective ways to do this is by setting a circuit breaker rule.

For example, if your index ETF drops more than 10% from its peak, sell immediately—no questions asked. This simple rule can prevent minor dips from turning into major losses, safeguarding your portfolio and giving you peace of mind.

This becomes extremely important when your strategies get more complex like the one taught in The Creative Investor - Individual Investor OS.

My strategy uses triple leveraged index ETF’s which means that when the market goes up 1% the leveraged asset goes up 3%. However, this is also true for the downside making a loss cutting rule super important. Remember, a 50% loss requires a 100% gain just to get back to break even.

The circuit breaker rule keeps you safe when markets get ugly fast like the 2008 financial crisis, the COVID crash, and the 22-23 bear market.

Real-Life Application

Let’s say you’re an investor who typically follows the buy-and-hold approach with a popular index fund like the S&P 500 ETF.

By setting a goal to achieve a 15% annual return, you start by researching market trends and adjusting your portfolio to include index ETF’s poised for growth like the Nasdaq (QQQ). Next, you implement the moving average strategy, which signals you to buy during a market upswing. Later, when the market begins to show signs of volatility, your 10% loss-cutting rule kicks in, prompting you to sell before the downturn deepens.

As a result, you not only achieve your higher return goal but also avoid the significant losses that other investors suffer.

The Benefits of This Approach

By adopting these three goals, you’re not just passively hoping for growth—you’re actively pursuing it.

You’ll experience stronger returns, greater portfolio stability, and the confidence that comes with knowing you have a plan to handle whatever the market throws your way.

Take Action Today

Don’t wait for the market to hand you average results. Start setting higher goals, implement a timing strategy, and protect your investments with loss-cutting rules.

These simple steps can make all the difference in achieving the financial growth you’ve always wanted.