Home Forums Hunting & Shooting Hunter's Campfire The single most powerful factor behind successful investing?

Good job!

Timing, luck AND investing in index funds. 80% of mutual fund active fund managers fail to beat the S&P 500 index for more than 3 years.

The US stock market has average 10.1% growth since 1929 - BUT, 1929 was the start of the Great Depression whereby many large cap funds (railroads, steel, etc.) were busted to mid-cap stocks. Since then they grew to their previous standing.

Also, the 10.1% growth rate assumes that the investor did not withdraw dividends (i.e., spend them) but re-invested them.

"They (Wall Street) will also tell you that over time with the market fluctuations, your principle will double on the average of seven years."

Using the "Rule of 72", investments will double in 7.2 years, assuming a 10% growth rate. This assumes that investments are in S&P 500 index funds (which have achieved the 10.1% growth rate) and not in bank savings accounts. Index funds are often ridiculed as for losers, but they do work. Many active investors and their advisors, tout superior growth of selected stocks, but who can predict which stocks will grow? I bought Berkshire Hathaway in 1966 at $22/share and sold it 6 months later at $29/share fearing tat it had made it's run. Boy, was I wrong!!!

I'm impressed. I save 16% (not counting the crapload of money I re-invest in the business). 33% is awesome.

It's interesting that, in the article (index funds) , linked to, Buffet did not have one fund manager that he would entrust his estate to, including his advice for his kids.

When I consider that, along with many other factors, my opinion comes to be that WB is pretty much a crony capitalist and his holdings are diverse enough that the information he is privy to (alluded to in the article) makes his decisions virtual (legal) insider trading. IMO, he would not be going along with øbama's taxation happy talk if he was not getting significant benefits in return. He's not a Republican or Democrat, but a VERY pragmatic investor.

Note, he has always lived well below his means. ;-{>8

Time and a little luck. You'll get some picks wrong, but it only takes a handful of picks to be right and you'll do very well if you go very long. I don't like mutual funds, index funds, etc. I pick stocks and ride them either into the ground or to wealth. Tough to do though if you are a fearful person.

Dutch, we were fortunate to have good incomes. We lived on 1/3, paid 1/3 in taxes and saved the final 1/3. We lived pretty good, but didn't squander money (OK, I did buy some decent guns). But, unlike many, we drove older cars, didn't have a beach condo, rarely ate out, packed our lunches for work ,didn't take annual lavish vacations, etc.

It paid off and the money saved will provide well for any emergency in retirement. BTW, we both still work in retirement - the wife does consulting (earned $40 last year) and I work at a golf course (small wage but free golf!). Neither of us know what we'd do if we didn't work; the money isn't important, but the activity is.

I agree with you to a point. Assets do build wealth, but at some point in time you'll need a place to stick money where it can grow as your assets bring you surplus cash. A guy only has so much time on his hands, and the stock market is handy for stashing money away for long periods and forgetting about.

A good steady income that grows with spending under control, and an aggressive investing plan is a good recipe for long term wealth and some happy children when you kick the bucket.

Guns btw, in the scheme of things, aren't a very good investment. You might get lucky on the occasional gun, but you'd have to move a pile of guns on a regular basis to make any real money.

Kinda like doubling down on a bet when you've already lost a lot of money. Just like in golf, pay the safe shots; risky shots often lead to a ball in the rough or water.

Consider that, as already referenced, 80% of professional fund managers do not beat the market averages (index). And, to beat a no load index fund they need to far exceed the market average, to cover their salaries, advertising, broker's fees and possible generated taxable events. What appears to be fearful for some, is really just good stewardship.

Further, consider the time, your precious life, that it takes, researching all of this, when it could be spent with family or acquiring valuable memories. IT AIN'T WORTH IT, TO ME.

If you won't listen to me, and why should you, listen to Warren Buffet. ;-{>8

Index funds have been very popular, and for a reason.. We just pulled out of a big crash and have been on a run for awhile. Hit another bear market for several years or longer and you won't hear people singing Index praises too loudly.

You have to take on some risk at some point in time.

The last 15 years in the market have actually been pretty "meh" compared to historical rates, but then again, so has inflation.

The stock market moves in spurts, both up and down. If you want to try your luck, you can try and time the spurts, and you can very easily outperform the market. Or lose money handsomely.

Miss one good upswing in your lifetime, and it will cut your lifetime returns as much as 50% (considering compound interest).

THAT is why index funds are popular. They are always in the market.

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order 1 a year.

Don't forget to adjust those long term earnings against the dollar index. The dollar index makes the long term return 6%-7% . Right now stocks vs earnings don't look cheap. buy low sell high. I started my retirement investing in the 90's, got pounded in 2000 and then again in 2008 so my perspective may be different than some of you. I've done ok, but my RTI has been way better buying crappy houses and making them into decent houses. It's a lot more work, but less risk. I'm hoping to have enough rentals to replace my income in the my early 50's.

The single most important act is like the saying making the 1st step Open that account and then make regular deposits to it. EdM and Rocky are right on. If your employer offers matching it is always wise to take advantage of that too unless they only offer the company stock and thenit might or might not be worthwhile. As to Investment advice the best I know is figure your investment profile by subtracting your age from 90 and putting that amount into equities and the rest in Fixed investments ( bonds). For example if you are 30 years old you should have about 60% equities and 40% bonds. If you are 60 then have 30% in equities and 70% in bonds. For the small investor you only need three funds a Stock index fund that follows the s&p , A bond index fund, and a money market fund where you can hold a small amount of cash if you wish. These funds should carry a low expense fee and will do as well as all of the managed funds etc. You should realign your portfolio every birthday.
The one thing I find I have issues with the financial planning industry is they are big on telling you to save save save and build up your portfolio. ( the bigger your portfolio the more they make in fees as a rule) They are lousy at helping you plan to spend your money when you retire. Their aim is to maintain your portfolio balance ( their income base) and they are full of dire warning about running out of money etc. to scare you. The issue is do you wish to leave a pot of cash in your estate or do you figure the kids are grown you raised them and educated them so they need to fend for themselves. If its the former you need a lot more money. If its the latter you can do on a lot less. One thing I will point out as an example of how they sort of mislead you is when they say to a 60 -66 year old if you can just work another 4-5 years you'll have so much more $$. The part they don't say is that's about 20%-25% of the time you have left and it most likely the best 20% you have.If you have been saving that probably isn't good advice if you have not you may not have a choice. Think about that. The final piece of financial advice Ill give is even if it means living in a smaller house plan on having it paid for by age 55-60. The American concept of your home as an investment is bad advice. You need a comfortable warm dry place to raise your family and that's what a home is. If you want to invest in real estate thats fine but buy a duplex , apartment etc that produces income. Don't be house poor all your life thinking it will pay off big as an investment.

I agree with this.

I married a smart girl, and worked my ass off, I don't owe anyone or need any money, that being said, I've seen dumbass gamblers that thought they were smart blow a lifetime of hard work and savings planning.

Truly sad to see the fallout from that level of stupid.

I'm with you gunner500. Years of hard work, spending way less than I made, and blessing from the Man upstairs allowed me to be 100% debt free, personal and business, at age 41. It ain't rocket science.

Oh yeah, never ever let someone else manage your money. The cash that I do keep is in several accounts at a local FCU.