Message Font: Serif | Sans-Serif
No. of Recommendations: 2
Nick a few things I have settled on after 40 years of investing -

#1. Target Funds really sound good for a person beginning to invest - Before you do that, look carefully at sets of target funds from several brokerage firms. I did that back in the 1990s and found that one companies fund with a 30 year horizon might have the same level of risk as a 20 your or 40 year horizon at another brokerage firm.

#2. For a long time, I have felt Warren Buffet really knew what he was doing. Some decades have been better for him than others. But he did put his money where his mouth was back in 2008 -- that was before the big recession. He said he would put a single mutual fund (S&P500 index) against all hedge fund comers for a period of 10 years. It was not particularly close even though Warren's bet was more than cut in half in the first year. Google Warren Buffett million dollar bet.

#3. When you look at investment returns for mutual funds, keep in mind if that fund is trading stocks, it is creating income taxes you get to pay, unless your investment is in a 401K or similar sheltered account. The reported returns generally do not reflect the effect of taxes.

#4. You will hear about many people who have information or investment approaches that "can beat the market". Apparently those did not want to take Warren Buffet up on a bet.

#5. There is a great allure at picking or finding some great stock. Back in the 1990s it was Microsoft. I am not sure what the current example would be. A few (Very Few) people will do that. But to beat the market, in my view you need at least one of three conditions. #1. You are very lucky. #2. You know something the people at Fidelity, Schwab and Vanguard do not know. #3. You are smarter or have better computer analysis than those folks managing mutual funds. I personally fell into the trap of confusing the rising market on the 1990s with my own investing skill.

If you have a long investing horizon, (and I sense to may have that)just put your funds in the S&P500 while you study and learn.
Print the post  


What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.