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How has it held up? What have you learned over the years as the single best tip for long-run returns?

Mine has been this simple powerful concept:
http://www.finweb.com/investing/compound-interest.html
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What have you learned over the years as the single best tip for long-run returns?

Mine has been this simple powerful concept:
http://www.finweb.com/investing/compound-interest.html


This just doesn't seem like a "long term strategy" ( --words taken from the title of your post). It's kind of like the strategy of choosing your parents carefully, or making sure to be born into a rich family. I don't have 30 years of life expectancy left. Even if I'm totally convinced of your "strategy" -- how can I follow it?

As for my own best long-term strategy, I suppose it would be constantly buying high quality dividend-paying stocks, and gradually shifting my investments into bonds, CDs, and high-interest-bearing bank accounts over time. I'm always fully invested. I don't try to time the market. I see the stock market as a way of generating wealth, and I see bonds, CDs, and high-interest-bearing bank accounts as ways of preserving that wealth. Even though the stock market has not produced an advance since I've been investing, since I'm not trying to time the market and have faith (hope?) that it will eventually turn upwards, I continue to look to it to generate wealth.

What have I learned over the years as the single best tip for long-term returns? I suppose it's patience. The importance of holding firm in the face of destruction of wealth. Psychologically, we are discouraged by what we see; but, logically, we reason that holding steady is the best thing to do. The best tip that I could give a beginning investor is NOT to act on emotion, NOT to follow the ups and downs of the market too closely, NOT to listen to financial "news," NOT to let emotion override reason; develop an investment plan and stick with it; study behavioral economics, and defend yourself against the feelings and emotions that we all have.

--SirTas
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My past, current, and best long-term strategy has been to use low cost funds from Vanguard on a buy and hold basis. I've watched my asset allocation (fixed versus equity) over the decades. I'm not at 30% equities and 70% fixed. About one-third of our portfolio is in a taxable account, with the balance in our rollover IRAs. I'm fully retired now, and my wife does a tiny bit of part-time work for money, but not enough to write home about. Keeping fingers crossed and knocking on wood, I think we're in good shape for the long haul, at least I hope so. Buying and holding is the single most important thing we've done. This way we avoid what kills so many people, which is buying high and selling low, plus paying to much in expenses. Good luck to us all.
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Two things, figuring out what type of investments that fit my character/lifestyle, and tracking performance.
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The best advice I can come up with is "Make hay when the sun shines."

Its tough to make money in all market conditions, but when the market starts doing well, make sure you are a participant. Too many hesitate or don't keep an eye on the market and miss out. Too many get there late when the market is near its peak.

Always keep at least a portion of your assets in the markets so you will know when things are perking along (before they make newspaper headlines).
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SirTas:

I agree with you. You offer very sound advice, in my opinion.

We all know the Rule of 73 -- divide the number 73 by whatever percentage return you can get on your investment (interest, dividends, etc.) -- to see how long it takes to double your investment.

However, the original post references information about somehow getting 12% interest! Excuse me? Where? Please show me a bank today paying much interest at all on CD's, etc., let alone savings!

I've managed my own investments for years, and have generally sought to diversify my investments in varied areas, with some getting dividends, some in "fliers", and some in very stable large companies.

As a retiree, I have now pretty much pulled in my horns, so to speak, away from most of the "fliers", given the questionable status of the market, and have sought out some reasonably stable companies that pay decent dividends.

Two of my current favorites are AT&T (symbol T) and B&G Foods (symbol BGS), each paying better than 6 percent. I also like Del Monte (symbol DLM), though that pays less. I now am about 25% in "cash" in my Fidelity IRA, and am watching to see where things are going, so I can invest later in whatever looks favorable.

Good luck to you and to all of us.

Vermonter
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Actually it is the Rule of 72 but I guess 73 is close enough.

Rich
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I've heard both 72 or 73. No matter. It gets the idea across simply.

Let me see now....

If I put my money into a bank paying 0.5 percent annual interest.... hmmm... it would take about 144 years (or would it be 146 years?) to double my money!

Is that awful or what? Remember the "old days" of 5% interest on savings?

Amazing.

VErmonter
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