Now and later: redefining success in investing
- Author
- Greenway Wealth Advisors, LLC
- Published
- Thu 03 Dec 2020
- Episode Link
- https://www.greenwaywealth.com/
Welcome to the Making Margin podcast! Greenway’s team is here to discuss common financial mistakes and to help you navigate them.
Meet the voices behind Making Margin:
Today’s episode:
- How can we be confident in 6% (or higher!) growth rate?
- Why do we think it’s important to have equities (and/or bonds) in a portfolio?
- We have to set some expectations regarding investment planning. So, how do we come to the conclusions that we do when designing a portfolio?
Discussion Topics:
- There is an equity premium. We know intuitively that the founder of a company has more to gain and more to lose than the bank from which he borrows the money. A bond is comparable to a bank that is lending out money. The bank expects the return of their capital and a slight return on their capital. A business owner is looking for a multiplication of capital.
- The longer the history, the more confidence you can have -- Looking at monthly data in the US from January 1926 to July of 2020, there have been just over 1130 months. This means that there have been over 1000, 10-year periods - 120 months squished together.
- Have a realistic expectation - Morgan Housel wrote, “Markets crash all the time. You should, at minimum, expect stocks to fall at least 10% once a year, 20% once every few years, 30% or more once or twice a decade, and 50% or more once or twice during your lifetime.”
- What’s the point of investing? Maximizing return or reaching a goal?
- Investor’s Manifesto
