Double Your Money as Many Times as you Can.
This week’s Barron’s Picklist Portfolio First. Check it out here.
We’re always doing the hard work combing through a week’s worth of financial news. And then building these little portfolio babies. So we can invest. Want to follow along?
Well, what is there to say? Trump comes out with a strong speech that sends the market rallying.
One of the hottest IPOs hit the market midweek in Snap. And bullish is as bullish goes.
Stock market news is starting to transcend from just the financial rags to the New York Times and PBS… even starting to become water cooler talk.
Keep watch here, I remember what happened last time my barber and shoe shine man wanted to give me some stock tips. Hint — not good.
I saw a case this week that, though we are in the eighth year and second longest bull market in history (1987–2000 is the longest), there is compelling reason to believe that we have another five years of strong equity performance. At least.
I’m not looking for good news and prognostication where it shouldn’t be found. But I didn’t mind this hypothesis.
In a nutshell, last year’s 15% slip in the market was the stock market hiccup we needed. The market simply needed a breather. And now we know that’s really all it was.
It was caused by typical bear market culprits — crazy oil prices and an earnings recession, although it brief. But a hiccup nonetheless. And now because of several solid reasons, the market goes bullish at least through 2022. So says the hypothesis.
What’s this based on? Everything that’s been in the headlines for the past few months. Trump tax cuts. Stateside manufacturing. Strong corporate balance sheets. It’s a strong case. I’m along for the ride.
How are you going to participate?
After all, my goal with my weekly work at the Pearly Pig is to summarize Barron’s and other great financial news sources I’ve dug through each week. And then put together an easy-to-invest in portfolio for you to stash some cash.
I invested $1,000 this morning in the portfolio. It’s a DOG to be sure. Read more about it’s dogginess below. Because of it’s “value” (another word for dog on Wall Street), I’m planning on investing $250/month in this baby.
Now let’s move on to this week’s lesson — much more interesting than the boring bull market news that is crowding media headlines day in and day out. And let’s try to do this lesson with saying the word “Trump.” Just for giggles.
Want to double your money? Want to figure out ways to double your money? You know, the more times you can double your money the more money you’ll have. But I’m not telling you anything you already don’t know. Just putting investing and saving into simple terms. Because it doesn’t have to be difficult.
It’s the first week of March, and just like in every other year, we have two months behind us since we made some New Year’s resolutions. Did you make some financial resolutions this year?
How they holdin’ up?
Maybe you would have made some financial resolutions if you had a little more information from which to work.
That’s cool. I get it.
And I also believe that it’s not too late to make some resolutions for 2017.
For instance. What if I told you that I am totally convicted the stock market will give us enough gas to double our money over the next five years, if we play our cards right?
Would you change your spending habits?
Would you decide to not worry about paying off that mortgage so quickly?
Would you decide to rethink how you have your money invested?
Would you dedicate more of your monthly cash flow to saving and investing?
Would you take a class to finally get a nicely rounded picture of investing and finance so, finally, you can feel confident in your investing decisions?
Would spending 2–3 hours a week be worth participating in this strong bull market? Worth figuring out how to double your cash?
“I put $200/month into an IRA at a major financial advisory company. I’ve been doing it for quite a few years now — I see the statements and it’s worth about $20,000. I never get a call from the advisor, and I have no idea how it’s invested. I should probably pay more attention to it and do something more proactive with it.” A Pearly Pigger last week over coffee.
I talk to dozens of Pearly Piggers each week, and I continue to be amazed at how many of us have old 401k and retirement plans hanging out in places long forgotten. What do you have out there? $500? $5,000? $15,000?
"Yah, I think I have an old 401k plan at a job from seven… maybe eight years ago. I was there for a couple of years. There’s probably two… maybe five grand in it. Not sure if I’ve even seen a statement lately? I should do something with that.” — Pearly Pigger last week over email.
Don’t assume that old account is too small to not worry about. And don’t assume that you can’t find some amazing opportunities for that account. After all, that’s what we’re doing with our weekly portfolios over at Motif Investing.
Let’s decide to make something happen today.
Let’s turn that $500 into $1,000. Or $5,000 into $10,000. Or $15,000 into $30,000. It won’t happen overnight. But it will happen. Pick the right ideas. And diversify. And let’s get there together.
This week’s Barron’s Picklist portfolio is very intriguing for a variety of reasons, but mostly because it has been an absolute DOG compared to the performance of the S&P 500’s performance over the past twelve months.
In fact, when the stock market, as measured by the S&P 500, returned 21.60% in the past twelve months, this portfolio only generated 6.80%.
If you haven’t been investing very long, you need to get used to the phrase that “past performance isn’t indicative of future results.”
In other words, a lot of people that deal with money (or want to deal with money) make some pretty huge claims about how well investments are going to do by showing you what they’ve done in the past.
Not a horrible way to do it, but that kind of analysis has gotten a lot of investors into a little doo-doo. That part of the analysis can only play a tiny part in your overall due diligence. But I digress.
It’s almost silly. “Hey you, you should check out XYZ stock, it’s really on a roll. It’s had an amazing run over the past 12 and 60 months and looks to continue to run. Just look at this chart of how it’s done over that past.”
It’s clear that this stock jockey is using past performance to predict future results. It’s lazy analysis.
But in the that stock jockey’s terms and conditions, it’s bound to say that “past performance isn’t indicative of future results.” So true, but ugh. What an industry.
Here’s the thing. This week’s portfolio has lagged the S&P 500 by 14.8% over the past twelve months. You better believe that I don’t believe past performance is indicative of future results. In fact, I’m looking for good opportunity in a pretty hefty stock market runup. And I’m looking for the Dogs with lots of potential.
Want to add a little fuel to your passion to save?
Did you know you had that passion? I’m telling you now, dig deep and find it.
I’m talking to all of you 30-year old young professionals and wage earners out there. If you’re 25, this still works. And if you’re 35 or 40 or 60 or 90, this still works. Just pay attention.
I’m going to challenge you to save $100/week. Four hundred bucks each month. Don’t have that extra cash lying around?
Then go get a side hustle.
It’s time. You’ve been thinking about it. Or maybe you have it and just need to figure out how to optimize your time with the hustle. Or you need to go after that raise, or upgrade your career.
Are you one of the jakajillions that read this blog that have a solid amount of cash in your checking account? Just sitting there because you haven’t gotten off your butt to figure stuff out? I get it.
So get some of that cash over to Motif and dive in. It’s time.
But I’m talking to the person that’s a few years out of college. It’s time for a self kick in the butt and get some things going.
Now, I’m not suggesting you stash that cash in an IRA where you can’t touch it for the next 35 years or so. I get that’s a stretch. Might be the wisest thing for you. But just can’t quite make the leap to save it somewhere that you can’t touch it for a few decades.
Keep reading, it’s about to get good.
Let’s just save it in a regular brokerage account at Motif. Let’s not worry about tax deductions or retirement or whatever else is causing you to hang up on getting your money to work harder than a savings account. Let’s just invest it over at Motif.
What does that mean for you? You can sell it any day. And push it back to your checking account any day. If the market hasn’t treated you well and you aren’t holding on to it for awhile then let’s reconsider.
Let’s try to hold on to stocks for three years or, even better, let’s try to have a five year time horizon for our stock investments. But if we have to get at our money, we don’t have to worry about penalties from an IRA. Just sell the investment and push it to checking. But remember, the longer you hold, the better you’re going to be off.
So, now that I’ve covered all the bases to save — let’s keep it liquid and get it working. Let’s look at the super power of compound growth.
COMPOUND GROWTH! $4,800/year saved over the next 5 years (remember I said I think the next five years may be pretty amazing for investors), could be worth $34,500.
You saved $24,000.
But the market was great. And we earned a cool $7,500 or so in that time period.
A savings account may have earned you a total of $600. So you’d have $24,600 rather than $34,500. Ugh.
Isn’t a little time setting some things up and following the Pearly Pig worth $7,000 over the next 5 years? Like 1–2 hours each week?
Now let’s get a little crazy. Let’s keep doubling our money every five years. And let’s keep stashing $400/month away. Remember. You’re 30. Let’s do this until we are 60. What would it look like? Pretty simply calculation really — and if you jump into our finance course later on in 2017 you’ll get to know more about how we calculate growth and figure out how to achieve our financial plans.
We are not suggesting the average investor, or a mutual fund, or a financial advisor will be able to double your money every 5 years. However, I am telling you that I am fully confident I will double my investments every five years. The Pearly Pig was built to allow you to copy what we do. To get a piggy back from us. Want to follow along?
$400/month growing at a rate that would double our money every five years would grow to $2,200,000. At your age of 60. Because you’re doubling your money every five years, we can make a few assumptions. Want to decide to not touch this cash until you’re 65? Add a double — to $4.4 million. Or you’re 25 years old? Okay — then $2.2 million until the age of 55 — or $4.4 million to the age of 60, or $8.8 million to age 65. Catch my drift?
This is just $400/month. What are you waiting for?
It’s not all that easy to grow money at a rate that will double every five years. But then again, we’re all about doing what’s hard at the Pearly Pig. I’d love to think we can double money every three or four years. After all, Warren Buffet has done it over, and over, and over again. And I think we have the tools and the mechanisms to do just that.
But let’s start at every five years. And get some of that money to work. Join us?