10 simple investment decisions guaranteed to change your ... · 6/2/2020 · 10 simple investment...
TRANSCRIPT
10 Simple Investment Decisions Guaranteed to Change Your Financial Future
June 2, 2020
Paul Merriman
10 Simple MILLION DOLLAR Investment Decisions Guaranteed to Change Your
Financial Future
Spoiler Alert!• There is no risk in the past• I know exactly what you should have done• The future is totally unknown
Warren Buffett"You only have to do a very few things right in your life so long as you don't do too many
things wrong.”
Three Keys to Success
• How much you invest• How much the investments grow• Extra .5% is worth over $1,000,000
Save vs. Spend!• Who wants you to save?• Who wants you to spend?• “Do not save what is left after spending,
but spend what is left after saving”.• Saving is spending… later!
Save Sooner vs.
Save Later
• $1 a day from birth to 65 at 10% $1,786,203
• $1 a day from 10 to 65 at 10% 686,420
• $1 a day from 21 to 65 at 10% 238,213
Stocks vs. Bonds• $100 invested 1928 to 2019• Bonds (loan) $10,000• Stocks (own) $600,000
One Stock vs.
All Stocks
• Risk of total loss • More stocks likely to earn more than fewer
Mutual Funds (1924)
• Professional management
• Broad diversification of companies
• Low minimum investment
• High liquidity
• Broad family of funds for every investor need
Index Funds (1976)
• Professional management of asset class
• Low to no minimum and fees
• More tax efficient
• Higher expected returns
High Expenses vs.
Low Expenses
• Lower expenses easiestroute to higher returns
• Range of expenses from .00% to 1%
Actively vs.
Passively Managed Index
Funds
• Index funds have more diversification• Index funds have lower expenses
(operational and turnover)• Index funds are more tax efficient • Only 1 in 10 to 1 in 20 actively managed funds
likely to do better
Add Small Cap to Equity Portfolio
• Most investments in large cap • S&P 500 9.9% vs. SCB 12% (1928-2019)
Add Value to Equity Portfolio
• Most equity investments in growth• S&P 500 9.9% vs. LCV 12.0% (1928-2019)• S&P 500 9.9% vs. SCV 13.2% (1928-2019)
Dollar Cost Averaging
vs.Waiting for a
Better Opportunity
• DCA guarantees more shares purchasedwhen market is down
• DCA guarantees few shares are purchasedwhen market is up
• DCA can fail with individual stocks• DCA can fail short term
Market Timingvs.
Buy & Hold
• Most market timing unproductive• Most popular timing system emotionally driven
(ICSIA)• Equity returns following severe bear markets
TARGET DATE FUNDS AMERICA’S #1
RETIREMENT INVESTMENT
The Greatest Investment
Products
• Mutual Funds• Index Funds• Target Date Funds
Target Date Funds (1994)
• One decision for life: Select retirement year • 2015 to 2065 in 5-year increments• Low minimum investment• TDFs are default investments in many 401k plans• Professional stock diversification• Professional asset allocation management
Vanguard Target Retirement 2060
Blackrock Target Retirement 2060
Thank you.
If you have any questions,please email [email protected]
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