Q3 2017 Portfolio performance - paternal ed
I know it must seem like all of us financial guys are a broken record. Always preaching about some nonsense and invoking your guilt receptors nonstop. After reading our articles you probably get that same feeling of when you desperately needed to move out of your parents' house at the ripe age of 35. And for that I sincerely apologize son. Here are the broken record type things you will catch us saying on the reg:
- Save money
- Don't buy stuff
- Why did you buy that junk
- Go back to your room
Geez how much more boring and cliche can we get here? I got some bad news for you, that is basically all there is to it.
Perhaps Homer has a deeper understanding of life than most of us do. And by understanding of life, I mean an understanding of his own needs which will bring him towards happiness. This coherence with the world around us is sometimes lost in the swirls of our daily drudgery to such an extent that it may not be caught site of again till the end of the next 3 day weekend. Is there any reason that these requirements be complex? Is there any reason that human beings inherently cannot be satisfied no matter what their social standing and monetary position? Is there any reason that the possession of a "soul," for lack of a better word, condemns us to this hell where every single day precludes another with no end in sight? Sigh. Let's not dwell on it, shall we?
I regret to inform you, that this article will not be a stepping stone on your way to feel-goodness. Because today I am your father. And it's time you cut your hair and get a job son. Your mom wants you to turn down the music and no friends over after 9pm. Also we know why you burn incense constantly - we aren't stupid. In fact it is likely you who is challenged mentally. This must be remedied in the worst way.
If your company allows it, you should have a 401k. If you don't use it when you have access to it you are probably a fool. This year has been what many investors would consider good. good meaning that the rate of return is above average. In fact, good may well be an understatement. If you don't have one, get a 401k please. This is akin to your driver's licence; a normal person should want to get it as soon as they can and they never leave home without it.
Son: BUT DAAAAD! I don't work for a company that has a 401k because blah blah blah it's probably everybody's fault except for mine.
Father: Right. You are correct. It is in fact everybody else's job to worry about your future and it would be unfair to place such a burden onto your head alone. However, if you have no 401k, there is definitely no excuse for not having an IRA or just a normal investment account.
Notice how all these results are percentages. Notice also that 5% in 4 months is pretty damn good. This is something anybody can match with ease. My portfolio's are generally in line with the most consistent advice given by every financial adviser ever. Hence me not beating the market in any respect. This advice looks like this:
- 401K / IRA accounts: Since you won't have this money available until your 60's, might as well have the slider in the agressive position. Stocks, growth, etc, whatever is available. When you approach 60, back off the slider. Not 50 yet? then don't worry about it.
- Personal investments: Depends on term. Shorter term, then lower your risk with bonds or lower risk stocks. For longer term investments, it is better to have more exposure to risk to garner perceived return enhancements. If you don't know what the money is for then you have some soul searching to do.
- Time in the market heals all wounds. This is due to compound interest and the fact that the markets over an extended period have always moved up and to the right and they will continue to do so.
To illustrate the final point I was going to share the gains from an account I opened 2 years ago. But right now it would feel too much like I'm kicking a puppy because damn it is brutal. The gains that is.
Ok son, there I gave you some quarters for the phone now get out. Don't pretend like you didn't see this one coming either. This hurts me more than it hurts you. Oh you're hungry? Pleased to meet you. My name is Dave.