Put all your eggs in one basket with investing?

[supton]

With inflation, a million bucks just is not what it used to be...

My one personal feelings are that if one wants to leave a legacy and be ABSOLUTLEY SURE one will not run out of money, and keep pace with inflation, one can withdraw 3% of one's portfolio each year (see sequence of return risk)...

If you do not care about leaving a legacy, but do not want to outlive your money, one can take 5%...

One million dollars then generates between $30,000 and $50,000 per year... not bad especially when combined with SS (if it still exists), but not the retirement life of luxury most people look forward to...

Do not get me wrong, a million dollars is a LOT of money, and more than most people will ever have, but it is not the magical number it used to be in the 80's and 90's... if one can have other income streams like rental real estate, that helps as well, but who really wants to be a landlord in their golden years?

The Paradox Of $1 Million

How much is $1 million? It's a lot of money — more than the vast majority of people will ever accumulate. It's also not enough to make you rich. This paradox is a useful tool for educating younger generations about wealth.

www.forbes.com

Oh I agree. I like to watch The Money Guy show and they are quick to point out that when The Millionaire Next Door came out in 1996, that $1M from then is now like $2M now. A million just isn’t what it used to be…. what’s really scary is, what will a million be worth when I retire 20 years from now???? sheesh if that doesn’t keep one up at night, I don’t know what will.

Rule of 72. If the Fed could magically keep inflation at 2% (ha!) then every 36 years our money would be worth half as much. 3% it’s down to every 24 years. Toss in the last few years and…

Still, the advice is the same as ever: stack it high and stack it deep. Only thing I think that is changing is that people are moving from recommending a 10% retirement savings rate to something closer to 20%.

Edit: forgot about the 3% bit. Only saw that recently, waiting to see how that new advice shakes out with time. One could always go Dave Ramsey and insist 8% is perfectly fine… yeah, not going there.

 

[Legal Eagles]

Warren Buffets said "diversification guarantees mediocrity".

If mediocrity is matching the return of the Wilshire 5000 over 40 years, I'll take mediocrity all day long... I am long term bullish on America.

 

[JohnnyG]

With the advent of high frequency trading and recently AI trading, and Bitcoin, the stock market is no longer a guaranteed thing.

I've made a lot of money over the years keeping the bulk of my 401K funds in a single stock. Note that I said bulk, not all.
You can pick a sector (AI, Tech, Bitcoin, or something else) and concentrate on that, but that would be your "speculative" position. In other words High Risk.
Right now the Insurance industry is looking hot. Mostly because of Hedge Fund interest. (I also say this is the MAIN cause of insurance premium increases, regardless of what the media is saying) Chubb,KNSL, ROOT, are a few examples.
Best advice is to go with a low cost broker, such as Vanguard.

The other key factor is TIME. These increases don't happen overnight, they take MANY years.
Invest speculatively in money you can afford to lose, and don't cry if you do.

 

[ecotourist]

I've been investing for about 40 years.

My really good investments are conservative investments I've been able to stick with over years or even decades - Berkshire Hathaway, and broad based mutual funds (I did say I started doing this 40 years ago) and broad based ETFs.

Years ago when I reviewed my investments I never did quite as well as the index - and I used to wonder why can't I just buy the index. Well now you can.

Any time I've bought a high flyer I've regretted it. Sometimes I managed to get out even, sometimes not.

People will tell you all about their scores. They don't talk about their failures.

 

[Highboy]

There should be a BITOG rule on these threads. In order to give great investment advice we must-see atleast one brokerage account or your overall portfolio..
I never said this in my life but old age is ruling my brain these days. Knowing @AutoMechanic can do it to you.

If it was that easy, everyone would be doing it. We need losers to create winners. Remember that

Or start a BITOG investment club!!!

 

[The motor guy]

I've been investing for about 40 years.

My really good investments are conservative investments I've been able to stick with over years or even decades - Berkshire Hathaway, and broad based mutual funds (I did say I started doing this 40 years ago) and broad based ETFs.

Years ago when I reviewed my investments I never did quite as well as the index - and I used to wonder why can't I just buy the index. Well now you can.

Any time I've bought a high flyer I've regretted it. Sometimes I managed to get out even, sometimes not.

People will tell you all about their scores. They don't talk about their failures.

I had about 50k in AAP stock thinking it was going to catch up with autozone and oreilly......until one day it dropped 50 percent in a single day lol glad that one is starting to come back around.

 

[supton]

Or start a BITOG investment club!!!

I believe the bogleheads forum is the analog of BITOG. I’d hang out there more, but really, you can only talk so much about dollar cost averaging and buying low cost index funds. Apparently there’s more to talk about for oil though.

 

[supton]

I had about 50k in AAP stock thinking it was going to catch up with autozone and oreilly......until one day it dropped 50 percent in a single day lol glad that one is starting to come back around.

Usually it’s best to buy and hold, and to not look.

I say that, but I did do well last summer, selling off some stock at just the right time. I hadn’t planned on selling, but the price was too good, and I sorta needed the money. Well timed it was.

But my portfolio, I try to look only a few times a year. And if it happens to be down, well, there’s always next quarter.

 

[AutoMechanic]

I need to start following the stock market more closely. It would be nice to invest and get some money. I want to invest in Apple stock and my dad said I was an idiot for that because too many people buy it lol.

 

[ecotourist]

I had about 50k in AAP stock thinking it was going to catch up with autozone and oreilly......until one day it dropped 50 percent in a single day lol glad that one is starting to come back around.

What is AAP?

When I google it I get American Academy of Pediatrics, Affirmative Action Plan, Accredited Automated Clearing House Professional, Accredited ACH Professional, and so on. None of which sound like potential investments.

You perfectly describe the danger of putting all your money into one really good idea. Maybe it works. Maybe you lose half your money and just hope it comes back.

 

[eljefino]

All my money is in a couple of index funds. Not sure on the difference between mutual fund vs ETF,

The difference is you can day-trade an ETF. The fees were cheaper too.

When I started my IRA 25 years ago ETFs weren't the thing they are today so I bought into VFINX for S&P 500. VOO is the ETF equivalent.

 

[99Saturn]

What is AAP?

When I google it I get American Academy of Pediatrics, Affirmative Action Plan, Accredited Automated Clearing House Professional, Accredited ACH Professional, and so on. None of which sound like potential investments.

You perfectly describe the danger of putting all your money into one really good idea. Maybe it works. Maybe you lose half your money and just hope it comes back.

Advance Auto Parts.

 

[Astro14]

They always say to diversify for safety of your portfolio and to also expose it to more possible gains, but imo looking at the history of stocks and etfs etc. Most all of them have quadrupled at one point or another. You could turn 250k into 1 million or more pretty quickly imo.

Opinions?

Foolishness. That’s my opinion.

You’re looking back with the benefit of hindsight, and with strong survivor bias.

How do you pick the stock that will quadruple in the future? Because getting that wrong (and the odds are, you will get it wrong) and your $250,000 goes to zero.

We bought Amazon at the equivalent of $12.60/share (because we bought before the split) and now, it’s at $174. A gain of 1,300%.

But some of the stocks we bought did not do well, and we lost money.

You have no way to know, NONE, which stocks will go up and which will go down. The analysts who spend their careers trying to predict that can’t get it right.

So, what makes you think you, with zero experience, will have a prayer of getting it right?

Remember, get it wrong, with all of your eggs in one basket, and you’re wiped out.

They always say to diversify because they have seen single stocks go to zero.

 

[Owen Lucas]

Warren Buffets said "diversification guarantees mediocrity".

"After Bill Gates became friends with Warren Buffett, he began to diversify his portfolio and sold Microsoft shares. Bill Gates' fortune today is 138 billion dollars, if he hadn't diversified it would be 1.33 trillion dollars. Be careful with diversification and with friends who recommend it"

Edit: https://www.tker.co/p/diversification-lowers-risk-and-upside

 

[99Saturn]

Yeah if I ever got to that point I'd just quit working and live off the interest, then go travel or something

Saving about $3,600 a year, from age 25 to 65 compounded at 8% year over year will get someone to $1M at 65. I doubt $1M will be the number for today's 25 year old, but one can do simple math and pick whatever multiple they want ($2M means save $7,200/year starting at 25 compounded at 8%).

 

[vavavroom]

I need to start following the stock market more closely. It would be nice to invest and get some money. I want to invest in Apple stock and my dad said I was an idiot for that because too many people buy it lol.

Rice futures. Demand is going up with populations increasing and living standards dropping. And you would be contributing to increasing demand with your relentless lust for starch. Win-win! We'll all be eating mostly rice and beans in no time. What's benjy going to do?

Disclaimer: Do not follow my advice. Make your own mistakes.
Also, please don't tell benji I mentioned him in this post. I wouldn't ever hear the end of it and it would be UNBEARABLE!!!!!!!!

 

[ecotourist]

I believe the bogleheads forum is the analog of BITOG. I’d hang out there more, but really, you can only talk so much about dollar cost averaging and buying low cost index funds. Apparently there’s more to talk about for oil though.

Making a lot of money in the stock market is (mostly) boring. You just come back monthly or quarterly and (usually) tote up your gains. Then every once in a while it all goes south, and you kind of wish you weren't there but you are so you just hang on, and a year or two later you're toting up your gains again. Been through that cycle a half dozen times. And I'm now way ahead.

One of the keys to making long term gains is not bailing out "in the middle of a mud hole". I don't believe that comment applies to a one stock portfolio (which I would never consider by the way, not even if that one stock was Berkshire Hathaway).

 

[supton]

I need to start following the stock market more closely. It would be nice to invest and get some money. I want to invest in Apple stock and my dad said I was an idiot for that because too many people buy it lol.

At your age, now is the time to start. Even if it’s $50 a month or whatever. Start the habit. It’ll take a couple of years, but at some point you should be able to zoom out and see the exponential growth.

Does your employer offer any retirement plan or options?

Nothing wrong with buying a bit of Apple stock, unlikely that is going to crater any time soon—but then again, that’s been said of a few different now long dead companies. 5 to 10% of your portfolio in hand selected stocks, that is low risk, sometimes you win and feel good, other times, well, at least it was only 5%. I’d be buying low cost index funds if I were you, or at least buy into a target index fund, something set to mature at your retirement age.

 

[AutoMechanic]

At your age, now is the time to start. Even if it’s $50 a month or whatever. Start the habit. It’ll take a couple of years, but at some point you should be able to zoom out and see the exponential growth.

Does your employer offer any retirement plan or options?

Nothing wrong with buying a bit of Apple stock, unlikely that is going to crater any time soon—but then again, that’s been said of a few different now long dead companies. 5 to 10% of your portfolio in hand selected stocks, that is low risk, sometimes you win and feel good, other times, well, at least it was only 5%. I’d be buying low cost index funds if I were you, or at least buy into a target index fund, something set to mature at your retirement age.

Yeah I’m putting 7% into retirement.

 

[Zee09]

I need to start following the stock market more closely. It would be nice to invest and get some money. I want to invest in Apple stock and my dad said I was an idiot for that because too many people buy it lol.

Your dad is a genius