I think it is important that each player or agent (and you will become one) in the stock market use a strategy that is entirely tailored to the individual. Indeed, it will significantly depress the historical returns and it could even make them negative if you get in at the end. You may stop for a moment to meditate on what the popularization of a given investment strategy will do to the returns of that strategy. Yet pick up any book (or blog) and you will find people happily extrapolating exponentially into the sky, the DOW 50000 kind of thinking. If everybody did the same thing, investment growth would be naturally limited by GDP growth and GDP growth would be naturally limited by world growth. (*)It is interesting to know that formal education in investing tends to focus on description and analysis while popularizations seem to mainly focus on theories.Īnd that is exactly the point. There have been some statistical inroads but beyond that investment theories generally seem to read as someone’s autobiography. As a predictive science, investing is very much lacking. As a science, investment has not progressed beyond description and analysis(*). Learning to manage your own investments is not easy and you will have to spend considerable time educating yourself. While this may be an acceptable solution for someone planning to work for 30 years, letting other people manage your money significantly impacts the time horizon of early retirement: You have to work 33% longer before you can pull the trigger. This is akin to giving Wall Street a third of your money. However, this means that instead of multiplying your monthly expenditures by 300(=12/0.04) you must multiply them by 400(=12/(0.04-0.01)). Now, you could pay some “25 year old fund manager with a bachelor degree from a top tier university” 1% to do this. Note: The investment overview now lives on the ERE wikiĪnd covers more strategies than described below.
DHANDHO INVESTOR AUDIBLE PROFESSIONAL
You will, of course, be operating on a much smaller scale and so you will have a much easier job than a real professional who is subject to regulations and other restrictions. If you plan to retire early, you are eventually going to become a “professional” money manager as in a sense you will be managing your money for money. Get updates on the facebook page, join the forums, and look for tactics on the ERE wiki. You can read the first chapter for free, listen to the preamble, or see the reviews ( 1, 2, 3, 4, 5, 6, 7, 8, 9, A, B, C, D, E, F, G, H, I, J, K, L, M, N, O, P, Q, R, S, T, U, V, W, Z).
If you enjoy the blog, also consider the book which is much better organized and more complete. ) I suggest only spending a brief moment on this blog, which can be thought of as my personal journal, before delving into the forum journals and looking for the crowd's wisdom for your particular situation. Since everybody's situation is different (age, education, location, children, goals. Increasing their savings from the usual 5-15% of their income to tens of thousands of dollars each year or typically 40-80% of their income, many accumulate six-figure net-worths within a few years. Here's more than a hundred online journals from people, who are following the ERE strategy tailored to their particular situation (age, children, location, education, goals. Conversely most consumers run their personal finances like an inflexible money-losing anti-business always in danger on losing their jobs to the next wave of downsizing. Not just any business but a business that's flexible, agile, and adaptable. The key to success is to run your personal finances much like a business, thinking about assets and inventory and focusing on efficiency and value for money. The wiki page gives a good summary of the principles of the strategy. If you're new here, this blog will give you the tools to become financially independent in 5 years.