Never thought I’d be seeing this.
For the average investor, trying to decipher what information to rely on is difficult at the best of times, and then, what if it is horribly wrong? What then…
Sorting the wheat from the chaff just chews through your valuable time.
Recently, an email hit my inbox, sprouting the words of a famous investor, Warren Buffet.
If you’ve never heard of him, he’s been given the nickname the Oracle of Omaha. In fact arguably one of the best investors of all time.
The investment community hangs off his every word.
Some even buy just one of his shares in his company (currently worth US 320,000 each) so they can attend his all-day update held every year.
If Warren Buffett says something about investing, you’d better take notice.
Back to the email.
It arrived in my inbox, an investment business I’d been following for some time.
They sell their investment services, but this one email really got my blood boiling.
Sprouting the words of Warren Buffett.
Here’s what they said:
“Everyone knows who Warren Buffett is. But very few investors are familiar with the strategy he used to make his millions…and then turn those millions into billions.
It’s probably the most valuable strategy in investing ever devised.
At the same time…it’s so simple a child could understand it.
Here it is:
1. Invest in the very best and most promising small companies.
2. Hold onto the shares as they become BIG companies.”
Pretty convincing, hey?
Sure, sign me up now…
But wait, what are they not telling you.
Sure, yes they are right, this is how Warren Buffett made his billions.
But here’s what average investor doesn’t have that Warren Buffett has in spades:
#1 He has 70 years worth of investment experience (yes, he’s still working at the age of 89).
#2 When he buys, he buys a large percentage if not the whole business.
#3 He can deploy resources among his other businesses to grow the business.
#4 He’s not a forced seller.
And guess what his advice is to the average investor?
Drumroll please…da da da
Invest in the market, through Exchange Traded Funds.
In fact, his instructions to his estate are to buy exchange-traded funds that track the market, no direct shares, no investment managers, but investments that represent the market.
Yep, that’s right, don’t go and play poker with the market risking your retirement nest egg. It’s not a time for gambling.
Truth is, investment markets are hard to beat. Even professional investment managers struggle to beat market returns.
You see, for most investors, they can’t handle the ups and downs (volatility) that come with investing in small companies.
It can feel like being on a wild roller coaster being thrown from side to side, down steep declines at speed feeling like your internal organs are being ripped out of you.
If you think you can beat Mr. Market, then go right ahead, but COWS may have a better chance…
There was an experiment in Norway where they pitted the likes of professional investors, astrologists, beauty bloggers and cows (aka Cowpat Capital) against each other. I won’t disclose how they choose the stocks, you can figure that one out for yourself…
While there have been many experiments over time, they highlight the same point that we’ve known for some time.
That most investors should stop trying to pick the best stocks to try and beat the market and stick to index-tracking investments.
Interestingly the beauty bloggers who knew nothing about investing fancied investments that seemed more like a sunny vacation, followed closely by the pros, closely followed by Cowpat Capital and the astrologist.
In a well-publicised experiment, Warren Buffett was pitted against the best of the best on Wall Street.
Warren Buffett bet 1 million US, that if the top brass on Wall Street could beat the S & P 500 (top 500 companies in the US) over 10 yrs, he’d hand over the 1 million US.
Can you guess who won?
Warren, the best of the best on Wall Street lost.
The moral of the story.
Rather than gamble with your life savings, invest based on the evidence. Sure it might not be that exciting, but it will get the job done.
The evidence is clear.
Are you ready to walk the proven safe path into and through retirement? Invest based on the evidence, not some hope and pray strategy.
One that helps you live your best life with less stress about money, less complexity so you can sleep better at night knowing you’ll be ok?
Here’s to living your best life!
P.S. There’s a MUCH faster and MUCH safer way to bridge the GAP from where you are on the retirement planning journey to living your best life in retirement free from money worries.
To get yourself moving in the right direction…and to give your retirement planning some serious nitro-booster-speed-rockets…book your Retire Ready call here and we’ll help you create your own stress-free…confidence building retirement blueprint the RIGHT way.
And remember…this is for you at WHATEVER stage of your retirement planning journey.
“knowing is easy, doing is hard…”
Glenn Doherty – CFP – Founder & Financial Organiser at Jigsaw Private Wealth
Helping busy professionals, business owners, and pre-retirees retire ready in better financial shape because living your best life is what matters most.
Advice Disclaimer: Any reference in this publication to the provision of advice refers to advice of a generic nature, and should not be taken as product or investment recommendations. Before any action is taken based on the information provided, independent financial advice from a licensed financial adviser should be sought. Financial Freedom Project Pty Ltd ATF GA & DC Doherty Family Trust Trading as Jigsaw Private Wealth is a Corporate Authorised Representative of Exelsuper Advice Pty Ltd. The information contained in this publication is of a factual nature only and is not intended to constitute financial product advice. Information is current as at January 2020. This is an online information blog. It does not imply an offering of securities.