Hi, First of all, I love this channel and I’m so happy to have found it. Thanks for taking the time to make these videos! Would you be willing to run my numbers? I’m 26 and I’m making $70,500 a year. I have $27,000 between a Roth IRA and a Roth 401K and I contribute $1,170 monthly between the two (I’m not counting employer match in these numbers, but it would be $1375 with it). Could you run the numbers for 40 years? I don’t plan on retiring early, but I’m interested to see at what point I could replace my current yearly income of $70,500 if at all possible. Thanks very much!
It's great that you start looking into investment. The earlier, the better. A few tips (from someone who makes +30-40 % per year with stocks and bonds): - As you probably know yourself, ETFs are the easiest. World ETF, S&P 500 ETF, etc. Say, World ETF. Starting at $27K with $500/month for 40 years at +11.4 %/year (MSCI World ETF), it will be some $7.4M in 40 years. On average. You never know how 40 years will go, but it will be some +10-12 %/year on average, as the economies keep growing. Think how - While doing ETFs only, you could register a so-called "paper money" (play money) account to get used to actual stock trading. You will make mistakes the first year, not knowing what to invest in, how to value companies, so it is best to have your ETF account running while at the same time you invest in real stocks but with fake money (or paper money), say, at Interactive Brokers (one of the biggest in the world). - You should look into dividends, as there is a lot of confusion and opinions about it. Give Dividendology or GenExDividendInvestor a try who explain many things. Dividendology has also some nice company valuation and analysis tools he shows which are kind of the basics of company intrinsic valuation theory. Dividends can be great, if you make 5 % annually in dividend income, but also when you bet on growing dividend stocks that appreciate over the years but also grow in dividends. - Last, eventually, maybe after 1-2 years, you could dive deeper into Graham, Lynch, DCF, different theories and analysis theories. This will help you understands strategies better. - You will most likely make mistakes as an investor, so paper money is the best, BUT you will learn to judge the market and companies better. The first 1-2 years are hard -- and there is a reason why 95 % of all private investors lose their money, and why ETFs are such a good solution to almost all Americans. But there is gold under the bridge in stock trading and it is not that hard, actually. A common investment tip that may make you miss the hypes and meme stocks, but works well in the long term goes like this (assuming that you are good at company valuation, say, with own tools, or with tools that Dividendology is using): - Buy stocks only at a 52 week low. Never buy into hypes. Never buy if the stock is > 25 % on the 52 week low-high line. - Invest only in companies with EPS > 10 and P/E < 15. Learn what EPS, P/E etc. mean. It is not that hard. - Buy only companies with a growing "free cash flow per share", "revenue per share", "revenue" and a growing "gross profit ratio" (revenue cost / revenue), as these companies are usually the healthy ones. - Keep in mind that every company will be on sale eventually. It can take 1 year, 2 years, but they will. Apple was recently. Nvidia will be in 1-2 years probably. Patience. - The 52 week low-strategy with good companies has a downside though: Look at 2022. Almost all companies reached a 52 week low eventually. Therefore, keep an eye on S&P 500. Does it go flat for a few months, is it growing even if mildly? Then 52 week low strategy works best. As Lynch once said: A sucker can go lower and lower (think German Commerzbank a few years ago or Starbucks currently). I hope it helps!
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Hi,
First of all, I love this channel and I’m so happy to have found it. Thanks for taking the time to make these videos!
Would you be willing to run my numbers?
I’m 26 and I’m making $70,500 a year.
I have $27,000 between a Roth IRA and a Roth 401K and I contribute $1,170 monthly between the two (I’m not counting employer match in these numbers, but it would be $1375 with it).
Could you run the numbers for 40 years? I don’t plan on retiring early, but I’m interested to see at what point I could replace my current yearly income of $70,500 if at all possible.
Thanks very much!
I just posted your numbers. Keep it up and you should be fine!
Thanks very much!
It's great that you start looking into investment. The earlier, the better. A few tips (from someone who makes +30-40 % per year with stocks and bonds):
- As you probably know yourself, ETFs are the easiest. World ETF, S&P 500 ETF, etc. Say, World ETF. Starting at $27K with $500/month for 40 years at +11.4 %/year (MSCI World ETF), it will be some $7.4M in 40 years. On average. You never know how 40 years will go, but it will be some +10-12 %/year on average, as the economies keep growing. Think how
- While doing ETFs only, you could register a so-called "paper money" (play money) account to get used to actual stock trading. You will make mistakes the first year, not knowing what to invest in, how to value companies, so it is best to have your ETF account running while at the same time you invest in real stocks but with fake money (or paper money), say, at Interactive Brokers (one of the biggest in the world).
- You should look into dividends, as there is a lot of confusion and opinions about it. Give Dividendology or GenExDividendInvestor a try who explain many things. Dividendology has also some nice company valuation and analysis tools he shows which are kind of the basics of company intrinsic valuation theory. Dividends can be great, if you make 5 % annually in dividend income, but also when you bet on growing dividend stocks that appreciate over the years but also grow in dividends.
- Last, eventually, maybe after 1-2 years, you could dive deeper into Graham, Lynch, DCF, different theories and analysis theories. This will help you understands strategies better.
- You will most likely make mistakes as an investor, so paper money is the best, BUT you will learn to judge the market and companies better. The first 1-2 years are hard -- and there is a reason why 95 % of all private investors lose their money, and why ETFs are such a good solution to almost all Americans. But there is gold under the bridge in stock trading and it is not that hard, actually.
A common investment tip that may make you miss the hypes and meme stocks, but works well in the long term goes like this (assuming that you are good at company valuation, say, with own tools, or with tools that Dividendology is using):
- Buy stocks only at a 52 week low. Never buy into hypes. Never buy if the stock is > 25 % on the 52 week low-high line.
- Invest only in companies with EPS > 10 and P/E < 15. Learn what EPS, P/E etc. mean. It is not that hard.
- Buy only companies with a growing "free cash flow per share", "revenue per share", "revenue" and a growing "gross profit ratio" (revenue cost / revenue), as these companies are usually the healthy ones.
- Keep in mind that every company will be on sale eventually. It can take 1 year, 2 years, but they will. Apple was recently. Nvidia will be in 1-2 years probably. Patience.
- The 52 week low-strategy with good companies has a downside though: Look at 2022. Almost all companies reached a 52 week low eventually. Therefore, keep an eye on S&P 500. Does it go flat for a few months, is it growing even if mildly? Then 52 week low strategy works best. As Lynch once said: A sucker can go lower and lower (think German Commerzbank a few years ago or Starbucks currently).
I hope it helps!