Successful investing is not rocket science. Morgan Housel, a columnist at the Motley Fool, recently wrote in The Wall Street Journal, “Live below your means. Save the difference. Invest in a low-cost, diversified portfolio. Have a long-term outlook and be patient as compound interest works its magic.”
This is an exceptionally clear and concise guide to successful investing. This is the strategy part, implementation is another matter. Successful investing is not a “one and done” event. Things change.
Change is impossible to predict. Lifetime investing can cover 50 years or more, from the first few dollars in a savings account to an income stream after retirement. While we don’t know what is going to happen over the next 50 years, we do know that the last 50 years have seen tremendous change.
In developing a long-term portfolio, investors should recognize that a changing environment requires a flexible approach to portfolio management which could benefit from competent advice. Companies that look great now, may have problems in the future. Consider, 50 years ago Xerox, Eastman Kodak, Polaroid and GM were all thought to be high quality investments for conservative portfolios.
The bottom line is, start saving as soon as possible, stick with it and pay attention.
All comments and suggestions are welcome.
Walter J. Kirchberger, CFA®