Are you chasing stock returns that just haven't materialized? Don't forget the easily overooked index funds. Not as glamorous, but a money maker overall. Do you know which one out performs 80% of the market?
Would you like to beat 80% of the market consistently? You bet! This little miracle is coming up- but let me wet your appetite first with this:
Are you getting at least 15%-20% yield in the stock market?
If not, it's being done right now - it has been for years. Here are a few examples:
Vanguard Health (VGHCX) has performed at an amazing clip over 5 years, yielding 15.45% return. Over 10 years it reaped a whopping 19.04%!
Longleaf Partners (LLPFX) over the same periods of 5 and 10 years reaped 15.88% and 17.35% respectively. The most recent 1 year performance was an eye opening 18.65%.
The above are not individual stocks, rather they are Mutual Funds: Mutual funds are professionally managed by fund managers who's job it is to protect and grow the fund, according to its goals.
The difference? Diversification - putting your money into a large variety of different stocks, not just one's your buddy at work or uncle Ed told you about. Friends and relatives have the best intentions although they typically just pass on what they hear.
So here's the key: Most folks think of "big wins" as hitting a couple stocks, getting lucky, and reaping the rewards in the short term. But the truly wealthy know better - that consistent, disciplined investing over time will reap the really BIG rewards!
The 'overlooked miracle' lies in a particular type of "group" fund:
Index funds are also groups of stocks, such as the Standard and Poor's 500 (SP500). This index consists of the top stocks chosen for market size, liquidity, and segment representation. Anther example of an index fund is the NASDAQ (QQQ).
The Miracle I was talking about? The S&P 500 Index Fund: The S&P 500 beats the returns of 80% of actively managed funds (and that isn't even taking into account tax efficiency). I'm always amazed how many folks overlook the big money in consistent investing in such funds, and go with the "hot tips' of friends or associates; then quickly losing their gains over a short period. Not fun in my book!
Remember, Getting Rich Steady isn't about quick bucks that dissipate! It IS about growing wealth over the short term, while getting HUGE gains in the long term.
How has your stock investments performed compared to the SP500 index?
Although individual stock may have significant yields over the short term, the SP500 catches up almost every time. How does Uncle Ed's hot stock pick now compare? You just might have a better tip now for your good ole' uncle!
Do your own research. There's a multitude of free web tools at your fingertips. To your success!
Resources:
http://www.morningstar.com http://mutualfunds.about.com/cs/indexfunds/ http://www.indexfunds.com
Articles at Get Rich Steady! are for educational purposes only, and do not consititute investment advice. You must speak with your investment professionals before making any investment decisions.
About the Author
Steven enjoys writing and teaching others on the special topics of wealth, health, and human potential. Steve left a lucrative career in biotechnology to fully pursue his passions in 2000. Now he writes, trains, and coaches full time in San Jose, CA. If you enjoyed this article you may enjoy Steve's tele-class: Infopreneuring MBA (Massive Bank Account!) at http://www.teleclassinternational.com/catalog.phtml?keywords=info01