Post #2275502

Some people probably wonder about my #Investing posts and why I do them. Well, I'm trying to get people interested in stocks. And the reason for that is very simple. Over long periods of time stocks outperform every other investment available to your average person. That's why I post the daily stock market gyrations and how I performed relative to the major indexes, why I post the dividend champions list, and why I chime in on investing discussions. Now, while I personally do invest in individual stocks that hasn't been the main focus of my investing and isn't what I recommend for the average person. The simple fact is that the vast majority of people who trade individual stocks don't beat a simple S&P 500 index fund in total return. Are you one of the few who can? Perhaps, but the odds aren't in your favor. What I recommend for your average investor is very simple. If you have a 401k plan at your employer put in whatever amount is required to max out their contribution. That's free money and you're never going to beat that. Simply put your money into the closest thing your plan offers to a total stock market fund and never draw any out. Why is this my recommendation? That's simple. Over the past 100+ years the average return on the S&P 500 has been right around 10% with dividends reinvested. If we accept the government's inflation figures (no, but they're the only thing we really have) that drops to right around 7% after inflation. Nothing else available to a normal investor comes close. A person making $50K/year with a 50% company match up to 6% (giving 9% total) being paid monthly and getting a 7% yearly return over 40 years would have $984,293.97 in his account ($2,371,587.56 using the 10% before inflation). Now, that doesn't work out exactly because stocks don't give a steady 7% or 10% return, but it's a good approximation. This is why I do my investing posts. To get people started on this path.