For those unwilling to look at the above link…. what it showed was that $100 stinky dollars (a lot of money in 1928) invested in the S&P 500 (a basket of stocks you can now buy - traded as the SPY) - netted you $193,219 in 2012
$100 invested over the same period in Treasury Bills -- netted you a whopping $1971.
$100 invested over the same period in 10 year Treasury bonds netted a whopping $6926
Those are COMPOUNDED VALUES !!!
EVER HEAR ME SAY -- BONDS SUCK??? LOL
Here's the AVERAGE RATE OF RETURN of the S&P 500 over three different periods of time all ending in 2012
1928-2012 11.26%
1962-2012 11.10%
2002-2012 8.71%
Was there historical blow ups during these periods? Hell yes! And you got killed if you sold in those down markets! But if you rode it out - you were richly rewarded compared to the other "SAFE" investments weren't you… and that's my point. The market doesn't go up like an elevator - well actually it does because elevators can stop along the way and so does the market…
The reason I love DIVIDEND stocks is because you can still live during those down periods - because the stocks are still spinning off income! In retirement you're not supposed to draw down your capital… you should be able to live off the income produced. Who knows how long you're going to live in retirement? Who can predict this? If you plan to live 20 years (85 years old?) and you planned to be out of money by then -- well -- dude! You suck! Because it's going to be a pretty nasty time for you when you're 86 and you're out of money!
Anybody here tell me what a car cost 20 years ago? What your property taxes where 20 years ago? What clothes cost back then?
I don't know what they were - but I can tell you for certain that they cost far less then than they do today. So your plan better be for income GROWTH -- or each year you're falling further behind.
My little buddy Pierre is 78 years old -- he just bought a new hot rod project and had a new shop built… so I wouldn't be so quick to say -- "Well - I probably won't be doing much by then". BS!!! I was parked next to a guy at Thunderhill that was 79 years old and he was out there on the track with his Mustang track car!
Again -- my point is -- better plan for success… and plan to live decently… and plan to live and enjoy life FAR LONGER than you may live… because I'd rather go out of this world on the big end than the short end.
Go back to that Chevron dividend just used as an example… they used to pay 36.5 cents per quarter -- now they're paying $1.00 per quarter. I'd say that goes a long ways towards helping me pay my bills in the future because their payout (in this example) is growing.
Now -- a guy can do all kinds of math --- and just using Chevron (a name I just picked for zero reason what so ever) as an example might show that inflation is more than the payout growth of their dividend… OKAY… I'm just trying to make some Investing 102 points here - again - about the way we all need to THINK about our futures - and our investments - and the length of time we're going to have for our investments to do "okay". It's not "I bought X company yesterday and they're down .50 a share today - so I suck as an investor"…. Okay -- maybe you're timing is HORRIBLE… but give those picks some time… And if you've followed along here and bought GREAT COMPANIES… not the ones the store clerk told you was the hot stock of the day… my bet is that 7 of the 10 names you bought will be ahead -- a couple of them WAY ahead - a couple of them just "okay" and a couple will suck. But you will be ahead overall -- nicely -- and your dividend payouts will be more than they were when you bought.
END OF STORY : > )
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