3 Things 1-17
1/17/2022 Although MAS is a financial services company, not everything published herein will be about numbers or investing. But no matter the topic, we hope for three things: 1) That you find the time you spend engaged worthwhile. 2) That you’ll reach out to us for help in any of our areas of expertise if something we discuss creates an urging in you to do so. 3) That you’ll share this with somebody new each time you read it. Thing One Got 30 Years? A while back we posted something titled, “Five Things I Wish Somebody Had Told Me In My Twenties “. Item number two from that list is spelled out below: "Thirty years from now you’ll wish you had invested more in stocks". With that in mind, we share some interesting information below taken from awealthofcommonsense.com. First, a look back at some 30-year chunks of time and what was going on in the world: 1926-1956: The Great Depression, a stock market crash of more than 80%, World War II, The Korean War, and four recessions. 1956-1986: The Civil Rights Movement, the Vietnam War, a president was assassinated and another forced to resign, an oil price shock from the OPEC embargo, double-digit inflation and interest rates, and six recessions. 1986-2016: Black Monday in 1987, the Savings & Loan crisis, Desert Storm, 9/11, wars in Iraq and Afghanistan, and three recessions. Second, what was happening with stock market returns for those same periods: 1926-1956: +10.77% 1956-1986: +9.63% 1986-2016: +9.99% Using the rule of 72, a person who got in the stock market and stayed invested from 1926-1956 doubled his money roughly every 6 ½ years. A person who got in the stock market and stayed invested from 1956-1986 doubled his money roughly every 7 ½ years. And a person who got in the stock market and stayed invested from 1986-2016 doubled his money roughly every 7 years. All this happened despite all the major shocks that happened during those periods. That’s something to think about, but not too hard. Time is your friend until it isn’t.
Thing Two A Letter From Nanna and Two Answers We happened across a letter in a financial advice column a few years ago that’s worth sharing. It was from a grandma looking to share a little of what she had with her grandkids. The letter, which was pretty simple, was addressed to the author of the column, who had, Ph.D., CFA, CFP, CASL after his name. Here it is: "Dear Dr. Don, I have four grandchildren whose ages are between 2 and 4. We spend $150 on them for birthdays and Christmas. Wouldn't it be wise to purchase a certificate of deposit for them so that, when they turn 16 or 18, they will have some money for a car or college? Thank you, -- Grandma Gaye" Now, rather than give you the long, complicated reply to Grandma’s question from the expert, we’ll just summarize it by saying he suggested she buy the savings bonds. The only question was whether they should be Series EE or Series I. And rather than take issue with what the financial advice columnist had to say, we’ll just say there are other options. In fact, a blogger with fewer letters behind his name shared some generic advice that we think might be an appropriate alternative for Grandma. See it below: "...A smart buyer who purchases a blue-chip stock today which is priced at $100 and pays a $3 annualized cash dividend will likely see the share price grow to ~$1,600 and the cash dividend yield $50 after 40 years, assuming that its average annual earnings grow at 7% compounded annually. " It should be noted that $300 per grandkid saved annually would grow to around $26,000 ($13,000 per grandkid) over the 20 years using 7% as the rate of return. .
Thing Three Just A Thought "The rich invest their money and spend what is left; the poor spend their money and invest what is left." - Jim Rohn