Originally posted by: Lothar
Originally posted by: ModerateRepZero
I'll give you a piece of advice I give some other people: read "The Intelligent Investor" by Benjamin Graham. You aren't guaranteed the ability to earn money, but I think it's safe to say that if you follow the principles in the book (such as having a certain "margin of safety"), you're almost certain not to lose your entire investment (over an extended period of time, anyway).
And to Special K: one of THE biggest advantages an individual investor has that a fund manager or other established group doesn't is the patience to wait for a big, fat softball pitch. If the investor is happy enough to avoid losing money on an investment, and hits the equivalent of a few singles per year, they're not going to be taking as big of a risk, and potentially lose their shirt, as a fund which aims to swing for the fences AND at every pitch.
If you invest starting early and over an extended period of time, steady gains add up if you reinvest the gains and you're not "in the hole". If your concern is on costs and reducing your risks in exchange for a reasonable expectation of protecting your investment from catastrophic losses, what's so bad about this mentality and approach?
"Bolded" and italicized for emphasis.
Most funds aim to make 10% every year for the next 30 years.
I only aim for a 10% annualized compounded return over 30 years.
Whether my investment is down -20% one year and up +40% the next year makes little difference to me.
However, to a fund manager, it makes A LOT of difference.
If your fund is down -20% one year while the market is up, people will yank their money out forcing you to liquidate and possibly change or reverse gears.