Long-term in­vest­ing re­ally works



“The kind of in­vestors we seek are long term, be­cause that’s how we make our de­ci­sions.” – Tim Cook

About 16 years ago, while work­ing at Citibank in Tel Aviv, I was asked by a col­league who was also a fi­nan­cial ad­viser whether I ac­tu­ally be­lieve in in­vest­ing in fi­nan­cial mar­kets. He told me he tells his friends and fam­ily to put their money in bank de­posits!

“Do you re­ally be­lieve in stock in­vest­ing?” he asked. I replied that I re­ally do, and that it would be a bad sit­u­a­tion – to put it mildly – if I didn’t be­lieve in it if I was ac­tively speak­ing to clients about the power of in­vest­ing.


Fast for­ward to a month ago, and I was sit­ting with a sin­gle lady in her early 40s who has no debt, a job that pays just enough to keep her head above water, $250,000 in re­tire­ment funds and a reg­u­lar in­vest­ment ac­count. She was pan­icked that she won’t have enough money to re­tire. I kept telling her that she is in great fi­nan­cial shape, and com­pared to most in­di­vid­u­als her age, she is way ahead of the game.

She was not buy­ing it. I then ran some num­bers on a very ba­sic com­pound-in­ter­est cal­cu­la­tor (I ac­tu­ally en­cour­age all of you to do this ex­er­cise as well). We took her $250,000 and in­putted some very ba­sic data, such as a 20-year in­vest­ment time hori­zon, no ex­pected de­posits and a 6% re­turn. In 20 years with those pa­ram­e­ters she will have ac­cu­mu­lated more than $800,000! Ob­vi­ously there are no guar­an­tees, and past per­for­mance is no in­di­ca­tion of fu­ture re­turns.

While this calmed her to a cer­tain ex­tent, I still think she was a bit skep­ti­cal. Since I met with her, I have had two more phone calls that help prove in­vest­ing for the long-term re­ally does work.

Real-life ex­am­ples

A long­time client of mine called to tell me he is with­draw­ing most of his money to buy some real es­tate with his son. We were rem­i­nisc­ing about how his ac­count had per­formed over the years. It turned out that he had started with me in 2003 with about $350,000; since then, his ac­count grew to $880,000. It’s also im­por­tant to men­tion that he was not at all ag­gres­sively in­vested.

Ear­lier this week I got a call from a lady who told me that un­for­tu­nately she is get­ting divorced. They also started with me back in about 2002 with $90,000 and added about $10,000 a year or two later. Their ac­count grew to more than $240,000. Again, I would point out that they were not ag­gres­sively in­vested.

What both clients had in com­mon was that they had a long-term vi­sion, set some goals and in­vested in ba­sic – what I like to call choco­late/vanilla – types of in­vest­ments. They kept it sim­ple.

What both clients had in com­mon was that they had a long-term vi­sion, set some goals and in­vested in ba­sic – what I like to call choco­late/vanilla – types of in­vest­ments. They kept it sim­ple

The point of this is not as a way for me to show off and brag that I am Hashem’s gift to in­vest­ing. I am far from that. Rather, the point is that if you have pa­tience, stick with your plan, in­vest in qual­ity in­vest­ments, keep it sim­ple and have a long-term in­vest­ment hori­zon, good things can and usu­ally will hap­pen.

Just do it

There is no rea­son for you not to have the same suc­cess. If you want to have a se­cure fi­nan­cial fu­ture, you need to in­vest for the long term, and you shouldn’t put off start­ing to in­vest. Sit down and map out your goals and needs.

Then speak with a fi­nan­cial ad­viser to cre­ate an in­vest­ment plan that will help you achieve those goals.

With base­ball sea­son just around the cor­ner, I ad­vise you not to try and hit grand slams with your in­vest­ments; rather, shoot for lots of sin­gles.

Slow and steady wins the game, and I can’t stress enough the im­por­tance of keep­ing it sim­ple. I see too many peo­ple fail to grow their money be­cause they get in­volved in too many com­plex in­vest­ments, and those tend to not pan out.

The in­for­ma­tion con­tained in this ar­ti­cle re­flects the opin­ion of the au­thor and not nec­es­sar­ily the opin­ion of Port­fo­lio Re­sources Group, Inc., or its af­fil­i­ates.

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