Comments on: What’s Better Than A 20% Return?

By: Shaun Rosenberg

Shaun Rosenberg — Mon, 22 Dec 2008 20:43:11 +0000

I think you forget about compound interest. In the long run investor 1 still wins.

Say investor 1 manages to get an average of a 20% for 30 years without depositing another penny, after 30 years she will have 190,049.64.

Investor 2 on the other hand continues her plan and saves $50 a month with an annual return of 8% after 30 years she will only have 80,977.95.

Once more it is not to say you can’t both chase high returns and save money. A 20% return can be made with as little of 5-10 minutes a day checking and readjusting your positions.

http://www.stocks-simplified.com

By: Do You Need A Little Balance When It Comes To Matters Of Personal Finance?

Do You Need A Little Balance When It Comes To Matters Of Personal Finance? — Sat, 02 Feb 2008 05:29:11 +0000

[...] Meg from the World of Wealth and All Financial Matters recently wrote a very interesting article about investing, saving, and ‘having a life’. I encourage you to click over and read the entire article, the final line of which I’ll quote here – [...]

By: The Simple Dollar » The Simple Dollar Weekly Roundup: Total Trust Edition

The Simple Dollar » The Simple Dollar Weekly Roundup: Total Trust Edition — Wed, 30 Jan 2008 14:02:21 +0000

[...] What’s Better Than A 20% Return? Big returns don’t matter much if they’re positioned on top of an unstable financial lifestyle. (@ all financial matters) [...]

By: MossySF

MossySF — Wed, 30 Jan 2008 08:10:02 +0000

I’ve been investing for more than a decade and I find my contributions still far outstrip my market returns.

By: Dan

Dan — Wed, 30 Jan 2008 04:06:23 +0000

Perhaps, but other things being substantially equal, your return is quite critical.

By: Early Retirement Extreme

Early Retirement Extreme — Wed, 30 Jan 2008 01:20:07 +0000

The crossover depends on how much principal one has stashed away and how much money is saved on a regular basis. In the beginning the biggest bang for the buck can be had in increasing savings and earnings. Once principal exceeds monthly savings by a factor 50 it’s definitely the ROI that is the most important.

One can simply divide surplus returns with the amount of hours spent doing so to get an “hourly wage”. Similar divisions can be done for ways to save money. Then there’s the quality of life associated with it. If I’d make $6/hr flipping burgers and only $5/hr investing actively, I would probably pick the latter “job”.

By: Mrs. Micah

Mrs. Micah — Tue, 29 Jan 2008 19:54:32 +0000

I like your perspective on this. For most of us, earning more in other ways is just as important as earning more through investing. If I had a million bucks, of course, I might be more focused on maximizing it. But I don’t and most of your readers don’t.

Plus, money you earn/save is real money. In comparison, hot stocks aren’t always hot stocks and you could end up with lower returns.

By: Eric Toya

Eric Toya — Tue, 29 Jan 2008 19:31:35 +0000

Tricky, tricky, tricky. Of course, the other question is how did Investor #1 do the next year? The “I beat the markets” refrain was common in the late 90s. You didn’t hear much from those same people a few years later.

By: moneymonk

moneymonk — Tue, 29 Jan 2008 18:41:20 +0000

The Moral of this story is…to work smart, not hard

Good post Meg!

By: Zulu

Zulu — Tue, 29 Jan 2008 18:19:48 +0000

It could be argued that, for some, the constant attention and every-day manipulation is as much a hobby as Guitar Hero.

Additionally, with $1k as the starting amount, investor 2 wins. However if the initial amount is … let’s see, where’s my calculator … $5000, then both investors come out even. Anything over that and investor 1 wins.

I understand what you’re getting at, but the example is a bit contrived. I take the approach of investor 2, but that’s more for the other reasons (time/values balance) than because the difference in return is negligible.