Basic Investing Principles: the Video

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chris319
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Basic Investing Principles: the Video

Post by chris319 »

I've been thinking about ways to convey some very rudimentary investment principles to young people who are brand new to investing. The principles would be based on 40+ years of investing experience.

I'd like to get to them before Robinhood does and they wind up losing their shirts trading fancy-a** option strategies.

I have thought about writing a book, but wonder if young people today are inclined to spend money for a book and if they have the time and attention span to sit and read it. I recently purchased such a book and it turned out to be very longwinded. I found myself skipping ahead to get past all the verbiage.

I have thought about doing a blog, which I have done in the past. The challenge is in letting people know your blog exists and getting people to come and read it. What good is doing a blog if no one will see it?

I have also thought about making a video. People seem amenable to watching a video and it's easier to find them on YouTube than on the blogosphere. Rather than showing me on camera flapping my lips (I'm nothing to look at), it would be mainly text with a voice-over track, maybe 5 to 10 minutes in length. It would basically be a slide show. People might watch that, but I realize it would be competing with many other videos which are full of cruft, and where the speaker comes across as a used-car salesman. Many of those videos have something they want to sell you. The sales pitch usually comes at the very end. I have nothing to sell.

I'm thinking of setting forth several guiding principles of investing. It would be a surface treatment, short and sweet. Here are some of the principles I'm thinking of. Being a first draft, this list is malleable. It would be intentionally agnostic with respect to specific funds or fund families.

Keep in mind that these points would be supported with a voice-over track.

1. Don’t try to strike it rich.

2. Open a brokerage account. (This would be accompanied by the names of several brokerages: Fidelity, Schwab, Vanguard, Merrill L., TD Ameritrade, E-Trade).

3. Invest early and often. (Emphasize the long-term and "pay yourself first").

4. Index funds are your friends. (Explain index funds, explain difference with individual stock picking).

5. Keep expenses and taxes as low as possible.

6. Volatility cuts both ways. (There is upside volatility and downside volatility).

7. Never sell in a panic.

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David Jay
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Re: Basic Investing Principles: the Video

Post by David Jay »

How about these:

Bogleheads Philosophy:

1 Develop a workable plan
2 Invest early and often
3 Never bear too much or too little risk
4 Diversify
5 Never try to time the market
6 Use index funds when possible
7 Keep costs low
8 Minimize taxes
9 Invest with simplicity
10 Stay the course

And at this wiki link there is a video for each one: https://www.bogleheads.org/wiki/Boglehe ... philosophy
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius
Astones
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Re: Basic Investing Principles: the Video

Post by Astones »

David Jay wrote: Mon May 03, 2021 4:20 pm How about these:

Bogleheads Philosophy:

1 Develop a workable plan
2 Invest early and often
3 Never bear too much or too little risk
4 Diversify
5 Never try to time the market
6 Use index funds when possible
7 Keep costs low
8 Minimize taxes
9 Invest with simplicity
10 Stay the course

And at this wiki link there is a video for each one: https://www.bogleheads.org/wiki/Boglehe ... philosophy
Or, in other words,

1. buy VTI
2. never sell it

:P
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David Jay
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Re: Basic Investing Principles: the Video

Post by David Jay »

Astones wrote: Mon May 03, 2021 5:47 pm Or, in other words,

1. buy VTI
2. never sell it

:P
You are obviously in the "accumulation" stage of life... :wink:
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius
livesoft
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Re: Basic Investing Principles: the Video

Post by livesoft »

TikTok or go home.

Get crackin'' because something else will replace TikTok shortly and you want to surf that wave as long as you can.
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Astones
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Re: Basic Investing Principles: the Video

Post by Astones »

I believe that the first important advice would be to understand what reasonable expectations look like.

When I started getting interested in investing I had no idea what to expect from it.

I believe that it is important for someone new to the field to understand the orders of magnitude of the return they can reasonably expect.You can give them actual numbers: as a very vague rule of thumb, they can realistically roughly double their invested capital every 10 years. Once they have an idea about the magnitude, I believe they'll have more chances to start with the right mindset.
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chris319
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Re: Basic Investing Principles: the Video

Post by chris319 »

Thanks for pointing out those rules and the videos.

The 10 videos run approximately 1 hour and 20 minutes in the aggregate. I don't think someone with a short attention span will sit through all of them.

I had combined expenses and taxes into one rubric.
3 Never bear too much or too little risk
9 Invest with simplicity
Both of these lack specificity. A video would have to give an explanation of what is meant by too much/too little risk, and would have to elucidate on the concept of "simplicity".
1 Develop a workable plan
This is a tricky one. The video that covers this topic alone runs 14:52.
5 Never try to time the market
This is a good one and should be included.

Here is a revised list:
1. Don’t try to strike it rich. (reasonable expectations with examples)

2. Open a brokerage account. (This would be accompanied by the names of several brokerages: Fidelity, Schwab, Vanguard, Merrill L., TD Ameritrade, E-Trade).

3. Invest early and often. (Emphasize the long-term and "pay yourself first").

4. Index funds are your friends. (Explain index funds, explain difference with individual stock picking).

5. Don't try to time the market.

6. Keep expenses and taxes as low as possible.

7. Volatility cuts both ways. (There is upside volatility and downside volatility).

8. Buy and hold wins every time. Stay the course. Never sell in a panic.
I have added "stay the course" and "Buy and hold" to #8.

#1 is related to having reasonable expectations.

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The only person you have to please in life is yourself.
Topic Author
chris319
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Re: Basic Investing Principles: the Video

Post by chris319 »

I believe that it is important for someone new to the field to understand the orders of magnitude of the return they can reasonably expect.You can give them actual numbers: as a very vague rule of thumb, they can realistically roughly double their invested capital every 10 years. Once they have an idea about the magnitude, I believe they'll have more chances to start with the right mindset.
Agreed. If we were to illustrate this point with actual numbers, what would suffice as an overall rate of return, again, for illustrative purposes only?
The only person you have to please in life is yourself.
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chris319
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Re: Basic Investing Principles: the Video

Post by chris319 »

I started to watch one of Rick Van Ness's videos. It was slow-paced, longwinded and soporific. Video valium.
The only person you have to please in life is yourself.
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retired@50
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Re: Basic Investing Principles: the Video

Post by retired@50 »

Scott Adams, of Dilbert comic strip fame, wrote a book called "Dilbert and the way of the weasel".

It's a funny look at how (human) weasels worm their way into our lives in a variety of ways.

In the chapter called "Financial Weasels" he wrote the following:
I once tried to write a book about personal investing. It was supposed to geared toward younger people who were investing for the first time. After extensive research on all topics related to personal investing, I realized I had a problem. I could describe everything a young first-time investor needs to know on one page. No one wants to buy a one page book.
The page is as follows:
Everything You Need to Know about Personal Investing.

1. Pay off your credit card balance.

2. Get term life insurance if you have a family to support.

3. Fund your company 401k to the maximum.

4. Buy a house if you want to live in a house and can afford it.

5. Put six months' expenses in a money market account.

6. Take whatever money is left over and invest 70 percent in a stock index fund and 30 percent in a bond fund through any discount brokerage company and never touch it until retirement.

7. If any of this confuses you, or you have something special going on (retirement, college planning, tax issue), hire a fee based financial planner, not one who charges a percentage of your portfolio.
He goes on to say this...
Everything else you might want to do with your money is a bad idea compared to what's on my one-page summary. You want an annuity? It's worse. You want a whole life insurance policy? It's worse. You want to invest in individual stocks? It's worse. You want a managed mutual fund instead of an index fund? It's worse. I could go on, but you get the point.
Regards,
This is one person's opinion. Nothing more.
Topic Author
chris319
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Joined: Thu Jan 28, 2021 6:04 pm

Re: Basic Investing Principles: the Video

Post by chris319 »

Everything You Need to Know about Personal Investing.

1. Pay off your credit card balance.

2. Get term life insurance if you have a family to support.

3. Fund your company 401k to the maximum.

4. Buy a house if you want to live in a house and can afford it.

5. Put six months' expenses in a money market account.

6. Take whatever money is left over and invest 70 percent in a stock index fund and 30 percent in a bond fund through any discount brokerage company and never touch it until retirement.

7. If any of this confuses you, or you have something special going on (retirement, college planning, tax issue), hire a fee based financial planner, not one who charges a percentage of your portfolio.
#1, #2, #4, #5 fall into the category of financial planning, not investing.

Except for index funds, I shied away from recommending specific investment vehicles and asset allocations.

One way to back into this subject would be to say simply, "put it all in a stock index fund" and then list all of the things not to do, i.e. mistakes to avoid.
The only person you have to please in life is yourself.
Astones
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Re: Basic Investing Principles: the Video

Post by Astones »

The elephant in the room of BH investing philosophy is that there is not much to say, at the end of the day.
All you have to do is buy the most boring financial product on the market and do nothing else, quite literally, in the sense that Bogle used those words himself.
You can spend days doing all your research, and it's healthy to actually do it, by all means, but all this research will eventually lead you to conclude that the right way to go is to buy a broad market-cap weighted index fund, and not some weird combination of several of them, but likely just up to four, often fewer, most commonly just a single one.

This is awesome on most extents, and of course also disappointing, in case the wannabe investor was hoping for some sort of excitement out of the experience.
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