If you have following my work for a while, you may have noticed how much I emphasize the importance of not only investing for the long term but ALSO making sure we are investing in QUALITY. I strongly believe this to be one of the best ways we can create wealth over time.
I like to remind my community of this every time I get the chance:
Buying and selling stocks within short periods of time and/or investing in random things you’ve never heard of or don’t quite understand simply to make a “quick buck” is very risky and costly. It is something I personally don’t get involved in. But we’ll leave that topic for another day.
One of the traits that motivates me the most about long term value investing is the fact that we can make our money work hard for us. By investing in high quality companies at the right time, we can benefit from their continuous growth over time and continue building our wealth in the process.
We can benefit from both, price appreciation and dividend payments (where applicable). One of the things that makes investing so exciting is that money in an investing account has the potential to grow A LOT FASTER than the money that sits in a savings account getting pennies on the dollar.
According to top financial publications, the current average interest rate on a savings account is around 0.08% – which is insane considering banks make billions from people’s deposits, fees, etc. Banks are businesses after all.
Don’t get me wrong, I am a strong believer in savings and HIGHLY recommend everyone has money put away for emergencies that is easily accessible and not tied to investments because we never know what can happen.
As a matter of fact, I wrote a post not too long ago about what to do with the money you do not have invested. In addition, there are a few important steps I believe people should follow before they enter the investing world.
However, “leveling up” or “graduating” into having an investing account is just as important if we wish to grow our wealth at a faster rate and more efficiently.
Below are some examples and proof of why I say investing is like savings on steroids. We’ll take a closer look at the performance of some companies I consider to be of high quality and their performance over the past 5 years.
Before we begin, I want to remind you that NONE of the companies below are recommendations. The market is volatile and unpredictable and past performance is NEVER a guarantee of a how company will do in the future. ALWAYS do your own due diligence and never invest or cease to invest solely on the information I provide.
If you own my book, some of these examples will seem familiar. Plus, you can see how much each stocks has grown since my book was published in January of 2016 :).
Johnson & Johnson:
Stock Price 08/23/2013: $77.56
Stock Price 08/23/2018: $135.11
Percentage Increase: 74%
Stock Price 08/23/2013: $29.10
Stock Price 08/23/2018: $82.91
Percentage Increase: 184%
Stock Price 08/23/2013: $59.34
Stock Price 08/23/2018: $205.22
Percentage Increase: 245%
Stock Price 08/23/2013: $290.01
Stock Price 08/23/2018: $1902.90
Percentage Increase: 556%
What’s even better is that all of the above companies (with the exception of Amazon) pay dividends. The percentage gains don’t include dividend payments which means the gains in an online brokerage account are actually more than the percentages shown.
KEEP IN MIND:
#1 These gains did not happen overnight, the analysis takes in to account percentage increase in stock price over the last five years. Money in the stock market should not be money that you need in the short term. You must be well diversified and allow the money to grow. What I tell my students is to only invest money they can afford to leave alone for 3-5 years or longer.
#2. We’ve been enjoying a very profitable “bull market” since the financial crisis and this has been reflected in many companies across the board. *Side note: I explained Bull Markets and Bear Markets in the 8/25/2018 newsletter. Sign up here.
And that’s all folks 🙂
Loved this post and would like to learn more about how you can learn to invest in QUALITY? Make sure to enroll in the courses, seminars, & masterclasses coming soon:
Stock Market Investing Boot-Camp for Beginners: Our five-week signature course where we teach you everything you need to know to understand how the stock market works and start building a stock portfolio.
The Wonderful World of Dividends: In this class I explain dividend investing from beginning to end including how to invest in dividends for passive income and how to choose the best dividend paying companies.
From Debtor to Stock Investor Accountability Program: A 6-month accountability program for individuals who want support getting out of debt and getting their financial life in order in order to Level UP into investing.
Stock Analysis Simplified – Masterclass: Coming soon – this class is for my more advanced members and teaches how to analyze a stock from the inside out in order to find out if it has potential to be a great investment.
Cheers to profits!