Salient to Investors:

Dale Roberts writes:

Very few middle class investors will retire due to the money generated from their investment portfolio or their investment philosophy.

The stock market is mostly long periods of losing money against inflation, punctuated by two rabid bull markets that led to extreme overvaluation. Regularly, US equity markets, excluding dividends, delivered no real returns for periods lasting 20 to 25 years, and that’s before taxes.

Expect real returns of no more than 3-4% from 2000-2020 or 2000-2025, or whenever this secular bear is slayed. 

Investors are really good at buying high and selling low.

It usually takes 20-30 years to break even from the previous market peak. The average length of the last three bear markets would indicate we are only about about halfway through this one.

No one retires because of his or her investment skills or perseverance. People retire or semi-retire when they accumulate wealth by living beneath their means and having money left over after every pay cheque.

Your investment portfolio grows only 3-4% a year if you’re doing most things right. The best investment advice is to be frugal and think like a Scot.

Long-term average stock market returns are useless to most investors because most people get serious about investing and saving for retirement over a period of 15-20 years or shorter. Your peak investment years could take place entirely within an equity bear market.

Save and invest 20-30% of your income. Protect yourself against stock market collapses and portfolio volatility with bonds and gold and exposure to other currencies.

A portfolio of 25% equities, 25% cash, 25% long-term Treasuries, 25% gold has returned nearly 150% over the last ten years. 38% over the last 5 years, and has had only two very small down years in the last 40.

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