Now and later: redefining success in investing

Welcome to the Making Margin podcast! Greenway’s team is here to discuss common financial mistakes and to help you navigate them. 

Meet the voices behind Making Margin:

NickDrewNatalie

Today’s episode: 

How can we be confident in 6% (or higher!) growth rate?Why do we think it’s important to have equities (and/or bonds) in a portfolio?We have to set some expectations regarding investment planning. So, how do we come to the conclusions that we do when designing a portfolio?

 

Discussion Topics:

There is an equity premium.  We know intuitively that the founder of a company has more to gain and more to lose than the bank from which he borrows the money.  A bond is comparable to a bank that is lending out money.  The bank expects the return of their capital and a slight return on their capital.  A business owner is looking for a multiplication of capital.The longer the history, the more confidence you can have -- Looking at monthly data in the US from January 1926 to July of 2020, there have been just over 1130 months.  This means that there have been over 1000, 10-year periods - 120 months squished together.  Have a realistic expectation - Morgan Housel wrote, “Markets crash all the time. You should, at minimum, expect stocks to fall at least 10% once a year, 20% once every few years, 30% or more once or twice a decade, and 50% or more once or twice during your lifetime.”What’s the point of investing? Maximizing return or reaching a goal?Investor’s Manifesto