Wealth Creation

You Can Build a Fortune Investing in Stocks

By investing a portion of your income in a diverse group of common stocks via an automatic investment plan, you can build significant wealth over time and reduce the short-term impact of market highs and lows. Sure it can take 10 years or more, depending in the amount of money you can invest every period, but if you invest consistently you can reasonably expect to enjoy the benefits of being financially independent.

For example, the table below shows the results that would have been achieved by a person who invested $1,000 at the beginning of each year since 1977 in each of the well-known companies in the table:

Of course not all investments will have positive results; hence the need to invest in several companies in diverse industries around the world. But even if some investments result in total loss of capital, a well-diversified portfolio of solid companies purchased at reasonable prices offers you a high probability of achieving significant wealth over a period of 10 years or more.

Investment Success Can Be Simple

The keys to building significant wealth through the ownership of common stocks are: (i) a long-term perspective, and (ii) the right investment approach. While the formula to investment success can seem quite simple, its implementation can prove mighty difficult.

An investor who can follow the steps below can expect superior results:

1. Identify a group of good businesses participating in diverse industries around the world;
2. Make a conservative assessment of what each business is worth independent of the stock market;
3. Buy shares of these businesses, but only when the stock price is at least 40% below your assessment of true value; and
4. Hold on to your shares for the long term, unless the market price goes significantly above your estimate of value (at which point you should sell and replace those with other good businesses selling below their value).

As you can see, this formula is quite simple, but most people don’t have the time, the desire, or the temperament to follow the steps consistently. Most people are not able to ignore the crowd and calmly buy during market panics or sell during market euphoria. During periods of extreme pessimism (the best time to buy) or periods of great excitement (the best time to sell) most investors succumb to their emotions.

Simple Capital Can Help

Simple Capital offers you professional investment management services so that you don’t have to worry about following the steps outlined above. With Simple Capital you can invest as little as $100 per month through the Simple Capital Fund, or as much as you wish either through the Fund or using a separate account at the custodian of your choose. Simplify your life today and set up an automatic investment plan with Simple Capital and begin your way to financial independence.