It was good to see my analysis on the Japanese Stock market picked up by newsonjapan.com. Will the Nikkei hit new highs?
You can see the full blog here.
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- Business Insider.
- The Kenyan Institute of Magazine
- Envsion Magazine
- Expat focus.
- Work from home show
- Business over beers.
- Laurent Notin.
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I often write answers on Quora, where I am the most viewed writer for investing and personal finance, with over 220 million views.
On the article below I discuss the following questions I have been asked on Quora.
- Most people, at least in developed countries, assume that getting rich is more difficult than before. But is that really true? I speak about how our perspective influences our approach to this question.
- What do people understand in their 30s that they don’t in their 20s?
- What should people know about investing in stocks? What are the opportunities, risks and what is the bottom line?
Here is a preview of one of the answers
The biggest things we shouldn’t forget are:
- Stocks as an asset class do go up long-term. The Dow was at 66 in 1900, 2,000 about 30–32 years ago and 31,000 today.
- Yet individual stocks don’t always go up. Individual industries don’t always go up either. The banks have never recovered from 2008 even though the general market has.
- Despite the fact that the market goes up long-term, there can be long periods of stagnation. 2000–2011 and 1965–1982 saw many markets stay still. The long-term investor shouldn’t be afraid of such periods. It allows you to buy lower for longer! When markets come up, you will make more money than if they had been rising however.
- Dividends are key. Over 35% of many stock market returns have been from reinvesting dividends. What’s more, reinvesting dividends protects you in stagnant or falling markets as well. The UK FTSE100 hasn’t done as well as the FTSE250 or S&P500 in recent decades. Yet look at the graph if you had reinvested the dividends:
As you can see, it all compounds. Over a 30 year period, the person who reinvested the dividends has about 5x more.
Likewise, many people know the Japanese Nikkei market is the only major market which is down on its height.
It is now 28,850. It’s height was briefly 38,916. Even if we ignore the fact that it is highly unlikely that you would have invested 100% at the very peak, you could still be up slightly in 2020 if you bought only once at the peak and reinvested dividends.
5. It doesn’t make sense to be 100% in stocks forever. At a young age that can work and if you are willing to see big volatility. Having a bond market index works long-term, because bonds tend to rise during periods when stocks fall. At least that is the case with short-term Treasuries.
6. US Stocks have beaten most International ones long-term, including emerging markets. Yet every dog has its day. There have been numerous periods where international has beaten US Stocks. It makes sense to own at least 2–3 indexes for this reason.
7. Nobody can consistently time markets. The only safe way to invest is long-term. Time is one of the only free lunches in investing because it lowers your risk and compounds your gains.
8. You should never speculate or panic.
9. Don’t blindly follow trends which are pushed by the media and others.
10. You need to invest a lot of money to get wealthy investing if you start late. If you start early, you don’t need to invest much. The
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