Investing and Retirement

Hello everyone! It's mid week and my studying has droned to a halt. I needed to clear my brain so I decided to share my knowledge on investing tactics that actually work. It is strange that I graduated with a degree in accounting but knew so little about real life application. The American school system is based largely on theory and to apply those theories you've got to get up off the couch and go throw some money around. Luckily, the internet and a few cheap books have taught me how to attract more money that what I threw into the system.

There are many ways to invest. To keep this topic in scope I will only talk about long term investing, the type that is needed for a successful retirement. Fortunately when you have 20 or 30 years to plan and invest your retirement it becomes far less challenging to create a profit, and a substantial one at that. I am talking Millions.  The key to effective retirement is simple: Begin your retirement savings NOW, plan sooner rather than later, and avoid gambling your retirement on risky stocks and market timings.

1. I don't care how old you are, and you have probably heard this often, the earlier you start the better. Based on the last 80 years of data and achievable market returns, every dollar you put away today will be worth $35 - $40 after 40 years. However, for every 10 years you wait,  you can divide that number by 3!. So would you rather have a million at 65? or 3 million? These are actual estimates based on the last 80 years of the stock market performance. Save NOW!!

2. Planning for the retirement should really be concurrent with savings but most people find it difficult if not impossible to save for retirement at a young age and thus saving really needs to take precedent. What is the point of planning a retirement but not having the cash to implement it? Even if you can only scrounge 500 a year, do so, because that $500 will contribute just as much to your eventual retirement as the $1500 you can save 10 years from now.

3. The most common tactics investors use to make money in the stock market DO NOT WORK. This study shows that heavily managed investing funds and companies make, on average, 5% less than average market returns over a 5 to 20 year period. Although I myself have made large returns trading on a single cash cow (Tesla), this was a calculated gamble and would never go into my retirement portfolio. (Companies like Tesla only come about once in history, I was just able to recognize it early on for what it was)


Once you realize the importance of retirement savings, followed by planning, I invite you to discuss with me, or a professional broker, the proven methods of a return on investment. By saving money annually and placing it into a correctly diversified portfolio, it is very reasonable to expect at least an 10% gain on an annual basis. Investing annually will allow you to defeat the uncertainties of market timing, 2008 was a great time to invest!!!! Late 2007 was not. By investing  $500 on Dec 31st 2007, and another $500 on Dec 31st 2008 you would now have $1435. This is because the good year evened out the bad year, thus eliminating the hazard of market volatility. Expanding this method to a period of  20 or more years your return would be 11.2% based on the last 80 years of the American stock movements. Based on these numbers, $500 invested annually for 40 years would grow to 386,000 after 40 years. If you start 5 years later, this would only grow to 219,000.

Final words: How do you invest? Open an account at fidelity.com or at vanguard. I use fidelity and it is super super easy to use with a user portal that puts my college portal to shame. This is where you will access stocks and bonds as well as unlimited resources and advice from real humans.


And I didn't even get a chance to mention the tax deductions you get on retirement savings!!!!

Summary: Save now, buy this book: http://www.amazon.com/Truth-About-Money-4th/dp/0062006487
or read it here -especially the chapter on dollar cost averaging. Talk to me, choose your retirement strategy and stick to it the next 40 years.

Why on earth am I so obsessed with Tesla Motors??

The first exposure I had to Tesla came back in 2008 when the roadsters started appearing in car magazines and I actually saw a couple. The coolest thing to me was it did not require gas and it only had one gear! I came across a mini case study in my management book the last semester of 2012, and I was completely sold. I have now bought over a hundred shares of the company and have made more than a 20% return on those shares. But to understand the company you have to study the CEO:

I first heard of Elon Musk as the co-founder of PayPal and backer of the X Prize competition. The X Prize was a cash prize of at least 1 Million dollars to the first company to create a practical reusable spacecraft. Elon Musk is now the CEO of two companies. SpaceX which recently became the first private company to send equipment to the International Space Station, and Tesla Motors. He is also the chief investor and  Chairman of the Board of Directors for Solar City, which installs solar power generators on houses and businesses.

The South African native was intrigued by going to space and the pursuit of renewable energy even before he became a teenager. In Africa he made money be designing commodore 64 games (precursor to Nintendo and Sony video games) and then selling them. He could not convince his parents to come to America, where he knew innovation would be rewarded, and has said "it is where great things are possible". He emigrated to Canada where his mother was from and then to America. He gained a degree in Business from Wharton and a degree in Physics from the University of Pennsylvania by 1992. At this time he said he wanted to get into 3 areas which would most effect humanity in the upcoming years. They were the internet, clean energy, and space.

In summary he has become a pioneer in all 3. It started with the creation of zip2 and Paypal, the eventual sales of which gained him at least a billion dollars. He used this money to launch the 3 companies I mentioned before SIMULTANEOUSLY. He didn't just pick 1, or even 2, he picked all three of his dreams. At times he has had to borrow money from his friends to pay rent.......

Currently he spends half his time at SpaceX in L.A. and the other half on Tesla in Silicon Valley (San Jose.) This involves flying back and forth up to 4 times a week. Up until recently he personally inspected every Tesla that rolled off the line and it has been said if you ask him about any part of his rocket he can tell you in detail how it works. 

You have got to be kidding me!

This man is a modern day super hero; he is completely selfless, absolutely brilliant, and is one of the few companies working to secure the world's long term future. He named Tesla after Nikolai Tesla, which is another inspiring hero of mine and deserves an entire blog post to himself. Musk actually is a lot like Nikolai Tesla; he is way ahead of his time, brilliant, and terrible at public speaking! As a matter of fact, Tony Starks character is based on Elon Musk! Musk even makes an appearance in Iron Man 2.

Tesla is a unique company and thus far has demonstrated the perfect execution of a totally new way of thinking. The automotive industry is immensely difficult arena for a start-up company. Musk knew he could not compete with affordable cars, so he built cars meant to compete with Lexus, BMW, and Mercedes. Not only that but they are completely electric!!  The cars this company make do not accept gas of any sort, they charge overnight at your house and will have from 120 to 280 miles of range depending on which battery size you buy and how you drive it. This is more than enough for 95% of commutes. Despite the fact that this car is not for everyone, and though very expensive it manages to sell about 89 new cars a day which equates to over a year long wait list in the beginning of 2013. They have delivered almost 4000 vehicles and promise to deliver 20,000 more in 2013. In 2012 it earned several prestigious awards, including Motor Trends car of the year and Yahoo's car of the year. 

Tesla WILL BE the 4th American auto company. Their plan is more flawless than any other business venture I have ever seen. Through Elon Musk's leadership, this innovative company has led battery technology to progress in ways that were previously unrealized. These batteries are getting cheaper and smaller, and gaining extended range. If Tesla can stay in business, the price of a 1000 mile range battery could drop to a  $1000 or even less within a decade. For once and for all America can loose its dependence on oil.

To summarize: Musk stakes at least 320 million of his own money in Tesla and creates the Roadster, a 2 seater sports car with amazing reviews that sold over 2400. He progressed to the Model S which is a family 5+2 sedan, from which he will launch an SUV based on the same platform. In 2014 he will reveal his 3 generation platform rumored to be a simple sedan with a price of under 30k. All of this done without a single gas tank in any of his products!

To conclude: in 2006 Elon Musk made the following blog entry. The last several lines are as follows:

So, in short, the master plan is:

1. Build sports car
2. Use that money to build an affordable car
3. Use that money to build an even more affordable car
4. While doing above, also provide zero emission electric power generation options

Don't tell anyone.

Looks like this man has stuck to his word. In this day and age is is refreshing to know one man can keep his word, make money of it, and enrich the country he lives in. All in all it gives me more hope and helps me avoid total ensanity.



P.S. If you would like to read a great article about Tesla and the struggles and miracles it has pulled off read this: http://www.wired.com/magazine/2010/09/ff_tesla/all/

First update in almost 2 years

Greetings!!!

The last two years have been full of a lot of life changes. For the first time in this span of my life I feel that my free time may accommodate writing again. I have lots of things on my mind, many of which could go on here but I will try to keep it brief and relevant. I hope to use this as a more intimate and rewarding means of conversing with dear friends than facebook, and I hope that I get a small following of quality folk to add to all the newfound inspiration I have found in life.

Some people have asked me what I am doing these days, and how is work? Actually on the day of my wedding as I was walking around the tables talking with everyone I heard one person claim to another"he does have a job". I had to grin and felt it was funny someone had to make such a claim. As a matter of fact I have accepted a job position in auditing, but it will not begin until July or August. So for a short amount of time my wife will be supporting this household.

In the meantime I have plenty of things to think about and work on from my apartment. Somethings on my mind are studying to become a Certified Public Accountant, as well as dabbling in the stock markets and trying to make a buck there. Also I will be passionately working on my writing skills and purging sentence fragments from the western civilization. However, most of all I have a yearning to make sense of what is happening in the world today and what I can do to provide financial, psychological  and most importantly, spiritual shelter from the ensane world we live in for my wife, future family and myself, as well as any friends that wish to come along and boost my low intelligence with their own.

Funny how my blog name has come around in a full circle that I could not have anticipated.