It's November, which means I will soon be gathered around the table with my family to eat turkey and all the fixings. Undoubtedly, my wife will invite everyone to say what they are thankful for. She usually starts and goes on at length for all the things she is thankful for, leaving it difficult for the rest of us to come up with different things to add to her list. My son and I have tried to say ditto but, apparently, that is unacceptable. It's also unacceptable to say I'm thankful for my new golf clubs and leave it at that. Through much trial and error, I have determined that I must be thankful for a) more than one thing and b) one of those things must be my wife. Only then will she allow us to finish eating and get back to the football game.
Seriously, though, I am thankful for many things, including my wife (she reads these articles too), and this applies to investing as well. As investors, we should all be thankful for the simple fact that we can invest. We have the means and access to financial markets. So, that's one thing. I invite you to join me at the Investing Thanksgiving table as I share "more than one thing" for which I am thankful this year.
The power of compounding: Being able to generate earnings from previous earnings over and over is one of the best things about investing. Compounding allows investors to select an appropriate investment strategy, build a diversified portfolio, reinvest dividends and capital gains, and watch their investments grow over the long-term. Of course, the markets go down as well as up, but the concept of investing small amounts that compound over enough time to become large amounts is truly something to be thankful for.
Health insurance and Social Security: Neither of these is perfect, and both involve politics. Setting all that aside, I am thankful for these safety nets. If you were retired during the financial crisis of 2008, you were probably thankful for the backstop Social Security provided. If you have health insurance, you can stay healthy with routine checkups and be covered in case of a catastrophic event. Knowing both are there helps me sleep at night.
A historically upward-trending market based on living in the country with the greatest economy in the world: In 2016, Warren Buffett explained: "American GDP per capita is now about $56,000. In real terms – that's a staggering six times the amount in 1930, the year I was born, a leap far beyond the wildest dreams of my parents or their contemporaries. U.S. citizens are not intrinsically more intelligent today, nor do they work harder than did Americans in 1930. Rather, they work far more efficiently and thereby produce far more. This all-powerful trend is certain to continue: America's economic magic remains alive and well."1
Notably low fees: Since the inception of index mutual funds, or exchange-traded funds (ETFs), investors have had the opportunity to diversify while paying much lower fees than were previously available. High fees are a significant drag on investment returns and these compound negatively just as returns compound positively.
Knowledge: For those of you too young to remember, there was a time when information was more difficult to obtain – it came through paper newspapers and physical books! Today, financial information, including investment research, personal finance blogs, financial websites, and compelling articles (sometimes delivered straight to your email inbox!) are readily available to us all. These resources enable everyone to be more informed on a wide range of investing topics, which in turn, can help us make better decisions and become better investors.
So many things money can't buy: Investing has allowed me to dream of and plan for a retirement where I will have more time with my family, more adventures with Rudy, and finally test the theory that one can never get too much fishing. Of course, the investment industry has also provided the opportunity to work with you, my clients. In case you missed my hidden one-word message to you within this article, "THANKS" for working with me and trusting me to guide you through your investing journey. I'm thankful for the opportunity to get to know you and your financial goals, be inspired by your hard work and commitment to saving, and to help you plan for and embark on your own vision of retirement.
References: 1Rich, Bryan. "Warren Buffett Explains Why Over Time Stocks Go Up." Forbes. 29 February 2016.
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