I have $X thousands to invest, what do I do? What book do I read?

[MJ DeMarco]

This is relevant to every discussion on this forum related to investing a small dollar amount... $1000, $10000, and even $50,000.

Learning "investing" at this stage of your progress is an EPIC WASTE OF TIME.

For the love of God, stop reading books on how to invest $10K so you can turn it into $15K five years later.
Instead, read books on how to invest in your own business so you can turn $10K in to $15,000,000 five years later.

Stop reading investing books until your business MAKES you read investment books.

I created this thread so I can link to it in the future when these threads arise, but feel free to comment and/or discuss.

 

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[doster.zach]

This is relevant to every discussion on this forum related to investing a small dollar amount... $1000, $10000, and even $50,000.

Learning "investing" at this stage of your progress is an EPIC WASTE OF TIME.

For the love of God, stop reading books on how to invest $10K so you can turn it into $15K five years later.
Instead, read books on how to invest in your own business so you can turn $10K in to $15,000,000 five years later.

Stop reading investing books until your business MAKES you read investment books.

I created this thread so I can link to it in the future when these threads arise, but feel free to comment and/or discuss.

View attachment 42232

I love the message, do you think the graphic can be a turn off to new people?

 

[MJ DeMarco]

I love the message, do you think the graphic can be a turn off to new people?

If it does, then they're at the wrong forum.

 

[lludwig]

Money magazine would always have headlines "How to invest $1,000 now" and every increment from $100 - $10,000.

It is also very popular SEO keywords. The reason is that's what most people can imagine having and have the ability to invest without much effort to do so.

Mark Cuban once said the avg American is best to spend time figuring out how to save money on expenses than investing $20k. I agree with the sentiment. Though you should also figure out how investing works BEFORE getting large sums of money. Otherwise, you'll have no way to maintain the pot you created.

 

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[garyfritz]

I agree "reading books to turn $10k into $15k in 5 years" is a total waste of time. Because you don't need a book. It's trivial. You just need an 8.5% return.

For any money you want to stick in the market, here's the "book:" Split your funds evenly between SPY and TLT. Once a year, rebalance -- transfer funds between SPY/TLT to bring it back to 50/50.

That's it. Over the last 20 years, including several bull/bear cycles, that's averaged 9.2% per year with pretty steady growth. On average your $10k turns into $15550 in 5 years.

If you want more reward and aren't afraid of a bit of risk (nah, nobody here can tolerate risk ...) then you can turbocharge it. UPRO and TMF are 3x SPY and TLT funds. Do the same 50/50 split. In the last 20 years it's averaged 23.7%, so your $10k turns to $28963 in 5 years. (In the linked backtest below I simulated UPRO/TMF with 3x leverage on SPY/TLT, because UPRO and TMF only go back to 2010.)

Of course, more leverage brings bigger gains AND bigger losses. The 3x basket took a 50% drawdown in 2008, vs. 18% for SPY/TLT. But it dug out of that hole in about a year, and then it was ahead of SPY/TLT and off to the races.

If you can read the market, you can move your 3x funds into SPY / TLT if things look dicey. When things settle down you can kick in the afterburners again.

Here's a backtest.

Naturally you won't turn $10k into $15 million with this. But let's be honest, most people don't turn $10k into $15 million with their businesses either. This approach returns less but with much higher probability of success. Do this with some of your funds to spin off grocery money or whatever, and put the rest into your moonshots.

 

[c23r]

Stop reading books on investing and start developing your Extrasensory Perception (ESP).



You can use your ESP to find stocks to invest in and everything will be fine. I'd also recommend to use an ESP training app on your smartphone to improve your skills.


Good luck!

 

[Paul_909]

I agree "reading books to turn $10k into $15k in 5 years" is a total waste of time. Because you don't need a book. It's trivial. You just need an 8.5% return.

For any money you want to stick in the market, here's the "book:" Split your funds evenly between SPY and TLT. Once a year, rebalance -- transfer funds between SPY/TLT to bring it back to 50/50.

That's it. Over the last 20 years, including several bull/bear cycles, that's averaged 9.2% per year with pretty steady growth. On average your $10k turns into $15550 in 5 years.

If you want more reward and aren't afraid of a bit of risk (nah, nobody here can tolerate risk ...) then you can turbocharge it. UPRO and TMF are 3x SPY and TLT funds. Do the same 50/50 split. In the last 20 years it's averaged 23.7%, so your $10k turns to $28963 in 5 years. (In the linked backtest below I simulated UPRO/TMF with 3x leverage on SPY/TLT, because UPRO and TMF only go back to 2010.)

Of course, more leverage brings bigger gains AND bigger losses. The 3x basket took a 50% drawdown in 2008, vs. 18% for SPY/TLT. But it dug out of that hole in about a year, and then it was ahead of SPY/TLT and off to the races.

If you can read the market, you can move your 3x funds into SPY / TLT if things look dicey. When things settle down you can kick in the afterburners again.

Here's a backtest.

Naturally you won't turn $10k into $15 million with this. But let's be honest, most people don't turn $10k into $15 million with their businesses either. This approach returns less but with much higher probability of success. Do this with some of your funds to spin off grocery money or whatever, and put the rest into your moonshots.

Is there a recommended window for the "year". Like using the calendar year and resync to 50/50 in January?

 

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[garyfritz]

And what gives a positive this application? . Is that something like a trading terminal? I use the Forexchief Trading Terminal Trade. He works consistently

@Gorm are you asking me? The backtest I referenced is just a website that's useful for testing portfolios of funds or stocks. Follow that link and you can experiment on your own.

Is there a recommended window for the "year". Like using the calendar year and resync to 50/50 in January?

It's really not very sensitive. The difference between "rebalance once a year" and "rebalance every month" is only a few tenths of a %. Even not rebalancing at ALL won't make too much difference with SPY/TLT, but it makes a lot more difference with the higher returns of UPRO/TMF . SPY/TLT makes about 9.3% in the last 20 yrs with yearly rebalancing, vs. 8.6% without. UPRO/TMF makes 23.7% with annual rebalance, 13.8% without. Much bigger difference.

BTW I should point out that those backtests are probably optimistic. Stocks and bonds have had a great ride. But now stocks are heavily overvalued, and bonds are losing value as interest rates trend back up. So future SPY/TLT or UPRO/TMF results will probably be less than the results from the backtest.

 

[rhyeal]

I was thinking about this thread while working the other day and I had some insight.

Frankly, at $1,000, this is not enough money to invest in the stock market with the expectation that you will fundamentally change your life. There are two ways to get this sum of money into something that will change your life. One is taking increasingly large risks in the market and winning enough bets. Flipping a coin 30 times in a row with a sufficiently large group of people will always have one person who gets 30 heads or 30 tails. Statistically, it won't be you.

If I had $1,000 and was starting from nothing, I'd do the following:

• Find a market that I wanted to become an expert in
• Research on Google to find the top experts in that field
• Find a book written by one of the experts that includes citations and sources
• Order that book and a box of highlighters
• Read the book, highlighting the parts that made me go "oh, that's good knowledge"
• Find the sources the author cites, order those books (this is a form of "snowball sampling").
• Repeat this process until I've spent my $1,000 on books. At $25 per book, that's 40 books I've read from industry experts and highlighted the key points of knowledge.
  • In academic worlds, this is called doing a "Literature Review"
• Take all 40 books and flip through them to find the highlighted parts
• Find the common themes among all the books
  • This is called doing "qualitative research" and "thematic coding"
• Make a course teaching the fundamentals of the industry based on what I learned
• Market the course through any channels I could for free since I've spent my budget on learning the industry and becoming an expert. Find any method I could to get my ideas out there since I am now a "world leading expert" in this industry.

I can't guarantee this will work for everyone, but this is essentially the exact same process that earns someone their PhD by doing a "qualitative dissertation". If it gets folks a "Dr." in front of their name, you can follow the same process to get the same knowledge to teach others for a fraction of the price!