Welcome to the beginning. We started this blog to show you how you can invest and save your money. There is a lot of fud out there from get rich quick schemes, to experts talking their book, to just plain ignorant comments causing people to invest in crap they don’t understand. It is our hope that we can cut through all of the bs and just discuss what works. This includes learning tried-and-true methods from successful investors and the latest understanding of the markets and investing techniques. Further, we wanted to provide some financial literacy training so that you can make your own success over time.
We are engineers by background, so we enjoy picking apart the data and finding the gems of knowledge contained within, to distill everything down to how it works. Engineers along with other practically minded people have one of the highest abilities as a group to grow large piles of wealth when adjusted for their lifetime earnings. Higher than, for example, doctors and lawyers who earn multiples more in salary. That’s not to say that all engineers do well – we have plenty of colleagues who don’t seem to have a clue about this stuff. Meanwhile, there are teachers, janitors, and plumbers who are able to amass multi-million dollar fortunes over their lifetimes using these principles that we will investigate. If people from such humble beginnings with average or even below average salaries can do it, you can too. The important thing is to maintain discipline and consistency in the application of wise investing practices.
We will start from index investing, but then show how you can take the best parts of index investing along with identifying great companies that are cash flow generating machines to essentially create your own shopping list. Companies from which you can purchase the best deals each month to add to your pile. This role-your-own indexing can be superior if you are willing to put in a bit more work to learn how the financials behind a company tell its investing story.
The nice part of this is that you can tune the method to your ability. Don’t have a clue? You can always index until you start to understand. Want to earn a better than average return and are willing to put in the work? We can go to developing our shopping list of outstanding companies and buy from that using the best principles that work. The best part is that most of you will be able to utilize these methods to earn an excess return if you are willing to maintain discipline and put in a bit of extra work. Even an extra 1% return over 30 years translates into a much larger pile of wealth if you are able to manage it. For example, if you earn 10% return over 30 years, and you end up with $1 million, you might have had $1.3 million had you earned 11% return instead. Quite a difference for such a small bump in return. That’s $300k that can be put to good use to send your sons and daughters to college, purchase your dream home, or live better in retirement. So, dear readers, let’s begin our journey to wealth together. In the next dozen or so posts we will lay out the foundational pieces for value investing and index investing using tried and true approaches. It is our hope that we can all learn from each other (us too!) and as a result we all benefit.
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