How to Easily Outperform Investment Advisors & Robo Advisors

Описание: Unconventional Wisdom & Advice
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You can easily – yes, easily - outperform investment advisors and robo-advisors by learning the skill of long-term thinking. To show you how easily: in the last 10 years, “total return investing” has outperformed index investing, typical investment advisors, top robo-advisors, dividend investors and couch potato investors by 4.0%-7.6% per year.

Their short-term thinking puts them at a massive disadvantage. It leads them to focus on suboptimal investments and the wrong risk. This video shows you why and how you can easily outperform, and then tells you the four secrets to effective investing.

Investment advisors and robo-advisors tend to focus on what might happen next week or next year, which asset class will outperform, and reducing short-term volatility.

They try for “reasonable return with less risk”. You can easily outperform them by thinking long-term and focusing on the “maximum reliable long-term total return”. Investment advisors and robo-advisors give you “compliance advice” (advice that fits the rules of their compliance officer), even if that means it is not what is optimal for you.

It forces them to focus on short-term volatility, using conventional asset allocation by allocating portfolios between stocks, bonds and cash. This is the wrong risk. Short-term risk is ups and downs, but the market has always recovered with time.

Long-term risk is the risk that your investment returns are too low for you to achieve your desired retirement and life goals. This is the risk that affects your life. Conventional asset allocation is “de-worsification” - a mix of good and bad investments, or high-return and low-return investments. Conventional asset allocation and “de-worsification” is probably how most people should invest – but you can learn to think long-term and use effective asset allocation instead.

Having a higher risk tolerance is a skill you can learn. Just like you can learn to tolerate turbulence on airplanes, you can learn to tolerate it with investments.

Long-term thinkers focus on the maximum reliable long-term total return on their investments to achieve their life goals, rather than settling for the reasonable return with less risk of the short-term thinker’s approach. Thinking long-term is a skill you can learn.

The asset class with the highest reliable long-term return is the stock market. Over the long-term, stocks have outperformed bonds and cash 100% of the time.

Stocks are unpredictable short-term and even medium-term, but have been very reliable as long-term investments. 

The worst 25-year calendar return of the S&P 500 in the last 90 years is a strong 7.9% per year.

Based on 200 years of history, we can more accurately predict stock market returns after inflation 20 years from now than returns on bonds or cash.

This is a summary. To find out more and see the evidence, read the full article in the “Must Read” section.

   • How to Easily Outperform Investment Adviso...