May 06 2008
low tax mutual funds
» Escrito en Business Tips por writer3 a las 13:49
low tax mutual funds
The stock market is going through a cycle right now that could be a bit unsettling. In fact if you were to buy into the media, there’s a lot of gloom and doom. And yet . . .
I have taught for years that everyone should earn 15% or more average annual return on all their investments, including real estate. Now, some people roll their eyes and say, “Impossible.”
Well… if it’s “impossible,” how have I been able to do just that for the past 50 years? YES, even with all the ups and downs of the stock market!
FIRST - I believed it was possible and I expected it to happen. Very powerful-one’s beliefs and expectations. What do you believe? What do you expect?
SECOND - Not many stocks have had 15% annual returns or higher. According to The Complete Investor, November 2007, the Small Stock Index has had returns of 15.6% for the past 81 years. The nice thing is you don’t need to know anything about investing other than to be able to write a check to the discount broker marked “Small Cap Fund.” That’s it. Very easy!
THIRD - You could build your wealth the old-fashioned way, purchase stock in the most profitable asset class in the past century-plain old timber. From 1973-2002, timber produced an average annual return of 15% (1973-1981 returns averaged 22%). The demand for lumber keeps rising while the supply holds steady. The best way to invest in timber is Plum Creek Timber, a REIT that invests solely in timberland. And currently it pays a dividend.
Yes, I have averaged 15% per year on all my investments for 50 years. Notice the word AVERAGE. One can have an average gain of 75% one year and have zero gain the next four years and the YEARLY AVERAGE would still be 15%. Do not be discouraged if some years your investments fall under 15%.
You do not have to be wealthy to learn how to invest and end up-as quickly as possible-a millionaire or multimillionaire. Invest $1 a week and increase it weekly as you become debt-free!
Warren Buffett is a very, very wealthy man-to put it mildly. One of his core beliefs is that “If a business does well, the stock eventually follows.” Almost 100% of his security investments were in stocks. Why? A major advantage is there are no taxes on stock appreciation until you sell.
Speaking of taxes. Did you know that mutual funds, which generally have higher commissions, you pay tax year after year-if you keep the mutual fund, if you sell it, or even if there is a loss. To me, that’s not logical.
So you may ask, “How can I earn 15% ongoing?”
Five tips for your financial success and your own wealth creation.
- Do not pay interest on anything except your interest-only home mortgage and other investments that become income tax deductible, thus giving you more cash to invest.
- No instant gratification. Everything you buy, except consumables such as food, you have to find a place to put it in your house, garage, or yard. You have to clean it and maintain it until it breaks and gets thrown out.
- Pay minimum income tax and invest the money for yourself.
- Raise financially independent children.
- Convert ordinary income (salary/wages) into securities and real estate. If self-employed, work out of your home and save taxes.
Here are a few of my favorite investments from the list in Chapter 12 of my book 80 Proven Ways to Become a Millionaire:
PLEASE NOTE-Rates shown are no guarantee of future performance. Stock Market, 11% for 71 years; Investment Company of America; 13.5% for 64 years; Lehman Brothers Brokerage (Top 10 uncommon stocks), 14% for 57 years; Small stock index, 15.7% for 50 years; S & P 500, 12.5% for 50 years; Acorn Fund (small companies), 16.3% for 33 years; CGM Capital Development, 17% for 30 years; Templeton Growth Fund, 15.1% for 30 years; Micro Cap Stock Index Fund, 13% for 80 years.
Each year, in the January 2 issue of The Wall Street Journal, or other major newspapers, you will find an annual report of all the 15,000 stocks and 14,000 mutual funds giving the total yield of each for the year. It is fascinating to see how many grew 100% the previous year. So be at ease, 15% is a reality for you.
Paul Damazo is the author of 80 Proven Ways to Become a Millionaire which is an Award-Winning Finalist in Personal Finance category of the National Best Books 2007 Awards by USA Book News. Included in it are Paul’s proven investment strategies that earned him an annual average return of 15% or more for the past 50 years. Flip to any easy-to-glean page and find neatly divided charts, actual results, and action lists that can be implemented today. It is a “brain dump” of what he taught for over 20 years at his Wealth Creation and Wealth Preservation seminars. He loves to help people, especially young people, to have a more rewarding, happy life as they make better financial decisions. He wants to improve the financial literacy of each person in this country. For great resources, visit his website: http://www.80ProvenWays.com
low tax mutual funds
