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The Personal Finance Podcast

10 Ways to Increase Investment Returns (Do These Now!)

 In this episode of the Personal Finance Podcast, we’re gonna talk about 10 ways you can increase your investment returns.

In this episode of the Personal Finance Podcast, we're gonna talk about 10 ways you can increase your investment returns.

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Transcript:

 

On this episode of the Personal Finance Podcast, we're gonna talk about 10 ways you can increase your investment returns.

What's up everybody, and welcome to the Personal Finance Podcast. I'm your host Andrew, founder of Master money.co. And today on the Personal Finance podcast, we're gonna be talking about 10 different ways. That you can use to increase your investment returns. If you guys have any questions, make sure you hit us up on Instagram or TikTok at Master Money Co.

And follow us on Spotify, apple Podcast or whatever podcast player you love listening to this podcast tune. If you wanna help out the show, leave a five star rating and review on Apple Podcasts or Spotify. And then don't forget to check us out on YouTube as. Personal Finance podcast on YouTube and Master money on YouTube as well.

So today I'm really excited about this episode cuz we're gonna be talking about ways to increase your investment returns. And for most people, if you invest in the market and or if you invest in businesses or real estate, you can utilize some of these ways to. Increase your return. So I want you to listen through this list and see which one of these do you need to add to your investment plan.

Cause it's really important to have an investment plan put into place and making sure that you are following that investment plan, which we will get into in this episode as well. So as we go through this list, make sure you're thinking through, hey, Which one of these pertains to me? How can I utilize these to increase my investment returns?

Because these small return increases can make a massive difference when it comes to the long run of your investment returns, especially if you're in your twenties or your thirties. You have so much time for compound interest to be working for you that if you make these small adjustments, now let's say you get a half percent to a 1% rate of return differential between those two things, that could be hundreds of thousands of dollars that you have in your retirement account by the time you hit retirement age and or if you're looking to become financially independent.

Need these additional things to make sure that you have more money and that your portfolio is growing over time. So it's very important to understand how some of these things work so that you can make these adjustments. Now, the sooner you make these adjustments, the better off you will be in the long run when it comes to your investing career.

So making sure that you think through these, which ones pertain to you, is gonna be incredibly powerful. So without further ado, if that's something you're into, let's get into it. Number one is to swap out high fee invest. For low-cost investments. Now, if you've listened to this podcast for any period of time whatsoever, you know that your boy loves low-cost investments.

In fact, that is the way that I invest for the long term. I love low cost investments when it comes to investing in stocks. I love it when it comes up to investing in real estate. I love it when it comes to buying businesses. I wanna make sure that my investments have minimal to zero fees whatsoever. Why?

Because those fees, I want those to compound and I want them to spit off more cash for me in my future. I do not wanna give my fees away to somebody else because it's a six to seven figure decision. If you haven't heard our episode, or we talk about the million dollar money decisions you need to focus on in that episode, we explain how important it is to reduce your fees and if you are paying an advisor, 1%, two.

Just to manage your portfolio. This could be something that could be detrimental to your investment returns over time. Sure, you're gonna have great investment returns, but you could be having so much more, and we'll give a couple of examples here as well. Now, the first thing you wanna look at is are you in actively managed funds?

Now, what is an actively managed fund? This is something like a mutual fund and a lot of 401k providers will put you into an actively managed fund automatically. So you have to look at the fees of your actively managed funds. Now, how do you find that? You can look at what it's called, the expense ratio.

So one of my favorite tools to do this is if you go to morningstar.com, when you go to Morningstar, you can plug in whatever the ticker symbol is for the mutual fund that you own, and you will see what is called the expense ratio right there. If that expense ratio is above a half a. Then you definitely need to reconsider what you are looking at and you need to do some research on some other investments because actively managed funds are problematic in a number of different ways.

One of which is they never beat the market. So if you're looking at the s and p 500, actively managed funds do not beat the market over the long term. His. Historically, in addition, the second reason is that they trade in and out of stocks much more, meaning that their turnover ratio is higher. Now, what is the turnover ratio?

That means they are buying and selling a ton of different securities. Well, when they do this, when they buy and sell a ton of different securities, what is happening here is that you are gonna be paying more taxes come taxe times on your investment returns. Whereas index funds and ETFs have much lower turnover ratios.

Now, how do you find that turnover ratio? You can Google the ticker symbol and say, Hey. What is the turnover ratio for whatever the tick or simple is? It will come up and it'll show you that, but this is a number a lot of people don't talk about with that. Turnover ratio does have tax implications, so you wanna make sure you reduce those fees when it comes to that turnover ratio.

Number three is that actively managed funds do have much higher fees. Those fees are something that you wanna make sure that you are reducing, keeping those. Lowe, what are those fees going to? They're going to the fund manager who has a entire team looking at these securities, which is not beating the market.

So none of it truly benefits you. The only person those fees benefit is the fund manager and the company you're paying those fees to. So look at your mutual funds. Look what's in your 401k. Look what's in your Roth ira. If it is something with a high expense ratio, you want to reconsider. We have a bunch of episodes talking about index funds and ETFs that you can check out where you can look at this.

Now, this is the difference between an actively managed fund, which is what a mutual fund is, fund managers buying and selling in a passively managed fund. What is a passively managed fund? This is ETFs where all they do is they just mirror an index. Say you buy a NASDAQ 100 index fund, all it's gonna do.

Follow the NASDAQ 100 and it's gonna buy the 100 investments inside of that NASDAQ 100. It's self cleansing. There's a ton of different benefits that happen when you buy passive investments. That's why we created an entire course called Index Fund Pro, teaching you how to passively invest because it is the way I invest my own money.

So we talk and walk through that. In that course. Now, here's some examples on why these fees matter so much. Let's say for example, you had a million dollar portfolio and you had it in a passively managed fund or a portfolio that is all passively managed with a 0.1% expense ratio. That's actually a higher expense ratio than a lot of them.

For example, index funds and ETFs usually have 0.03% or 0.04. Three basis points, four basis points. What I'm talking about here is about 10 basis points, 0.1%, so I'm going on the higher end. And with that a million dollar portfolio would cost you $1,000 per year with your investments. But let's say you had an actively managed portfolio, meaning a mutual fund with 1.2% expense ratio.

If you had a 1.2% expense ratio, you'd be paying $12,000 per year on a $1 million portfolio. You'd be paying $11,000 more per year on that portfolio. That's not the only cost. Now, imagine this over a long timeframe. Let's say you had 30 years of a million dollar portfolio. Obviously most people don't, but let's say you had 30 years of a million dollar portfolio, right?

That means that $11,000 cannot be compounding for you towards your future. This is the opportunity cost that you always have to be looking at when it comes to investment fees. So with that $11,000 is missing out on compounding yearly every 10 years. That means you're missing out on contributing $111,000, which is compounding over time.

If you look at that over the course of 30 years, it is millions of dollars, millions of dollars, even if you hit retirement. At 60 and you have 30 years of retirement living all the way up till you're 90 years old, that is going to be millions of dollars that you could have in your pocket or compounded based on opportunity costs.

This is the problem with investment fees. This is why it is the biggest decision that you have to make when it comes to your investment outside of asset allocation, because if you do not. You are making a million dollar decision. So people who focus on their $3 lattes every single day and don't focus on the things like this are really missing out on what truly matters with your money.

Focus on what matters and don't focus on the things that really don't matter. Focus on the big problems. Now, what to invest in, if you want to get out of actively managed funds to passively managed funds would be index funds, ETFs, cash flowing assets, things like real. Businesses, maybe even niche websites.

There's a bunch of different ways that you can invest your dollars. I like index funds and ETFs for most people who are starting out, but you can look into your research to see which one might suit your needs best. Number two, this is a big one. Avoid strategies that are not proven. So some of those best decisions that you can make are the ones when you decide not to do something.

So here's a bunch of losing strategies that I want you to think through and see if you've ever done these. Now, there's a couple that I've done that. I'll give you a couple of stories as. So trying to pick winning stocks. So for a long time before I started investing in index funds and ETFs, I would try to pick the winning stocks, and I would go out there and I would try to pick individual stocks.

Well, if you've heard an episode with Brian Aldi, who does pick individual stocks, he says 99% of investors should not pick individual stocks. Warren Buffet himself, you've heard me talk about this all the time. The greatest investor of all time says Most investors should not be picking individual stocks.

They should be investing in index funds and et. Why? The reason for this is we are not good at choosing stocks. Individuals are not good at choosing stocks for a number of reasons, one of which emotions come into play, another of which is we don't have a crystal ball. We don't know what's going to happen in the future.

Third is if you are gonna pick individual stocks, you need to be doing a ton of research, including. Reading hundreds of pages a day, you need to dive into 10 K reports. If you're investing in individual stocks and you don't know what a 10 K is, and that's the first problem you have right there. But you need to be diving into quarterly reports.

You need to be listening to earnings calls. You need to understand what's going on with that company because you are buying a business. And when you buy a business, you have to know everything about that company. So investing in individual stocks is very difficult. Now, my best performing asset over the last 10 years is an individual stock.

I bought Apple Stock years and years and years ago. It is my best performing stock of all time. And I did a chart on the Master Money Newsletter where I showed you what the difference between buying an s and p 500 index. And Apple stock was since 2005, and since 2005, it was something like if you put a thousand dollars into Apple stock, it grew to $112,000.

If you put a thousand dollars into the s and p 500, it grew to like $4,500, but it doesn't matter because we cannot know what the next Apple stock is. The reason why I bought Apple stock was because I realized very early on that everybody's addicted to their phones. They're looking at their phone, they're creating all these different products.

They have an economic moat around their products, meaning that it's really hard to compete with Apple. There's a bunch of different things that are in play, but still, I got lucky. And so we don't know what the next Apple stock would be. So within this, we need to understand that we don't have a crystal ball.

We don't know what's gonna happen in the future. So if you can't beat the market, become the market. Number two is buying penny stocks. That's another losing strategy. If you don't know what a penny stock is, that's any stock that's priced below $5. So early on in my invested career, when I was a teenager, I bought penny stocks.

And when I bought penny stocks, I thought I was gonna hit it big and maybe buy something for 20 cents. And the reason why I did this is cause I realized I could afford a lot of shares. And so I used to subscribe to a bunch of penny stock newsletters, and this is before newsletters became really, really popular.

And so I got this one newsletter to my email. And when this email came in, I looked at this newsletter and it said, here's the penny stock you need to buy, and it was some company I never heard of. I didn't even think twice. I put all of my money into this penny stock. Now I was like 14, 15, maybe 16, somewhere in that range.

So all of my money was like a thousand dollars. I had to work really hard when I was young for my money, so I took all my money. All the chips into this one stock in one day. I lost my entire net worth in one day from buying this penny stock, and I learned a very valuable lesson that day. And it's that do not chase the fads.

Do not listen to people on what the media is saying, all this different stuff instead. You gotta learn what you're doing and you gotta get educated before you start doing this stuff. And that's very obvious now. But if you do not fully understand what you're investing in, then you are much better off taking the time to invest in yourself, doing the research so that you can understand what is going on.

Number three is day trading. So most people don't know this. I don't even know if I've ever talked about this in the podcast, but for about a year, I was a professional day. And when I did this, I realized something very, very quickly. When it comes to day trading, most people know when to get in when it comes to day trading because there's all these different models that you can put into play to figure out when to get in.

Most day traders do not know when to get out. So what happens here? Is that day traders will start to play with large amounts of money. And when they swing big, they have these large profits, but they also have to be able to stomach major losses. But at the same time, nobody has a crystal ball. So for day trading to actually work, you have to know when to get out.

Nobody knows when to get out because nobody knows what's going to happen in the future. There's a bunch of different indicators when it comes to day trading, including economic factors that can completely tank a stock that you just. Day trading is another strategy that I've never seen anybody be able to tell me.

When you can get out and if professional money managers on Wall Street 90% of the time cannot beat the s and p 500, why do we as individual investors who want to day trade think we can beat the market? Number four. Another losing strategy is buying investments based on dividend yield. So some people will go in there and they'll say, what's the investment with the highest dividend?

And they'll look at reach. They'll look at high risk dividend stocks. This is a mistake. Instead, you need to be looking at the underlying company and understanding how it works. If you're gonna be a dividend stock investor, Number five is putting all your eggs into assets with non intrinsic values. Now, you know, me and my beef with gold and all these other things as well.

They do not have intrinsic value, meaning that they do not have cash backing them up. You have to have an intrinsic value on your investment, meaning a p and l statement or something that tells me why this asset is worth what it is. Otherwise it's only worth what somebody else says it's worth and what somebody else is willing to pay for.

Are you willing to take the. To figure out what somebody else is willing to pay for in the future. Because if you can't predict the future, then how do you know what somebody else is going to be willing to pay for that asset? Now, people will say gold never goes down. Gold has really just stayed flat for the majority of the last few decades.

And the same thing for crypto. It is the most highly volatile thing that you've ever seen in your entire life. And obviously people who put all their chips in crypto, especially when Bitcoin was around 60 oh, Who knows what's gonna happen in the future. Bitcoin could go to a million. Bitcoin could go to a thousand.

We have no idea what's going to happen. And so putting all of your eggs in those baskets is something you definitely don't wanna do. That's a losing strategy that can really cost you a lot of money if you do that instead, diversify your investments. If you want to invest in things that have zero intrinsic value, then look at putting maybe 5% of your portfolio, 10% max into things like.

And then the big one, number six, a losing strategy is investing in things you don't understand if you do not understand your investments, if you don't understand how it works. This includes real estate. This includes businesses. This even includes index funds and ETFs, which is why we created Index Fund Pro.

So you understood how this works. You gotta make sure that you understand how these investment works before you invest in them. The third way to increase your investment returns is to use tax advantage accounts. So taxes can eat away into your investment returns as well. So making sure that you use tax advantage accounts is going to be incredibly important for most people.

Now, there's a bunch of them that we absolutely love here and we talk about them in order when it comes to the Stairway to Wealth. If you've never heard the Stairway to Wealth, we have an episode called the Stairway to Wealth 2.0, and we have a 3.0 that we're working on that's coming out soon too.

That's going to show you the order to invest your dollars, the order to actually work through your. And so when we talk about this, we wanna make sure that we are taking advantage of tax advantage accounts. Why? Because this is another six figure decision. It'll make a six figure difference for you if you take advantage of some of these tax advantage accounts.

The first one I love is the hsa. The HSA has a. It actually stands for health savings account, but we call it the super retirement account here. Why? Because tax-free money goes in, the money can be invested and grows tax-free, and you could pull the money out tax-free with a qualified medical expense, but there is no timeline as to when you have to pull that qualified medical expense out.

So you could have all these expenses that have built up over the course of 30 years. You let that thing. And over the course of 30 years, you have a slew of qualified medical expenses where now you can start pulling money out, and as you get older, you're gonna have more medical expenses. It's just the fact of life, it's how life works.

And so over time, you can use this H S A as an amazing retirement account because it has triple tax benefits, meaning you're sheltering a large portion of your income from taxes. Number two is the Roth I r. And the Roth four Ohk. Now the Roth 401k is one of my favorite accounts out there. If your employer offers a Roth four oh , I would definitely look into that and do yours research on that.

It is one of my favorite accounts. It is the one that I max out first. There's also the Roth ira, which is the one I used to max out first, but now that I have a Roth four oh , that's the one I max out. So if your employer doesn't offer a Roth four ohk, Or if you're self-employed, you can do a solo Roth 401k, which is what I do.

Then look into the Roth ira. Now, these accounts are incredibly beneficial because of tax-free growth, so you're gonna put money that you've already been taxed into these accounts, meaning money that already came from your paycheck, you get your paycheck, that money's already been taxed. You take that money, you put it into the Roth IRA or the Roth 401k, that money grows tax.

Now if you don't understand why this is so powerful, let's say for example, you maxed out a Roth IRA over the course of 30 years and you have $1.1 million in that Roth IRA over the course of 30 years, if you've got a 10% rate of return, well if you did this $850,000 of that money that you invested at a 10% rate of return, Would be the growth of your money, and if that's the growth of your money.

The amazing part here is that that is $850,000 that you got completely tax free. You can see how this really increases your investment returns if you are not paying taxes on $850,000 inside of your investment portfolio. So this is an amazing way for you to really grow that money. Now, why do I like the Roth 401k?

Because you can get $22,500 per year into that account, and if you're over the age of 50, you can get even more in there up to $30,000 into that account. That is extremely powerful for you to use when it comes to growing your wealth over time. Now the third one is the four. Oh, the ira, the 4 0 3 , the 4 57.

All of these across the board. What I would consider to be the third bucket, which is pre-tax. So you're gonna put money in pre-tax, meaning that a lot of times when it comes to your 401k, your money goes in outta your paycheck. If you haven't been taxed on that money yet, then your money grows, and then when you pull the money out, you get taxed on the money, but you're not paying taxes on this money, meaning that you are putting more money into that account.

Before it's taxed and then you get taxed on the back end, depending on what your tax rate is in the future, this is another powerful way to increase your returns. Number four is using tax efficient investments. Now, what are tax efficient investments? There are two that I absolutely love, one of which is your business.

If you have a business, this is a tax efficient investment. Investing your dollars back into your business is a very wise decision if it is a income producing activity, and number two is real. Now there's a reason why a lot of millionaires and billionaires invest in real estate because there is a ton of different tax benefits there.

Now, when it comes to real estate, you can write off depreciation. There's the 10 31 exchange has a ton of different tax benefits, where if you buy a like kind property within a certain amount of days, you don't have to pay taxes on that money. You can roll it over into the next property. There are write-offs on all sorts of different things when it comes to real estate like property taxe.

Property insurance, mortgage interest, property management fees, anything associated with your property, you can do tax write-offs on that. So this is a tax efficient investment. The same thing with your businesses. So with businesses, you could do all sorts of different things that have creative accounting.

You could do write-offs. There's a bunch of different various things that you can do. And if you have a business or you have a real estate business, I would definitely have a tax strategist as part of my team. Why? Because a tax strategist is going to give. Very specific instructions based on your situation that can save you thousands and thousands and thousands of dollars every year in taxes.

In Fast. Last year, mine saved me about $50,000 in taxes, so making sure that you have a tax strategist in play is going to be one of the best things that you can do. Having that tax strategist is really gonna help you, which is an accountant or a cpa, making sure you have somebody on your team that's gonna be able to help you do that.

All right, so number five is to make sure you invest your money in other tax efficient ways by using the correct account for the correct investment. So what I mean by this is that you want to invest. Tax efficiently. Now, what we're gonna talk about here is dividends, because a lot of people don't understand the implications of what happens when it comes to dividends.

So there are two different types of dividends, one of which is ordinary dividends. Now, ordinary dividends are typically paid out of a company's profits and are taxed at your regular income tax rate. They're reliable income, but they come with a much higher tax bill. So anything with ordinary dividends, you wanna put this into a tax e.

Account because they are taxed at your income tax rate. Now, the difference between your income tax and the amount of tax that you pay when it comes to your investments is that your income tax is way higher typically than when it comes to your investments. Now there's another type of dividend called qualified dividends, and these are tax at the lower capital gains tax rate or what your investments are tax on as your capital gains tax rate.

And this is usually lower than your income. Now this can be a great way to get tax advantage income, but it does come with requirements. So to be considered a qualified dividend, an investment must meet a certain criteria. So it must be held for a certain amount of time and must be a qualified stock. So the best way to check on this is to check with your own cpa, but making sure that if you have investments that have ordinary dividend.

They have ordinary difference. This is like dividend stocks. This is REITs. These types of things are not tax efficient to having a taxable brokerage account. You need to make sure, can I put it into something like a Roth ira? Because this is going to allow you to get that tax efficiency. Once you start to get some of these dividends, especially if you have a very large portfolio, it's really important to make sure that you can get as much as possible into those Roths.

So dividend investors, if you are a dividend investor, maxing out the Roth first is gonna be important for you because when you do. Didn't get tax-free income from those dividend stocks. This is a very powerful way to invest with your dividends, is that you get that tax-free income. So if you are a dividend investor, I would definitely make sure that I am looking at that.

So to recap this, if this is confusing for you, qualified dividends are taxed advantage, but have very specific requirements and ordinary dividends have a much higher tax bill because they are taxed close. They're taxed at your income. Whereas qualified dividends are taxed at your capital gains tax rate, which is much lower.

Now, how do you invest tax efficiently stocks, index funds, ETFs, all various tax efficient investments if you're not taking those dividends and living on those dividends. So that's another reason why you wanna make sure that you take advantage of some of these taxed advantaged accounts. Number six is to invest long term.

So here is a really, really powerful stat that I want you to understand. If you look at the s and p 500 over the course of any 20 year timeframe, and you can look at this from 1926, all the way up to 2021 is the day that I'm looking at now, and if you're watching on YouTube, we will throw this on the screen so that you can see this chart.

Over the course of one month, on average, the positive returns are 63.1% over the course of one year, 75.7% over the course of five years. 88% of the time you have positive returns over the course of seven years, 94.9% of the time you have positive returns. Over the course of 15 years, it really starts to increase 99.8% and over the course of 20 years, 100% of the time.

If you invested in the s and p 500, you have 100% of the time a positive. That is an amazingly reassuring stat. Obviously, historic returns are not indicative of future results, but at the same time, 100% of the time for the last almost 100 years, we'd have positive returns. If you keep your money invested for 20 years or longer.

What does that tell you? That tells you our minimum timeframe to invest our dollars if we're gonna buy anything, stocks, bonds, whatever it is should be to hold that investment for at least 20 years. Warren Buffet talks about this all the time. If you're not willing to hold an investment for 10 years, don't even think about holding it for 10 minutes.

This is why long-term investing always wins. And you know, here at the Personal Finance Podcast, at Master Money, we are long-term investors, meaning that we let to buy and hold for the long term cuz we don't have crystal balls. We don't know what's gonna happen in the market. And in addition, you need to stay invested because if you miss some of the best days, you are literally losing out on a ton of different gains.

In fact, Historically, a large share of the stock market's gains are usually only on a couple of days, and if you miss those days, your returns go way, way down. So if you are fully invested, here's the return to the s and p if you stay fully invested and if you miss the best days. Okay, so if you're fully invested, the s and p 500 returns from.

1990 to 2021 have been 10.76%. If you missed the 10 best days invested. So if you didn't stay invested and you missed those 10 best days, it drops to 8.09%. If you missed the 20 best days, it drops to 6.32%. If you missed the 30 best days, 4.83. So over the course of 31 years, if you missed the 30 best days, your returns dropped from 7.76% to 4.83%.

If you missed the 40 best days, 3.5% is your returns. 50 best days, 2.2% and 1.12%. If you missed the 60 best days, you could have almost a 0% rate of return if you missed the 60 best days, 1.12%. That is absolutely amazing and shows you why you have to stay invested if you get in and out of these. You are really going to lose out on some of the best returns of your life because you don't know when the best days are gonna be.

Nobody knows when the best days are gonna be. You have to stay invested. That is one of the biggest things that you can do to increase your investment returns. You can see it right here, is you have to stay invested for the long term. Number seven is to dial up and increase your stock exposure. So we've talked about this a number of times before.

When it comes to the difference between stocks and bonds, we know that stocks have historically outperformed bonds. So Vanguard did research on the average annual return in the worst single year of various stock to bond allocations from 1926 to 2021. So let's say for example, we want 100%. And that we're gonna assume that that's the riskiest asset that we can have the average annual return.

If you had 100% stocks over that timeframe, be 12.3%, but in the worst year, you'd have lost 43.1% of your portfolio. So this means if you had a hundred thousand dollars in your portfolio on that 43% loss, you would've lost $43,000 in value. And for a lot of people, this can be very hard to swallow.

Motions come into play, they're losing half of their portfolio of value. They're freaking out. They don't know what to. You may even pull some money out, and that'd be the wrong decision in most situations. But let's say for example, we go a hundred percent bonds instead, in the worst year, you would've lost 8.1% of your portfolio, and this is why we talk about bonds are less volatile, which would be much better than that 43% loss.

However, on average, the annual return is only 6.3%, so half of what we would've gotten with the 100% stock portfolio over that time, And we would lose less risk with a hundred percent bonds. Now here's the thing. You're gonna get half of the rate of return when it comes to bonds over that timeframe.

Historically, we know bonds underperformed stocks, stocks will get 12.3%. Bonds got 6.3%. This is a massive difference between the two. Imagine if you had a million dollar portfolio, but you could have a $2 million portfolio if you just rode out the wave. And that's exactly how this. Now, a lot of people think bonds are safer, but I'm gonna show you something because Javier Estrada tested out a bunch of different portfolios and what he looked at was the stock to bond split.

So if you had a hundred percent stock portfolio, he wanted to look at what is the fail proof rate of these portfolios. It's very interesting. A hundred percent portfolio has a 3.5% failure rate, and he looked at this from 1926 all the way up to 2014. So a hundred percent stock portfolio. Had a 3.5% failure rate.

A 90 10 portfolio actually went down to 2.3%, adding some of those bonds in there. The 90 10 portfolio as the Warren Buffet portfolio, an 80 20 portfolio, 2.3%, so the Warren Buffet portfolio and the 80 20 portfolio had the same exact failure rate, but the Warren Buffet portfolio would outperform that other portfolio 1.2% with a 70 30 portfolio and zero.

For a 60 40 portfolio. Now, does this mean a 64 portfolio is the one you should look at? No, because a, something like a Warren Buffet portfolio is gonna highly outperform that 60 40 portfolio. What about a 50 50 portfolio? 1.2%, 50% stocks, 50% bonds. 40, 63 0.5%, meaning 40% stocks, 60% bonds, and this is crazy.

30% stocks and 70% bonds, meaning this safer bet, which is 70% bonds had a 12.8% failure rate, meaning you fail more if you have a higher weight in bonds than you do stocks. This is a massive revelation for a lot of people because a lot of times they can be when it comes to riding out the waves, but for a fail-proof portfolio, Having the majority in bonds instead of stocks based on the results from this study show that it's not always the best option.

So making sure you're thinking about that is gonna be incredibly powerful. Number eight, tune out the experts. The number one thing I want you to learn is that you need to stop listening to C N B C. Stop listening to the news. Tune out all the portfolio experts, for example. Jim Kramer just recommended to invest in Silicon Valley Bank, and recently Silicon Valley Bank just had a bank run and went completely under.

If you listen to that expert, you would've $0 in investments if you invested in that stock portfolio. This is why you never wanna listen to experts. You wanna do only your own research, and if you don't know how to research, investing passively is the best option for most people, which is index funds, ETFs, those types of things.

Now, sure, if you want to watch experts for entertainment value, that's fine. But listening to experts, you wanna tune out all the additional noise. Number nine is rebalance regularly. So we're gonna have an episode talking about the difference between if you rebalance a portfolio and if you don't rebalance a portfolio.

But this is one option that if you do enjoy rebalancing your portfolio, you can definitely look at rebalancing regularly and see what the return differential is. So if you don't know what rebalancing your portfolio, here's what it is. So if you re. All you're doing is trying to get your portfolio back to the original level of diversification.

So if you plan on having 60% of your portfolio in stocks and 30% in bonds and 10% in cash, and your stock allocation has grown way above 60%, then what you do is you sell a portion at stock allocation and reallocate those dollars towards your ideal portfolio range. So if your bonds were like 20%, your stocks went up to 70.

Then you'd sell off 10% of your stocks and put them back in a bond. So your portfolio is rebalanced. Now, the reason why this is helpful in some situations is that when the market goes down, say for example, that your stock allocation has fallen 40%, like we were just talking about 43% on the worst year due to a declining market, and you rebalance to increased position, you are buying no stock shares at a lower price, meaning you're buying back into stocks at a much lower price, which we all know buy low, sell high, so that your returns could be higher if you rebalance regular.

But the opposite is also true if you're rebalancing and you just keep funneling money back into bonds, and bonds are underperforming and they don't perform as high as stocks do, and you're just taking money in, rebalancing back into stocks. So you have to consider the options here and what type of portfolio you have.

So what I would do, Is look at my asset allocation and I would say, what do I need to do with this specific ALI asset allocation? And historically, what has this done over time? If I actually rebalance this or if I just let it go and do not rebalance what would happen? And I would look at both different models to see if you wanna rebalance.

We'll talk about that in that episode coming up as well. Number 10, it's to learn how to manage your emotions. So, you know, we've talked about this, a number of different. You need to manage your emotions in order to be a good investor. If the stock market goes down, you do not need to freak out and panic and sell.

Instead, you need to understand that this is a very normal event. Stocks go up, stocks go down, but staying invested and continuing to invest is what you want to do over time. Just keep buying, just keep telling yourself that. Just keep buying is the key when it comes to investing in the market, because when it goes down, stocks are on.

Whether it's stocks or stocks, I like to buy things on sale. So making sure that you look at this and say, Hey, this stock is on sale. I can buy more at a cheaper price so that I can increase the amount of returns that I have over time. So managing your emotions and not selling when the market goes down is incredibly important cuz you're gonna miss out on some of the best days if you start selling and buying into different stocks.

And we just talked about how you need to stay invested over the long. And then number 11 is a bonus one, so I'm gonna give you a bonus. I know we talked about only having 10, but number 11 is to create an investment plan. The reason why is when you have this investment plan in place, then you can just stick to this investment plan.

It takes your emotions out of the equation, and instead you have an investment plan. You know why you're doing what you're doing. You have it written down. It could be a one page thing, it could be a paragraph. It doesn't matter what it is, but you create that investment plan, you stick to it, your returns will increase because you will stay, invest.

Over the long run. We have an episode talking about how to create a Bulletproof investment plan. If you haven't heard that one, we'll link it up down the show notes as well so you can check that out and learn how to create that investment plan. Listen, I hope you guys enjoyed this episode on ways to increase your investment returns.

If you guys have any questions, make sure you hit me up on Instagram or TikTok, and don't forget to leave that five star rating and review if you're enjoying this episode, and share this with your family members and friends as well. If you're truly getting value at this. I cannot thank you guys enough for listening to this episode.

My goal is to bring you as much free value as I possibly can, and so we cannot thank you guys enough for listening to this. I want every single person listening to this podcast to become a multimillionaire and have the best investment returns they possibly can. Thank you again for listening to this episode, and we will see ya on the next episode.

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