stonebluff

Stocks for the Long Run?

I bought my first stock,GM, right after the Korean War started and the market tumbled. I made about $400 in a few months and I was hooked. I have always been a long term holder, but willing to sell if a stock looked hopeless or hopelessly overpriced. Taxes and commissions used to be so high that it was tough to make any money getting in and out. I kept at it through good times and bad, my goal being to get dividend income to the point that if I couldn't or didn't want to work, I could quit and still live decently. After raising 4 children and putting them through college (and private schools) I quit work and have lived off my dividend income for 24 years. My wife and I did not live extravagantly, but we lived well, and consistently saved. Watch income, with stocks as cheap as they now are, I expect that my income will actually rise for at least a while. The trick in this program is to keep income and capital rising at least at the rate of inflation. It can be done with common stocks (and an occasional convertible). As Scott Burns points out, mutual funds are a tough go because of costs, other peoples bad management, etc.

If you want to get rich, buy income producing real estate. Real estate has the advantage of leverage to jack up the returns. But you've got to be willing to deal with tenants and even occasionally get your hands dirty, or have a spouse who'll do those unpleasant tasks. I have a friend who followed that route for 45 years and he now spends half his time cruising with his girl friend. (he's a widower) and his son looks after his properties, about l50 now. Right now is probably a better time to buy residential real estate than stocks.