An economist is someone who didn't have enough personality to become an accountant.

Go to Jokes & Quotes page

Money is like manure. If you spread it around it does a lot of good. But if you pile it up in one place it stinks like hell. - Jr Murchison

Go to Jokes & Quotes page

Money and how to make $273,354 profit

Money and how to make $273,354 profit

Is it really that hard? After reading a recent article on a financial website where you could find out the secrets by paying a fee, I thought I would explain how easy it is to produce a return of $273,354. Is it really that hard that you need to pay someone? I don’t think so, as I previously wrote in “Do you need a Financial Planner or Guru”.

So I thought for about 5 minutes and used everything I’ve learnt over the last few years in the finance industry to devise a plan. It involved looking through my bookshelf to find an old book I have mentioned in a previous post. I flipped through a few pages of Top Stocks 2000 Edition by Martin Roth and thoughts flowed back to me quickly. Sometimes you can complicate your life when really the simplest things are staring you in the face.

I did something that is sometimes over complicated, procrastinated about and intellectualized to death. It’s called a savings plan that can be implemented easily, with no fuss and left for 14 years until it reaches its conclusion.

Imagine planting a tree such as an olive tree, which takes many years of care and watering before it even begins to bear any fruit. Many people wouldn’t think twice about planting such a tree but they would find it a lot more difficult to put their money away for the same amount of time.

I decided to pick 10 stock from Top Stock’s 2000 edition and then look up the present prices. To make the maths easy I decided to buy $10,000 worth of each share, so $100,000, in total. I put them in a spreadsheet (see below) that included columns for the initial price, number of stocks bought and the present day value of those stocks if they’d been held for the total 14 years.

 It’s not that hard !!

It’s not rocket science and easy to do but why don’t more people do this even on a smaller scale? The reason is psychology – people have to be very disciplined to hold onto an asset like these for a long time. The best thing you could do is probably get someone else to do this for you so it isn’t on your mind. Real estate is very popular in Australia and it’s because people feel they are investing  in their own home. Thus they find it easier to hold onto such an asset for an extended period of time. If only everyone had the same mindset when it comes to other types of paper assets.

Random share picks from Top Stocks 2000

2000 price 10k/price=no.of shares 2014 price 100K 10k per share
Comm.Bank 24.29 412 81.40 33,512 235%
Rio Tinto 26.90 372 63.05 23,439 134%
GUD Holdings 1.57 6,369 6.87 43,758 338%
CSL 17.70 565 68.36 38,621 286%
Maxitrans 0.30 33,333 1.07 35,500 255%
Monadelpheous 3.30 3,030 16.45 49,848 398%
Wesfarmers 13.49 741 43.12 31,964 220%
Westpac Bank 9.44 1,059 33.99 36,006 260%
Amcor 7.69 1,300 10.29 13,381 34%
Woolworths 5.38 1,859 36.22 67,323 573%
373,354 Prices 15 July2014

*Please note these figures don’t include any extra money or dividends added over the 14 years *

 “Our favourite time for holding is forever.”

Of course it’s not quite as easy as I’ve tried to make out because during this time was the Global Financial Crisis which affected all the shares concerned. I haven’t researched what happened at the time to all the individual shares but it would have been a difficult time to hold onto them through the turbulent times of the GFC. I can tell you though that all of these shares obviously survived the GFC  and have gone on provide good profits. This is where it’s important to have discipline. Warren Buffett, the worlds most famous investor says  “Our favourite time for holding is forever.”

It’s a difficult task to be so disciplined but not impossible. If it’s your future or your families future at stake I’m sure you can do it.

Let’s try it ourselves! I’ll use these exact same shares and follow them for an extended amount of time. Every month I’ll write about their progress and how the account is doing. I’ll start next week, so look forward to ongoing monitoring of this share portfolio.

Hope you enjoyed this post and remember it’s Your Savings!!

If you liked this post please feel free to add your name to the mailing list below.

Get free updates
If you like this - please join us

Add comment