Rich Man, Poor Man

dowtheoryletters.com

4 pointsprakash3 comments

Where does the author find securities guaranteed to provide a 10% after-tax annual return for the next 47 years? I'm sure there must be some out there somewhere... after all, his entire model depends on such securities existing.

In all seriousness, compounding is great... IF you can reliably get good returns. These days, after taxes and inflation, you have to be very lucky to get 5%, never mind 10%.

Yeah, I was going to give the author a hard time, but the fundamental ideas aren't bad. Considering most people without training invest like drunken cowboy fighter pilots riding a skateboard backwards down a hill, being told to be ultra-conservative might push them from "totally asinine" to "moderately asinine" and thus is a good thing.

Index funds are probably the easiest way to stock your IRA these days. If you have larger money, real estate probably offers more flexibility with tax deductions on interest and 1031 exchange to defer capital gains from selling if you buy more property. But I'm not an ultra-savvy investor myself, and my IRA got obliterated with everyone else's last year. I reckon I'll sit on it for some decades and it'll be okay again.

Dude you should be Treasury Secretary. Good stuff.

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