1000 Ways To Make 1000 Minaker Pdf
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What better way is there to learn something than from a person who's already very good at it?
And when it comes to investing, what better investor is there to learn from than Warren Buffett?
But of course, you may be wondering: How did he get so good in the first place?
Of mentors and men
Most people -- OK, most investing geeks -- know that Buffett was an ardent devotee of deep value investor Benjamin Graham, who taught him to look for dollar bills selling for 50 cents. Buffett's investing later evolved through his association with Charlie Munger, and now he prefers a great company at a good price over a good company at a great price.
But before all of that, when he was still quite young, he learned the fundamental lessons of his investing life through a book titled A Thousand Ways to Make $1,000.
Multiply, multiply, multiply
That book gave Buffett his legendary appreciation for compounding -- the way time plus investment makes money multiply.
Check out how $1,000 will grow over long periods, at the market's historic average growth rate of 10%:
Period | Result |
---|---|
10 years | $2,600 |
20 years | $6,700 |
30 years | Inazuma 11 go episode 1. Best torrent sites 2018. $17,400 |
40 years | $45,300 |
50 years | $117,400 |
60 years | $304,500 |
70 years | $789,700 |
That 10% return, over 70 years, really adds up. Investing matters.
Start yesterday
The authors of that book also urged readers to not put off making money -- because the annualized return is only one piece of the puzzle. How long the money has to compound is the other.
Just look at that table again. The same $1,000 compounding for 60 years will add up to less than half of that amount if it compounds for 70 years.
If you start investing early, it can be hard to not end up rich. Buffett was a pre-teen when he read about compounding -- too bad for us that we often grasp its power when we're in our 30s or 40s or later.
So what?
Given that you probably are in your 30s or 40s or later (most investors are), what good does all of this advice do?
If you're 10 or 20 or 30 years from retirement and just now starting to invest, you might not end up with millions. But that doesn't mean you shouldn't start now. Even if you just invest in a broad-market index fund and earn the historical average of 10% per year, that rate of return will turn a nest egg of $100,000 into more than $670,000 in 20 years. If you add money every year, the figure will become much, much greater.
And sure, that 10% figure might seem, um, generous given our current economy, but remember that it's an average over many, many years, including those of the Great Depression. When it comes to investing -- and compounding -- you want to think in terms of decades, not years.
Great companies
But how do you get those 10% returns? You can invest in a broad-market index fund, of course. For a chance at market-beating returns, however, you'll need to add some individual companies to your mix.
Buffett looks for companies generating growing streams of money. You can screen for the same thing to get a list of companies worth further research.
Here are some large-cap possibilities I got when I screened for returns on equity (ROE) of 20% or more, three-year revenue growth of 10% or more, and four- or five-star ratings in our CAPS community -- all indications that a company is worth a second glance.
Company | CAPS Stars (Out of 5) | Return on Equity | 3-Year Revenue Growth |
---|---|---|---|
Transocean | ***** | 29% | 64% |
PotashCorp | **** | 66% | 37% |
Mosaic | **** | 45% | 31% |
BP | ***** | 23% | 15% |
Coca-Cola | **** You were my everything youtube. | 28% | 11% |
Chevron | **** | 29% | 11% |
Cisco Systems | **** | 22% | 15% |
Data: CAPS, Fool.com.
Good prices
You really don't need 1,000 ways to make $1,000. Time and the compounding it brings are plenty. They're the foundations of Buffett's investing prowess -- but it's also important to buy great companies at good prices.
That's what we look for at Motley Fool Inside Value. Like Buffett, we're on the hunt for dollar bills selling for 50 cents -- and our current depressed market is offering a lot of bargains these days. You can even take a free, 30-day guest pass and see all of our current and former recommendations. Click here to get started -- there's no obligation to subscribe.
Already subscribe to Inside Value? Log in at the top of this page.
Longtime Fool contributor Selena Maranjian owns shares of Coca-Cola. Coca-Cola is a Motley Fool Inside Value selection. The Motley Fool isFools writing for Fools.