Building Long-Term Wealth

by FI Fighter on August 2, 2018

in Financial Independence, Thoughts

When I first started this blog, I was very much a student of the Buy and Hold Forever model for building long-term wealth. I mean, I was like a total sponge and used to try my best to soak up as much knowledge and information as I possibly could…

Not surprisingly, this led me down the path to investing heavily in:

  • Index funds.
  • Dividend stocks.
  • Class A rental properties.
  • Class C Turnkey Turkey rental properties.
  • Etc.

Later down the line, my spider senses were telling me that the aforementioned assets were entering “overpriced” territory, and around summer of 2015 I switched my focus to more speculative endeavors, such as dabbling in mining stocks…

Fast-Forward to the here and now, and what have I learned?

Although I do believe that it is very possible to make massive gains in many different types of asset classes, I will be the first to admit to you straight up:

 

Speculating is extremely challenging, especially for the retail investor. The odds are heavily stacked against you and there are many, many, too many things that can easily go wrong… which can lead you to losing a ton of money.

 

Much luck (timing) is required to succeed with speculation, and the windows of opportunity that you can exploit (buying extremely low during the Depths of Despair and selling for insane profits at the Heights of Smug) are few and far between…

With the benefit of hindsight now, I can easily see and understand clearly why most retail folks decide to avoid the more speculative assets entirely… Long-term, I’m having a very difficult time imagining how someone can possibly come out ahead…

 

It’s just not easy… at all.

 

You could say that I have a newfound appreciation for those original asset classes and types of investments I used to fixate so heavily on when I first started my journey to early FI…

 

For most everyday folks, I really don’t think you can lose long-term going with, again:

  • Index funds.
  • Dividend stocks.
  • Class A rental properties.

But I will emphasize that the one MASSIVE MISTAKE I did make was venturing off to buy Turnkey Turkey rental properties out-of-state. Those were total dogshit, no questions asked. I never presume to know much, but I am 1,000% convinced that all investors need to steer far, far, far, far away from that mess…

Anyway, to build long-term wealth, I guess you could say I’m more sold than ever before to just stick to the “tried and true” stuff… For adding “foundational pieces” to your early FI portfolio, again, you really can’t go wrong with:

  • Index funds.
  • Dividend stocks.
  • Class A rental properties.

 

Worth re-emphasizing many times…

 

Obviously, I’m not suggesting now is a wonderful time to jump in head first into some of those asset classes, which are arguably trading at extremely frothy/overvalued levels…

I’m just saying, for myself, I’ve learned a lot over these last few years… and I’m simply sharing my own thoughts.

Don’t get me wrong — Speculating in mining stocks was an extremely lucrative “gamble” on my part and I have zero regrets… I thank my lucky stars that I had the conviction to get into this space, at what was pretty much the most opportune time, where from a risk vs. reward angle, I actually had a shot at winning.

It’s just so crazy you know… I almost feel like when mining stocks are crashing, burning, and trading at 52 week lows, I should be talking more and more about them… because the opportunities are more abundant… But like everything else, most folks don’t want to read up on an asset class that is universally hated and performing terribly…

No, most people only want to get in and start taking up positions when these mining stocks are flying and setting new record highs in share prices… but, you know, my own experience is telling me that during the Heights of Smug, it’s actually the time for speculators to proceed with the most caution and be extra greedy in booking profits!

De-risk, pull back out your initial capital, and lower you cost basis to near zero or even go free-carried (and beyond). If you don’t take gains on the way up, you most definitely will regret it down the line! Mining stocks ALWAYS crash back down… it’s hard-wired in their DNA to disappoint you long-term!

 

Mining stocks are shit investments over the long haul… Never forget that!

 

Hold these ticking time bombs for too long, and you will end up in financial ruin.

 

I’m pretty damn sure that’s the likely outcome for most retail investors… so think twice before you get too greedy with your gains!

 

Just telling it like it is…

 

Don’t risk more capital than you can afford to lose all of!

 

Mining stocks summary — Get in during the Depths of Despair, buying into overwhelming fear, don’t ever get too greedy during the Heights of Smug, sell into immense strength, book your profits, and then get the hell out of dodge… before everything blows up and the cycle inevitably starts all over again!

 

Happy Hunting!

{ 1 comment… read it below or add one }

1 John @ BinocularsNo Gravatar August 4, 2018 at 8:31 am

I like your convictions.

The key to speculating, in my mind, is to remember that it is speculating and not investing. These two should not be confused.

So, like you said, only put in what you can afford to lose because in many ways it’s like gambling…except there is some skill and forethought involved with speculating unlike gambling.

Another mistake people make is putting all (or most) of their money in speculative buys rather than leaving the bulk of their money in good investments, and speculating on the fringes.

Reply

Leave a Comment

 

Previous post:

Next post:

Copyright © 2012 FI Fighter