TJ Walker and a co-host discuss three investing rules: know your risk tolerance, limit any single stock to 10% of your portfolio, and hold for at least 10 years. A $100,000 investment grew to $433,000 over a decade. The host gifts fractional shares to grandchildren instead of toys to teach long-term investing.
Questions this video answers
No more than 10% in any one stock.
Keep stocks a minimum of 10 years.
About 10% per year.
$433,000 (speaker notes that this does not count taxes).
Three of her stocks were down after 10 years.
Chapters
Well, first of all, number one, there are three different types of people. There are people with low risk, medium risk and high risk. That's tolerance levels. So that's number one. Everybody has to be comfortable about what they do. I do not like cnbc. I love cnbc. Before I even have my first cup of coffee, I turn on CNBC because I have learned so much. Do I agree with them? Not always. I could have changed half their diapers. They're so young now. Yes, they have something behind them. They have experts behind them. However, I have someone. And this is why I wrote the wannabe investor who's been in the market 65 years and the proof is in his bottom line. I'm telling you, he is my Alan Buffett. I mean, what is, what is it? You tell me somebody who you hear who's been in the market 65 years. Successfully. Successfully. And so I tell you, yes, you have to be right more than wrong. Now, stocks go up, stocks go down. There are three things you have to do to be successful. Number one, you have to diversify. You should not put more than 10% in any one stock. Do you. Do I do that? Not all the time. Sometimes I break that rule. However, that is the guideline. Two, you must have again, 10%. No more than 10%. So you have 10 stocks, 10%. That's number one. Number three. Number two. Three two. Keep your stocks a minimum of 10 years. In my book, in the must know facts of the wannabe investor, there is a woman who's 92 years old. She was told that 92 is the first 62. She was so panicked, thinking, I don't have enough money to live another 20 years. I planned to have my funds last until probably 85. And now I'm 92, I have some left. So what she did is she listened to somebody who was in the retirement center who had a background. He said, take 25% and invest it for 10 years. No more than 10% in each stock. And make sure you only buy one of each sector because there are 10 business sectors. There's a whole section in the book on that. Well, guess what? Stella did exactly that. And what you will see is there's a chart exactly what she did. She didn't make millions of dollars. However, she ended up buying after 10 years. Three of her stocks were down, were negative after 10 years. However, the other ones were up and she ended up with 4.75, 433,000 after putting in 100,000. Now, that doesn't count taxes, et cetera. Her bracket was low, needless to say. The point is those are the formulas for success. Diversify. No more than 10% in any one stock. And in this case, I did business sector. And keep it a minimum of 10 years. You know, be careful. Be careful who you're listening to.
But I'm, I'm sorry, I'm confused. Because if you're buying the entire s and P500, you have 500 stocks.
So there you go.
Are diversified. If you get an index fund, number one. And if you're focused on long term, long term, The S&P 500 stock market in general has gone up about 10% a year. So I'm not seeing how you've negated my premise.
I guess I did not negate it. Here's the case. Thank you for saying that. And I love a good debate, TJ Number one, if you are low risk or medium risk, you might invest in an index fund. If you are high risk, and I am high risk, that I don't jump off a bridge. I don't do these things. However, I enjoy managing my portfolio by stocks. By investing in stocks and following this premise, it's not right for everyone. You have to determine what's right for you. Now, the one thing I'm going to say to you, T.J. because I know your listeners, readers are going to love this. If you have children in your life or grandchildren or nieces or nephews, stop buying them all kinds of crap, excuse my French. Instead, what I've done with my grandchildren. Four years ago, they were 7 and 11. I said no more toys, no more clothes. Every single Christmas, every single birthday, they get a share of stock. And if it stocks expensive, maybe 500. They're not getting a $500 gift from me. I might buy a partial share, which is called a fractionate share. They also have a charm bracelet, a sterling silver charm bracelet with a stock, with a symbol. Apple, Minnie Mouse, Starbucks cup, a plane for GE. And they have actually 19 stock. They have 19 stocks in their portfolio and they have 19 charms. So I say think diversify. Map things out. Understand.
