Investing in Stocks vs Real Estate

[Jya-Ning]

Interest. not knowing enough on investment, but very surprise to see Perry take the simplest approach and turn stock investment to put money into CD.

What happen to the risk factor and cash flow?

I thought the comparsion of investment is the return / risk. And take each one's risk level find the best return?

And I believe current dividend for DIA is a little over 2% and SPY is around 1.6%. If you do need to use the dividend. Try to compansate .4% cash flow diffenrence, you need to have initial captial 25% or more. Otherwise, you will need to sell the investment yearly. And try to use an Excel spread sheet and use any model to play see what their return will become now.

Perry, are you sure your DIA dividend is 4%? I thought over these years, it only pay over 2% unless you are looking at the whole live of Dow Jone index.

Also, it could easily become another Japan Index. Which over 26 year, will give you about total 5% annual return. IMHO, Does not matter what investment tool you are looking, if it is inside USA, you have to assume USA's economic will support a health return.

Jya-Ning

 

[PerryM]

Interest. not knowing enough on investment, but very surprise to see Perry take the simplest approach and turn stock investment to put money into CD.

What happen to the risk factor and cash flow?

I thought the comparsion of investment is the return / risk. And take each one's risk level find the best return?

And I believe current dividend for DIA is a little over 2% and SPY is around 1.6%. If you do need to use the dividend. Try to compansate .4% cash flow diffenrence, you need to have initial captial 25% or more. Otherwise, you will need to sell the investment yearly. And try to use an Excel spread sheet and use any model to play see what their return will become now.

Perry, are you sure your DIA dividend is 4%? I thought over these years, it only pay over 2% unless you are looking at the whole live of Dow Jone index.

Also, it could easily become another Japan Index. Which over 26 year, will give you about total 5% annual return. IMHO, Does not matter what investment tool you are looking, if it is inside USA, you have to assume USA's economic will support a health return.

Jya-Ning

The DJIA dividend average since 1933 is 4.28%
The DJIA dividend average for the past 10 years is 2.12%
The DJIA dividend average for the 10 years prior to that is 3.35%

Remember that the 30 stocks that appear on the DJIA are constantly being changed by a bunch of folks who control that average. The last 10 years have had those guys deciding that growth stocks should be in the DJIA – that can change at the drop of a hat.

 

[Steamboat Bill]

He was basically pitching that the American dream of owning your home and a great paying job was all wrong - then tried to convince folks to chuck the job and use other peoples money to make yourself a great life.

Using Other Peoples Money (OPM) is not as easy as it sounds. The concept of having dumb people hiring a bunch of smart people to work for them is even harder. Exceptions to this rule do exist. Get rich fast is a sure path to destruction and bankruptcy.

Trust me...I get lots of pitches to invest in all sorts of crap....I usually pass on most. Living in South Florida, when I meet new people, I now don't ask what they do for a living as I don't care and don't want to let them make me rich" with some hairbrained idea.

Almost every week in the www.sun-sentinel.com newspaper there is some person in South Florida getting busted for some type of scam where they got busted trying to rip people off. Unfortunately, it has made me very skeptical of new people I meet.

Investing in DIA is actually good and sound advice. Paying off all your debits (even your mortgage) is even better advice. That is why I like KISS...if it is too complicated...forgetaboutit.

According to Yahoo Finance DIA is currently paying a 2% yield and has a P/E of 15.1.

http://finance.yahoo.com/q/bc?s=DIA&t=my

 

[PerryM]

The great thing with using a Margin Account and the DIA is that you can double your positions if you so wish. e.g. say you have $500,000 in DIA & cash, you can then buy another $500,000 in other stocks and play stock mogul all day. You can go long or short and just have a ball. All the while you average 13.3% on your base DIA. You are charged interest on the margined stocks - right now that’s 8% on $500k.

You can day trade if you believe you can forecast the future and be flat at the end of the day – no worries overnight. There are lots of creative ways to use the old boring stock DIA. However, do this for 20 years and you will realize that the DJIA and DIA represent the market in general and there is little need to invest elsewhere. Certainly you don’t need a mutual fund that will 95% of the time underperform the DJIA. If you want to get into foreign stocks then you not only play their game, which may be rigged, and you also play the exchange rate between US dollars and their currency.

 

[Jya-Ning]

The great thing with using a Margin Account and the DIA is that you can double your positions if you so wish. e.g. say you have $500,000 in DIA & cash, you can then buy another $500,000 in other stocks and play stock mogul all day. You can go long or short and just have a ball. All the while you average 13.3% on your base DIA. You are charged interest on the margined stocks - right now that’s 8% on $500k.

8% margin rate is real, you will have to pay it no matter what happen. 13.3% is book, it is avg. And you may loss when market take a down turn. In the long run, you are adding 5.3% return assume US economic can keep its pace, but risk lossing big time when market take wrong turn and you get margin call. You are simply increase your risk level but does not get same return.

Why need to make a simple method become more complicate. It is much easy to buy some emergence country index or special sector index nowadays if your goal is to increase the return.

On the other hand, you may know the big market very well, so there is not much risk increased. If that is true, you can buy special sector index as well.

Jya-Ning

 

[GOLFNBEACH]

However, do this for 20 years and you will realize that the DJIA and DIA represent the market in general and there is little need to invest elsewhere. .

Perry, how old are you and when did you start serious investing? If you invested in the S&P for the last 60 years you would have more money than if you invested in the Dow. Why do you refuse to acknowledge facts?

http://quote.fool.com/chart.aspx?s=^GSPC&c=^IXIC,^DJI&q=l&l=off&t=my

 

[Steamboat Bill]

I decided to start a new thread on investing in Stocks vs investing in real estate, fractionals, condo-hotels, DCs, etc.

There are no absolutely correct answers here and there will be a variety of opinions, but my benchmark is how do you compare to the S&P over a 1 year, 3 year, 5 year and 10 year cycle?

In addition, I have learned to love dividend paying stocks and I also like to gamble a small bit and try to hit a home run with a stock like Apple, Google, etc.

 

[bobcat]

I decided to start a new thread on investing in Stocks vs investing in real estate, fractionals, condo-hotels, DCs, etc.

There are no absolutely correct answers here and there will be a variety of opinions, but my benchmark is how do you compare to the S&P over a 1 year, 3 year, 5 year and 10 year cycle?

In addition, I have learned to love dividend paying stocks and I also like to gamble a small bit and try to hit a home run with a stock like Apple, Google, etc.

Just REMEMBER, Bears and Bulls make money, PIGS get KILLED in the MARKET.

 

[Jya-Ning]

Perry, how old are you and when did you start serious investing? If you invested in the S&P for the last 60 years you would have more money than if you invested in the Dow. Why do you refuse to acknowledge facts?

http://quote.fool.com/chart.aspx?s=^GSPC&c=^IXIC,^DJI&q=l&l=off&t=my

Don't know why someone want to argue which index is better. But if you really like it, http://siepr.stanford.edu/Papers/pdf/99-16.pdf. I think the difference is not that much, if you reinvest the dividents. However, dividends does need to pay tax. Since none can predict future, it is hard to tell which one is better.

I decided to start a new thread on investing in Stocks vs investing in real estate, fractionals, condo-hotels, DCs, etc.

Not an investor but IMHO, Don't know if they are the same. most of real estate investment is kind of like you will running a company unless you put money into REIT or some partnership, usually you actually run it. Stock and Mutual funds and Index is kind of put trust into a company's head, you don't actually run it unless you have a lot of money or form your own company. They may or may not require the same skill set to be really good although I tend to believe it will be very similar. I do believe they have different risk level thus will have different return.

Jya-Ning

 

[PerryM]

Perry, how old are you and when did you start serious investing? If you invested in the S&P for the last 60 years you would have more money than if you invested in the Dow. Why do you refuse to acknowledge facts?

http://quote.fool.com/chart.aspx?s=^GSPC&c=^IXIC,^DJI&q=l&l=off&t=my

I guess I can answer the question - I hope.

I have DJIA numbers going back to 1896 which I study all the time.

I have S&P numbers only going back to 1960.

From 1960 on:

1) DJIA averaged 11.27% total return. Standard Dev is 15.79%
2) S&P averaged 11.62% total return. Standard Dev is 15.64%

These are just 47 numbers each - think about that, just 47 numbers.

Going back to 1896 the DJIA has averaged 11.93% - that's 110 numbers. Std Dev 22%

I favor using the DJIA since I have this data and this includes World War I, the Crash of 1929 which lost 79.91% of the value of the DJIA, World War II, Korea, Vietnam, the Cold War, and the War on Terrorism. It has seen the Industrial Revolution, the train, the car, the airplane, the computer, and the Internet come and go - I just trust it more than any other investment number out there.



If you want to use the S&P go right ahead.

 

[Steamboat Bill]

It has seen the Industrial Revolution, the train, the car, the airplane, the computer, and the Internet come and go .

Is this a slip of the keyboard or are you predicting an Internet Web 2.0 meltdown?

 

[PerryM]

Is this a slip of the keyboard or are you predicting an Internet Web 2.0 meltdown?

No; but the Internet is old technology now. Wireless cell phones and all kinds of wireless Blue Tooth goodies is now the latest revolution.

Whenever the medical industry looks at the human ailments the right way and comes up with cures for cancer and all the other illnesses that will be a huge revolution. So far it has been a pharmaceutical one - that is not the answer. The answer is to let the human body repair itself with the aid of technology - whatever shape that might be. DNA modification, nanites, who knows. Spare parts from the pig we tend in the back yard - our imagination is limitless.

My new cell phone allows me to:
1) Make phone calls
2) GPS navigation
3) Full Internet browser via Internet and Wi-Fi hot spots - avg 500kb/sec max of 2 MB/sec
4) Stereo broadcast of music via blue tooth head phones
5) Play 4 full length movies on a 2 GB micro chip and watch via the large display screen and listen via blue tooth stereo head phones
6) Get an instant snapshot of my digital world with a single button - ALL my eMail accounts, my eBay auctions, my other sales outlets
7) 2 M pixel camera and movies

I can only drool at what I will be wearing on my hip 20 years from now - satellite communication at least.

 

[Steamboat Bill]

Apple vs Dell

It was 10 years ago that Michael Dell, speaking before several thousand technology executives at ITxpo97 in Orlando, answered a question about what he would do if he were CEO of Apple with a remark he probably instantly regretted:

“What would I do? I’d shut it down and give the money back to the shareholders.” (link)
​

As others have noted, Apple’s (AAPL) market capitalization today is more than double that of Dell (DELL):

Apple: $140.4 billion
Dell: $62.27 billion
​

But don’t shed a tear for Micheal Dell. According to a list of the 400 wealthiest Americans published last month, his net worth is more than triple Steve Jobs’.

Michael Dell: $15.5 billion
Steve Jobs: $4.9 billion
​

 

[Harvey and Lin]

How does it feel to have a technical paper loss of $430,000-$500,000?

it does not feel very good at all!!!!!

 

[Mydogs2big]

We have stocks in our own companies, which by the way the IRS decides what they will allow us to make in wages, what they will allow us to claim as expenses and even what they will decide to consider as a loan vs investment. NOT FUN

We cannot control when or which of the companies we do business with will regularly "restructure through bankruptcy"

Many other governmental agencies regularly tell us what we need to do and when and how much money they want in order to take care of their requests.

We cannot control employees, accidents, lawsuits, etc.

On the flip side/we own real estate. With real estate, I feel that the world is a little safer. I know how much and when of everything. And whenever My stock has big fluctuations, I leverage the real estate to carry us through. I never have to pay it back either, the tenants take care of it.

So Real Estate vs. Stocks? If it's the Company you're buying, you must be a huge believer and know that nothing will probably happen to them. Real estate is physical like a goose laying eggs, but don't eat the goose!

If you are buying because other people are interested in buying, I hardly call that an investment at all. "gambling is the word that comes to mind"

But good "luck" You may need it in about 20 years (or less) when the U.S. is not seen as a very lucrative investment and people get scared from overseas lies and scams, and americans have to start taking mandatory withdrawals and pay for healthcare with their retirement funds.

I say the best investment is in yourself and your knowledge and people skills.
Money is easily made, and wherever you are, there you will be.

 

[CarlK]

How about those dogs?

It's hard to outdo the DJIA over a long period of time. [/B]

But, if you like the DJIA, one strategy that seems to beat the index is investing in the "Dogs of the Dow." Less diversification than the index, but last time I looked, a better return.
Carl

 

[PerryM]

We have stocks in our own companies, which by the way the IRS decides what they will allow us to make in wages, what they will allow us to claim as expenses and even what they will decide to consider as a loan vs investment. NOT FUN

We cannot control when or which of the companies we do business with will regularly "restructure through bankruptcy"

Many other governmental agencies regularly tell us what we need to do and when and how much money they want in order to take care of their requests.

We cannot control employees, accidents, lawsuits, etc.

On the flip side/we own real estate. With real estate, I feel that the world is a little safer. I know how much and when of everything. And whenever My stock has big fluctuations, I leverage the real estate to carry us through. I never have to pay it back either, the tenants take care of it.

So Real Estate vs. Stocks? If it's the Company you're buying, you must be a huge believer and know that nothing will probably happen to them. Real estate is physical like a goose laying eggs, but don't eat the goose!

If you are buying because other people are interested in buying, I hardly call that an investment at all. "gambling is the word that comes to mind"

But good "luck" You may need it in about 20 years (or less) when the U.S. is not seen as a very lucrative investment and people get scared from overseas lies and scams, and americans have to start taking mandatory withdrawals and pay for healthcare with their retirement funds.

I say the best investment is in yourself and your knowledge and people skills.
Money is easily made, and wherever you are, there you will be.

Luckily the choice of real estate or stocks is one we don’t need to make – we own both. About half our net worth is real estate and half is in stocks. I don’t like or believe in bonds – they are subject to terms that change daily by the folks issuing the bonds.

When our son was born in 1986 his grandfather bought zero coupon high grade municipal bonds that would cover his college education 20 years later. At the time he got fantastic bonds/rates – all were called within 10 – 12 years and we put the money in the stock market for him. Bonds are just too one-sided for me.

Folks ask me about risk all the time. They want a “Risk Free” investment. I advise them to put their money in US government bonds the big ones. Beyond that every investment has risk and generally the more risk the higher the reward. You can’t make that determination without at least 2 to 3 times the history versus the time you want to hold the investment.

For someone who is looking at 40 years of investing that’s a track record of 80 to 120 years. There is but one investment vehicle – the DJIA that meets that criterion.

P.S.
Putting your money in US bonds is "Risk Free" but will see your standard of living plummet over the years. You need to make a profit that accounts for at least 3% inflation, Uncle Sam's hands in your pocket, and throw in inflation in certain areas, like health care, that move at 2 or 3 times inflation. Again I come back to the DJIA - the stock market.

 

[PerryM]

But, if you like the DJIA, one strategy that seems to beat the index is investing in the "Dogs of the Dow." Less diversification than the index, but last time I looked, a better return.
Carl

I've studied the "Dogs" for many years - it was a curved fitted stock scheme that has fallen apart in the past 10 years - avoid the "Dogs" is my advice.

In the past 20+ years I've investigated at least 1,000 stock schemes - from plotting the moon to which months are best to enter and leave the market to the 4 year presidential cycle.

Believe me when I say that just buying the DIA is the ONLY system I've found that will make you consistent money over a 20 year time frame - no switching in and out, no timing, just buy and hold.


I have some unbelievable stories about stock trading systems - I have flown around the country and attended hundreds of seminars - all phony.

And when you think about it - why would someone who has the Holy Grail of stock trading systems share it with a living soul? They would not - they would form a hedge fund and make even more money and not tell a soul how they do it.

 

[GOLFNBEACH]

I guess I can answer the question - I hope.

From 1960 on:

1) DJIA averaged 11.27% total return. Standard Dev is 15.79%
2) S&P averaged 11.62% total return. Standard Dev is 15.64%

.

Well is looks like the S&P is the better investment for this timeframe. And it looks like there are viable alternatives to DIA. That was my point.

I'm leaving for 2 days of golf and then a weekend in NYC so I will be unable to follow-up until next week.

Happy investing.

 

[Steamboat Bill]

In the past 20+ years I've investigated at least 1,000 stock schemes - from plotting the moon to which months are best to enter and leave the market to the 4 year presidential cycle.

Believe me when I say that just buying the DIA is the ONLY system I've found that will make you consistent money over a 20 year time frame - no switching in and out, no timing, just buy and hold.

wow...I have never heard about investing in the phases of the moon...but I guess it could make sense to readers of Freakonomics.

I also think it is HARD for anyone to beat the DOW or S&P500 over a 10 year or longer period.

Most people LOSE money chasing the hot stocks they hear about on CNN.

I am pretty good friends with a "Talking Head in CNNfn" and his fund can't beat the S&P over a 10 year period and this guy is considered an "expert" and manages almost $1b of OPM (other people's money). What are the little guys (teachers, plumbers, secretary) supposed to do...investing in DIA or SPY is probably better than anything else?

 

[PerryM]

wow...I have never heard about investing in the phases of the moon...but I guess it could make sense to readers of Freakonomics.

I also think it is HARD for anyone to beat the DOW or S&P500 over a 10 year or longer period.

Most people LOSE money chasing the hot stocks they hear about on CNN.

I am pretty good friends with a "Talking Head in CNNfn" and his fund can't beat the S&P over a 10 year period and this guy is considered an "expert" and manages almost $1b of OPM (other people's money). What are the little guys (teachers, plumbers, secretary) supposed to do...investing in DIA or SPY is probably better than anything else?

I have a closet full of gadgets that "Forecast" the future of stocks - paid big bucks for them. I have every device Gann sold, I have every one of his hidden manuscripts that folks fly all over the earth to track down - all phony.

I feel like that magician guy who debunks mystics - all phony.

Trust me when I say that buying the DIA or SPY or whatever index stock you want is the ONLY safe investment over the long haul. Even Warren Buffett makes slightly more than the DJIA over a long period of time - this is nothing to sneeze at by how long will Warren be around to do this - 40 more years?

Be your own investment master - don't hire someone to tell you to diversify you already know that. Buying the DJIA and real estate and holding them long periods of time is wealth creation. Everything else is smoke and mirrors.

But, that's just my opinion and put as much stock in it as you paid for it.

 

[Tedpilot]

The dogs of the DOW...that reminds me of the system that the Motley Fool invester use to recommend. Of course, their data was based on the history of the market and which ones would always out perform the index. Needless to say, when they became popular all of the sudden their model that they spent years perfecting was no longer any good... Back to the drawing board. I'm not sure what snake oil they are selling today.

My non-real estate investments are primarily in American Funds products. They have been good to me and my broker has been on top of them so I don't worry. He has been able to stay slightly ahead of most market trends and move the mainstay of my money in/out of the right sectors. So far it has all been sage advice. A long time ago I asked him about day trading and if I could do better than he. He laughed...I was serious. I thought I could do well and this was in late 99'. He said to take $2k, play with it, and if I could beat my own portfolio's return he would give me my entire portfolio back and pay the fees himself. Needless to say I couldn't and by late 00' I was depositing what I had left back into the account.

If there is anything that I have learned in my adult life about money it would be that it takes time to grow and compound interest is my friend. I have found that I need to be patient, persistent, disciplined and make sure I understand that some returns aren't all about the interest or dividends, but about my family and friends. A carefully planned vacation, night out with the wife, or drinks with the boys are all sound intangible investments in life. As the saying goes, they are priceless.

 

[vivalour]

I have found that I need to be patient, persistent, disciplined and make sure I understand that some returns aren't all about the interest or dividends, but about my family and friends. A carefully planned vacation, night out with the wife, or drinks with the boys are all sound intangible investments in life. As the saying goes, they are priceless.

So true, and I would add kids to that mix. As a long-time investor and market observer (since high school under the tutelage of my dad), I have learnt not to take anything for granted in the markets, including trends. I think the rise of China as an industrial superpower and vast consumer of resources is going to be the "next big thing" to contort international markets in the next 25 years or so. Watch as they establish their own state-owned companies to buy up oil and a 100 or so other resources from other emerging states. Have you tried to buy toys, office supplies or kitchen utensils NOT made in China, lately?

 

[BocaBum99]

I have a closet full of gadgets that "Forecast" the future of stocks - paid big bucks for them. I have every device Gann sold, I have every one of his hidden manuscripts that folks fly all over the earth to track down - all phony.

I feel like that magician guy who debunks mystics - all phony.

Trust me when I say that buying the DIA or SPY or whatever index stock you want is the ONLY safe investment over the long haul. Even Warren Buffett makes slightly more than the DJIA over a long period of time - this is nothing to sneeze at by how long will Warren be around to do this - 40 more years?

Be your own investment master - don't hire someone to tell you to diversify you already know that. Buying the DJIA and real estate and holding them long periods of time is wealth creation. Everything else is smoke and mirrors.

But, that's just my opinion and put as much stock in it as you paid for it.

Perry,

Whatever floats you boat is fine for you. But, that doesn't mean that your strategy is right for everyone.

To debunk your assertion of absolutes, let me provide the following. First, An investment in a diversified porfolio of Treasury Bills and Bonds is far more safe and secure than investing in DIA. So, that debunks your absolute assertion that DIA is the ONLY safe investment over the long term. Second, if a family needs income from their investments, DIA isn't necessarily the best investment for them, especially if they may need to liquidate their portfolio in any given year for special needs like buying a home.

Moreover, I used to invest heavily in the Stock market. I made a lot of money doing it. Over a 2 year period after the stock market bubble burst that I actively invested in individual stocks, I averaged over 30% gain per year on a rather sizable portfolio and I beat the S&P 500. I got lucky mostly because I picked a good time to pick up stock investing and caught a very nice and extended bull run. This was a case where luck played a bigger role in my success than skill. I gave all that up since I didn't think my good fortune was sustainable and I found that actively investing my money in businesses yielded a far greater return, gave me much more control of my own destiny and reduced the need for luck. This is one of the Rich Dad concepts that I agree with.

Another concept that Robert Kiyosaki advocates that I agree with is this. Stocks, bonds and other such passive investments are best to use AFTER you have enough networth and assets to quit working. You are much better off taking all of your assets and putting them to work in business and real estate assuming you have the skill and drive to make it happen. Once you get out of the rat race, then these investment types make more sense.

In playing the cash flow game, a very interesting thing happened. At first, people would be presented with stock investment opportunities that sounded pretty good. Sometimes, they would make 50% gains in a very short period of time. But, that strategy ended after they say person after person foregoing those opportunities in favor of Real Estate investments that yield huge returns that enabled them to generate enough passive income to get "out of the rat race." Now obviously, investing actively in business and real estate takes a lot of skill or you can easily lose everything. I don't want to minimize the fact that that is the case. I just want to point out that if you are a middle or even upper middle income person, investing in Stocks or DIA is not likely to get earn you enough passive income to stop working.

 

[PerryM]

The turtle always wins....

Perry,

Whatever floats you boat is fine for you. But, that doesn't mean that your strategy is right for everyone.

To debunk your assertion of absolutes, let me provide the following. First, An investment in a diversified porfolio of Treasury Bills and Bonds is far more safe and secure than investing in DIA. So, that debunks your absolute assertion that DIA is the ONLY safe investment over the long term. Second, if a family needs income from their investments, DIA isn't necessarily the best investment for them, especially if they may need to liquidate their portfolio in any given year for special needs like buying a home.

Moreover, I used to invest heavily in the Stock market. I made a lot of money doing it. Over a 2 year period after the stock market bubble burst that I actively invested in individual stocks, I averaged over 30% gain per year on a rather sizable portfolio and I beat the S&P 500. I got lucky mostly because I picked a good time to pick up stock investing and caught a very nice and extended bull run. This was a case where luck played a bigger role in my success than skill. I gave all that up since I didn't think my good fortune was sustainable and I found that actively investing my money in businesses yielded a far greater return, gave me much more control of my own destiny and reduced the need for luck. This is one of the Rich Dad concepts that I agree with.

Another concept that Robert Kiyosaki advocates that I agree with is this. Stocks, bonds and other such passive investments are best to use AFTER you have enough networth and assets to quit working. You are much better off taking all of your assets and putting them to work in business and real estate assuming you have the skill and drive to make it happen. Once you get out of the rat race, then these investment types make more sense.

In playing the cash flow game, a very interesting thing happened. At first, people would be presented with stock investment opportunities that sounded pretty good. Sometimes, they would make 50% gains in a very short period of time. But, that strategy ended after they say person after person foregoing those opportunities in favor of Real Estate investments that yield huge returns that enabled them to generate enough passive income to get "out of the rat race." Now obviously, investing actively in business and real estate takes a lot of skill or you can easily lose everything. I don't want to minimize the fact that that is the case. I just want to point out that if you are a middle or even upper middle income person, investing in Stocks or DIA is not likely to get earn you enough passive income to stop working.

Well, to invest in the stock market just requires an IRA or better a Roth IRA if a person qualifies.

Assume a person deposits just $5,000 per year in a Roth IRA for 40 years - and that the DJIA averages 12% per year over that time frame (Same as the average since 1960) then when a person retires he/she will have:

$4,245,863 to retire on. In today's dollars that's $1,828,492 on an investment of $117,381 (net present value of $5,000 deposited for 40 years) (3% inflation)

That's a return of 1,500% on that money. Not one decision had to be made, not one more second was needed to provide for a fantastic retirement. Thanks DJIA.

Once a person has done this they can go and play real estate tycoon or stock tycoon or any kind of tycoon they want.

You must be employed to get a Roth IRA however.

Me, I'm that turtle that plods along year after year with the retirement goal not that many years away.

P.S.
To recap: stuff $5,000 per year into a Roth IRA and the DJIA (DIA) and that's all the stock investing you need to ever do - the rest of your money you can blow anyway you want.

Come on now folks, $5,000 a year is just the same as a cheap timeshare and this will greatly improve your life.