Our ultimate goal here is to discover an easy way to grown our very own Golden Goose, one that consistently lays golden eggs. By golden eggs, what I mean is a secure and steady income for us down the track by selling the eggs, not the Goose. [Att Technorati: 3A65KHWDYSSW ]
This is a noble cause, to be sure, and there’s no shortage of people out there with all manner of advice. There is advice on how to make money, invest like a pro, beat the market, hedge, trade and imitate others who’ve made it big. It can all get a bit confusing.
A case in point – here’s an article from the respected financial journal Forbes magazine:
A Recipe For Riches
Want to become a tech titan or hedge fund tycoon? Up your chances by dropping out of college or going to Harvard [...]
Can you see the problem here? The very first paragraph of this article suggests in their recipe for riches two simple steps. One – drop our of college (university) and Two – go to Harvard (a college, or university!) What? So to make it onto the Forbes 400 Rich List all you need do is simultaneously drop out of college and get a degree from one of the top institutions in America.
To be fair Forbes were analysing the list looking for trends. What they found were groups on the list who had either dropped out or gone through Harvard. Nonetheless it serves me as an example of the many pieces of conflicting advice that are offered to the novice investor.
All this brings me to the number two person on the rich list. Warren Buffet, who is known as the Oracle of Omaha. Warren is clearly the most successful investor in the world, given the next investor on the list is George Soros at number 15!
What advice does Mr Buffet give to aspiring investors? You can read this many times in his letters to shareholders, but it is very simple.
Invest regularly in low cost index funds.
Simple.
In fact this message is worth hearing, so I’ve made it a favourite on the GoldenGoose8 YouTube Channel as well as making it the Featured Video for this blog.
On my personal blog I wrote a couple of years ago on this topic, Coffeehouse investor in Australia which was really some links to information on index funds and their cousin exchange traded funds. Some good reading is available at the ASX http://www.asx.com.au/products/etfs_etcs/index.htm; also Neerav has a long running post called Index Fund: lower fees, reliable growth, less volatility.
So in summary our strategy to grow our own Golden Goose is to :
- Save money (spend less than you earn / pay yourself first)
- Invest regularly in low cost index funds
- Teach your kids how to do the same
- Repeat
Join me on this journey – I’ve been buying the ASX 200 SPDR this year for my Golden Goose. My kids have been investing in a high yield bank account and are nearly ready to buy the SPDRs as well. What will your next step be?
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