So this is a question that a lot of clients ask us on a yearly basis.
How do i invest on the stock market for my savings and for my retirement?.
So this is what we tell all of our clients, we can look back 100 years on the financial markets and also go over the history of the stock market since it started.
So having your money liquid/cash/savings account has been a really bad idea for the past 100 years time.
Inflation has then eaten up your savings over time.
So investing into to the stock market is the best way to let you nest egg grow, even if it only grows with 8% on an average.
So the way you build a stable but also interesting stock portfolio is to follow the 60+20+20 principle.
The principle works like this, and we learned this principle from a very good investor who helps us out with the stock market support to our clients, this Swedish guy worked at the factory floor for over 45 years time and he invested 20% of his monthly net income for 45 years and he retired with over 5 million dollars in his stock portfolio, having had a 50.000 USD salary before tax for most of his life.
So the way he could invest 20% of his monthly net income was that he picked up extra shifts in the factory he worked in as overtime when there was big holidays and when he got double pay for his hours.
This extra work made sure that he did not have to go without normal stuff, just because he wanted to invest 20% of his monthly net income into the stock market.
One tip he gave to save money was that he read all newspapers once a week in the library instead of having any subscriptions.
Another tip was that he never overspent on clothes or drinking alcohol, more than a few times a year.
So how did his investment system look like when we talk about the 60+20+20 principle?.
What he did was that he bought 60% , Blue chip stocks, blue chip companies, and if you do not know what blue chip stocks are, they are companies like Pepsi, Coca-cola and similar stable oldtimers.
And the way you divide these 60% into blue chip companies is that you pick 30 different companies and you invest 2% of your monthly savings into these 30 companies.
The second part 20% is meant to be invested into big tech companies, he started with IBM and Microsoft , Cannon at the time.
And over time for him it became Facebook, Youtube, Twitter and Google/Alphabet and similar companies.
The last 20% is what he called gambling stocks, where he tried to find 4 companies each year in the start up sector for bio medics and high tech companies.
The way he saw this was that he wanted to find one stock that could reach the stars over the next 20 years time, and then one that would be decent.
And then he was willing to let the other two stocks be complete busts.
This way he was able to find a few 100 times the money stocks over time!.
So when our clients asks us how to invest over time, this is a method that we like to use and to promote.
So take care out there.