Investing can be for anybody, but is certainly not for everybody.
Only a handful of professional investors can compare to the legendary Peter Lynch. He rose to investing stardom in 1977 when he was appointed the fund manager of Fidelity’s Magellan Fund.
When Lynch took over, the fund had around $18 million in assets under management. After 13 years at the helm, Lynch increased the fund’s size by almost a thousand-fold.
In 1990, the Magellan Fund, and its over $14 billion in assets under management, became the biggest mutual fund in the world. At times, the fund held over 1,000 different stocks in its portfolio. Also, there was a period when it had an average annual return of 29.9%.
It doesn’t matter if you don’t know anything about investing, since there are actions a beginning investor can take to learn how to invest and how to manage their money and finances. One of the most important actions for new investors is to get started early.
Investing doesn’t have to be hard. Yet, it’s important to learn the basics of investing and what type of investments are the best depending on your financial situation and the amount of money you want to make.
When you make it a point to save money, you are protecting yourself against life’s unforeseen difficulties. And when you invest, if you choose to do so, you will have a chance to earn much more than you would have expected to, growing your money exponentially.
Time Period
Long-term investing is one of the key concepts in Lynch’s and many of the most successful investor’s investment philosophy. Lynch argued that the value of stocks was rather easy to predict over a 10 to 20-year period, while short term predictions were pretty much useless and effectively impossible to make accurately due to market volatility.
Source: Brian Feroldi
Therefore, he strongly urged investors to always select stocks of companies that they understand, believe in and be patient to wait for them to go up over a long period of time rather than selling for profits.
According to research, if you invest a $1,000 every year on the highest day for a period of 30 years, you can expect a 10.6% annualized return. On the other hand, if you invest the same sum on the lowest day of the year, you can expect an 11.7% compounded return over the same period.
Peter Lynch also encouraged the reader to look for the tenbagger stocks.
A tenbagger is a stock that rises in value 10-fold or 1,000%. He advises against selling when the stock goes up 40% or even 100%. Instead, he urges investors to hold onto them for the long-term, despite the common trend of many investors to take profits by selling appreciated stocks.
References:
- https://finmasters.com/one-up-on-wall-street-review/
- https://www.benzinga.com/money/peter-lynch-books