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December, 2015


Save More Tomorrow - Research, not to mention personal experience, indicates folks are usually better at procrastinating than making proactive decisions right away. A relatively new concept, TED Talk, and book on this theme, Save More Tomorrow, takes advantage of this fact of human nature and suggests how we can be generous to our future selves. Basically, the idea is, though we think we cannot afford to save and invest now, how about later, once we have had promotions or pay increases? So this involves putting the legal pre-planning in place to assign some or all of our future enhanced earnings and bonuses to tax-deferred savings/investing accounts. A quick search engine query on the title will bring up a PDF that can be downloaded immediately, talks we can listen to on the topic, books others can give us for Christmas, and related calculators one may use. Studies have shown that people who assign future wage increases toward tax-deferred investing successfully save and invest as much as 55% more than those who do not. How much difference can that make? To keep things simple, here is a straightforward example: even if with no matching funds from the employer, a person who begins saving and investing in a 401k or self-employment IRA with $5000 per year at age 25, earns just a market average of 10% annually, takes no distributions, and reinvests capital gains and dividends will have $2,212,963 about when it may be time to retire, forty years later. Another person who has used the Save More Tomorrow approach and invests 55% more ($7750 a year) but otherwise has the same history will have $3,430,092 forty years later, well over a million dollars more.

Loving What Others Hate - A contrarian approach to investing calls for judiciously buying what most investors would rather shun. It stands to reason that certain assets will not be down forever. For example, an index of major financial holdings in a country like Russia, currently going through rough economic times, is unlikely to be perpetually out of favor. Similarly with stocks whose profits depend on gold, silver, coal, or other natural resources later being more in demand. What follows, then, is an assortment of beaten down assets which probably will do better, perhaps significantly so, once their underlying business models improve.

One Year
Goldcorp, Inc.GG$11.59negative 33.28%N.A.
Market Vectors Coal Exchange Traded FundKOL$6.34negative 53.20%0.50%
Russia Exchange Traded FundRSX$15.03negative 27.11%0.61%
Silver Wheaton Corp.SLW$12.36negative 30.75%N.A.
T. Rowe Price New Era (Natural Resources)PRNEX$26.71negative 30.37%0.65%

An investor might put 5-10% of available investment funds into a portfolio of such volatile and currently unpopular holdings, adding to it (and so decreasing the average cost basis) if the overall investment continues to decline. Having five such beaten-down securities spreads the risk. Once they are restored to favor, the portfolio's gains should give a nice boost to one's general return on investment. After a big increase in the portfolio, holdings might be traded for new assets currently lacking investor support but likely to enjoy a comeback in future.


Larry is not a professional. Don't take him seriously!

Actually, the investment article provided here is for general information only and should not be considered as professional advice, a solicitation to buy or sell any security, or the Word of God. Investors are encouraged to do their own research while considering their personal goals and circumstances, or consult their own professional financial advisors, before making investment decisions. Neither Larry nor LARVALBUG will be liable for any losses sustained by any visitor to this site.

(Disclosure statement: Larry and Val have holdings in some of the suggested assets but do not "make a market" in any of them and do not derive any direct benefit from recommending them, except perhaps for a bit of smug self-satisfaction.)

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