How to Beat Wall Street Like a 14 Year Old
Iโm a 14 year old investor, and I beat 94% of Wall Streetโs โexpertly managedโ funds every single year – and you can, too.
Howโs that even possible, you ask?
Wall Street Funds Make a Crucial Mistake
Well, all these funds make one crucial mistake that leads to their downfall. Iโll show you how I avoided this deadly trap to beat Wall Street, and how you can replicate my success for free in just 5 minutes.
First, letโs take a look at what all these Wall Street funds do – and where theyโre going wrong. These actively managed funds have a team of experts who try to find investments that they think will give the highest returns.
The people running the funds are professionals, so youโd think they know exactly what to invest in to make a huge profit – but thatโs where youโre wrong. In practice, these funds donโt actually do that well. But why?
To figure that out, we have to go back to 2016, when my investing journey began.
How to Beat Wall Street – My Investment Journey
I started investing when I turned 7 by putting my entire allowance into the stock market.
Since I was really new to the world of investing, I invested in individual blue chip stocks I thought would do well – just like the Wall Street funds. If thatโs what the experts were doing, I thought it would work for me, too!
But over the next couple of years, I learned a lot more about investing. Thatโs when I uncovered the truth: there was one investment that would catapult me to success — far greater success than even Wall Street was able to achieve.
The Sure Shot Way to Beat Wall Street
What was this incredible investment? Index funds!
Index funds track a certain stock index, like the S&P 500. This means they invest in the same stocks in the same proportion as the broad based index they are tracking; allowing them to match the overall stock marketโs returns.
The trap Wall Streetโs actively managed funds fall into is trying to beat the market. Even if they do succeed, itโll only be for one or two years, as the data proves that itโs impossible to beat the market consistently over the long term.
Instead, by investing in index funds, I have been matching the marketโs returns – which is actually higher than 94% of Wall Streetโs actively managed funds. You can beat Wall Street too just by investing in index funds!
An Incredible Example of My Strategy
Let me give you an example to show just how well you can beat Wall Streetโs professionally managed funds.
Letโs say John invests $100 a month in an actively managed mutual fund returning 9% per year, from the time heโs 20 to his retirement at 65. The fund has a 0.6% expense ratio – which is about average.
By the time John retires, he would have $520,000! This seems like a great return, but is it, though? Letโs find out.
Sally invests the same amount as John for the same amount of time. But instead of an actively managed mutual fund, she chooses a broad based index fund that tracks the S&P 500. It gives an average return of 11% per year, and has a 0.05% expense ratio.
So even after investing the same amount, Sally would have twice as much money as John: over $1.15 million!
Conclusion
This just goes to show how you and I can significantly outperform Wall Street, by simply investing in index funds.
But knowing what to invest in is just the beginning; it doesnโt even matter if you donโt actually start investing. To learn how to start investing quickly and easily, check out Start Investing in 7 Easy Steps: A Guide to Begin Investing Today for Kids & Beginners