When asked to name the greatest invention in history, Albert Einstein responded, compound interest.
Over three decades ago I started our family investment counsel firm focusing on the miracle of compound interest to help retired and soon to be retired investors just like you.
My short and quick goal was, as it remains today, safety of principal and a consistent flow of income through investors’ long and peaceful retirements.
In J.R.R. Tolkien’s The Hobbit, when the wizard Gandalf asked Bilbo Baggins to take part in an adventure, the Hobbit told Gandalf that he viewed adventures as “… nasty, disturbing, uncomfortable things! Make you late for dinner.”
To meet our mission for family-centric clients, we wrap the Hobbit’s security blanket around Einstein’s concept of compound interest. This duo forms the foundation of our prudent investor platform. And no, we do not advise investing adventures for our clients.
Consistent Cash Flow and Security of Principal
To a one, when clients join us, they know that we, on their behalf, are focused on a consistent flow of cash, security of principal, and the miracle of compound interest. We neither speculate nor market time. We base our sound investments on the Prudent Man Rule, first initiated by Justice Samuel Putnam back in 1830.
The discretely managed portfolios at our investment counsel firm are crafted selecting individual securities for clients one at a time, like rare postage stamps. As you know from reading my reports, we have moved away from the mutual fund model, especially as regards index funds, products whose time has past.
We craft portfolios by combining dividend-paying blue-chip stocks, each with a long record of increasing dividends annually. Our portfolios also include a substantial mix of blue-chip fixed income, whether corporate or government securities. The majority of portfolios are weighted 60/40 (stocks/bonds) or the inverse.
Not a Single Down Year this Century
Our most defensive portfolios are aimed at investors looking to draw 4% (our base target) annually from retirement portfolios with (1) minimum volatility and (2) a high degree of comfort.
To that end, I have developed what I refer to as our Dynamic Maximizers® model, which retraces the entire 21st century. Despite the multi-year dotcom bust and the disastrous financial collapse of 2008/2009, my Maximizers model has yet to record a single down year this century. Saying that, however, as every prudent investor knows, the past can never be expected to be predictive of the future.
To date, the Dynamic Maximizers® have offered total returns ranging most often between 3% and 10% annually. We look for an All-Star-like on base percentage, but do not expect many home runs. As previously noted, I have yet to log a single Maximizer’s down year this century. Given this comfortable long-term record of consistency, you can see that a 4% annual retirement draw should be comfortably enjoyed with a substantial Ben Graham-style margin of safety.
For anyone wanting to delve deeper into this investment marvel, check out our maximizers page.
If you prefer a more personalized approach, give my family-focused investment counsel firm a call (888-456-5444) to discuss today how we might make your investment life a little bit easier, and more productive for you.
At Richard C. Young & Co., Ltd. we all look forward to sharing our retirement (current or future) strategies with you.
Warm regards,
Dick Young
Originally posted on Young’s World Money Forecast.