Investor class: Buy and behold

If you're lazy and stupid, you need our help.
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If you're lazy and stupid, you need our help.

Given Flip Side's investment expertise, we receive many inquiries.

"I want to make a lot of money," one man confesses, "but like most of your readers, I am lazy and stupid. What should I do?"

This is the response from my shameless twin brother, Clip Clifford.

If you are greedy, otiose, and not the sharpest lance on the lot, I have the answer: compound interest.

According to Albert Einstein, "compound interest is the eighth wonder of the world." Consider a few examples its power:

  • Suppose your grandparents had established a $10,000 trust for you 60 years ago. Invested at 8 percent, you would now have more than $1 million.

    Instead, your grandparents took expensive vacations. So you are poor and miserable, but at least you now understand the power of compound interest.

  • The Canarsie Indians sold Manhattan to Peter Minuit in 1626 for $24. Had the tribe invested this sum at 7 percent they would now have $4.6 trillion, could purchase Manhattan, and have money left over for Brooklyn and Queens.

  • Judas Iscariot received 30 pieces of silver for betraying Jesus Christ. The 30 pieces would be worth about $600 today. Had Judas invested his $600 at 6 percent interest, it would now amount to:


    This buys a lot of indulgences.

  • You get the point. Invest and hold.

    It doesn't matter if you have no grandparents, sell Manhattan for $24, or betray our Lord — so long as you INVEST AND HOLD.

    What should you invest in?

    There are five principal investment vehicles: stocks, bonds, real estate, venture capital, and alternative investments. Here's an overview:

    Stocks: When you buy a share of common stock, you own part of the company. This does not make you a real "owner." Usually, it makes you a chump. Tell your friends, "I bought stock in General Motors." They will not respond, "How does it feel to own General Motors?" They will ask, "How does it feel to be a chump?"

    Bonds: When you buy a corporate bond, you are loaning money to a company. Why would you want to do that? You can also buy municipal bonds. In this case, you are loaning money to states such as California and New Jersey. Why would you want to do that?

    As a financial advisor, I seldom recommend bonds to my clients. I get higher commissions on stocks and alternative investments.

    Real estate: While you can invest in a publicly traded real estate investment trust (REIT), often a better investment is your own house. Or, better yet, invest in my house. While remodeling, I am offering, for a limited time, naming rights. For $75,000, your name can be appended to my kitchen. The four times a year I have a dinner party, everyone will note the meal was cooked in the [YOUR NAME HERE] Memorial Kitchen.

    For as little as $1,500, you can name a bathroom plumbing fixture. These make great birthday gifts and are also suitable memorials to comatose relatives.

    Venture capital: You can invest in start-up companies through my venture capital fund, ClipVentures. We helped finance Google, Amazon, Starbucks, Costco, and Microsoft (by occasionally buying their products).

    Alternative investments: This class includes private equity, LBO funds, hedge funds, market neutral (absolute return) funds, and chain letters. You can't afford the first four. The latter may be purchased through ClipFinancial.

    In the future, I will offer proven investment strategies for each of the above investment classes.

    Or maybe I won't. I don't need the money. I am a direct descendant of Judas Iscariot.


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