The foolish Fool

[AdrianC]

I've spent quite a bit of time on the Motley Fool site and I learnt a lot on the boards there. Their articles are getting to be just like the regular financial media (maybe they always where and I only just started to notice?). Here's todays wisdom:

http://www.fool.com/investing/general/2014/02/08/warren-buffett-reveals-the-biggest-mistake-we-make.aspx

Consider a scenario of two people, each 25 years old, David who makes $40,000 a year and Michael who makes $80,000 a year. Each year, they get a 2.5% raise and work until they are 73. Let's say the only difference is David starts saving 10% of his income when he's 25, but Michael decides to wait until he's 40, while he's making $115,000 a year.

Did you say work until they are 73?

No thanks. What a ridiculous example.

[Exflyboy]

Sad thing is that probably will become the new normal.. with increasing life expectancy it has to.. Unless your a MMM of course.

Frank

[Nords]

I've spent quite a bit of time on the Motley Fool site and I learnt a lot on the boards there. Their articles are getting to be just like the regular financial media (maybe they always where and I only just started to notice?). Here's todays wisdom:

The Fools lost their way in the late 1990s.

[shadowmoss]

I agree with Nords, not unusual.  I was on the site when it was free, and learned a lot.  When they started charging, but gave regulars who were 'entertaining' enough free accounts to stay (including using in their advertising the account name of a guy who had died...) I decided that I wasn't needed there anymore.  I loved the Living Below You Means, and also loved the Living Beyond Your Means threads.  I learned a lot there.

[lizzzi]

I joined Fool around two years ago, based on the way they used to be. (I was really looking for MMM, but just had not found this site yet.)  What a mistake. I did opt out after while…felt like I was in an annoying, bad Infomercial. They  unsubscribed me, but I did not think it was as easy as it should have been to get out.

[taperted]

I just wanted to voice the contrary opinion before all the "THE MOTLY FOOL SUX" posts start rolling in.

I've followed The Motley Fool since their AOL days, and then became a member of one of their subscription newsletters in 2003. Currently, I subscribe to several of their services that span the range from value, growth and income investing.

To the OP, I am not sure if you were making a tongue-in-cheek comment, but just in case others were confused by your post, the article that you linked wasn't really saying that people should wait to retire by 73, it was more about the value of time when compounding your interest. The author could have picked 45, 55, 65 or 75 and the point of the lesson would be the same (refer to the graph in the article). It's just that the 2nd saver started at 40 years old, so giving him 33 years seemed like a good time frame to amass wealth.

I agree this is pretty much standard fare, and most of the free articles that are available on the site are on par with other articles you can find on any site with personal finance advice such as Marketwatch, CNN Money, etc.

From the early days, the mantra of The Motley Fool has been to support DIY stock picking, and over time, they have tried to build a business that gives individual investors the resources and information to do just that. When you sit down and think about it, it is actually a really difficult task to try to build something that can be of value ot people of all investing experience levels, investment philosophies, risk tolerance and net worth.

I have profited from many of their stock picks that have been recommended over the years in their various newsletters. I don't blindly buy/sell based on their advice. I look at their recommendations and try to find the ones that I can understand. I find ones that are appealing to me, discuss it with my wife, and try to get a handle on the valuations before buying. Sometimes my slow pace causes me to miss a buying opportunity, sometimes it gives me a buying opportunity. Over time, the process has worked for me.

The most valuable part of the subscribing to the newsletters is that the stock picks have been previously vetted, so it greatly narrows down the universe of stocks into a manageable number that I can process myself. I don't believe that The Motley Fool is the only reliable game in town, but in general, the philosophies championed by the advisors are in line with my own investment style.

The other thing I like about the paid subscriptions is access to the message boards. When a stock pops or when it drops, there are usually thoughtful posts by the bulls and bears. Both sentiments are welcomed, as long as there is a healthy debate and it doesn't degenerate to a "you suck" "no, you suck" situation. With other sources like Yahoo Finance, it is often difficult to sift past the noise when I am looking for information.

I would argue that The Motley Fool has vastly improved from their early days. They have learned a lot, and are willing to admit their mistakes while trumpeting their successes. If you read through some of their early work, some of it is truly cringe-inducing, eg., The Dogs of the Dow strategy comes to mind. I don't think they will ever live this down, seeing as it is immortalized in print, in The Motley Fool Investment Guide.

Anyway, I am a satisfied "Fool." I have never had the expectation that I would get rich quick following their stock picks, but I do believe that using their site to interact and learn about the investing process has made me a successful investor. Their investing philosophies align with mine and over time, I have found value in their services.

[Jamesqf]

Did you say work until they are 73?

No thanks. What a ridiculous example.

Why ridiculous?  Assuming you find something you enjoy doing, and which leaves you with plenty of time to enjoy other things, why would you NOT want to work?

And if you haven't found something like that, why aren't you out looking?

[chasesfish]

I'm a huge fan of their free podcasts, Marketfoolery and Where the Money Is.

[MrFancypants]

Based on what I've seen, most don't see their income increase all the way through their 60's and into their 70's.  It seems like typically they get bumped out of a higher paying job at some point after 50 and typically do not manage to pick up other employment making the same or more and are forced to take what they can get.

I tend to agree that if you genuinely love doing what you're doing, why not work until you're 73?  But that doesn't necessarily mean that you shouldn't prepare to retire as early as possible.  Let us say that you become financially independent at 45....  but you still want to work, which is great, so maybe use the extra cash to buy a shiny, expensive toy or pay for some home improvements or an extravagant vacation or whatever.

[Jamesqf]

Based on what I've seen, most don't see their income increase all the way through their 60's and into their 70's.  It seems like typically they get bumped out of a higher paying job at some point after 50...

Or they have reached a certain level of financial independence, and decide to scale back to more satisfying but less lucrative work.  I think the article is trying to look at the two extremes, realizing that most people fall somewhere between.
 

But that doesn't necessarily mean that you shouldn't prepare to retire as early as possible.

I think that's more a matter of semantics - MMM's "Internet Retirement Police" thing.  If I want to work, but can't find a job, I'm not retired, I'm unemployed.  Though I am fairly well prepared, at this point, to deal with a period of extended unemployment that might last well into my 80s :-)

[pac_NW]

Ditto what Taperted said.  Many years ago, we started buying per Tom's recommendations first and then later mixing in some of David's. If you have the time to learn from their research and the fortitude to invest in the stock market, then I recommend the Motely Fool.  You cannot argue with the results each has achieved over time.  70%+ and 200%+, respectively.  Personally, I have seen a great track record in my own accounts through what I have learned.  The newsletters I subscribe to our Rule Your Retirement, the Dividend Investor, and Stock Advisor.  FYI - I don't work in the investment industry.  Am just a regular gal that invests.

[TrulyStashin]

Ditto what Taperted said.  Many years ago, we started buying per Tom's recommendations first and then later mixing in some of David's. If you have the time to learn from their research and the fortitude to invest in the stock market, then I recommend the Motely Fool.  You cannot argue with the results each has achieved over time.  70%+ and 200%+, respectively.  Personally, I have seen a great track record in my own accounts through what I have learned.  The newsletters I subscribe to our Rule Your Retirement, the Dividend Investor, and Stock Advisor.  FYI - I don't work in the investment industry.  Am just a regular gal that invests.

+1 to this and other pro-Fool posts.  I knew very little about investing when I started in 2010.  Granted, anyone who started in 2010 has had a pretty good return over time because the market was in such a trough then.  However, the value of Fool newsletters, to me, is in the education I've gotten along the way.   I enjoy the challenge of researching and choosing stocks.  I've had a few dogs along the way but I've had some really good ones too and the Fool's tools have helped.

In 2010, I started with about $12,000 that I rolled over from a 403b mutual fund into a IRA brokerage account.  It's value is now around $25k.  Count me a happy Fool.

Plus, thanks to the Fool, I bought 15 shares of Netflix when it was $71/ share and had the fortitude to hang on when the stock tanked shortly after I bought it.

[AdrianC]

Well, I'm sorry if I offended the Fool-fans.

I still think if you are trying to show the benefit of compounding and saving early, a 48 YEAR work-life example is ridiculous. Your average 25 year old making $40K reads that and thinks: "Oh, all I have to do to get $2M is save 10% of my salary for 48 YEARS! Count me in!". Yeah, right.

I am not saying that working until you are 73 at something you love doing is ridiculous. Of course it isn't. My Dad is 73 and is only semi-retired due to ill health, otherwise he'd still be full-time (he owns the business). I don't need to work but I still do.

Now what's with all the Warren Buffett references? "Warren Buffet reveals...". Cheap marketing of Fool products is what it is.

[soccerluvof4]

AdrianC,

I think like anything or financial sites there will be the occasional article that a person isnt going to agree with. I belong to at least 20+ sources and just pick and choose with my own research and idealism's what I want to believe in.  As with so many i have found success in many of there suggestions and have downright disagreed with others.

[oldtoyota]

I agree with Nords, not unusual.  I was on the site when it was free, and learned a lot.  When they started charging, but gave regulars who were 'entertaining' enough free accounts to stay (including using in their advertising the account name of a guy who had died...) I decided that I wasn't needed there anymore.  I loved the Living Below You Means, and also loved the Living Beyond Your Means threads.  I learned a lot there.

Yep. Agreed.

[taperted]

I'm a Fool-fan, and no offense was taken, so no apology needed! I recognize that there is a plethora of finance sites out there. I just wanted to say that I've found value in this particular one.

Like I said, I don't think the author chose a 48 year work life as a necessity. It's just a hypothetical example for illustrative purposes. In reality, the person might get bonuses, get promotions, maybe get a better paying job, invest in the next AAPL, hit it big in Vegas, marry Miley Cyrus, etc. All of these would accelerate his path to $2M. However, It is difficult to model if/when these events will occur, and the magnitude of the impact they will have on his wealth accumulation plan. So conservatively speaking, if he leads a life of obscurity and mediocrity and nothing else happens to this fellow, then yes, it just might take him 48 yr to earn $2M.

How would you plan it?

Another point is that if I could write something that would inspire a 25 year old making $40K/yr to start saving 10% of that, I would consider it mission accomplished. I know when I was that age, I would just blow my excess cash (and then some) on going out, CDs (the music kind, not the saving vehicle kind) and other toys. My plan for retirement was basically: Hope I Die Before I Get Old.

Anyway, my intention is not to recruit you (or anyone else for that matter) into Fool-dom. I just don't see a lot of reason to read anything into this article other than the basic generic message of "you should start saving money earlier than later."

Well, I'm sorry if I offended the Fool-fans.

I still think if you are trying to show the benefit of compounding and saving early, a 48 YEAR work-life example is ridiculous. Your average 25 year old making $40K reads that and thinks: "Oh, all I have to do to get $2M is save 10% of my salary for 48 YEARS! Count me in!". Yeah, right.

I am not saying that working until you are 73 at something you love doing is ridiculous. Of course it isn't. My Dad is 73 and is only semi-retired due to ill health, otherwise he'd still be full-time (he owns the business). I don't need to work but I still do.

Now what's with all the Warren Buffett references? "Warren Buffet reveals...". Cheap marketing of Fool products is what it is.

[TreeTired]

70%+ and 200%+

   Very impressive annual returns!  Oh, they are not annual returns?   In that case the numbers are fairly meaningless.     

[Nords]

Now what's with all the Warren Buffett references? "Warren Buffet reveals...". Cheap marketing of Fool products is what it is.

It's a popular tactic for search-engine optimization, but of course it's over-used to the point of being worthless.

The current trend is "Warren Buffett hates..." or "Warren Buffet told me..." or "How I face-punched Warren Buffett"... you get the idea.  My Google Alert for "Warren Buffett" has to specifically exclude anything written on TMF or SeekingAlpha.com.

[pac_NW]

70%+ and 200%+

   Very impressive annual returns!  Oh, they are not annual returns?   In that case the numbers are fairly meaningless.     

Correct. Total return since March 2002. S&P was around 48% for same period.

http://wiki.fool.com/Total_average_return

It is one way of looking at returns. I like Fool from the perspective of learning.

[ThermionicScott]

I've always been skeptical of The Motley Fool's (or anyone's) stock-picking articles, but the LBYM subforum and articles like "You Missed The Best Day to Invest" got me going down the right path, so I won't hate on them too much.  :^)