When you watch CNBC and the other financial programs, do you ever get the feeling those talking heads are trying to baffle you with baloney rather than enlighten you with their brilliance?
Are Wall Street fund managers smarter than you?
Here’s why: Good fund managers simply have, and execute, good plans. That’s all.
When you have a simple, well-thought out plan for your investments and follow that plan, you can consistently beat the market.
This fact was demonstrated by two of the great fund managers of the past century, Peter Lynch and Sir John Templeton. They never claimed extraordinary abilities to analyze stocks or predict the direction of the market. On the contrary, they always said they used simple principles to guide their choices and decisions about when to buy and when to sell.
They both had simple plans that they executed with near perfection.
The Millionaire Blueprint plan is a simple investment plan that you can execute easily.
Like Lynch and Templeton, your Millionaire Blueprint is based on two simple investment principles for structuring your portfolio based on how long you want to hold an investment for a specific profit objective:
- Make your investments with expectations of a specific profit objective within a specific time horizon.
- Use the fund managers’ secret called hyper-compounding to accelerate the growth of your money.
Keep It Simple
You have better things to do with your time than fiddle around trying to keep tabs on a lot of different stocks. That’s why the Millionaire Blueprint shows you how to focus on just a handful of carefully selected stock investments… 10, at most.
Having only a few stocks in your portfolio relieves you of the necessity to spend hours of time to manage your money the way a larger portfolio can.
Hyper-Compounding: The Financial Secret Experts Refuse to Share
Hyper-compounding is a strategy to increase the annual rate of return on your money by compounding your gains monthly instead of annually.
This tactic is used to implement this important concept: Rapid portfolio growth is the result of focusing on maximizing the annualized rate of return on your money.
Let’s look at the power of hyper-compounding.
Let’s assume you’re starting with $10,000 and you get an average return per month from your investments of 4%… not per year, but per month.
After 12 months, you’d have $16,000.
That’s an annual return of 60%.
Remember, the key is to increase your annual rate of return, so that 4% per month is the compounding strategy.
If you follow that same plan for a second year, starting with your $16,000 and still generating that 4% return per month, your money would grow to over $26,658 at the end of the second year.
Your annualized rate of return is over 83%.
Notice that in just two years, you more than DOUBLED your money—but you never added a single penny.
That’s the power of hyper-compounding in action.
Now, let’s look at the Millionaire Blueprint plan…
This smart-yet-simple plan starts with short-term investing.
NOTE: Short-term investing is not day trading. Short-term investing means holding stocks or other assets up to 90 days or until your specific profit target is reached.
As your short-term portfolio grows, some investments will be worth holding a little longer. These move into the medium- and long-term sections of your portfolio. This is an important feature of your plan because it eliminates the frustration many investors feel when they try to do everything at once without a plan.
First, you must determine how much money you can start with. You may have a larger portfolio and only want to allocate a fraction of that portfolio to the Millionaire Blueprint plan.
For illustrative purposes, we will use $10,000. That’s a reasonable number for most investors. If you want to start with less, that’s fine, but you’ll be taking on more risk.
Next, divide your short-term investing capital into 10 equally funded groups or “buckets”. In our illustration, that would be $1,000 per bucket. Each bucket will be invested in shares of just one stock.
Your target will be an increase of 20% within the next 90 days and you will sell the stock if it loses 10% of its initial value. These are your decision triggers.
Weekly, (many folks like to do it on Saturday) review the investments in your 10 buckets, according to the following rules:
- Has anything changed?
- Are there other forces at work driving down the value of your stock holding?
- Has the company reported negative news or reduced future earnings expectations?
If so, when the 10% loss trigger is reached, that’s the time to preserve capital and move on to another opportunity.
Sometimes your review will show good reasons to hold the stock a little longer, so you move it into your medium-term section and reset your targets. Your new sell decision trigger is your previous gain target (20% growth above investment value) and your new growth target is 40%.
Good performing, medium-term stocks can be moved to your long-term section if they still show promise. Your targets are readjusted to a growth of 100% or a price drop to the previous 40% growth target.
When you sell, whether to capture and gain or minimize a loss, all of the proceeds are returned to the bucket and reinvested in another short-term stock and the cycle repeats.
Bottom line: The Millionaire Blueprint is a simple investment plan that can realistically grow an investment of $10,000 to $1,000,000 in about 8 years.