These days we're busier than ever, with not enough time to finish everything we need to do, much less pursue what we want to do. Given that time crunch, the thought of sitting down to study the stock market likely sounds laughable. But luckily for you, even busy people can earn great investing returns.
Starting with the simplest…
Mutual funds present one of the easiest ways to invest. A passively managed, broad-market index fund, such as one based on the S&P 500, can deliver healthy returns over the long haul. If it averages 9% over 25 years, your annual investments of $12,000 could ultimately become $1.1 million.
If you'd like to aim higher, seek market-beating long-term returns from the very best managed mutual funds. Before you hand over your money to a fund manager, however, make sure you'll pay reasonable fees for experienced management, an investment approach you like, and ideally, low turnover.
I've rounded up several high-performing actively managed funds below, with a passive index fund for comparison:
|
Fund |
10-Year Avg. Annual Return |
15-Year Avg. Annual Return |
Major Holdings Recently Included |
|---|---|---|---|
|
Yacktman (YACKX) |
13.4% |
11.1% |
PepsiCo, Pfizer |
|
T.Rowe Price Media & Telecommunications (PRMTX) |
5.4% |
15.1% |
American Tower
, Qualcomm |
|
Fidelity Contrafund (FCNTX) |
3.4% |
10.6% |
Google, Amazon.com |
|
Vanguard Total Stock Market Index Fund (VTSMX) |
0.2% |
7.9% |
ExxonMobil, Intel |
Data: Morningstar.
Once you're invested in a fund, you'll only have a few quarterly reports to review. And if your fund averages 11% over 25 years, a $12,000 annual investment could eventually leave you with $1.5 million.
Draw on dividends
If you'd like to aim even higher, and have the time and energy to put in a little more work, consider adding a handful of healthy companies that pay -- and grow -- their dividends.
Start by screening for companies with solid revenue and earnings growth rates, healthy returns on equity and profit margins, and manageable debt loads.
Once you've assembled a crop of candidates, start sifting for those with sustainable competitive advantages. For instance, AT&T may currently enjoy an exclusive spot as the sole carrier for Apple's iPhone, but recent reports suggest that its rival wireless networks might soon join that party. In contrast, the popularity of its App Store, and the numerous programmers writing software for it, give the iPhone a much stronger and more lasting edge over its smartphone rivals.
Next, look for defensive companies. They'll often do well even in a poor economy, because they offer products and services people can't or won't do without. Examples might include utility, pharmaceutical, consumer-goods, and fast-food companies, along with discount retailers.
If you can unearth attractive companies that meet these criteria, sport solid dividend yields, and have a long history of both paying and increasing those dividends, you may have found a good long-term, low-maintenance investment.
True, finding great dividend payers requires more energy than simply opting for an S&P 500 index fund. You can save some time, however, by letting us recommend a bunch of promising and well-researched dividend payers. Try our Motley Fool Income Investor newsletter free for 30 days. You'll have full access to all past issues, including the entire list of the stocks our team thinks you should "Buy First."
Intel, Pfizer, and UnitedHealth are Motley Fool Inside Value picks. American Tower and Google are Motley Fool Rule Breakers choices. Apple, Amazon.com, and UnitedHealth are Motley Fool Stock Advisor selections. PepsiCo is a Motley Fool Income Investor recommendation. The Fool has created a covered strangle position on Intel. Motley Fool Options has recommended buying calls on Intel, and a "roll your diagonal call" position on PepsiCo. The Fool owns shares of UnitedHealth.
Longtime Fool contributor Selena Maranjian owns shares of Apple and Fidelity Contrafund. The Motley Fool is Fools writing for Fools.
