Sure, a gold medal at the Olympic Games is great. Winning the lottery would be terrific, too (provided it doesn't lead to disaster). And who wouldn't want to strike it rich with a phenomenal investment that soars to five, 10, or even 20 times its original value? But sometimes, settling for a bit less than first place will still leave you in great shape.
If you doubt that conclusion, consult your nearest Olympic bronze medalist. Researchers have found that athletes who win the bronze tend to be happier than silver medalists. If you win silver, you're likely thinking more about how you just missed the gold. If you win bronze, though, you think about how you just missed not medaling at all, and you're happy just to stand on the medal podium.
Investing is no different. If you sell a superlative performer such as BHP Billiton (NYSE: BHP) or UnitedHealth Group (NYSE: UNH) after five years of gains, only to watch it achieve even greater heights, you might be tempted to kick yourself. Instead, be glad you made such blockbuster investments in the first place.
Slower growers can still astound
After 10 years of 25% annual growth, a $100,000 investment will become $930,000. Finding such amazing stock success stories isn't easy, though -- and you can often do better overall by settling for less. Invest the same $100,000 for 25 years at just a 10% annual return, and you'll end up with almost $1.1 million. A 25% average return might feel like a gold medal, but a bronze 10% return is nothing to sneeze at, either.
See for yourself how these recent highfliers have performed over the past 10 years, and compare them with some related companies' long-term records:
|
Strong Performer |
10-Year Avg. Annual Return |
10-Year Total Return |
Competitor in Same Industry |
25-Year Avg. Annual Return |
25-Year Total Return |
|---|---|---|---|---|---|
|
Express Scripts (Nasdaq: ESRX) |
37.4% |
2,300% |
Merck |
14.3% |
2,700% |
|
Chesapeake Energy (NYSE: CHK) |
26.0% |
900% |
ExxonMobil (NYSE: XOM) |
14.0% |
2,500% |
|
Steel Dynamics (Nasdaq: STLD) |
19.5% |
500% |
Nucor (NYSE: NUE) |
16.4% |
4,300% |
Data: Yahoo! Finance.
Don't be dismayed with slow but steady returns for your portfolio. Don't worry if you're not invested in the fastest growers. And don't waste time comparing yourself to others. Just keep investing regularly and sensibly, for the long haul, and you'll end up a winner.
