Taylor Schulte

3 Retirement Investing Principles

Published about 1 month ago • 3 min read

Hi Reader,

One of the most popular investing books of all time is The Intelligent Investor by Benjamin Graham.

Originally published in 1949, it has been updated multiple times and continues to be a best-seller today.

In case you haven't heard of Benjamin Graham, he was Warren Buffett's teacher and mentor.

And Buffett has said that he considers The Intelligent Investor to be "the best book on investing ever written."

I'm not necessarily encouraging you to read the book (candidly, it's a bit dense for most people.)

However, I do want to share three important principles from the book that are still relevant today.

Before we review each one...did you catch this week's podcast episode?

Dividend Investing

(Part 1):

Learn the truth about dividends, why companies pay them, how they affect investors, and tips for constructing a retirement portfolio.

Three Principles for Investing Success

Ben Graham's fundamental principles are as follows:

  1. Treat a share of stock as a proportional ownership of the business.
  2. Buy at a significant discount to intrinsic value to create a margin of safety.
  3. Be rational, objective, and dispassionate.

Let's review each one. 👇

1.) We Own a Collection of Businesses

Stock prices are erratic. As a result, our portfolios often feel like a group of irrational squiggly lines subject to the whims of fear and greed.

While prices can (and do) act irrationally from time to time, the underlying businesses are anything but irrational.

Our diversified portfolios include some of the best businesses in the world.

These businesses are run by teams of incredibly competent people who are tasked with maintaining profits through different market environments.

That's about as rational as it gets!

If we focus on the long-term value of owning our collection of businesses, it's much easier to ignore the short-term noise.

2.) Margin of Safety

Graham and Buffett were/are buyers of individual companies.

Since individual companies have a risk of going to zero, Graham and Buffet's success relied on buying businesses at a discount.

They refer to this as their "margin of safety."

I love this margin of safety concept because it allows us to tip the odds slightly in our favor.

Since we are long-term owners of a diversified portfolio of companies, we can take a slightly different view of this concept:

We can view TIME as our margin of safety.

Think back to the year 2000 -- the greatest investing bubble of our lifetime.

The S&P peaked in March of that year at around 1,550.

Were stocks overvalued, then?


But I'll bet that anyone reading this would gladly buy at those prices today because, thanks to the benefit of time, they are now an unquestionable bargain.

While not as extreme, many pundits are encouraging investors to sell their stocks today because the market is supposedly "overvalued."

Nothing about the future is guaranteed.

However, my guess is that we will all feel that today's prices are a bargain at some point in the not-so-distant future.

As they say:

"If you think today's prices are high today, wait 20 years…"

3.) The Importance of Rational Behavior

The necessity for proper behavior is fundamental to every piece of advice in The Intelligent Investor.

More specifically, Graham shares that successful investors must act rationally, objectively, and dispassionately.

One way to do that is to learn from those who have come before us.

Given that we are constantly encouraged to quickly act on short-term news, I want to share three quotes from some of the best to help you on your investing journey.

From Warren Buffet:

"My favorite holding period is forever." ~Warren Buffet

From the late Charlie Munger:

"The big money is not in the buying and selling, but in the waiting."

And finally, as we consider the uncertain future that lies before us, remember the wise words of Nick Murray:

"It's not just that you can't time the market; it's that you don't need to."

Please reach out with any questions you may have. And as always, stay the course!

Stay wealthy,

Taylor Schulte, CFP®

When You're Ready, Here Are 3 Ways I Can Help You:

📊​ Free Retirement & Tax Analysis​. Learn how to improve retirement success + lower taxes.

🎙️ Stay Wealthy Retirement Show​. An Apple Top 50 investing podcast.

🏫 Retirement Podcast Network​. A safe place to get accurate information.

Taylor Schulte

Retirement and tax planning plain English.

I'm the host of the Stay Wealthy Retirement Show and founder of Define Financial, an award-winning retirement and tax planning firm. When I’m not helping people lower their tax bill, you can find me traveling with my wife and kids, searching for the next best carne asada burrito, or trying to master Adam Scott’s golf swing.

Read more from Taylor Schulte

Hi Reader, Whenever an asset class performs well over a short period of time, investors inevitably start asking whether or not they should buy some (or more) of the high performer. Given the recent performance of Bitcoin, Ethereum, gold, and silver, I wanted to share some thoughts on these assets. The Past It's difficult to provide a detailed historical analysis of Bitcoin and Ethereum because they are relatively new (2009 and 2013, respectively). However, their performance since inception...

4 days ago • 2 min read

Hi Reader, There's often a disconnect between what we think is happening in the economy and what is ACTUALLY happening. I think of this as the difference between facts and feelings. In today's email, I'm sharing: How consumers currently feel about the economy What the actual economic data says Why the disconnect between facts and feelings exists Before we dive in...did you catch this week's podcast episode? Dividend Investing (Part 3) In this week's episode, I'm discussing Stock Buybacks...

11 days ago • 3 min read

Hi Reader, Today, I’m sharing five of my favorite investing and economic charts from the past month. These charts cover topics like: The Futility of Forecasting Emerging Market Stocks Predicting Interest Rates...and More! Let's dive in.👇 #1 - Predicting The Future Is Hard An inverted yield curve is widely touted as the mother of all “recession indicators.” In other words, when the yield curve "inverts," it indicates that a recession may be near. 💡 What Is An Inverted Yield Curve? It's when...

18 days ago • 3 min read
Share this post