How did I do in 2012 against the big boys?

This is the time of the year when people who have no plans for the future or do not care about the future claim that I am bragging. People who want to learn to create wealth for their future learn from my experiences. As I have been telling my readers of this blog since 2008 and followers of my investment teachings since 1976, buying individual bonds is the way to go when investing for your retirement.


Please don’t get bonds and bond funds confused. Brokers will try to confuse you because they do not make much money off of the purchase of individual bonds. They make money off bond funds. Bond funds do not mature. Bond funds are a collection of bond investments. This type of investment will rise and fall based on business conditions and interest rates. Corporate Bonds will mature at usually $1,000 per bond. If you bought a bond at $800 in 2008 giving $110 per year and it matured in 2012 at $1,000, you would have $440 in interest and $200 in principal per bond.

Your risk with High Yielding Corporate Bonds is only business risk. The exception would be if interest rates and inflation climbed above the rate given by the bonds. In the case I just described, rates would have to claim past 11%. Interest rates today are lower than 3% and inflation is about 2.5%.

This is how my portfolio increased from the beginning of 2009 to the end of 2012;

2009 – 38.99%

2010 – 17.62%

2011 – 15.36%

2012 – 20.882%


  Over 4 years my portfolio increased without counting my contributions, only interest earned and increase in principal minus any losses, +92.852%. Over the past 4 years, the growth of my IRA including contributions and returns have averaged +59.2358% per year. Can you say that about your 401K at work or your IRA?

The Dow Jones Industrial Average Yearly Returns;

2009 – 18.82%

2010 – 11.02%

2011 – 5.53%

2012 -- 7.26%

The Dow Jones Industrial Average gave a total of +42.63%. It averaged +10.6575% per year. The talking heads on the news tell me that is a good return. My four year average is 48.5783% better.

Why is this happening?

This is happening because of slow growth (under 3%) in the United States. All people have to do is follow the baby boom in the United States starting in 1946. The people born from 1946 to 1966 are the people who buy most of the goods and services. They are the reason why we had the housing boom and the stock market boom until 2006. The people born from 1946 to 1966 are now between the ages of 46 and 66. As they age, they will use less goods and services. More homes will become available as they die off. The use of health care will go up.

Governments and corporations will not be able to sustain investments in retirement funds. Look for more organizations to abandon these programs. Some may keep 401K programs while abandoning matching funds provisions in these programs. This is not good for your future retirement needs.

The growth of the United States will stay low as it is today until most of these people die off. This also means that the stock market will not perform well over that same period. Here is the reason why I suggest placing your money in High Yield Corporate Bonds (not bond funds). This is why I tell you to stay away from the stock market and mutual funds when investing for retirement.

Below is the speculative performance of the Dow Jones Industrial Average which is made up of the most popular stocks followed by the Dow Jones Company. It shows how one year you can gain money and the next year you can end up with losses. This is why most people with 401k plans made money in the 20th Century and lost all of their gains in the last 12 years.

Dow Jones Industrial Average Yearly Returns

Stock Performance Guide

Yearly Stock Returns Index

Year ______Price Gain or Loss______ Percent Gain or Loss

1975__________ 236.17 ______________38.32%

1976 __________152.24 ______________17.86%

1977 _________-173.48 ______________-17.27%

1978 __________-26.16 _______________-3.15%

1979 ___________33.73 _______________4.19%

1980 __________125.24 ______________14.93%

1981 __________-88.98 _______________-9.23%

1982 __________171.55 ______________ 19.61%

1983 __________212.09 _______________20.27%

1984 __________-47.07 ________________-3.74%

1985 __________335.10 _______________27.66%

1986 __________349.28 _______________22.58%

1987 ___________42.88 ________________2.26%

1988 __________229.74 _______________11.85%

1989 __________584.63 _______________26.96%

1990 _________-119.54 ________________-4.34%

1991 __________535.17 _______________20.32%

1992 ___________32.28 ________________4.17%

1993 __________452.98 _______________13.72%

1994 ___________80.35 ________________2.14%

1995 _________1282.68 _______________33.45%

1996 _________1331.15 _______________26.01%

1997 _________1459.98 _______________22.64%

1998 _________1273.18 _______________16.10%

1999 _________2315.69 _______________25.22%

2000 _________-710.27 ________________-6.18%

2001 _________-765.35 ________________-7.10%

2002 ________-1679.87 _______________-16.76%

2003 _________2112.29 _______________25.32%

2004 __________329.09 ________________3.15%

2005 __________-65.51 ________________-0.61%

2006 _________1745.65 _______________16.29%

2007 __________801.67 ________________6.43%

2008 ________-4488.43 _______________-33.84%

2009 ________1651.66 ________________18.82%

2010 ________1149.46 ________________11.02%

2011 _________640.05 _________________5.53%


If the economy improves for a few years which in my opinion will be a temporary thing, it may rival what I am doing with individual bonds.