itsbob said:
That being said, Rich people didn't get rich being safe and conservative. there has to be risk.
Actually, most millionaires got that way (if they weren't born that way) by building a foundation. The bulk of the people who retire with a million plus aren't found in glitzy neighborhoods drinking champagne. They are found in old neighborhoods with large, fat aging trees populating their yards. They got this way because they saved over their life, and they usually saved in blue chip, growth and income type investments. At least, when you work as an advisor, that is what all the business statistics tell you. Those stats are generated by companies who look for the money because thats where you make the money. So, you go looking for business in those neighborhoods; and when I did it I was regularly surprised by the many people who were sitting on over a million dollars with a early 90s car in the driveway, an older but good sized home (1-2 story), and no apparent signs of wealth anywhere. These retired folks hardly did anything risky with their lives.
On the flip side, they told you to avoid the new neighborhoods with the million dollar homes, driving Audis and BMWs, and showing obvious signs of spending money. Those people usually weren't sitting on nest eggs and they were definitely playing it more risky.
So, I wouldn't generalize that millionaires become millionaires because they take risks. A large part of those who make it to retirement with a significant amount of wealth did so because they saved in conservative, long term investments and didn't try to rush ahead. However, there are many people who risked it all and made millions or billions. Yet, if you take a percentage of those folks that risked it who actually made their goal, it would be a much smaller ratio than the one ratio of those who took a long term, conservative approach and wound up with their goal. Why play the lower odds when you know you can make it with good odds?
Of course, many people didn't start early enough and don't have the long term. The closer you are to when you think you need that result, the more likely you are going to be to play those lower odds in hopes for a quicker return. But, if you have the time, take the safe bet and get there (not that you should bet if you don't have the time, because then you will more than likely you leave yourself short from what you could have had). Aim for an average return of 10-12% a year which is very achievable in conservative growth-and income investments. In fact, most good advisors will tell you that is all you should expect.
But, that being said, there has to be risk to growth. On that, you are on point. The difference is what level of risk. Growth and income stocks are considered risky to fixed income insured investments. Growth and Income is about middle of the rish with straight Growth above it (still a good part of your portfolio) and Aggressive Growth above that (no real need for it). International Funds and Small Cap can satisfy that desire to chase larger gaains as a portion of your portfolio without actually being truly Aggressive Growth (non-diverse/one or two industry heavy).
