Japanese Proverb Fugu is a type of Sashimi prepared from a type of pufferfish that contains a poison that can produce a rapid and violent death. Yet it is beloved by Japanese gourmets. It is usually served in the shape of a chrysanthemum, the traditional funeral flower of Japan. If you choose to eat fugu from a reputable restaurant in Japan, you are probably going to be OK. Fugu chefs serve a rigorous three year apprenticeship under the supervision of a master. Then they must pass a “multitude” of tests before they can obtain a license to prepare and serve this delicacy to the public. If you buy fugu prepared by an amateur, you are risking your life. Every year people die of fugu poisoning in Japan, yet they say that he who doesn’t eat fugu is a fool. I often say that failing to start an investment program is the greatest mistake an investor can make. Yet the very concept of investment, especially in the stock market is haunted by the spectre of risk. Consider the power of compound interest. Say you receive a refund check for $1,000 from the IRS this year. If you invest that $1,000 and every year thereafter another $1,000, in 25 years you would have $50,000 with only a very realistic 5% return on your money. If your stock pays a 2.5% dividend you are already halfway home. If you get lucky, a 10% return will give you $108,000. If you start saving just $4,682 a year at age 25 you will reach $1,000,000 by age 65 given the 7% return predicted by Jeremy Siegel. Is there any risk? Of course there is risk. However, if you seek to build a balanced portfolio of well managed, low cost, funds from a provider such as Vanguard or Fidelity, that risk is minimal. Listen to the latest hot tip from your buddy at work? Well, “Only a fool eats fugu.”
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