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How should I invest my money?
12/5/2011 2:58:48 PM
Hello all,
First let me apologize for the long post - but I'm hoping that someone more experienced may be able to give some advice.
I'm 22 years old and have been putting away money from my full time employment from the time I was 16.I know that there are many knowledgeable people here and was wondering your thoughts on my investment strategy.
Currently I make about $40k/year but I'm waiting to leave for USMC bootcamp so my 401k will likely be rolled over into my Roth IRA at some point next year.
I hold a Fidelity 401k invested at 10% of my gross income and my employer kicks in an additional 2%. It is broken down into these funds at the percentage listed-
Fidelity Contrafund - 25%
Fidelity Low-Priced Stock Fund - 25%
Royce Opportunity Invmnt CL - 15%
Royce Value Plus Fund Institutional Class - 5%
Fidelity International Small Cap Fund - 20%
PIMCO Total Return Inst CL - 10%
I also hold a First Investors Roth IRA invested at 5% of my gross income. It is invested very agressively into their "Select Growth Fund".
Lastly, I buy around $150 in Silver each month.
Any advice for things that I should do differently? Funds that I shouldn't be investing in?
First let me apologize for the long post - but I'm hoping that someone more experienced may be able to give some advice.
I'm 22 years old and have been putting away money from my full time employment from the time I was 16.I know that there are many knowledgeable people here and was wondering your thoughts on my investment strategy.
Currently I make about $40k/year but I'm waiting to leave for USMC bootcamp so my 401k will likely be rolled over into my Roth IRA at some point next year.
I hold a Fidelity 401k invested at 10% of my gross income and my employer kicks in an additional 2%. It is broken down into these funds at the percentage listed-
Fidelity Contrafund - 25%
Fidelity Low-Priced Stock Fund - 25%
Royce Opportunity Invmnt CL - 15%
Royce Value Plus Fund Institutional Class - 5%
Fidelity International Small Cap Fund - 20%
PIMCO Total Return Inst CL - 10%
I also hold a First Investors Roth IRA invested at 5% of my gross income. It is invested very agressively into their "Select Growth Fund".
Lastly, I buy around $150 in Silver each month.
Any advice for things that I should do differently? Funds that I shouldn't be investing in?
12/5/2011 5:20:57 PM
You sound like you are investing wisely but the truth is nobody knows what the future holds. I would say that I believe that in the current depressed economy the wise purchase is farm land because there is only so much land on the face of the earth which is suitable to grow crops. Tillable farm ground can be cash rented to provide income. Government programs like CRP pay cash rent each year to do certain positive things like trees and grass along any creek which protects the water from farm chemicals.
12/5/2011 9:44:30 PM
I don't often say it but you're damn near perfect compared to most people for practical purposes. Unless someone comes in here to critique a specific fund choice, I'd avoid any advice you get here because at this point you have better odds of doing damage to what looks like a VERY reasonable plan than you do of actually making an improvement.
I specifically award points for:
1) Effectively a 17% savings rate (15% and up is where we all need to be)
2) A sane percentage of money going into PMs (as opposed to going full retard and betting the farm on a commodity)
3) Participating in both a 401k and an IRA (nice to have your eggs in a couple different baskets of baskets)
Keep that up for 40 years and you'll have quite a nice retirement for yourself. Whatever you do, resist the urge to raid this pile at any point for any reason until it's time. If you need to save up for something else like a down payment on a house, then keep it do it separate from this.
I specifically award points for:
1) Effectively a 17% savings rate (15% and up is where we all need to be)
2) A sane percentage of money going into PMs (as opposed to going full retard and betting the farm on a commodity)
3) Participating in both a 401k and an IRA (nice to have your eggs in a couple different baskets of baskets)
Keep that up for 40 years and you'll have quite a nice retirement for yourself. Whatever you do, resist the urge to raid this pile at any point for any reason until it's time. If you need to save up for something else like a down payment on a house, then keep it do it separate from this.
12/5/2011 10:35:20 PM
Originally Posted By woodsie:
I don't often say it but you're damn near perfect compared to most people for practical purposes. Unless someone comes in here to critique a specific fund choice, I'd avoid any advice you get here because at this point you have better odds of doing damage to what looks like a VERY reasonable plan than you do of actually making an improvement.
I specifically award points for:
1) Effectively a 17% savings rate (15% and up is where we all need to be)
2) A sane percentage of money going into PMs (as opposed to going full retard and betting the farm on a commodity)
3) Participating in both a 401k and an IRA (nice to have your eggs in a couple different baskets of baskets)
Keep that up for 40 years and you'll have quite a nice retirement for yourself. Whatever you do, resist the urge to raid this pile at any point for any reason until it's time. If you need to save up for something else like a down payment on a house, then keep it do it separate from this.
I don't often say it but you're damn near perfect compared to most people for practical purposes. Unless someone comes in here to critique a specific fund choice, I'd avoid any advice you get here because at this point you have better odds of doing damage to what looks like a VERY reasonable plan than you do of actually making an improvement.
I specifically award points for:
1) Effectively a 17% savings rate (15% and up is where we all need to be)
2) A sane percentage of money going into PMs (as opposed to going full retard and betting the farm on a commodity)
3) Participating in both a 401k and an IRA (nice to have your eggs in a couple different baskets of baskets)
Keep that up for 40 years and you'll have quite a nice retirement for yourself. Whatever you do, resist the urge to raid this pile at any point for any reason until it's time. If you need to save up for something else like a down payment on a house, then keep it do it separate from this.
Thank you for the advice, it is very much appreciated.
12/6/2011 2:45:52 AM
Originally Posted By KimberTLE45:
Hello all,
First let me apologize for the long post - but I'm hoping that someone more experienced may be able to give some advice.
I'm 22 years old and have been putting away money from my full time employment from the time I was 16.I know that there are many knowledgeable people here and was wondering your thoughts on my investment strategy.
Currently I make about $40k/year but I'm waiting to leave for USMC bootcamp so my 401k will likely be rolled over into my Roth IRA at some point next year.
I hold a Fidelity 401k invested at 10% of my gross income and my employer kicks in an additional 2%. It is broken down into these funds at the percentage listed-
Fidelity Contrafund - 25%
Fidelity Low-Priced Stock Fund - 25%
Royce Opportunity Invmnt CL - 15%
Royce Value Plus Fund Institutional Class - 5%
Fidelity International Small Cap Fund - 20%
PIMCO Total Return Inst CL - 10%
I also hold a First Investors Roth IRA invested at 5% of my gross income. It is invested very agressively into their "Select Growth Fund".
Lastly, I buy around $150 in Silver each month.
Any advice for things that I should do differently? Funds that I shouldn't be investing in?
Hello all,
First let me apologize for the long post - but I'm hoping that someone more experienced may be able to give some advice.
I'm 22 years old and have been putting away money from my full time employment from the time I was 16.I know that there are many knowledgeable people here and was wondering your thoughts on my investment strategy.
Currently I make about $40k/year but I'm waiting to leave for USMC bootcamp so my 401k will likely be rolled over into my Roth IRA at some point next year.
I hold a Fidelity 401k invested at 10% of my gross income and my employer kicks in an additional 2%. It is broken down into these funds at the percentage listed-
Fidelity Contrafund - 25%
Fidelity Low-Priced Stock Fund - 25%
Royce Opportunity Invmnt CL - 15%
Royce Value Plus Fund Institutional Class - 5%
Fidelity International Small Cap Fund - 20%
PIMCO Total Return Inst CL - 10%
I also hold a First Investors Roth IRA invested at 5% of my gross income. It is invested very agressively into their "Select Growth Fund".
Lastly, I buy around $150 in Silver each month.
Any advice for things that I should do differently? Funds that I shouldn't be investing in?
Invest in bond funds for long term. Stock aren't good for long term that including stock funds.
50/50 on Government and high yield corporate bonds funds
Or
50/25/25
50 Government bonds, 25 high yield corporate bonds, 25 long term corporate bond funds
https://personal.vanguard.com/us/funds/vanguard/FundsTableView
Long term bonds will always beat stock.
I would not go for precious metal unless they are really really cheap, ie $10 or under for silver. They are like stock high risk low reward. But unlike stock they are very sensitive to the dollar movement. Stick with bond funds for less stress in your life.
12/6/2011 2:42:21 PM
Originally Posted By LGK:
Invest in bond funds for long term. Stock aren't good for long term that including stock funds.
50/50 on Government and high yield corporate bonds funds
Or
50/25/25
50 Government bonds, 25 high yield corporate bonds, 25 long term corporate bond funds
https://personal.vanguard.com/us/funds/vanguard/FundsTableView
Long term bonds will always beat stock.
I would not go for precious metal unless they are really really cheap, ie $10 or under for silver. They are like stock high risk low reward. But unlike stock they are very sensitive to the dollar movement. Stick with bond funds for less stress in your life.
Invest in bond funds for long term. Stock aren't good for long term that including stock funds.
50/50 on Government and high yield corporate bonds funds
Or
50/25/25
50 Government bonds, 25 high yield corporate bonds, 25 long term corporate bond funds
https://personal.vanguard.com/us/funds/vanguard/FundsTableView
Long term bonds will always beat stock.
I would not go for precious metal unless they are really really cheap, ie $10 or under for silver. They are like stock high risk low reward. But unlike stock they are very sensitive to the dollar movement. Stick with bond funds for less stress in your life.
I really have to disagree with almost everything you've posted here. Stocks are much better long term investments than bonds. The long-term return on stocks averages 10-12%. Bonds are nowhere near that rate.
The benefits of bonds are stability. For someone who has 20-40 years to watch their money appreciate, stocks are very stable and provide a much better return. As you get older and you can't tolerate as much fluctuation in your portfolio, bonds start to become a better investment.
12/6/2011 4:25:25 PM
Originally Posted By graysonp:
I really have to disagree with almost everything you've posted here. Stocks are much better long term investments than bonds. The long-term return on stocks averages 10-12%. Bonds are nowhere near that rate.
The benefits of bonds are stability. For someone who has 20-40 years to watch their money appreciate, stocks are very stable and provide a much better return. As you get older and you can't tolerate as much fluctuation in your portfolio, bonds start to become a better investment.
Originally Posted By LGK:
Invest in bond funds for long term. Stock aren't good for long term that including stock funds.
50/50 on Government and high yield corporate bonds funds
Or
50/25/25
50 Government bonds, 25 high yield corporate bonds, 25 long term corporate bond funds
https://personal.vanguard.com/us/funds/vanguard/FundsTableView
Long term bonds will always beat stock.
I would not go for precious metal unless they are really really cheap, ie $10 or under for silver. They are like stock high risk low reward. But unlike stock they are very sensitive to the dollar movement. Stick with bond funds for less stress in your life.
Invest in bond funds for long term. Stock aren't good for long term that including stock funds.
50/50 on Government and high yield corporate bonds funds
Or
50/25/25
50 Government bonds, 25 high yield corporate bonds, 25 long term corporate bond funds
https://personal.vanguard.com/us/funds/vanguard/FundsTableView
Long term bonds will always beat stock.
I would not go for precious metal unless they are really really cheap, ie $10 or under for silver. They are like stock high risk low reward. But unlike stock they are very sensitive to the dollar movement. Stick with bond funds for less stress in your life.
I really have to disagree with almost everything you've posted here. Stocks are much better long term investments than bonds. The long-term return on stocks averages 10-12%. Bonds are nowhere near that rate.
The benefits of bonds are stability. For someone who has 20-40 years to watch their money appreciate, stocks are very stable and provide a much better return. As you get older and you can't tolerate as much fluctuation in your portfolio, bonds start to become a better investment.
It's not my opinion that bonds beat stock long term. It's a fact.
Stock aren't stable. Companies come and go. Unlike bonds if a company goes bankrupt, the stock you own in the company become useless. With bonds you at least get some of it back. Stocks are volatile. Stock are great for short term but long term your investment might be negative. How many recessions did the US have in the past 30 years? How many times did these recessions take out the life saving of retirees?
Stick with bond funds for retirement. Don't risk your money in stocks or stuck funds when it comes to retirement.
12/6/2011 4:30:12 PM
Kudos OP, for starting early and sticking with it.
The only flag I see raised in your plan, is that you want to roll your employer 401K over to a Roth IRA. I don't think I'd do that, unless you're prepared to pay the taxes due upon conversion. Seems like the TSP (no first hand experience - they didn't have it when I was in) offers really low management fees and a good choice of plan funds. Can you roll your 401K over to a TSP account perhaps, and not get the tax hit?
I think your bond allocation is fine. Young = long time until retirement = stocks = growth.
The only flag I see raised in your plan, is that you want to roll your employer 401K over to a Roth IRA. I don't think I'd do that, unless you're prepared to pay the taxes due upon conversion. Seems like the TSP (no first hand experience - they didn't have it when I was in) offers really low management fees and a good choice of plan funds. Can you roll your 401K over to a TSP account perhaps, and not get the tax hit?
I think your bond allocation is fine. Young = long time until retirement = stocks = growth.
12/6/2011 4:35:48 PM
Originally Posted By JI603:
Kudos OP, for starting early and sticking with it.
The only flag I see raised in your plan, is that you want to roll your employer 401K over to a Roth IRA. I don't think I'd do that, unless you're prepared to pay the taxes due upon conversion. Seems like the TSP (no first hand experience - they didn't have it when I was in) offers really low management fees and a good choice of plan funds. Can you roll your 401K over to a TSP account perhaps, and not get the tax hit?
I think your bond allocation is fine. Young = long time until retirement = stocks = growth.
Kudos OP, for starting early and sticking with it.
The only flag I see raised in your plan, is that you want to roll your employer 401K over to a Roth IRA. I don't think I'd do that, unless you're prepared to pay the taxes due upon conversion. Seems like the TSP (no first hand experience - they didn't have it when I was in) offers really low management fees and a good choice of plan funds. Can you roll your 401K over to a TSP account perhaps, and not get the tax hit?
I think your bond allocation is fine. Young = long time until retirement = stocks = growth.
My uncle is a former First Investors VP and Raymond James broker, he advised me to roll the 401k into my Roth. I haven't looked into it much as I wont be in that position for another 6 months or so, but I guess that I should determine what will be the best outcome for me.
He also explained to me that stocks are more risky but I'm young and can invest aggresively but given how my portfolio has been doing, I may look into becoming a bit more conservative with a higher percentage of bond funds.
Fortunately I didn't listen when the market crashed and everyone was pulling out, I invested substantially more money and didn't look at any investments for a year or so as my uncle advised and made a considerable gain.
Again, thank you very much to everyone responding - it is appreciated.
12/6/2011 4:59:23 PM
Well hey - whoever's been advising you so far hasn't steered you wrong. Uncle's probably saying roll your 401K into your roth and pay the conversion taxes because you're in a low tax bracket right now.
I'd hit him up every year at the family Christmas party for free financial advice.
I'd hit him up every year at the family Christmas party for free financial advice.
12/6/2011 5:59:15 PM
Originally Posted By LGK:
It's not my opinion that bonds beat stock long term. It's a fact.
Stock aren't stable. Companies come and go. Unlike bonds if a company goes bankrupt, the stock you own in the company become useless. With bonds you at least get some of it back. Stocks are volatile. Stock are great for short term but long term your investment might be negative. How many recessions did the US have in the past 30 years? How many times did these recessions take out the life saving of retirees?
Stick with bond funds for retirement. Don't risk your money in stocks or stuck funds when it comes to retirement.
It's not my opinion that bonds beat stock long term. It's a fact.
Stock aren't stable. Companies come and go. Unlike bonds if a company goes bankrupt, the stock you own in the company become useless. With bonds you at least get some of it back. Stocks are volatile. Stock are great for short term but long term your investment might be negative. How many recessions did the US have in the past 30 years? How many times did these recessions take out the life saving of retirees?
Stick with bond funds for retirement. Don't risk your money in stocks or stuck funds when it comes to retirement.
What you're stating completely contradicts the basic fundamentals of investing that are available on any legitimate investing website or publication. You're not posting facts, because there is no data to support your theory.
You seem to not understand the concept of an AVERAGE. Stocks on AVERAGE, have a long term return of 10-12%. That means if you pick 100 stocks at random, and monitor them for 30-40 years, they will return 10-12% per year, on average. Sure, all of them will fluctuate and some of them will go bankrupt. Others will grow 50-100% per year. But on the average, they return 10-12%. That's a fact and you can look it up on any website. Bonds on the other hand, have a lower average return. Some bonds don't pay out (even they're not guaranteed), other bonds pay well below the average market return. But on average, the return on bonds is lower than stocks. You can't just hand pick a couple bankrupt stocks and say "look, the return on stocks is poor and the return on bonds is good".
Recessionary periods are natural in an economy. Sure, they cause stock fluctuations, but those are SHORT TERM fluctuations. Eventually, the market recovers and returns 10% on average. You have completely flipped the facts of investing. Stocks are considered a poor short term investment because of fluctuations that can cause big swings in portfolio values. Bonds are considered poor long term investments because of lower returns. Younger investors will generally prefer stocks as they can afford to wait out the fluctuations. Older investors move their funds into bonds because of security. Complaining about stocks losing value during a recessionary period is complaining about the short term return, and does not back up your argument that bonds have a better return.
How can you possibly think that bonds have a better long term return? Have you ever seen any data whatsoever to support this? Have you not wondered why people even buy stocks, if bonds provide a better return and security? Why do millions of investors put their money into a stock when all they have to do is invest in bonds for a better guaranteed return? Or do you think that you've come upon some crazy scheme in bond investing that the millions of other professional investors have never discovered?
Here are the 30 year rolling average returns for the Dow and the S&P 500. Notice how even during recessionary periods, the long term rate for any 10 year period still returns over 8% and has been up to 14% during boom periods.
12/6/2011 6:09:45 PM
Originally Posted By KimberTLE45:
He also explained to me that stocks are more risky but I'm young and can invest aggressively but given how my portfolio has been doing.
Originally Posted By JI603:
Kudos OP, for starting early and sticking with it.
The only flag I see raised in your plan, is that you want to roll your employer 401K over to a Roth IRA. I don't think I'd do that, unless you're prepared to pay the taxes due upon conversion. Seems like the TSP (no first hand experience - they didn't have it when I was in) offers really low management fees and a good choice of plan funds. Can you roll your 401K over to a TSP account perhaps, and not get the tax hit?
I think your bond allocation is fine. Young = long time until retirement = stocks = growth.
Kudos OP, for starting early and sticking with it.
The only flag I see raised in your plan, is that you want to roll your employer 401K over to a Roth IRA. I don't think I'd do that, unless you're prepared to pay the taxes due upon conversion. Seems like the TSP (no first hand experience - they didn't have it when I was in) offers really low management fees and a good choice of plan funds. Can you roll your 401K over to a TSP account perhaps, and not get the tax hit?
I think your bond allocation is fine. Young = long time until retirement = stocks = growth.
He also explained to me that stocks are more risky but I'm young and can invest aggressively but given how my portfolio has been doing.
These are the same words that people used 40 years ago. You know what happen 40 years latter? They still working because they do not have enough money to support their retirement. The numerous stock market crashed wipe out their saving and Social Security isn't enough.
Why are so many Americans that can't retire? Because they got tricked into investing their life saving into stocks at a young instead of putting it in a safe consistent growth investment like bonds.
12/6/2011 6:26:09 PM
Originally Posted By LGK:
These are the same words that people used 40 years ago. You know what happen 40 years latter? They still working because they do not have enough money to support their retirement. The numerous stock market crashed wipe out their saving and Social Security isn't enough.
Why are so many Americans that can't retire? Because they got tricked into investing their life saving into stocks at a young instead of putting it in a safe consistent growth investment like bonds.
These are the same words that people used 40 years ago. You know what happen 40 years latter? They still working because they do not have enough money to support their retirement. The numerous stock market crashed wipe out their saving and Social Security isn't enough.
Why are so many Americans that can't retire? Because they got tricked into investing their life saving into stocks at a young instead of putting it in a safe consistent growth investment like bonds.
You are giving very poor advice in this thread, and you need to just stop posting. You have no clue what you're talking about, and you're only giving anecdotal references to short term fluctutions in the market and trying to present them as facts. And you keep referencing all of the "stock market crashes" over the past. In the real world, there have only been a couple major crashes in our lifetime, and decades of boom periods with excellent returns on investments. Claiming he shouldn't invest in stocks is like saying you should never get a burger at McDonald's because one guy got salmonella and died from a tainted burger 10 years ago.
The argument you're making is not the fault of stocks as an investment vehicle. It's an example of poor risk management. People who are 10-20 years from retirement can't afford the risks of stock fluctuations making a big impact on their portfolio as they near retirement age. They need to gradually shift money into safer investments (like bonds or CDs). That is NOT an excuse for someone who is 30-50 years from retirement to avoid stocks when they have plenty of time for their portfolio to grow and recover from fluctuations over their lifetime. You are suggesting that the OP give up huge potential returns when all of the market data and trends show that he should continue to invest in stocks for the long term.
With your logic, why even invest in bonds? There's still potential to lose money. Why not just stuff the money under your mattress and avoid the risks of losing your investment?
12/6/2011 6:34:30 PM
Originally Posted By graysonp:
What you're stating completely contradicts the basic fundamentals of investing that are available on any legitimate investing website or publication. You're not posting facts, because there is no data to support your theory.
You seem to not understand the concept of an AVERAGE. Stocks on AVERAGE, have a long term return of 10-12%. That means if you pick 100 stocks at random, and monitor them for 30-40 years, they will return 10-12% per year, on average. Sure, all of them will fluctuate and some of them will go bankrupt. Others will grow 50-100% per year. But on the average, they return 10-12%. That's a fact and you can look it up on any website. Bonds on the other hand, have a lower average return. Some bonds don't pay out (even they're not guaranteed), other bonds pay well below the average market return. But on average, the return on bonds is lower than stocks. You can't just hand pick a couple bankrupt stocks and say "look, the return on stocks is poor and the return on bonds is good".
Recessionary periods are natural in an economy. Sure, they cause stock fluctuations, but those are SHORT TERM fluctuations. Eventually, the market recovers and returns 10% on average. You have completely flipped the facts of investing. Stocks are considered a poor short term investment because of fluctuations that can cause big swings in portfolio values. Bonds are considered poor long term investments because of lower returns. Younger investors will generally prefer stocks as they can afford to wait out the fluctuations. Older investors move their funds into bonds because of security. Complaining about stocks losing value during a recessionary period is complaining about the short term return, and does not back up your argument that bonds have a better return.
How can you possibly think that bonds have a better long term return? Have you ever seen any data whatsoever to support this? Have you not wondered why people even buy stocks, if bonds provide a better return and security? Why do millions of investors put their money into a stock when all they have to do is invest in bonds for a better guaranteed return? Or do you think that you've come upon some crazy scheme in bond investing that the millions of other professional investors have never discovered?
Here are the 30 year rolling average returns for the Dow and the S&P 500. Notice how even during recessionary periods, the long term rate for any 10 year period still returns over 8% and has been up to 14% during boom periods.
http://www.investorsfriend.com/return1.gif
http://www.investorsfriend.com/return5.gif
Originally Posted By LGK:
It's not my opinion that bonds beat stock long term. It's a fact.
Stock aren't stable. Companies come and go. Unlike bonds if a company goes bankrupt, the stock you own in the company become useless. With bonds you at least get some of it back. Stocks are volatile. Stock are great for short term but long term your investment might be negative. How many recessions did the US have in the past 30 years? How many times did these recessions take out the life saving of retirees?
Stick with bond funds for retirement. Don't risk your money in stocks or stuck funds when it comes to retirement.
It's not my opinion that bonds beat stock long term. It's a fact.
Stock aren't stable. Companies come and go. Unlike bonds if a company goes bankrupt, the stock you own in the company become useless. With bonds you at least get some of it back. Stocks are volatile. Stock are great for short term but long term your investment might be negative. How many recessions did the US have in the past 30 years? How many times did these recessions take out the life saving of retirees?
Stick with bond funds for retirement. Don't risk your money in stocks or stuck funds when it comes to retirement.
What you're stating completely contradicts the basic fundamentals of investing that are available on any legitimate investing website or publication. You're not posting facts, because there is no data to support your theory.
You seem to not understand the concept of an AVERAGE. Stocks on AVERAGE, have a long term return of 10-12%. That means if you pick 100 stocks at random, and monitor them for 30-40 years, they will return 10-12% per year, on average. Sure, all of them will fluctuate and some of them will go bankrupt. Others will grow 50-100% per year. But on the average, they return 10-12%. That's a fact and you can look it up on any website. Bonds on the other hand, have a lower average return. Some bonds don't pay out (even they're not guaranteed), other bonds pay well below the average market return. But on average, the return on bonds is lower than stocks. You can't just hand pick a couple bankrupt stocks and say "look, the return on stocks is poor and the return on bonds is good".
Recessionary periods are natural in an economy. Sure, they cause stock fluctuations, but those are SHORT TERM fluctuations. Eventually, the market recovers and returns 10% on average. You have completely flipped the facts of investing. Stocks are considered a poor short term investment because of fluctuations that can cause big swings in portfolio values. Bonds are considered poor long term investments because of lower returns. Younger investors will generally prefer stocks as they can afford to wait out the fluctuations. Older investors move their funds into bonds because of security. Complaining about stocks losing value during a recessionary period is complaining about the short term return, and does not back up your argument that bonds have a better return.
How can you possibly think that bonds have a better long term return? Have you ever seen any data whatsoever to support this? Have you not wondered why people even buy stocks, if bonds provide a better return and security? Why do millions of investors put their money into a stock when all they have to do is invest in bonds for a better guaranteed return? Or do you think that you've come upon some crazy scheme in bond investing that the millions of other professional investors have never discovered?
Here are the 30 year rolling average returns for the Dow and the S&P 500. Notice how even during recessionary periods, the long term rate for any 10 year period still returns over 8% and has been up to 14% during boom periods.
http://www.investorsfriend.com/return1.gif
http://www.investorsfriend.com/return5.gif
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aR8JREWPNUyQ&refer=exclusive
Than you have corporate bonds that give greater returns at a lower risk than stock. High yield corporate bond funds while much more riskier still better than stock funds. While their principal can go down their yield will move up making their losses if any bearable.
Why are so many Americans can't retire? They got suck into the get rich stock schemes.
There is a difference between retirement investors and professional traders. People that invest for retirement don't know when to get out of the stock market when it is high. Professorial trades does. Unfortunately stock funds doesn't trade on fly. Most of the time when they move away from a stock it is at a lost. Who take the lost? The people that invest in the stock fund.
12/6/2011 6:43:02 PM
Originally Posted By graysonp:
With your logic, why even invest in bonds? There's still potential to lose money. Why not just stuff the money under your mattress and avoid the risks of losing your investment?
With your logic, why even invest in bonds? There's still potential to lose money. Why not just stuff the money under your mattress and avoid the risks of losing your investment?
What's wrong with my logic? Bonds are low risk high reward investment. Stock are low reward high risk investment. Bonds have a consistent growth curve. While stocks are unpredictable year to year. Most people show you the bright side of investing in the stock market. They never show you the darker side of how much money the lost until the blow up their brain out or jump off a building.
I have seen so many life saving wipe out because they invested in stocks. So many pension funds are in the negative because their investment in the stock market didn't work out as planed.
Any investing have a level of risk. Good investors have a good understanding of risk investment. The worst thing you can do is invest in stocks for your retirement.
12/6/2011 6:50:11 PM
Originally Posted By LGK:
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aR8JREWPNUyQ&refer=exclusive
Than you have corporate bonds that give greater returns at a lower risk than stock. High yield corporate bond funds while much more riskier still better than stock funds. While their principal can go down their yield will move up making their losses if any bearable.
Why are so many Americans can't retire? They got suck into the get rich stock schemes.
There is a difference between retirement investors and professional traders. People that invest for retirement don't know when to get out of the stock market when it is high. Professorial trades does. Unfortunately stock funds doesn't trade on fly. Most of the time when they move away from a stock it is at a lost. Who take the lost? The people that invest in the stock fund.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aR8JREWPNUyQ&refer=exclusive
Than you have corporate bonds that give greater returns at a lower risk than stock. High yield corporate bond funds while much more riskier still better than stock funds. While their principal can go down their yield will move up making their losses if any bearable.
Why are so many Americans can't retire? They got suck into the get rich stock schemes.
There is a difference between retirement investors and professional traders. People that invest for retirement don't know when to get out of the stock market when it is high. Professorial trades does. Unfortunately stock funds doesn't trade on fly. Most of the time when they move away from a stock it is at a lost. Who take the lost? The people that invest in the stock fund.
The "Facts" you are using to support your position in that link are a reference to a single 30 year period. Which means if you didn't invest in bonds specifically in 1977, you would NOT have seen a better return than the long term stock market average. That's why I posted the rolling 30 year averages, because it takes into account that not everyone was investing in 1977, and not everyone retired and got out of the market in 1977. If someone invested in bonds in 1976 or 1978, they would have seen a lower return that the stock market during that same time period. This one specific time frame is a fluke. It's great for anyone who happened to be invested in bonds during the time period, but it means diddly to anyone else. 99% of the time, stocks will have the greater return, which is why people invest in them.
Again, I'm talking about long term averages. Not hand picked numbers to make you think your opinion is correct. What your posting is basically akin to me hand-picking a stock that has appreciated 200% per year for the last 10 years and claiming tha it's proof that stock markets return 200% per year.
Again, I'll ask: Do you really think noone else would notice or care if your statement were true? Why would people be investing in stocks and suggesting stocks as investments? The one investment firm who suggested all bonds as investments would be huge, since all their customers would make a guaranteed return better than stocks with less risk. Right?The investors who only invested in bonds would be making millions and never losing money, right? Wrong. Because the tradeoff of investing in a more secure bond is a lower average return.
12/6/2011 6:54:34 PM
Originally Posted By LGK:
What's wrong with my logic? Bonds are low risk high reward investment. Stock are low reward high risk investment. Bonds have a consistent growth curve. While stocks are unpredictable year to year. Most people show you the bright side of investing in the stock market. They never show you the darker side of how much money the lost until the blow up their brain out or jump off a building.
I have seen so many life saving wipe out because they invested in stocks. So many pension funds are in the negative because their investment in the stock market didn't work out as planed.
Any investing have a level of risk. Good investors have a good understanding of risk investment. The worst thing you can do is invest in stocks for your retirement.
What's wrong with my logic? Bonds are low risk high reward investment. Stock are low reward high risk investment. Bonds have a consistent growth curve. While stocks are unpredictable year to year. Most people show you the bright side of investing in the stock market. They never show you the darker side of how much money the lost until the blow up their brain out or jump off a building.
I have seen so many life saving wipe out because they invested in stocks. So many pension funds are in the negative because their investment in the stock market didn't work out as planed.
Any investing have a level of risk. Good investors have a good understanding of risk investment. The worst thing you can do is invest in stocks for your retirement.
Your logic is ignoring the facts and data that are out there. You're basing your opinion on anecdotal information of some people who lost money on the stock market. There are just as many people who have made millions on the stock market. And the long term data shows that the average return is greater than almost any other investment vehicle. That's why stocks are popular and that's why people continue to invest in them. Because they are a great security for long term investing. You seem to fail at understanding risk management and try to blame the security itself when someone loses their fortune. That's like blaming guns for killing people.
Again, what you're suggesting is like me saying noone should eat McDonald's because one guy died from salmonella poisoning at some point in the company's history. The facts are that they have served billions of hamburgers, and you can't just ignore that fact while handpicking some small piece of information that supports your opinion. The claims you have made in this thread are not representative of the market as a whole. They are representative of one small scenario that is an anomoly over a long period of time.
12/7/2011 3:01:53 AM
Originally Posted By LGK:
These are the same words that people used 40 years ago. You know what happen 40 years latter? They still working because they do not have enough money to support their retirement. The numerous stock market crashed wipe out their saving and Social Security isn't enough.
Why are so many Americans that can't retire? Because they got tricked into investing their life saving into stocks at a young instead of putting it in a safe consistent growth investment like bonds.
Originally Posted By KimberTLE45:
He also explained to me that stocks are more risky but I'm young and can invest aggressively but given how my portfolio has been doing.
Originally Posted By JI603:
Kudos OP, for starting early and sticking with it.
The only flag I see raised in your plan, is that you want to roll your employer 401K over to a Roth IRA. I don't think I'd do that, unless you're prepared to pay the taxes due upon conversion. Seems like the TSP (no first hand experience - they didn't have it when I was in) offers really low management fees and a good choice of plan funds. Can you roll your 401K over to a TSP account perhaps, and not get the tax hit?
I think your bond allocation is fine. Young = long time until retirement = stocks = growth.
Kudos OP, for starting early and sticking with it.
The only flag I see raised in your plan, is that you want to roll your employer 401K over to a Roth IRA. I don't think I'd do that, unless you're prepared to pay the taxes due upon conversion. Seems like the TSP (no first hand experience - they didn't have it when I was in) offers really low management fees and a good choice of plan funds. Can you roll your 401K over to a TSP account perhaps, and not get the tax hit?
I think your bond allocation is fine. Young = long time until retirement = stocks = growth.
He also explained to me that stocks are more risky but I'm young and can invest aggressively but given how my portfolio has been doing.
These are the same words that people used 40 years ago. You know what happen 40 years latter? They still working because they do not have enough money to support their retirement. The numerous stock market crashed wipe out their saving and Social Security isn't enough.
Why are so many Americans that can't retire? Because they got tricked into investing their life saving into stocks at a young instead of putting it in a safe consistent growth investment like bonds.
I'm with you. Took my money out after I retired. Tired of losing hard earned money. I know many people who lost their a$$ in the market . Next to none who made a profit. Over the years I have heard many pastors talk against gambling but, say investing is alright. If you have had a chance to check things out over the last couple of years you know the market is rigged[Flash Crash].Glorified gambling. Good luck.
12/7/2011 9:08:28 AM
Originally Posted By StogerMan:
I'm with you. Took my money out after I retired. Tired of losing hard earned money. I know many people who lost their a$$ in the market . Next to none who made a profit. Over the years I have heard many pastors talk against gambling but, say investing is alright. If you have had a chance to check things out over the last couple of years you know the market is rigged[Flash Crash].Glorified gambling. Good luck.
I'm with you. Took my money out after I retired. Tired of losing hard earned money. I know many people who lost their a$$ in the market . Next to none who made a profit. Over the years I have heard many pastors talk against gambling but, say investing is alright. If you have had a chance to check things out over the last couple of years you know the market is rigged[Flash Crash].Glorified gambling. Good luck.
No offense,but when I see anyone post that the market is rigged on this board, it's pretty much a sure sign that they don't know what they're talking about. It's generally someone who's frustrated that they lost money due to poor portfolio management for whatever reason, and they're blaming the investment product they used. It's like blaming guns and claiming they're evil when someone close to you gets shot.
If the market is rigged as you claim, why do people keep investing in it? Do you think this is some tin foil conspiracy that only Arfcommers have discovered? Millions of investors wouldn't stumble onto this at some point? And how do you explain the fact that the majority of average investors make money in the long run? That's just simple statistics. You can claim that you "know many people who lost their ass in the market", but actual data shows that those people are in the minority. Again, you're looking at a small sample of people over a small period of time when the overall market return is much better than what you're implying. If you're at retirement age, you would have watched the big bull markets of the 50s, 60s, 80s and 90s. But you conveniently neglect to mention that those markets were making big returns, and only mention the recent (short term) crashes and bear markets.
Stocks require proper research and diligence. People get frustrated because stock prices are influenced by a lot of different factors and they don't put the time and effort into properly managing their portfolio. There are thousands of books out there and millions of average investors who have proven that it's not very difficult to achieve good returns on the market if you spend the time to invest properly.
12/7/2011 10:21:44 AM
Originally Posted By LGK:
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aR8JREWPNUyQ&refer=exclusive
Than you have corporate bonds that give greater returns at a lower risk than stock. High yield corporate bond funds while much more riskier still better than stock funds. While their principal can go down their yield will move up making their losses if any bearable.
Why are so many Americans can't retire? They got suck into the get rich stock schemes.
There is a difference between retirement investors and professional traders. People that invest for retirement don't know when to get out of the stock market when it is high. Professorial trades does. Unfortunately stock funds doesn't trade on fly. Most of the time when they move away from a stock it is at a lost. Who take the lost? The people that invest in the stock fund.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aR8JREWPNUyQ&refer=exclusive
Than you have corporate bonds that give greater returns at a lower risk than stock. High yield corporate bond funds while much more riskier still better than stock funds. While their principal can go down their yield will move up making their losses if any bearable.
Why are so many Americans can't retire? They got suck into the get rich stock schemes.
There is a difference between retirement investors and professional traders. People that invest for retirement don't know when to get out of the stock market when it is high. Professorial trades does. Unfortunately stock funds doesn't trade on fly. Most of the time when they move away from a stock it is at a lost. Who take the lost? The people that invest in the stock fund.
From the article you posted:
The biggest bond gains in almost a decade have pushed returns on Treasuries above stocks over the past 30 years, the first time that’s happened since before the Civil War.
The first line in the article indicates that trailing 30 year performance of bonds beating stocks is exceedingly rare.
Further down in that same article:
“The rally in bonds is a once in a millennium event, but it’s absolutely mathematically impossible for bonds to get any kind of returns like this going forward whereas stock returns can repeat themselves, and are likely to outperform,” he said. “If you missed the rally in bonds, well, then that’s it.”
The article seems to hurt your argument, not help it. I'm not sure I understand why you cited this article to support your position.
12/7/2011 2:52:11 PM
M F Global where is the money ? Market not rigged ! What's happening to the commodity market ? Don't expect a lot of coverage by the media. 
12/7/2011 3:23:18 PM
Originally Posted By StogerMan:
M F Global where is the money ? Market not rigged ! What's happening to the commodity market ? Don't expect a lot of coverage by the media.
M F Global where is the money ? Market not rigged ! What's happening to the commodity market ? Don't expect a lot of coverage by the media.
You realize your post has nothing to do with stock prices and the stock market being "rigged", right? You're referencing a bankrupt company that mismanaged their funds and used sketchy accounting policies. The problems with MF Global would have happened if they weren't publicly traded.
Again, you're making ridiculous claims that aren't backed up by any data or facts, simply because you don't understand the fundamentals of what drives stock valuations.
I'd love to hear your explanation of how the market is rigged. Who is pulling the strings and to what benefit? How many people does it take to manipulate thousands of stocks and funds across the world? And how do millions of investors continue to make money if they're not in on the scam? Why are they still investing in stocks? How is it that millions of people haven't figured out the simple truth that you have learned?
12/7/2011 9:34:51 PM
http://www.youtube.com/watch?v=5TQhl58GAxI
12/8/2011 9:01:09 AM
Originally Posted By StogerMan:
http://www.youtube.com/watch?v=5TQhl58GAxI
http://www.youtube.com/watch?v=5TQhl58GAxI
Posting a Youtube video doesn't answer anything. It shows that you can go onto a public entertainment site, and find some random person who agrees with what you said (unless that's your own video
). You have yet to show any ability to actually explain your opinion like a rational person and have no facts on which to base it. Each time you post in this thread, it further goes on to prove that you don't know what you're talking about. You're just bashing stocks because you're frustrated that you lost money without understanding what drives stock prices.
I'm not going to go out today and open up a hotel. I don't know the first thing about running a hotel, so it's extremely likely that I wouldn't succeed. Does that mean the hotel industry is rigged? Of course not, and making that claim just because I'm not successful at opening one today would be ridiculous. You need to keep your tin-foil hat advice back in GD. Posters in this forum are looking for actual information that can be supported with data and statistics. You're giving out bad advice to people who may not realize that the facts don't support anything you're saying here.
12/8/2011 9:13:11 AM
Originally Posted By StogerMan:
http://www.youtube.com/watch?v=5TQhl58GAxI
http://www.youtube.com/watch?v=5TQhl58GAxI
I watched this but in all honesty it didn't answer any of my questions. I don't intend to buy real estate or a farm anytime soon - while I understand what he's saying, I don't feel that it applies to what I'm asking about.
12/8/2011 1:29:28 PM
Sorry . Good Luck .
12/8/2011 2:41:43 PM
I suspect that over the last 10 years my mutual-fund-heavy investment strategy absolutely smokes what most (all?) people are able to get out of the bond market.
Some investment advice on this board baffles me and I really hope that people are gaining some information from ARFCOM and using it as a stepping stone to actually becoming an informed investor.
-shooter
(edited out the longer post because others have already shown the research on why bonds are not the be all and end all solution)
Some investment advice on this board baffles me and I really hope that people are gaining some information from ARFCOM and using it as a stepping stone to actually becoming an informed investor.
-shooter
(edited out the longer post because others have already shown the research on why bonds are not the be all and end all solution)
12/9/2011 8:23:14 AM
Thanks everyone for your input!
12/9/2011 10:00:32 AM
Some of the stuff I bought doubled in value, but you would laugh and call me crazy.
