- Joined
- May 29, 2003
- Messages
- 18,816
Re: Investing
BC, been investing for a long time. The thing to remember is the greatest factor in savings is time! My recommendation, for what it is worth, but it has worked for me and for others, is to start savings NOW. Even if it is only a little, systematically put some away.<br /><br />Several have mentioned real estate, which is an option. However, with the rise in inflation, and the tightening of interest rates, many real estate markets will not be as attractive as they have been over the last 10 years. These markets were attractive, in part, because the Stock Market had lost face. People saw the "quick bucks" that could be had in techs and the bidding went wild! When it all came to a screeching halt, those that got in at the last minute, and lost their shirt, were afraid of the market an moved to real estate, CD's, etc.<br /><br />Back the original question, what to invest in, and how. That depends on how much risk you are willing to assume. I have always recommended (and I am not a financial planner) that people have enough for at least 2 months of in liquid assets (check book, money market account, etc). Something that will not have any penalty for withdrawal in case of emergency.<br /><br />Next, I feel you should have at least 6 months of cash in an easy to get to fund (mutual fund, T-Bill, Muni fund, etc.). Something that you can get out within 2 months with no penalty, and is relatively safe.<br /><br />Once you have this safety net of 8 months of living expenses safely stashed away (enough for mortgage, car payment, bills, insurances, food, maintenance on house and car, gas, hair cuts, etc), then you are ready for the more risky adventures of playing the real estate or stock markets. Make sure you do your research well, and I would suggest if going with the stock market, which I would recommend (I have both stocks and real estate), you begin using a full coverage broker. Yes, your commissions will be more, but if he/she is good, you will learn so much more. You will learn not just what stocks the big boys are picking, but why. You will begin to understand cash flow analysis and profit margin. And you will be able to weed through the hype and begin picking solid stocks for the long term investment.<br /><br />All the while, do not stop the systematic investment.<br /><br />If you save $100 per month, at 8% interest, for 30 years, that $36,000 investment will be worth about $150,000. All things stay the same, and you invest another $100 per month for another 10 years, that $48,000 will become about $350,000! Time is the magic of investing.<br /><br />The rule of 72 (72/interest rate or rate of return) lets us know how many years it will take for our money to double. ($50 invested at 8% will double in 9 years and be worth $100). So if you are adding to it regularly it will mushroom!<br /><br />If you start saving $5 per week for you kid at 5% compounded weekly, by the end of 1 year, that child will have $267 and $3,374 in just 10 years.<br /><br />Hope that gives you some things to think about!
BC, been investing for a long time. The thing to remember is the greatest factor in savings is time! My recommendation, for what it is worth, but it has worked for me and for others, is to start savings NOW. Even if it is only a little, systematically put some away.<br /><br />Several have mentioned real estate, which is an option. However, with the rise in inflation, and the tightening of interest rates, many real estate markets will not be as attractive as they have been over the last 10 years. These markets were attractive, in part, because the Stock Market had lost face. People saw the "quick bucks" that could be had in techs and the bidding went wild! When it all came to a screeching halt, those that got in at the last minute, and lost their shirt, were afraid of the market an moved to real estate, CD's, etc.<br /><br />Back the original question, what to invest in, and how. That depends on how much risk you are willing to assume. I have always recommended (and I am not a financial planner) that people have enough for at least 2 months of in liquid assets (check book, money market account, etc). Something that will not have any penalty for withdrawal in case of emergency.<br /><br />Next, I feel you should have at least 6 months of cash in an easy to get to fund (mutual fund, T-Bill, Muni fund, etc.). Something that you can get out within 2 months with no penalty, and is relatively safe.<br /><br />Once you have this safety net of 8 months of living expenses safely stashed away (enough for mortgage, car payment, bills, insurances, food, maintenance on house and car, gas, hair cuts, etc), then you are ready for the more risky adventures of playing the real estate or stock markets. Make sure you do your research well, and I would suggest if going with the stock market, which I would recommend (I have both stocks and real estate), you begin using a full coverage broker. Yes, your commissions will be more, but if he/she is good, you will learn so much more. You will learn not just what stocks the big boys are picking, but why. You will begin to understand cash flow analysis and profit margin. And you will be able to weed through the hype and begin picking solid stocks for the long term investment.<br /><br />All the while, do not stop the systematic investment.<br /><br />If you save $100 per month, at 8% interest, for 30 years, that $36,000 investment will be worth about $150,000. All things stay the same, and you invest another $100 per month for another 10 years, that $48,000 will become about $350,000! Time is the magic of investing.<br /><br />The rule of 72 (72/interest rate or rate of return) lets us know how many years it will take for our money to double. ($50 invested at 8% will double in 9 years and be worth $100). So if you are adding to it regularly it will mushroom!<br /><br />If you start saving $5 per week for you kid at 5% compounded weekly, by the end of 1 year, that child will have $267 and $3,374 in just 10 years.<br /><br />Hope that gives you some things to think about!
