Comments on: Getting started in the Market http://www.investorgeeks.com/articles/2005/11/22/getting-started-in-the-market/ Learning and sharing investment knowledge. Thu, 04 Dec 2008 18:54:56 +0000 http://wordpress.org/?v=2.0.4 by: Poker-Tournament http://www.investorgeeks.com/articles/2005/11/22/getting-started-in-the-market/#comment-259 Sun, 23 Apr 2006 17:04:03 +0000 http://www.investorgeeks.com/articles/2005/11/22/getting-started-in-the-market/#comment-259 <strong>Poker-Tournament...</strong> ... Poker-Tournament…

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]]> by: theophylline http://www.investorgeeks.com/articles/2005/11/22/getting-started-in-the-market/#comment-214 Sat, 08 Apr 2006 04:30:34 +0000 http://www.investorgeeks.com/articles/2005/11/22/getting-started-in-the-market/#comment-214 <strong>theophylline</strong> theophylline

]]> by: Jason http://www.investorgeeks.com/articles/2005/11/22/getting-started-in-the-market/#comment-17 Tue, 22 Nov 2005 15:06:21 +0000 http://www.investorgeeks.com/articles/2005/11/22/getting-started-in-the-market/#comment-17 For further reading, here is my reply to the original email sent: ---- Hey xxxxxxxx, The 9% number comes from the referenced CNN Savings Calculator which states: "When estimating a projected rate of return, keep in mind that the classic portfolio with 60% in stocks and 40% in bonds gained an average of 9% over the past 75 years." link: http://cgi.money.cnn.com/tools/savingscalc/savingscalc.html I've seen similar numbers referenced other places for the average return expected for a diversified portfolio over the span of your typical person's career up to retirement. [note: Our own Chris is a little more conservative with these numbers.] You're right that bonds, CDs, and other low risk investments don't come close to a 9% return. You're also right that investing in stocks can be risky, but you know what? You're only 24, be a little risky. When you get closer to retirement and the prospect of having to live off of your savings, you'll have to pull it back a bit (or a lot) on the stocks. I know it can be scary investing in stocks. Especially after living through (and looking for a job during the middle) of an economic downturn like we had 2001-2003. But it's really not that bad. As long as you make smart choices, diversify your stocks (across industries and amount of risk), and put enough capital into your savings, you should be able to weather the downturns (and upswings!) rather nicely. For someone your age, stocks is definitely the place to be with investing. Usually, the first place to start is with your 401k if your job offers one. You won't have to pay taxes on money invested in a 401k and your employer may even add a match up to some % of your income, which is basically like a 50-100% return on investment right there. For example, my employer's match is 50% up to 6% of my income. Say I make $50k per year. If I save $3000 per year in my 401k, my company will add an additional $1500 for a total of $4500 plus any capital gains for the year. I could go on further, but it may be better if you started reading some of the books in our recommendations list or the "personal finance" sections of the sites recommended on our page. Another great thing you can do is read our archives and keep coming back to our site to see what investments we are making and talking about. ;) Thanks for your interest. I hope this has helped. Regards, Jason For further reading, here is my reply to the original email sent:
—-
Hey xxxxxxxx,

The 9% number comes from the referenced CNN Savings Calculator which states:

“When estimating a projected rate of return, keep in mind that the classic portfolio with 60% in stocks and 40% in bonds gained an average of 9% over the past 75 years.”

link: http://cgi.money.cnn.com/tools/savingscalc/savingscalc.html

I’ve seen similar numbers referenced other places for the average return expected for a diversified portfolio over the span of your typical person’s career up to retirement.

[note: Our own Chris is a little more conservative with these numbers.]

You’re right that bonds, CDs, and other low risk investments don’t come close to a 9% return. You’re also right that investing in stocks can be risky, but you know what? You’re only 24, be a little risky. When you get closer to retirement and the prospect of having to live off of your savings, you’ll have to pull it back a bit (or a lot) on the stocks.

I know it can be scary investing in stocks. Especially after living through (and looking for a job during the middle) of an economic downturn like we had 2001-2003. But it’s really not that bad. As long as you make smart choices, diversify your stocks (across industries and amount of risk), and put enough capital into your savings, you should be able to weather the downturns (and upswings!) rather nicely.

For someone your age, stocks is definitely the place to be with investing. Usually, the first place to start is with your 401k if your job offers one. You won’t have to pay taxes on money invested in a 401k and your employer may even add a match up to some % of your income, which is basically like a 50-100% return on investment right there. For example, my employer’s match is 50% up to 6% of my income. Say I make $50k per year. If I save $3000 per year in my 401k, my company will add an additional $1500 for a total of $4500 plus any capital gains for the year.

I could go on further, but it may be better if you started reading some of the books in our recommendations list or the “personal finance” sections of the sites recommended on our page. Another great thing you can do is read our archives and keep coming back to our site to see what investments we are making and talking about. ;)

Thanks for your interest. I hope this has helped.

Regards,

Jason

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