asbestosman wrote:Who Knows wrote:Knowing accounting doesn't really say much about knowing how to handle your money. Honestly, I'm not that good at it.
Your strategy is about as good as it gets. It's more about controlling your impulses than it is about knowing the dollars and cents and debits and credits.
If you can control your impulses, you're fine. Unfortunately, I have a problem with that. ;)
The problem being that my wife doesn't like living with a skinflint. I'd make Jack Benny blush if I could have my way. ;) But in any case, I think my problem is that I don't really know how to invest the money that I'm saving. Should I put it into a nicer house, a CoD, the stock market, or what? I just don't have a good enough grasp of risk vs possible payoff. I understand expected value and averages, but it's not quite the same thing.
Hi everyone.
I was in the investments business for some time. I would recommend anyone and everyone to take a Series 7 license course, or just get the materials and study it yourself. You will know all the basics and then be able to talk with your favorite investment advisor intelligently.
The problem will be that the advisor knows all the same stuff, but will not lead you to the right investments often because the good investments don't provide the commissions for the advisor that he/she needs to make a living and to satisfy his desires (and his wife's, which is more often the determining factor).
The "rule of 72" is always good to keep in mind. If you're getting 3% at a bank, for example, it will take approximately 24 years to double your money (compunding figured in). Ouch! The stock market (large cap stocks, over 30 years or so) has returned around 10% on your money. Well, then to double your money, it takes approximately 7 years. Small cap stocks have returned a little better, around 13% or so. So, 5 or 6 years to double your money.
Of course, if you pull your money out of the market at the bottom of a cycle, then it all comes to naught anyway. Who knows when one retires whether the cycle will be at the bottom or not? That is the big gamble.
Of course, property (a house, for example) values go through a cycle as well, but seems to be a little more secure in order to help one figure out how much one will have after 30 years.
Why doesn't someone start a thread on investments and we can go through some of the basic stuff and talk through what makes sense and what doesn't, given the current situation in the markets and the economy? That might be fun!
When I was in the business, you could purchase 30-year government zero coupon bonds at 9%. 9%! That was incredible for AAA rated bonds. And zero coupon bonds were wonderful for a retirement plan or IRA. I fear what they can be purchased for today. I haven't checked recently, but I am sure it ain't 9%. That is why so many people are jumping into the market, to try to get a better return in hopes they can retire according to plan. They won't be able to, I fear.
Anyway, my .02.