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Investments! (from church growth thread)
Posted: Thu Apr 05, 2007 10:20 pm
by _Analytics
I would claim that Who Knows was mistaken when he said that the strategy of “not spending it” is about as good as it gets.
Let’s say you are 40 years old, and start saving $200 a month. You save until age 65.
If you earned 5% in a money market fund, you’d end up with $120,000. If you earned 12% in an index fund, you’d end up with $375,000, and if you earned 15% in an aggressive fund, it would grow to $650,000. If you could bump that 15% up to 16%, it would grow to $780,000.
I’d suggest that in addition to not spending it, what makes a huge difference is getting a marginally higher return on your money over time and starting early enough so that compound interest will have time to work its magic.
Posted: Fri Apr 06, 2007 4:51 pm
by _Trinity
We have our children on a 20x20 program. Their goal is to have $20,000 saved by the age of 20 and then they do not touch that money until they are 55. At a decent rate of interest (12%) they will have $1,055,992, allowing for a variance on fees. The good news is that when you have a longer duration of investment on your side, the greater the result. You can also afford more aggressive types of investment vehicles. And it is really good for teaching children to save rather than spend.
Their money is currently held in mutual funds with interests bearing between 14 -19%.
My picks of late:
Fidelity Value Discovery (FVDFX) (1 year -11.40, 3 year - 16.09, life of fund 18.51)
Fidelity Mid Cap Value Fund (FSMVX) Mid Value (1 year 15.88, 3 year -17.13, 5 yr- 13.11, life of fund 14.52)
Posted: Fri Apr 06, 2007 7:46 pm
by _Analytics
20x20 sounds great! I haven't heard of it before. It totally exploits what I said--get some real money in early, make a decent return, and leave it there a long time.
Are they doing this in a Roth? That would be so freakin cool. Pay basically zero taxes on it as a teenager, and then get a million dollars tax free at 55.
I wish you had been my mom.
Re: Investments! (from church growth thread)
Posted: Sat Apr 07, 2007 10:25 pm
by _Who Knows
Analytics wrote:I would claim that Who Knows was mistaken when he said that the strategy of “not spending it” is about as good as it gets.
I think you misunderstood (or maybe I didn't write clearly what i was thinking), but the first BIG step is SAVING your money. In other words, not spending it. That's (in my view) the biggest problem people have.
Sure, you can worry about risk, rates of return, etc. But that really doesn't mean a whole lot unless you're saving it in the first place. People can worry all day about diversifying, looking at bonds, stocks, CD's, etc. And then they turn around and have a big mortgage, 2 car payments, and credit cards. While if they just worried about SAVING (not spending it), then they'd be much better off.
And if you read further on, I stated that the best thing to do was to stick it in a market indexed mutual fund, and forget about it.