Monday, March 08, 2010

Calculating the Climb Back

People have been asking for 401(k) enrollment packets over the last several weeks (wanting to get into the market? Figuring they'll have to fund their own retirement?). Whatever the reason, people recognize that they'll have to build up their balance sheets ...

In crawling across the Internets, I came across this useful tool:

Recoup Your Savings Calculator

I don't think there are any easy, sure-fire ways to build retirement next eggs. If you want to build it up fast, you'll have to take on more risk. (And everybody remembers our recent past.) If you want to avoid big drops in your total stash, you need to stick to short-term bonds and cash equivalents.

So what to do? Know the best and worst things that can happen. (And note that the best thing is -- if you're in your twenties or thirties -- a decade or two of down markets so you can buy investments cheap.)

What I tell most people is asset allocate to your age and/or comfort zone. If you are fifty-five, you are nuts to have eighty percent of your investments in stocks. If you are twenty-five, you are nuts not not to have eighty percent of your investments in stocks (unless you can't keep solid food down when the market drops.)

All I can say is, start putting money away. Ten percent of your cash flow if you can manage it, more if you are really disciplined.

You're going to need it later.


Anonymous said...

I don't make comments on investment often but here goes.

I agree with trying to put 10% away, totally. More if you can , save the most you can. The reason we had a crash is we are all in terrible debt and the only way to survive is every one of us must save.

Bonds , CDs and such , yes if you can find any with a decent rate. Banks have been holding rates to 0% while they line their CEO's pockets and rip the country for trillions.

Some of you have done fairly well with stocks purchased way back so I have only one warning. It is gambling, pure and simple. Stocks are not a prudent investment if you can't risk losing money and I'll bet most of you can't, don't even bother. I personally know people who lost hundreds of thousands in the market over the last few years. Stocks are gambling.

We are not in a time of solid economics based on real supply and demand markets. We are in a time of incredibly manipulated fraud where banks are holding millions of properties off the market, our currency is being trashed and dumped abroad and this summer we will experience a second meltdown. All the info is out there so don't even consider a home an investment even in what seems a buyers market. It's not, it's intentionally manipulated waiting for the next suckers. Rents are beginning to fall as people move away with no jobs here in LA. Do not sign more than a yearly lease as the drops are happening fast.

Don't bother investing in gold, it is vastly overpriced and to buy in now is like buying in the housing market at it's most inflated. YOU WILL LOSE ! Gold is just a commodity, it has no special or magical value and especially not now. The Chinese are investing in silver because the price hasn't been inflated beyond reason . . . . . yet.

Just my opinion.

Anonymous said...

^ Ditto. Consider yourself lucky if you simply break even after inflation. Stay short term in everything including bonds, as rising interest rates on future issues will sink demand on current ones. The future is not bright, no matter what CNBC says.

Anonymous said...

Gold is not a realistic or accessible option for the individual investor, but it is very important to understand how and why welfare states develop in the absence of sound monetary policy in fractional reserve banking. Economics 101. You ever wonder how all of this around you is paid for? Simple math.

Anonymous said...

I'll be 35 years old soon. Here's what I'm doing in my Vanguard Roth IRA:

35.0% VIPSX

The remainder is split evenly between VTSMX and VFWIX.

If I had access to the Local 839 401(k), I'd settle for the appropriate Vanguard Target Retirement Fund.

I'm not afraid of stocks at my age.

Anonymous said...

okay, well, then be careful out there in the street, kiddo. could be quite a few bankers jumping from windows soon.

Anonymous said...

okay, well, then be careful out there in the street, kiddo. could be quite a few bankers jumping from windows soon.

That's cool. I have thirty years before retirement. The market recovered in the thirty years after the bear market of 1929-1933. It'll recover in the thirty years after this, too.


Steve Hulett said...

Remember what Buffet says: "You want stocks do keep going down for the twenty or thirty years before you retire."

Anonymous said...

Here's what the almighty CNBC has to say on Tuesday.

Here's Wednesday.

So which one are we going to land on, red or black? If you are any student of history, I would guess red. In a 1929 to the power of ten kind of way.

Anonymous said...

That's fantastic news. William Bernstein wrote that young investors should get down on their knees and pray for a crash, so that we can buy our retirement nest egg cheap.

C'mon, red! Yay!

Anonymous said...

any future imagined gains on the market are currently being erased by the global energy shock taking place at present. it's a zero sum game no matter how you look at it. domestic demand of all sorts is going to get smacked even harder by energy reality.

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