Is it callous of me to not particularly mind if there is a correction in stock prices? I've certainly got a long horizon on my investments, and a chance to buy at low prices for awhile and then hold on for forty-odd years seems like a good opportunity, not a doomsday scenario. Presumably, most people close to retirement have conservative enough portfolios that this isn't hitting them particularly hard, so what, exactly, are we worried about? The fortunes of forty-five-year-old hedge fund investors? The idea of a Great Depression redux? Some sort of end-of-American-economic-dominance thing? Is it that we have somehow attached the trajectory of the graph line on the Dow to our sense of our own futures?
Perhaps this is just simple lack of understanding, but I can't quite wrap my head around the downside here for young investors.
(Points if you know where the title comes from.)
Thursday, August 16, 2007
Stay Down, Lads! Go For the Burn!
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6 comments:
I tend to feel this way as well, although the older I get the less inclined I am to think that. Do you invest steadily every month, or throw extra money in when the market is down?
I agree with you. My 401K and Roth are down, but on the other hand, those are more shares that I'll have once it goes up.
story girl, my 401(k) contributions are invested monthly. So far my Roth contributions have been invested in lump sums, but I'm maxed out for 2007, so I can't contribute any more there now. I don't have a brokerage account, or I might actually think about buying now, but mostly I'm just psyched about my 401(k) bargains.
english major, you may want to consider Sharebuilder. They're a great service for people getting started, and have very low trading requirements (I think you can trade as little as $50 at a time). If not, T Rowe Price allows you to open an account with as little as $50 with an automatic investment plan.
You know, the loudest screamers get the most news coverage! Here's my theory: *If* you're young and investing, you don't have to worry about market turn downs.....*If* you're old and have your investments spread out properly (called "asset allocation") you've protected yourself against serious losses.
However, if you've been stupid and have had aspirations of being a day-trader and raking in the moolah, you're screwed! Or if all the stock you own is from your own company, you're screwed (ala Enron). Or if you were one of those folks who implicitly trusted a financial salesperson and bought a single retirement vehicle, you're screwed. These are the folks you see on the news who are crying when the market takes a serious dive.
The take home message? Spread out your investments. When you're younger, you can afford to have more in stocks (which are volatile). You should check into your investments every so often to make sure your risk level is appropriate to your age/life stage.
How do I know all this? I'm an avid reader of Money Magazine and/or Forbes. They both have great tips, even for newbies and those who don't have much money (as in the case of yours truly).
RE: T.Rowe Price
I love this company. They are very helpful. You can have any IRA set up for the $50/month investment program (which is their minimum). You can even put the automated debit put on hold in case of emergency (which I had to do for a while after a bad car accident). You can do business by phone (including set up the account and ask for disbursement of funds), with very little wait time and no tree phone b.s. They do have Internet access which is very easy to use. And, perhaps best of all, the annual management fee is only $10 which can be paid right from the account or by check (that's the best idea because it doesn't decrease your investing funds and you can potentially claim it on your income taxes).
I am nearly a year late, but I know where the title is from and I love you for using it! ("No pain, go gain! No fish, no foul! No socks, no shoes! No hair, no haircut!")
Just discovered your blog yesterday, so I'm reading through the archieves and enjoying it greatly. As a former English major, working, at least for now, in the same field you are, I can really appreciate the things you say. Keep it up!
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