Better to save than to invest? (concept of Time)

[becomethepath]

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Edited June 2, 2013 by becomethepath

[wayki]

"worry about retirement." such a silly notion.

 

1) never worry about the future.

2) society does not tell me when i stop or start doing things.

3) career is a 20th century invention, live your life the way you want.

 

 

but i agree, if got lots of dough, save it or get gold/silver.

 

 

**

waykiwayki.com

Edited May 22, 2013 by wayki

[Marblehead]

I will take the other side. Yes, save up for your retirement. The Markets are risk ventures - mostly for people who have more money than they know what to do with.

 

I used and still use CDs (Certificates of Deposit) because they earn a higher interest rate than does saving or money market accounts do. There is also Treasury Bonds (US Savings Bonds). Both are minimum risk and generally earn a rate greater than the rate of inflation. Ideally one would find a Credit Union that is FDIC insured rather than a Bank because the Bank will get most of your interest. (Banks are "for profit" establishments whereas most Credit Unions are "not-for profit".)

 

All of my retirement comes from the government (Army Retirement and Social Security) so if my government goes belly-up I would have to go back to work when my savings ran out.

[mYTHmAKER]

saving accounts, money market accounts CD's are presently paying almost nothing.

Seniors and those who save are being ripped off. Interest rates are not keeping up with inflation.

That said i no longer put my money in the rigged stock market.

[Marblehead]

saving accounts, money market accounts CD's are presently paying almost nothing.

Seniors and those who save are being ripped off. Interest rates are not keeping up with inflation.

That is a fact. But the only other options are a risk investment or none at all. I am satisfied with the security even though I bitch a lot about the interest rates. Just another way for the rich and government to keep the poor people poor and the rich people rich.

[thelerner]

I like my life simple. Instead of wasting time investing, wouldn't it be better to save the money instead in a money market account (basically a savings account with interest)? Let's say I make 100,000 per year (I don't, but just an example). I can put whatever I have left each month into the money market account (It's FDIC insured). I work 9-6pm Monday to Friday, after coming home each day, I can just do whatever I like, meditation, exercise, yoga, read about Buddhism, practice dharma, hang out with friends etc.

 

But let's say I want to invest, I would be spending at least 1-3 hours a day on reading about investments.

 

So let's say I work 30 years, 30 x 70,000(rough estimate after tax and mortgage), I would have at least 2 million dollars by age 60. If I live 30 more years,

Please give me some insight and advice. I want to know if I'm thinking right.

To me the right thinking here is living under your means and focusing your life on what you like. The fuzziness begins thinking you or the average person will make $100 grand a year (& for 30 years) and have $70 g's to save. That's generally not how it works. The reality is most people are lucky to put away a few thousand a year with some of that going into an emergency fund because every year or there's an unexpected medical needed or roof that needs repair.

 

If you figure a more realistic even optimistic saving rate averaging $5,000 a year, suddenly the math is having $150,000 which after 30 years of inflation is more like $60,000 or 2 or 3 years of retirement income. If you've been putting the $5,000 into a diversified investment account or even the Dow or S&P500, and earned a say 7%, you'd have over $500,000.

 

While investing has risks, you can be on the conservative side and come out way ahead of stuffing money into a CD or mattress. Nor does it take 1 to 3 hours a day or week. Maybe that much a month or even a quarter.

 

A conservative style portfolio might be one that concentrates on high dividend stocks that pay between 3 1/2 to 7% interest. Where to find them (good articles) Seeking Alpha website, general financial web sites (many dividend based sites, I like Dividend Monk). Pick good companies that tend to raise dividends yearly. Keep an eye that the companies aren't tanking, but don't let a few a poor quarters upset you either, they're actually good because you're accumulating shares cheaply.

 

As dividends payouts out rise, you'll get to an average of 7% in 7 to 10 years even if the stock stays flat (as long the stock dividend rates rise, good example of this is JNJ). This year dividend stocks have risen with market, many up 12 to 14% in 5 months and if they drop back down, no matter you're in it for the dividends. On retirement you may be earning well over 12% and getting a much lower tax rate to boot (15%) because of dividends special tax status. Ofcourse there's a chance we'll be ruled by damned dirty apes or aliens, so enjoying your life is the main game, money just lets you play it with a more options.

 

 

Low interest rates screw seniors and conservative savers rich or poor. But they're low to encourage home buying and save home owners big bucks as well as encourage new business and business investment. That's the theory anyway.

Edited May 27, 2013 by thelerner

[Marblehead]

But they're low to encourage home buying and save home owners big bucks as well as encourage new business and business investment. That's the theory anyway.

Yeah, right.

[Grigory]

Personally, I'm a big fan of Warren Buffett's investment strategy. It's very Taoist, in its own way: find a good company that has an affordable price, a "moat" and good management. Then invest in it and keep the money there for as long as possible. His other advice for people who don't want to bother with stock-picking is pretty good, too: just put the money into an index fund that would grow with the economy and let it be.

 

There have always been and always will be giant recessions, market corrections, etc. The opposite is also true. Instead of trying to time the market or spending your precious time trying to become one of the world's greatest experts on investing ("I would be spending at least 1-3 hours a day on reading about investments" - for how long???), just find a good spot to park your money and let others worry about it.

[DalTheJigsaw123]

To me the right thinking here is living under your means and focusing your life on what you like. The fuzziness begins thinking you or the average person will make $100 grand a year (& for 30 years) and have $70 g's to save. That's generally not how it works. The reality is most people are lucky to put away a few thousand a year with some of that going into an emergency fund because every year or there's an unexpected medical needed or roof that needs repair.

 

If you figure a more realistic even optimistic saving rate averaging $5,000 a year, suddenly the math is having $150,000 which after 30 years of inflation is more like $60,000 or 2 or 3 years of retirement income. If you've been putting the $5,000 into a diversified investment account or even the Dow or S&P500, and earned a say 7%, you'd have over $500,000.

 

While investing has risks, you can be on the conservative side and come out way ahead of stuffing money into a CD or mattress. Nor does it take 1 to 3 hours a day or week. Maybe that much a month or even a quarter.

 

A conservative style portfolio might be one that concentrates on high dividend stocks that pay between 3 1/2 to 7% interest. Where to find them (good articles) Seeking Alpha website, general financial web sites (many dividend based sites, I like Dividend Monk). Pick good companies that tend to raise dividends yearly. Keep an eye that the companies aren't tanking, but don't let a few a poor quarters upset you either, they're actually good because you're accumulating shares cheaply.

 

As dividends payouts out rise, you'll get to an average of 7% in 7 to 10 years even if the stock stays flat (as long the stock dividend rates rise, good example of this is JNJ). This year dividend stocks have risen with market, many up 12 to 14% in 5 months and if they drop back down, no matter you're in it for the dividends. On retirement you may be earning well over 12% and getting a much lower tax rate to boot (15%) because of dividends special tax status. Ofcourse there's a chance we'll be ruled by damned dirty apes or aliens, so enjoying your life is the main game, money just lets you play it with a more options.

 

 

Low interest rates screw seniors and conservative savers rich or poor. But they're low to encourage home buying and save home owners big bucks as well as encourage new business and business investment. That's the theory anyway.

 

This was sound advice! Thank you! Any good resources I can check out?

[DalTheJigsaw123]

Personally, I'm a big fan of Warren Buffett's investment strategy. It's very Taoist, in its own way: find a good company that has an affordable price, a "moat" and good management. Then invest in it and keep the money there for as long as possible. His other advice for people who don't want to bother with stock-picking is pretty good, too: just put the money into an index fund that would grow with the economy and let it be.

 

There have always been and always will be giant recessions, market corrections, etc. The opposite is also true. Instead of trying to time the market or spending your precious time trying to become one of the world's greatest experts on investing ("I would be spending at least 1-3 hours a day on reading about investments" - for how long???), just find a good spot to park your money and let others worry about it.

I really like this! Thank you!

[Grigory]

I really like this! Thank you!

My pleasure.