Steve wrote:
- quote -

Have you read any personal-finance books for an intro to the topic? Eric
Tyson's "dummies" book is pretty good, and there are a few good ones
from the Wall Street Journal. Also "The only investment guide you'll
ever need" by Tobias. You don't necessarily need a paid advisor to
answer the questions you're asking but it'd be good to read a
broad/general book to see the big themes.

- quote -

If you haven't found it yet: a great site on the topic is
www.savingforcollege.com. You might want to read up on the alternatives
and repost any questions later.

- quote -

It's a good idea to do a good bit of savings outside of retirement
plans, but there's no quick or "right" answer to the best balance
between 401k, IRA, Roth IRA, taxable savings, annuities, college savings
plans, life insurance, etc. Each of these are just pots you can pour
your money into, and which to choose depends a lot on your priorities,
and a bit on your taxes.


- quote -

The main idea of having an emergency fund is to avoid being forced into
selling your more-volatile or less-accessible investments at a bad time
to raise cash. Market drops aren't much of a concern really; _needing to
sell_ during market drops is the problem (actually, the drops are good
as long as you're buying...they're just bad for anyone selling).

So if you think in terms of the costs you might need to cover - major
car repair, vacation - and factor in job stability, you might end up
with a one-month or twelve-month fund, it really depends on you. Also if
your investments include things like short-term CDs or short-term bond
mutual funds, you don't need to keep such a big checking account balance
(another way of saying that is that you can "invest" part of your
emergency fund in conservative places).

Again though I'd recommend reading the broad/intro kinds of books and
then reposting w/questions.

-Tad

[mhnsp[at]yahoo.com (Steve)] wrote:
[ 62 lines in misc.invest.financial-plan ]
===================

- quote -

You are on the right path. First priority should, indeed, be to build up an
emergency fund, covering about 3-6 times monthly net expenses. Second, if
you have money to spare every month, try to put it in tax-deferred plans
(since I'm not a US citizen, I do not know the details of 401(k)s, IRA's
and education plans -- but those are where the money should go to first).

After that, it boils down to some financial guesswork. Namely, what do you
expect will happen to inflation, costs of education, interest rates and
equity returns? If anybody knew with certainty those things, they would be
busy exploiting them, so we cannot do more than guess.

Just for the sake of the argument, let's make some assumptions. Say that
the inflation rate will be approximately 2%/year over the next 25 years,
that bonds will return 3%/year and that stocks will return 5%/year.
Starting from scratch, this will mean the following (approximately):

Investing $100/month ==> $58k if invested in stocks until you are 65, $39k
if invested in bonds
Investing $200/month ==> $117k stocks, $77k bonds
Investing $300/month ==> $176k stocks, $116k bonds

.... and so on. These calculations are extremely sensitive to future changes
in inflation, bond return and stock return. If we keep inflation at 2%, but
instead increase expectations of stock returns to 7%, you would get:

$100/mo ==> $78k
$200/mo ==> $157k
$300/mo ==> $235k

Of course, this is before adjusting for new expenses in the year 2028. If
inflation is 2%, $235k would be worth $135k in today's dollars -- at 3%,
only $103k.

Then, if you would invest in equities, you would still have to face large
risks. Even if you could get 10% returns during 20 years, five bad years in
2023-2028 could mean disaster for your nest egg. Many advocate shifting to
more bonds and less stocks in later years for this very reason.

Note: all figures above are before taxes, but has not included your savings
in your retirement plans. Also note that during retirement, a 100%
allocation in bonds can provide you with enough interest to cover much of
your expenses, if your nest egg has grown large enough. The $235k in the
7%/year stock appreciation scenario would, if invested in bonds paying
3%/year, give you $7k/year to supplement other income. If your goal is to
have as much income when you retire as you have now, you probably need to
invest a lot of money.

--
Joakim Persson
M.S. student, CS/CE [at] LTH, Lund, Sweden
Libertarian -- Heavy Metal fanatic
zaladin[at]home.se -- http://www.efd.lth.se/~d00jp

mhnsp[at]yahoo.com (Steve) wrote in message news:<ddd9ca63.0312150555.558ba73f[at]posting.google.com> ...
- quote -

First of all, thanks to everyone who posted. I publicly admit that I
am a novice when it comes to all this financial stuff. I guess what I
should have explained initially was the why to my question. I have
contemplated seeking the services of a financial adisor to iron-out a
concrete plan for me and my family. I'm almost 40 years old, and
started in on the game a little late. Now I am trying to get things
straightened out for retirement. My big question is how much should I
put away to be comfortable when I retire (65-70?). I had hoped by
understanding previous trends in the financial world (mainly
inflation, bond and stock rates), I could get a guage on how to
realize my goal. I understand that past results have no bearing on
future results, but thought it a better guage than nothing.

Basically, I am married and almost 40 and have about $65K currently
locked into a company 401(k) account (~$50K) and my wife's traditional
IRA account (~$15K). We recently had our first child, and want to
start saving for her college eduaction, also. We have some bills to
pay off in the short term, but hope to be clear of everything but a
mortgage and a car payment in a few months. I currently put away
~$400/month in my 401(k) with an employer match of 50% (making it
~$600/month). I also get a pension of ~$300/month. My wife does not
work, and we haven't contributed anything to her IRA in well over a
year.

My goals are to ...

1. Start an education plan for my child immediately, so that she will
ave enough money for college when she reaches that age. This requires
knowledge about college savings plans, which I have started
investigating. One problem I have is trying to figure out how much
will be enough. Education expenses are skyrocketing and am trying to
understand how much she'll require in ~18 years.

2. Put more money into retirement. I figured if I continue my current
course, we will have <$500K for retirement. This isn't a whole lot by
today's standards, and even less when inflation is factored in over
the next 25+ years. So, I am guaging how much to put away without
over-doing it. I'd hate to lock all that money into retirement, and
then I lose my job or something and cannot get hold of any of it.

3. Start an emergency fund. This is actually my first priority. I
want to put as much money as is needed into an emergency fund in case
I lose my job or something. I've heard various amounts like 2x, 3x,
6x and even 12x your monthly income. I figure 3x is probably enough,
but the recent economic times, I've heard people looking for jobs for
over a year, too.

Any suggestions (short of talking to a qualified financial advisor)?

Regards,
Steve

On Mon, 15 Dec 2003 19:30:28 CST, Rich Carreiro
<rlcarr[at]animato.arlington.ma.us> wrote:


- quote -

Thanks. I used to know of one that showed the "value of $10,000
invested", but lost track of it. Do you have any sites that feature
that type of chart as an option?

-HW "Skip" Weldon
Columbia, SC

- quote -


Does this help??

http://marketswing.com/Historical_Charts.htm



"Jack" - John H. Fisher - TaxService[at]aol.com
Philadelphia, Pa - Atlantic City, NJ - West Wildwood, NJ
My Newsgroups & Boards at: http://members.aol.com/TaxService/index.html

Where Ignorance is bliss, 'tis folly to be wise!=

In article <9mistv8usm96s5kq1km5outr48d5fo685e[at]4ax.com> , "HW \"Skip\" Weldon"
<skip5700removethis[at]hotmail.com> writes:

- quote -

Does this help??

http://marketswing.com/Historical_Charts.htm


"Jack" - John H. Fisher - TaxService[at]aol.com
Philadelphia, Pa - Atlantic City, NJ - West Wildwood, NJ
My Newsgroups & Boards at: http://members.aol.com/TaxService/index.html

Where Ignorance is bliss, 'tis folly to be wise!=

"HW \"Skip\" Weldon" <skip5700removethis[at]hotmail.com> writes:

- quote -

No. SPX is a price-only index.

- quote -

No fund *price* chart does (because of dividend and
capital gain distributions) . But a fund chart that
reads something like "Value of $10,000 invested assuming
reinvestment of all distributions" will.

And as for the original question, go to your local
library and checkout/request via interlibrary loan
the latest version of Ibbotson's "Stocks, Bonds, Bills,
and Inflation" book.

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us

On Mon, 15 Dec 2003 16:11:52 CST, BreadWithSpam[at]fractious.net wrote:


- quote -

Good point. Here's a related question: Does the SPX chart on Yahoo
show reinvested dividends? Does any mutual fund chart?

-HW "Skip" Weldon
Columbia, SC

inevercheckthismailbox[at]yahoo.com (Andy) writes:
- quote -

Remember to take into account _dividends_ if you are looking
to calculate rate of return. It's a substantial part of the
total return.


--
Plain Bread alone for e-mail, thanks. The rest gets trashed.
No HTML in E-Mail! -- http://www.expita.com/nomime.html
Are you posting responses that are easy for others to follow?
http://www.greenend.org.uk/rjk/2000/06/14/quoting

mhnsp[at]yahoo.com (Steve) wrote in message news:<ddd9ca63.0312150555.558ba73f[at]posting.google.com> ...
- quote -

Funny you should ask, I just looked up similar things last week.

I was able to find the S&P500 for the last 50 years on Yahoo Finance,
get a quote for ^SPX and then choose "max" for the timescale on the
chart. You can get the same thing for the Dow Jones by getting a
quote for ^DJI.

You can get the Consumer Price Index data from
http://www.economagic.com/

Let us know what you find out!

Andy

Does anyone know where I may be able to find the following data:

1. Dow Jones Industrial Average rate or return for each of the past 25-30 years.

2. Inflation rate for each of the past 25-30 years.

Thanks,
Steve