- quote -

IMO, you are doing well. You have control over spending, minimal debt
and enough understanding to ask for ideas about "rates fo return".

Rates of return come down to managing risk. We don't "know" your risk
profile... so we can guess, make suggestions, or ask further questions
to nail down the profile.

I like reading web sites like T Rowe Price, Morningstar, smartmoney
and cbs marketwatch. Books also help, as do magazines like
smartmoney.

Here are the next steps to think about:

1) risk profile. If your assets were 100% stocks, 100% cash, 80-20,
60-40 or 50-50, do you know what the expected returns would be on
those investments?

2) what do you WANT? Higher returns require you take some risk. With
CDs and cash, there is inflation risk. With equities there is market
risk. Nothing is without risk, you need to decide what risks you are
willing to take.

3) Within any "category" (asset class) like equities, there are
conservative approaches, normal approaches and aggressive approaches.
You need to read/learn what these approaches are and how to quantify.

Age 40, 9% return, if you have between $125k and $250k set aside, you
are "on track" to retire (and maintain a retirement income of 80k
starting at age 68). More than likely with conservative investments
right now, you will be "slightly" behind this target.

Use 401ks, IRAs and taxable accounts to build up your retirement
picture. Be mindful of costs, taxes and expenses, but before worrying
about these details, I think you should suggest what your risk profile
is. There are calculators on web sites (like T Rowe Price) to suggest
what your risk profile is.

black wrote:

<snip stuff about good amount of money in bank, little debt, and maxed
401(k)
- quote -

You are being awfully hard on yourself. So you lost some money in the
market? That's the price you pay for being in the market, it happens.
And stop orders and fancy tools from online brokerages aren't going to
stop that (but not falling in love with individual issues, and not
procrastinating would help).

- quote -

Yesterday's gone, but there's still plenty of investing opportunity.
More crazy bull markets will come, but so will more crazy bear markets.
If you want the gain of equities, then this is a reality you must face.

- quote -

Ah well, then maybe conservative investing is for you. Or maybe you buy
a few equity mutual funds and get professional investors on your side.
Let them decide what tools to use, whether stop orders have merit, and
when to make moves. Or you could take even these parts out of the
equation and go with index funds. You're still going to lose money a
significant part of the time, but you rode your stock down 80%, so you
must have some stomach for loss, right? You could even limit your
overall losses with a nice dose of diversification - throw in some bond
and cash investments, maybe even some real estate. This should dampen
the swings in your portfolio value.

- quote -

And you are already smart enough to see through some of the sales
pitches? Come on! Give yourself some credit! You've accumulated
savings, you've stayed out of debt, you have tax-deferred accounts,
you're earning decent returns while you figure things out, and you've
kept your family from getting ripped off.

Others here have already made good suggestions on what to read and what
to invest in, I just wanted to point out that you're doing better than
you think you are.

Keep it up!
-Will

On Sat, 17 Mar 2007 18:38:14 -0500, Logan Shaw
<lshaw-usenet[at]austin.rr.com> wrote:


- quote -

Thank you for your comment, logan. Appreciate your appreciating my
little money wizardry :-)! Fact of the matter is, we are very
conservative people. About the only thing that I can claim that we do
well (extraordinarily well, that is) is hoard money in a bank. We
drive 10 year old Camry's (both of us). I cut my own lawn and do my
own fixes (whatever I am capable of- I am a reasonably good handy man)
around the house and on the cars. My wife is a vegetarian with very
little appetite for the cheese and meat laden food that they dish out
at the restaurants and that keeps us eating our own cooked food
(which, I suppose, is good for our health and our pocketbooks). We
take only one vacation a year and we plan it well to save on the
travel and other expenses. In a nutshell, we are good and educated on
the part about saving and not being spendthrifts, but not so well
versed in the investing side of it. On the part about growing our
money well, we are not so well educated. But I am trying to put my
best foot forward and trying to make it work. Thanks to you and all
the other wonderful people that have taken some of their time to help
me out with this. Hopefully, I will put the advise here to some good
use.

black

On Mar 17, 1:52 pm, black <b...[at]hereandthere.com> wrote:
- quote -

For what it's worth, I don't think this is a great time (year) for us
novices (I'm not into shorting and so on) to be getting into the
market ... or ... that 5% you are making is imo very reasonable for
the times. E.g. ... plot the 200 day and the 20 day average of an
equity, index, whatever of your choice and in most cases you'll see
growth has/is slowing significantly. The odds are, due to current
conditions, you will most likely have a repeat your past experience.

What I do that you might consider. I have an online investing account
and I've set aside a fixed amount about 5% of my worth for my hobby
investing ... I will have a decent pension, the house is paid for, RSP
topped up, savings growing at 4%, I drive an 11 year old truck that I
wouln't trade for the world :-). I have established a group of
equities that I follow. Some I trade on the ups and downs, some are
new areas. For example, spent last week looking into canadian banks
and think there's still opportunity there and with one in particular
(due to conditions elsewhere) so I put some $$s into that with the
expectation that when it goes up a few $$s I'll sell and move on to
something else. Compared to my buddy at work who is locked into gold
and is convinced that some day he'll strike it rich, I'm doing better,
learning a heck of a lot, and having a heck of a lot more fun. And
yes, those stop orders are my friend :-)


======================================= MODERATOR'S COMMENT:
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black <black[at]hereandthere.com> writes:

- quote -

If you absolutely don't want to risk losing money, then bank CDs,
money market accounts, and T-bills are pretty much your only choice.
Over the long term, a diversified portfolio of equities and bonds will
bring in a higher return -- but in the short term, you may lose money.
If you are the type who would panic and try to sell everything if the
stock market suddenly dropped 10% or more overnight (think Sep 11, for
instance), then maybe you should avoid equities entirely, since panic
selling is a sure way to lose money in the long term as well as the
short term. Bonds return a little more than cash instruments, and
while it *is* possible to lose money in bonds, a loss of over 10% from
a diversified bond fund would be pretty much unheard of.

- quote -

Personally, I've learned pretty much everything I know about investing
and financial planning from the morningstar.com web site. They have
some excellent tutorial material there.

Do you and/or your spouse have a Roth IRA yet? If not, open one *now*
(as in, before April 15) at one of the fund supermarkets like E-Trade,
and dump in your maximum contributions for both 2006 and 2007. You
don't have to make any immediate decisions about how to invest the
cash once it's in your account, but if you're looking for a no-brainer
type of investment strategy, you might consider a no-load, low-expense
"target retirement" fund like TRRCX (T. Rowe Price Retirement 2030). The
value of your account will go up and down with the market, though, and you
need to face up and decide whether your nerves can handle that.

-Sandra

black wrote:
- quote -

If you have very little debt, you are more of a 'money wizard' (to use
your term) than half the people living in the United States. ;-)

- quote -

Just like anything, getting something out of the market requires
putting something into it. Specifically, if you are trying to beat
the market, you can't expect to do that unless you know something more
than an average investor, because everyone else is trying to make as
much money as possible as well. For your outcome to be different than
everyone else's, you have to be doing something better than them.
(Or you have to be lucky, but luck is not a *strategy*.)

Therefore, to be rational about investing, you have to make a decision.
Either you put lots of effort into becoming better than the average
investor and shoot for above average, or you don't, and you shoot for
average.

If you choose the latter, shooting for average, you want a simple
approach that is very likely to approximate average returns.
Shooting for average definitely means diversification, because
diversification pulls you more towards the average, which is the goal.
Uncomplicated mutual funds (like index stock funds, but not limited
to that) could be a part of the solution.

- quote -

You should definitely do something about that. :-)

I suppose the two obvious approaches are to either go pay someone
to help you choose a strategy, or just choose a simple, reasonable
strategy yourself, one that is an improvement over a bank account
but would be easy to convert into something a little more optimized
later.

- Logan

On Mar 17, 6:52 pm, black <b...[at]hereandthere.com> wrote:
- quote -


Mutual Funds for Dummies and Financial Planning for Dummies are both
helpful.

My general thoughts are:

- work out how much you need for expenses, etc. It is normally
prudent to keep at least 6 months of living expenses (including
mortgage) in a 'cash' account (MM Funds, CDs etc.)

- make sure you have enough term life insurance and disability
insurance to cover you in situations of death or serious illness
(including benefits provided by your employer)

Assuming you have a normal retirement profile (ie seeking to retire
between 60 and 65, no special health or family issues) and you feel
you are making adequate college provisions for children etc. then

- subject to that, maximise your 401k contributions, at least to the
point of getting any company matching, investing, if possible, in a
low cost index fund. Ideally, a low cost index fund and a low cost
international index fund (70-75% in the former, 25-30% in the latter).

You don't want to make investments in a lump sum, you want to make
investments steadily over time, on a month by month basis.

If there is a range of index funds on offer, what you want is the fund
that 1). matches or tracks the widest index possible (ie if possible
more than the Standard and Poors 500 index) and 2). has the lowest
possible fees and Total Expense Ratio.

- IRAs are a separate issue, as I am not an American based investor, I
leave that to others to consider

Remember paying down your mortgage is also an investment, and one
which gives a certain rate of return (the interest rate of your
mortgage, adjusted for the tax benefits and the tax you pay on
investment income).

On Mar 17, 6:52 pm, black <b...[at]hereandthere.com> wrote:

- quote -

I would add, a good long term bet is 8% per annum from such a stock
index fund as I suggest in my other post. And that fund will beat at
least 2/3rds of the funds out there. It is a pretty safe bet that it
will do at least as well as 2/3rds of the funds out there.

8% doubles your money every 9 years.

On Mar 17, 11:52 am, black <b...[at]hereandthere.com> wrote:
- quote -

I recommend you read a book or two to get a quick education:

1 - Common Sense on Mutual Funds: New Imperatives for the Intelligent
Investor by John C. Bogle
2 - Asset Allocation: Balancing Financial Risk by Roger C. Gibson

Then you will know more, and also you will know what you *don't* know,
and avoid
lots of mistakes, including paying advisors to get you into loaded
funds, annuities,
and insurance schemes.

Joe Weinstein


======================================= MODERATOR'S COMMENT:
Please trim the post to which you are responding. "Trim" means that except for a FEW lines to add context, the previous post is deleted.

OK...I admin that I am not a money wizard!! There I said it.
I have ideas but can never seem to implement them. Therefore, we have
a good amount of money in the bank but its not earning us anything.

This is my story!

I am a 42 yr old married man with a 7 year old kid. We make a decent
living and have a house that has about $100000 in mortgage left. My
wife and I make about $160000 total/year. Our cars are paid for and
we have very little debt (knock on wood) other than the mortgage.

Back a while ago, I made some bad investments that took my confidence
down in investing. Due to many factors which included
procrastination, emotion attached with a certain company, assuming
that the stock will go up eventually even when the stock dropped 80%
and the most important of all, not knowing that there were stop orders
and the like and not being able to use all the tools in my Datek
account back in 2000. Made the mistake of not investing in 401k until
2003 and then started dumping about $15000, which in 3-4 years time
has grown to $88,000

With all of that lousy history, fast forward to 2007, we have quite a
bit of money in the bank in a money market account that earns about
4-5% interest. I feel that I have let us down by not educating myself
and investing wisely that would have almost had our money doubled or
tripled. I keep thinking that I have missed so many opportunities
that I will not be able grow the money like it could have back in the
last 6-8 years. The main things that prevent me from taking another
crack in investing wisely is the thought of losing money like I did
when I invested in some of those stocks.

What are some of the steps that one would have to take if they are in
my position other than talking to a financial analyst, to whom we have
spoken but this guy pushes things like insurance and the like which
are profitable to him.

I would appreciate any and all advise. Thanks


black