It can be very tough investing in retirement. When you retire you get a big pot of money called a 401(k) (or TSP, or other qualified retirement plan), and you have to manage it wisely to last you the rest of your life (and your spouse’s life if you’re married).
For most people this will involve investing it. Perhaps even investing a portion of it in the stock market. The stock market can be volatile. No one can perfectly predict it. And if you are not an investing expert, you will often doubt your own buy/sell decisions.… Continue Reading
Have you ever heard your buddy brag about how much money he made on “X” stock? It usually goes something like:
“I bought Intel when it was trading for mere dollars. Then I sold it at the peak and had a 500% return on my money!”
Here are some things your buddy probably didn’t tell you:
That he only used about $500 of his $600,000 portfolio to buy shares. So his overall portfolio return attributable to this investment is quite small.
That time he bought Enron stock and lost all of his investment.
The amount of risk he had to take to generate the return on his Intel investment
And point number 3 is the one we need to focus on today. In order to generate return on investment you have to take risk. And the expected return should be in line with the amount of risk.… Continue Reading
“Inflation is when you pay fifteen dollars for the ten-dollar haircut you used to get for five dollars when you had hair.”
If you buried your cash in your back yard and dug it up 10 years later, inflation would have caused it to be worth less. It’s like a loss on your money, even though the actual dollar amount stayed the same.… Continue Reading
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