Originally posted by: FeathersMcGraw
Everyone has different circumstances and needs, but I think that's the absolutely wrong approach to retirement investing. I started an IRA the first year I started working, which was when I was 16.
There's an hypothetical example (which I can't find online) which compares an investor who puts in $500 per year starting at age 21 and stopping at age 31, to an investor who puts in the same $500 a year from age 35 until retirement. Assuming that both investors have the same annual percentage gains on their portfolio, the investor who started at 21 still has a bigger account value at retirement.
3) William and James are twin brothers aged 65. Thirty-five years ago (at the end of the year when he reached age 30), William started an IRA (individual retirement account), putting $2,000 per year in the account at the end of each year. After 10 years of contributions, William stopped making new deposits but left the accumulated contributions in the IRA fund. The fund produced returns of 10 percent per year. No taxes are paid. James started his own IRA at the end of the year when he reached age 40 (25 years ago) and contributed $2,000 per year, making his last contribution today. Thus James invested 2½ times as much as William. James also earned 10 percent on his investments (tax free).
answer:
William ? value after 10 years at 10 percent:
$2,000(15.937) = $31,874.00
then reinvest $31,874 for 25 years:
$31,874(1.1)25 = $31,874(10.835) = $345,354.79
James ? value after 25 years at 10 percent:
$2,000(98.347) = $196,694
that is why you start early. maybe not now, but asap.
(sorry, just answered this a few weeks ago, figured it was kinda applicable.)
Originally posted by: Shanti
Personally, if I had 1000 to play with, I'd probably open an Ameritrade account and have some picking a couple of stocks.
If you want to spread your risk more, buy some shares in a couple of different solid mutual funds.
Historically, the stock market has averaged 10% a year or something like that over the LONG TERM.
Basically, you can settle for 2% and be guaranteed, hope for around 10% and be moderately safe, or go for high returns (50%) by playing the market and guessing which companies will be the big winners this year, and risk losing it all.
no, not ameritrade, that is the worst idea. funds are the way to go, lower risk, higher return. stocks have averaged 7.1% over the long run since 18.. something. (had a midterm this morning, forget it already) there is no fast sure way, there's fast risky, slow steady and worth while. just pick a big fund, cause its already diversified, look into it a bit.
-Krugger
***cough cough*** make sure though not to date or sign the title when you buy the car becuase the new owner that buys it from you will do that and you wont get stuck with having to get a dealer license becuase you tittled and sold too many cars in a year .
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