My father in law will have about two thousand a month to invest towards his retirement. He is fifty so he will still hopefuly be working for at least twelve more years. Unfortunatley he, and I, know nothing about investing so I hope he gets this right. He is going to see a an investment counselor next week but these guys sometimes are a little sketchy, and misleading, so I was wondering if anyone had any good tips.
Where to invest
- Thread starter skychief
- Start date
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Lifer
- Feb 8, 2001
- 29,033
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with twelve years to retirement, he does not have the luxury of a high risk portfolio.
In the interest of keeping it simple, I would open a brokerage account and have the money put into a Growth and Income fund every month. A G&I fund is a balance of stocks and bonds that will give him a a moderate risk/return profile and will keep the book keeping simple.
In the interest of keeping it simple, I would open a brokerage account and have the money put into a Growth and Income fund every month. A G&I fund is a balance of stocks and bonds that will give him a a moderate risk/return profile and will keep the book keeping simple.
He has a small side business so I heard he could put about eleven thousand in an IRA and a 401 combined, with him as the employee. Is this true, and if so, is this something to look into? Is it even worth the trouble?
GTaudiophile
Lifer
- Oct 24, 2000
- 29,767
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not to thread hijack, but....
If those are the moderate to low risk/return investments, what's considered higher, say...what would be good for a 21 year old to invest in?
If those are the moderate to low risk/return investments, what's considered higher, say...what would be good for a 21 year old to invest in?
take advantage of whatever 401K / IRA plans you can first, then invest the rest in some sort of fund. i'd be wary about a growth and income fund for the sole reason that interest rates will most likely be going up in the near future, which will mean that most fixed-income (bond) related funds will suffer. at the same time, going all equity doesn't seem like the best in terms of risk.
for a 20 year old, go all equity...qqq is a good start.
for a 20 year old, go all equity...qqq is a good start.
Schadenfroh
Elite Member
- Mar 8, 2003
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Well, normally I'd say a person in his position should start looking towards a heavier bond weighting in their portfolio as they grow older and need to preserve the core of their portfolio. However, with interest rates as low as they are there's little to no chance of building anything in bonds for the next three or four years (note: three to four years is pulled out of my ass, I'm not really well-versed on how often interest rates change between extremes).
Hmmm, let me try my hand at making a portfolio. Note that I have little experience in this area so don't take anything I say seriously.
brb
Hmmm, let me try my hand at making a portfolio. Note that I have little experience in this area so don't take anything I say seriously.
brb
Originally posted by: Xiety
Originally posted by: Skoorb
$24k to retire with
He'll need something fairly low risk, though assuming he has social security, a lot of that money will have a lot of years to progress.
($2,000 x 12) x 12 = $288,000
that's what my math works out to, as well
$2000 a month is very, very good by the way. I'm assuming he has a Roth IRA, 401k, etc. Max those out ASAP, obviously, that tax-free growth is vital. Hmm, I would say it's also wise to taylor your entire portfolio towards utilizing the unique aspects of each account. Put your high-tax-liability assets into your tax shelters and try to minimize your tax liability in your taxable accts.
We need a real professional to stop in and sound off, I'm just a kid who took a licensing exam and thinks he knows something.
We need a real professional to stop in and sound off, I'm just a kid who took a licensing exam and thinks he knows something.
Originally posted by: Orsorum
$2000 a month is very, very good by the way. I'm assuming he has a Roth IRA, 401k, etc. Max those out ASAP, obviously, that tax-free growth is vital. Hmm, I would say it's also wise to taylor your entire portfolio towards utilizing the unique aspects of each account. Put your high-tax-liability assets into your tax shelters and try to minimize your tax liability in your taxable accts.
We need a real professional to stop in and sound off, I'm just a kid who took a licensing exam and thinks he knows something.
trust me... most "professionals" don't know anything better.
Just play it safe & simple; put a sizeable amount in stocks (contrary to what was said above, 12 years to retirement is a pretty long time horizon) and the rest in fixed income instruments (perhaps a little cash too). Remember, there is no reason to limit yourself to domestic stocks/bonds. While US yields may be low, yields in other countries aren't necessarily as low. Combine this with any currency views you might have, and you are set (UK & EU government bonds have done really well for me the past few years due to this).
Try something like:
US Large Caps (S&P 500 or R1000 index fund): 30%
US Small (or mid) Cap (R2000 index fund): 10-15%
US Fixed Income (don't get munis if these are in an IRA or 401k): 20%
Intl Stocks (I would stick with large caps here... maybe an EAFE index): 20%
Intl Fixed Income: 10-15%
Cash: Rest
Google for more info, but QQQ (or the "cubes") is basically just an ETF that indexes to the Nasdaq 100 (which is pretty close to the Nasdaq 30 that is always quoted on the news and financial shows).
I would actually not use the QQQ for my choice of index funds. It is highly tilted towards tech stock so it is not as diversified as something like the SPY (s&p 500 ETF) or IWB (russell 100 ETF).
Thanks to everyone for the responses! Some pretty useful information there. I'll have to look into some of these ideas.
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