Investing for beginners

[Fuddy1952]

Someone once asked Eisenstein what he considered a true miracle. "Compound interest" he replied.
Notice this graph showing $1,000 invested in the S&P 500 at inception in 1957 until 2021, adding $25/ month. It shows how (green line) your contributions are negligible compared with returns (red line). At some point the returns take off like a rocket.
The reverse is true. Just look at the National Debt clock.

 

[Jrasband]

Invest in something REAL - land, gold, silver, livestock, equipment, etc. If you want to invest in communist China then go ahead and invest your money in stocks or something like that.

 

[Fuddy1952]

?????

 

[Fuddy1952]

I wasn't going to respond, but we'll play this game: "As of June 2019, US stocks had an average 10-year return rate of 12.21 percent, whereas gold had a return rate of only 3.71 percent."

 

[California]

Yeah. That first chart: $5k then annual $2k for 30 years compounds up $530k, is a model for my experience too.

Two points for the beginner to understand:
1) Live below your income and invest the difference.
2) S&P 500 mutual fund, any with low fees, will have results over time exceeding 85% of retail investors. Why not join the top 15%? As I'm getting older (WWII baby) I don't want to micro-manage a portfolio. This S&P strategy doesn't need active management.

Considering all that, in December I started a '529' college savings account for our new grandson. $10k (the annual limit) into a Fidelity S&P fund to start, likely another $10k in 2022, then leave it alone. This won't fund the kid's entire college career but with a similar contribution from his other grandparents, and the majority from his parents, he should be able to go anywhere. A 529 is the best way to do this because you don't need to prepare an annual income tax return for the kid every year - like we had to, with our own kids college savings accounts.

But all that is with regard to passive investing. Active hands on investing - remodeling and flipping houses for example, can have greater returns. That's where we accumulated the funds to buy rentals that when we sold, funded our investments.

One more point - avoid cryptocurrency. Nearly all is a vast Ponzi scheme that will eventually crash. I was just reading about one where the founder soon took out 80% of the cash that his investors had put up. He made $600k for his two weeks work getting it started. Then he said well they should have known better.

 

[Doughknob]

Invest in something REAL - land, gold, silver, livestock, equipment, etc. If you want to invest in communist China then go ahead and invest your money in stocks or something like that.

Huh? U r joking right?

 

[Doughknob]

Yeah. That first chart: $5k then annual $2k for 30 years compounds up $530k, is a model for my experience too.

Two points for the beginner to understand:
1) Live below your income and invest the difference.
2) S&P 500 mutual fund, any with low fees, will have results over time exceeding 85% of retail investors. Why not join the top 15%? As I'm getting older (WWII baby) I don't want to micro-manage a portfolio. This S&P strategy doesn't need active management.

Considering all that, in December I started a '529' college savings account for our new grandson. $10k (the annual limit) into a Fidelity S&P fund to start, likely another $10k in 2022, then leave it alone. This won't fund the kid's entire college career but with a similar contribution from his other grandparents, and the majority from his parents, he should be able to go anywhere. A 529 is the best way to do this because you don't need to prepare an annual income tax return for the kid every year - like we had to, with our own kids college savings accounts.

But all that is with regard to passive investing. Active hands on investing - remodeling and flipping houses for example, can have greater returns. That's where we accumulated the funds to buy rentals that when we sold, funded our investments.

One more point - avoid cryptocurrency. Nearly all is a vast Ponzi scheme that will eventually crash. I was just reading about one where the founder soon took out 80% of the cash that his investors had put up. He made $600k for his two weeks work getting it started. Then he said well they should have known better.

Or you could just buy Tesla stock! LOL

 

[California]

Or you could just buy Tesla stock! LOL

The problem with that is how do you recognize the NEXT Tesla stock?

At the minimum, it takes an ability for research so that you know more than professional stock pickers. Who would have bid up the price if they had recognized the value.

 

[Fuddy1952]

^^^X10^^^
Vanguard & Fidelity mutual funds have performed well for us (a few others also, mainly those two). Now in the diversified mix some in a cash annuity, and an SMA account...the experts buy & sell daily.
Never put all your eggs in one basket. Only debt I ever had was a 30 year mortgage, paid off in 3 years.

 

[BravoXray]

Or you could just buy Tesla stock! LOL

I did. 135 shares at $85.90 a couple of years ago.