Investing for beginners

[fruitcakesa]

Don't know how old you are, but I'm a boomer and I don't recall that many of my generation started thinking about saving for retirement until their late 30s/early 40s. I didn't really, though I've always been thrifty and lived well below my means.

As far as my parents, they grew up in the depression, and scrimping and saving was deeply ingrained in them. It was a bit easier for them because for a lot of their working years company pensions were still quite common, though in many cases they were self-administered so if the company went feet up, there went the pension fund. My parents were lucky enough that the company they worked for got bought out by a large company and both qualified for that company's pension plan. Of course with inflation, the monthly payout is pretty meager now.

We are also boomers and did not begin investing till the early 90's in our mid/late 40's.
We have always been frugal and avoided any debt in all that time and it has paid off.
Regular investing over those decades has gotten us a steady flow of income in our 60's and 70's.

 

[Fuddy1952]

This is an exaggeration, but just trying to make a point since the premise or synopsis is true:
I've always thought if you want to retire comfortably you need to invest:
$100s in your early 20s.
$1,000s in your early 30s.
$10,000s in your early 40s.
$100,000s in early 50s.
$1,000,000s in early 60s.
Time...do the compound interest math...time.

 

[drssg]

A couple of things I find interesting. One is the 1961 "Mayberry" episode where Andy must evict Frank from his run-down house for non payment of taxes. Frank has very little belongings except he does have a $100
bond issued by Mayberry in 1861. The mayor says "so give him his $100". The problem is the bond has an interest rate of return of 8.5%. The Mayberry bank calculates cashing in the bond, now worth $349,119.27 which the bank has insufficient funds to cover. This illustrates time is key. Thirteen years later in 1974 the bond exceeds $1,000,000, and now the graph skyrockets.

If you recall, they later learned that Frank's bond was issued by the Confederacy and was worthless.

That illustrates another key. Choose an investment that won't go belly up!

 

[GeneV]

IDK. It does get tough at times.. I'm hoping these new investments I'm in now will help during the rocky times !

I'm not a skilled investor, I just let the robot handle the core portfolio. Overall it's been going great, and I'm not cashing out anytime soon, so should be ok overall.

 

[California]

If you recall, they later learned that Frank's bond was issued by the Confederacy and was worthless.

That illustrates another key. Choose an investment that won't go belly up!

And related: Investment results you read today, leave out everything that bombed out before being shown in today's results.

 

[kenmac]

I'm not a skilled investor, I just let the robot handle the core portfolio. Overall it's been going great, and I'm not cashing out anytime soon, so should be ok overall.

I won't be cashing out any time soon either. 8.5 more years (at this point) before RMD kicks in for me.

 

[Fuddy1952]

If you recall, they later learned that Frank's bond was issued by the Confederacy and was worthless.

That illustrates another key. Choose an investment that won't go belly up!

A mutual fund won't go belly up.

 

[California]

Re Facebook, they might lose all their subscribers in the European Common Market due to privacy rules. Look into this before investing!

https://www.cityam.com/mark-zuckerberg-and-team-consider-shutting-down-facebook-and-instagram-in-europe-if-meta-can-not-process-europeans-data-on-us-servers/

 

[Oaktree]

A mutual fund won't go belly up.

Maybe not, but they sure aren't all created equal!!
A lot of brokers, bank investment depts, etc. seem to push Putnam funds because from what I understand they offer high sales commissions. Guess whose pocket that comes out of?
Do your homework, as a rule you can't go wrong with Vanguard or Fidelity, but some of their funds perform better than others.

 

[California]

Maybe not, but they sure aren't all created equal!!
A lot of brokers, bank investment depts, etc. seem to push Putnam funds because from what I understand they offer high sales commissions. Guess whose pocket that comes out of?
Do your homework, as a rule you can't go wrong with Vanguard or Fidelity, but some of their funds perform better than others.

Agree, on each point.

Long ago when we first invested, father-in-law said he had enrolled in a Putnam investment plan but the sales commission ate a lot of the price increase.

We looked into it and in those early days the only plans available to buy mutual funds if you didn't meet their minimum purchase ($25k??), required a contract agreeing to invest a set amount monthly for an indefinite, long, time period.

We chose T Rowe Price for its market-leading results but the contract was nasty. Something like 6% sales commission, immediately, on the first $10k in your investment contract and it would take several months of monthly payments to pay the commission before any of your 'investment' went to purchase the mutual fund.

That investment made a reasonable return but a later opportunity to invest in Peter Lynch's Fidelity Magellan fund was much better.

As you said, Vanguard or Fidelity are what I would recommend to the beginner. Vanguard is no-nonsense lowest cost, so potentially slightly better in the long term. Fidelity was our choice. Phone service is 24/7. The person you talk to is intelligent and knowledgeable. To me that is worth paying a few $ per year in comparison to Vanguard. The other brokerages offer good service but seem to be oriented more toward pushing what is profitable for them.