Author Topic: Why is investing so important? I'm afraid.  (Read 2601 times)

ayylmao

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Why is investing so important? I'm afraid.
« on: August 06, 2017, 04:26:41 PM »
I'm 17 years old, so I haven't had access to a full income yet. However, I always see everyone talking about investing, especially here on this board. What even is it? I'm afraid to invest because I firsthand have seen many of my family members have their financial lives completely ruined by the 2008 crash. I don't understand why you wouldn't just keep it in a regular savings account in a bank! Is there anything wrong with my way of thinking? Educate me on the other point of view!

ixtap

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Re: Why is investing so important? I'm afraid.
« Reply #1 on: August 06, 2017, 04:45:37 PM »
I'm 17 years old, so I haven't had access to a full income yet. However, I always see everyone talking about investing, especially here on this board. What even is it? I'm afraid to invest because I firsthand have seen many of my family members have their financial lives completely ruined by the 2008 crash. I don't understand why you wouldn't just keep it in a regular savings account in a bank! Is there anything wrong with my way of thinking? Educate me on the other point of view!

In a word: inflation

As prices increase, that $100 in your bank account becomes worth less and less.

Also, historically investments do better than inflation. Even in a huge crash like 2008, if you can just let your investments sit there and not sell them while the price is down, then when the market recovers, you will be fine.

Financial.Velociraptor

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Re: Why is investing so important? I'm afraid.
« Reply #2 on: August 06, 2017, 05:03:14 PM »
If you are dead set against using the stock market (my dad is for example).  There are alternatives to cash in a bank account.  There are bonds, annuities, and insurance products that all pay better than the bank.  I recommend you educate yourself and learn about risk mitigation strategies.  You will probably find that at least a small allocation to equity is something you are comfortable with, especially with so many years ahead of you. 
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Frankies Girl

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Re: Why is investing so important? I'm afraid.
« Reply #3 on: August 06, 2017, 05:09:10 PM »
Because savings earn little to nothing - no growth. They used to earn more but it is highly unlikely that savings accounts will ever earn enough interest to grow the money that you put into them, and if you stop earning (from a job) and need to draw on that savings account, it will disappear quite fast and you'll be in trouble when it runs out.

Inflation is the rising cost of things. Gas, food, electric bill, cars, going to the movies, buying a new pair of jeans... all of that costs X amount of money right now. But in another 5 years? It could be X + 10% more. Or higher. And if you don't have your money making more money (by investing), then the money you banked is now worth less in future dollars. You understand the old folks complaining about when gas cost 80¢ a gallon and how it's crazy paying more than $20 for a jacket or something now? THAT is inflation.

Investing is not hard. It should not be scary. It ends up sounding that way because there are lots of folks out there that treat the market like it's gambling - they chase after high returns and big money instead of being smart, educating themselves on the basics and going for the safe (but boring) path of index investing. There are many "experts" out there too that will tell you that a crash is coming trying to scare folks enough to put their money in with those "experts," or they'll say the average person isn't capable of investing well, and make things sound as complicated as possible. This is because it is in their best interest to make it scary - so they can convince you to give them your money to take care of for you... for a tidy little fee they'll skim off the top. It is completely legal to do this, but it's not best way for the investor - just the adviser and the company they work for.

If you had relatives that were ruined by the crash in 2008, they either did one of two (very unwise - sorry) things:
1. they panicked and sold off everything at the bottom of the market, instead of just leaving it alone. Even a bad crash recovers if you don't sell and lock in the losses, or
2. they were invested in pretty awful/shady/poor choices to begin with, and were screwed when they went belly up because they were basically gambling with their investments instead of investing safely in trustworthy and/or indexed investments that would eventually recover.

The market will always have periods of ups and downs, but in its entire history, it always recovers eventually and continues upward. The key is understanding that part and not panicking when there is a down period/crash. And you never should look at it as gambling and risking money on shady or overly volatile investing strategies that you don't understand completely. Some people don't get that, and they are bad at investing because of it. But again, it doesn't have to be that way - the key is knowledge.


I'd suggest reading through Jim Collins' site on investing, or check out his book and see if that helps: http://jlcollinsnh.com/stock-series/

His advice for his teenage daughter is here: http://jlcollinsnh.com/2011/06/08/how-i-failed-my-daughter-and-a-simple-path-to-wealth/

Pay attention to his nine basic rules for his daughter in that second link. You're at an age where these make the most sense for you, and if you get a good handle on the basics now... my goodness, you'll have an amazing future ahead of you. Good luck!
« Last Edit: August 06, 2017, 06:36:57 PM by Frankies Girl »
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Holyoak

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Re: Why is investing so important? I'm afraid.
« Reply #4 on: August 06, 2017, 05:52:51 PM »
How interesting and delightful to have a 17 y/o person on a MMM forum, asking good questions.  I'll second the recommendation to visit Jim's website.  Many things that are unknown are scary, even for folks twice your age.  When I saw your age, and your willingness to learn, my heart felt happy...  Do you realize if you start very soon, with even modest amounts of $$$ regularly invested, you will be well on your way to being a millionaire...  Really, a million bucks, or far more if it matters, like many members of this forum have.

Good luck ayylmao, I admire your willingness to learn, and I wish you the best of luck in your investing education, and path to wealth (wealth = freedom).


Retire-Canada

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Re: Why is investing so important? I'm afraid.
« Reply #5 on: August 06, 2017, 06:32:19 PM »
I'm afraid to invest because I firsthand have seen many of my family members have their financial lives completely ruined by the 2008 crash.

I had ~$300K invested during the 2008 crash. I did nothing and it didn't take long before I had $300K again. I continued to save and invest now I'm closing in on $800K and retirement.

If your family members had their financial lives ruined by 2008 they either had a poor investment plan and/or did something stupid. That's sad and I feel for them, but it's also something you can avoid.

respond2u

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Re: Why is investing so important? I'm afraid.
« Reply #6 on: August 06, 2017, 07:37:01 PM »
I'm afraid to invest because I firsthand have seen many of my family members have their financial lives completely ruined by the 2008 crash.

I had ~$300K invested during the 2008 crash. I did nothing and it didn't take long before I had $300K again. I continued to save and invest now I'm closing in on $800K and retirement.

If your family members had their financial lives ruined by 2008 they either had a poor investment plan and/or did something stupid. That's sad and I feel for them, but it's also something you can avoid.

+1

There are no guarantees about the future, but if our future is anything like our past since the late 1800s, the stock market has been a great wealth generator (even with some long periods of not).

Invest in VTI (or the like), in a Roth IRA if you can, and just forget about it until you're 5 years away from retirement (other than to watch out for taxes if not in the Roth :)

TomTX

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Re: Why is investing so important? I'm afraid.
« Reply #7 on: August 06, 2017, 07:54:42 PM »
I'm 17 years old, so I haven't had access to a full income yet. However, I always see everyone talking about investing, especially here on this board. What even is it? I'm afraid to invest because I firsthand have seen many of my family members have their financial lives completely ruined by the 2008 crash. I don't understand why you wouldn't just keep it in a regular savings account in a bank! Is there anything wrong with my way of thinking? Educate me on the other point of view!

I was fully invested in a low-cost index fund (US Total Stock Market) for the 2008 crash - and it had zero negative effect on me. It allowed me to buy stocks with new money cheaper for awhile. 

The 2000 crash hurt more, because I was young and ignorant and stock-picking individual tech stocks. Nothing as dumb as Pets.com whose main competitive advantage was a sock puppet commercial, but that chunk of AMD hurt as it didn't recover with the rest of the market.

I have a separate emergency fund, in case I lost my job or something like that along with the crash. That's in very safe stuff.
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L.A.S.

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Re: Why is investing so important? I'm afraid.
« Reply #8 on: August 06, 2017, 08:03:31 PM »
What even is it?

Investing is letting someone else use your money (capital) now with the expectation that you will receive more later.

This is through a bond, which is a loan the pays interest.
Using your money to buy real estate which can then be rented out.
Also using your money to buy shares of a business allows the business to raise money and then they pay back shareholders a portion of their earnings.

Interest in an insured savings account is low volatility low reward.
Buying company stock is a higher volatility but higher reward sort of investing.
« Last Edit: August 07, 2017, 08:23:49 AM by L.A.S. »

PizzaSteve

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Re: Why is investing so important? I'm afraid.
« Reply #9 on: August 07, 2017, 07:46:58 AM »
I'm 17 years old, so I haven't had access to a full income yet. However, I always see everyone talking about investing, especially here on this board. What even is it? I'm afraid to invest because I firsthand have seen many of my family members have their financial lives completely ruined by the 2008 crash. I don't understand why you wouldn't just keep it in a regular savings account in a bank! Is there anything wrong with my way of thinking? Educate me on the other point of view!

There is nothing wrong with your view.  You dont understand something, so you hesitate to participate. Check out the Bogleheads wiki 'getting started' page, to learn more.  They have excellent advice.  The key to investing is picking an investment you can trust.  Vanguard is a very trustworthy investment firm.

Investing with a good plan will most likely grow your money faster than a savings account, but it does have risks.  It is important to understand the risks before investing.  This is especially true if you tend to panic and might sell during a time of stress (by the way, if you are really 17, then you were 8 in 2008, so i dont expect that you really understood what was going on then).

Think of it like a trip to a far off place.  Investing is like driving faster.  You will get to your destination sooner, but there is some risk you get a ticket on the way. For a long trip, even if you get a ticket and lose some time, the faster speed still gets you there.  A bad investment plan (poorly diversified, lots of fees or trusting a bad advisor) is like a poor detour. It may set you back, but finding the fastest highway gets you going again.  Cant make up the lost ground, so steer the fastest path and keep going.

However, the path to wealth is mostly driven by your savings rate.  If you save a good percentage of income and live below your income level, you will be fine. 

« Last Edit: August 07, 2017, 05:52:00 PM by PizzaSteve »
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Babybalrog

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Re: Why is investing so important? I'm afraid.
« Reply #10 on: August 07, 2017, 09:17:19 AM »
What even is it?

Investing is letting someone else use your money (capital) now with the expectation that you will receive more later.

This is through a bond, which is a loan the pays interest.
Using your money to buy real estate which can then be rented out.
Also using your money to buy shares of a business allows the business to raise money and then they pay back shareholders a portion of their earnings.

Interest in an insured savings account is low volatility low reward.
Buying company stock is a higher volatility but higher reward sort of investing.

Investing is giving up something now, for the (expected) bigger return later.

Going to college is an investment. You give up money, and time, but the jobs you can get later are much better than what you can get with a HS degree.

Exercising is an investment. You give up time now, for health later.

Watching that movie you hate with your SO, because they like, it is an investment.

Getting a CD from the bank is an investment. Instead of leaving your money in a savings account, you agree with the bank that you won't use the money for a period of time (6-months, 5-years, etc), and they agree to give you your money when the time period is over, PLUS INTEREST.

Bonds work the same way except you get interest payments over time.

Stocks, are like little slices of a company. Imagine your friend wanted a partner to open a lemonade stand. He has a great location picked out. Sign designed. A good recipe for the product, not too sweet, not too tart. But he needs $50 to get started.  You agree to front him the money, and he's to pay you back half his profit. Maybe his profit is really good and he pays you back $100. Maybe it's a bad year, and he can only give you $10. But maybe that's only the first year, and he can give you $20 the second year, and $25 the third year. etc.

That first disappointing year is like 2008. A lot of people freaked out when they only got $10 bucks back the first year. and said, "screw it, I'm out." and sold their half of the profits away to somebody else. And since everyone was selling the price when down. For the lemonade stand, it would be like selling your share of the profits for 30 bucks so you at least got something. But those that stuck around (or bought in) got paid more, and more, and more each year. Eventually sales recovered. Imaging getting paid $20-$30 per year, for ever, for an initial investment of $50? Sounds pretty awesome. And as the companies do better, those returns increase, but can also decrease if they do worse. Now of course realistic returns are smaller in the 5-10% range per year. Today the Market is at an all time high.

Stocks are like your lemonade stand, except of you and a partner splitting the money, there are a Million shares out there, and people are trading them back and forth all the time. and there are a thousands of companies. It's all the same, just bigger.
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koshtra

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Re: Why is investing so important? I'm afraid.
« Reply #11 on: August 07, 2017, 09:19:50 AM »
An example may help:

Suppose you save a thousand dollars a year every year from now until you're 67 and are really getting tired of it all. You take a look at your bank account. What have you got? Well, $50,000, but the buying power of that, because of inflation, has sunk to about half that. What you've got in today's dollars is $25,000, maybe enough to keep you going for a year or two... better git back to the grindstone, there. No retirement for you.

Or suppose you save a thousand dollars a year and invest it, and get on average a 7% return (which is about what the stock market has usually done, for the past hundred-and-some years.) You look at your brokerage account after fifty years and what do you have? Just shy of five million dollars. With inflation, that's really only two and a half million in today's dollars... but that's still a shitload of money. You can do whatever the hell you want.

Of course, over fifty years a LOT of things can happen. And will. It's well worth playing with the numbers and trying various scenarios. But that's why we keep telling you to invest it: because it's the difference between ending up with $25,000 and ending up with $2,500,000.

->->-> EDIT  oops! I dashed this off in a hurry and screwed up. THIS IS NOT TRUE. I was comparing 1,000 per year in the first to a thousand per month in the second. It's $600,000 in the savings account and $5,000,000 in the brokerage account, if we're doing per month. At a thousand a year it's $50,000 vs $464,443. Sorry!!!
« Last Edit: August 07, 2017, 11:47:57 PM by koshtra »

MNBen

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Re: Why is investing so important? I'm afraid.
« Reply #12 on: August 07, 2017, 11:12:35 AM »
...because it's the difference between ending up with $25,000 and ending up with $2,500,000.

It's hard to add anything after that wonderful example, but I'll say that when I was a kid my parents put all my savings in CDs and thought they were doing me a huge favor.  And I didn't know any better so thought they did too.

Then in college I took a personal finance class and learned a lot about many things, including investing.  I started talking to my parents about their 401k, etc. only to find out they were still very conservative in their investing only using money market accounts.  I'd like to think I helped them out greatly by teaching them about investing.

So that story aside, one lesson I learned from that class is putting your money in a savings account is what the professor called "going broke slowly".   As others have tried to explain, the cost of things is going up faster than your money is growing... you're slowly going broke.

Mighty-Dollar

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Re: Why is investing so important? I'm afraid.
« Reply #13 on: August 07, 2017, 02:07:42 PM »
I'm 17 years old, so I haven't had access to a full income yet. However, I always see everyone talking about investing, especially here on this board. What even is it? I'm afraid to invest because I firsthand have seen many of my family members have their financial lives completely ruined by the 2008 crash. I don't understand why you wouldn't just keep it in a regular savings account in a bank! Is there anything wrong with my way of thinking? Educate me on the other point of view!
Your family members committed the Cardinal sin of putting too much into stocks instead of bonds. Notice how if they took the lowest risk (28/72) they were able to do BETTER than 4% returns. How much is the bank paying? Less than 1%?

Babybalrog

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Re: Why is investing so important? I'm afraid.
« Reply #14 on: August 07, 2017, 03:16:45 PM »
Why is investing important?

Building your stash is critical if you ever want personal freedom. Do you want to work until your 80, and drop dead? No. Then you need to save. If you want to maintain your lifestyle, that means you need to save 50% of your income from age 20 to age 50, so that you have a big enough cash reserve to live the next 30 years. Basically every year of earning has to support two years or life. Inflation makes this even worse!

There are three ways out of this situation, work longer and be free shorter, save a higher % of your net pay, or invest.

Investing lets your savings work for you, and those little workers, never get tired, sick, or retire at 60. They work forever. The Shockingly Simple Math says that, on average,  you would need to work 17 years before your stash can support you, forever (on average).

I don't know about you, but I'd rather work 17 and live 43 free and clear, then work 30 and only enjoy 30. And that's with the same quality of life - 50% of your income! And those 13 years saved, are not 13 years, when your old and decrepit. Those are ages, 37-50. Fairly healthy fun years.

And so what if you don't get "average" returns, or can't manage a 50% savings rate. By never saving and never investing, you never gain any freedom. You work until you die.  You can play in conservatively, have bonds mixed in. Get a 5% return instead of 7%. But guess what, those are all MASSIVELY better than 0% from a savings account. Nobody wakes up one day and goes from broke to a millionaire (without winning the lottery, etc.). No, millionaires save $1 a million times, and they invest so that those million dollars spawn more little dollars for them.
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JanF

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Re: Why is investing so important? I'm afraid.
« Reply #15 on: August 07, 2017, 04:56:16 PM »
I get the fear I was there once. The first time I invested (maybe about 5k worth...basically testing the water) I was terrified because I went in totally blind. I was watching the numbers go up and down and down and down everyday and I lost money investing in a company that closed down. After that I ended up selling some stocks and holding the rest and basically just ignored my account for a long time. When I finally checked back on it, guess what? The numbers went up and I made a profit! And if I would've kept the stocks I sold (except for the company that shut down) I would've profited from that too. So I learned a huge expensive lesson and I educated myself and now I'm less worried about it because the market will always go up and that was the biggest game changer to my view point.

In my high school finance class the teacher had us play the stock market game (regrettably I've never taken the class but I heard it from my friends). Since you don't have any income this is a risk free way to learn about the market. They give you "money" and you "buy" stocks or bonds with it and track your investment in real time.

http://www.marketwatch.com/game/

ToTheMoon

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Re: Why is investing so important? I'm afraid.
« Reply #16 on: August 07, 2017, 05:03:03 PM »
Think of it like a trip to a far off place.  Investing is like driving faster.  You will get to your destination sooner, but there is some risk you get a ticket on the way. For a long trip, even if you get a ticket and lose some time, the faster speed still gets you there.  A bad investment plan (poorly diversified, lots of fees or trusting a bad advisor, is like a poor detour.  Cant make it up.

However, the path to wealth is mostly driven by your savings rate.  If you save a good percentage of income and live below your income level, you will be fine.

I love this description - posting so that I can find it again!

2Birds1Stone

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Re: Why is investing so important? I'm afraid.
« Reply #17 on: August 07, 2017, 05:23:21 PM »
Here is a simple reason.

If you put $1000/month in a savings account that earns little to no interest for 50 years, you will finish with $600k

If you invest $1000/month and average 7% return after inflation (slightly below average for stock returns in the past 100+ years) for 50 years you will finish at a whooping $4,878,347.

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Bicycle_B

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Re: Why is investing so important? I'm afraid.
« Reply #18 on: August 07, 2017, 06:45:01 PM »
Hi, Ayylmao.  What does ayylmao stand for, and what do you think of the answers so far?

I made some small investments in my 20s, such as stock purchased through my job's 401k retirement plan, and buying a house where I could rent the rooms out at a profit.  20-25 years later, I have enough money to live pretty comfortably without having a job - enough for the rest of my life, basically.  The majority of the money I have came from those small investments.  Had I left the original investment money in the bank, it would only be enough to pay a few months' bills.  So investing can be the difference between being broke, or being safe and free.

Since your parents invested and still went broke, you need to learn about how to invest more safely than they did, and how to live so that your expenses don't overcome your investment earnings.  This website is a good place to learn.  Welcome.

surfhb

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Re: Why is investing so important? I'm afraid.
« Reply #19 on: August 07, 2017, 07:46:07 PM »
I'll repeat what already been stated.   POOR CHOICES is what put people in the shitter in 2008!

JoshyBoy

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Re: Why is investing so important? I'm afraid.
« Reply #20 on: August 07, 2017, 07:49:05 PM »
Thanks for the question OP! Very insightful. Great to see you’re thinking about this stuff at an early age. As others have said, investing is a way to lend your money with the idea that they’ll pay you back, plus extra (aka Interest). This could take the form of a loan, a bond, annuities, property (rental or otherwise), shares or stocks (i.e. investing in part of a business), or even high interest long or short term deposits.

All of these investment options sit on different ends of the “risk factor” spectrum. A high interest savings account, for example, is little to no risk. Throw that money at a bank or credit union and it probably won’t go anywhere fast, but neither will your total with such (relatively) low interest rates. Many would consider shares or stocks, on the other hand, to be a riskier investment, though it all depends on your experience and the kinds of risks you’re willing to take. As you’ve seen first-hand, sometimes those risks simply don’t pay off...

As an example, let’s use NZCU’s term deposits. NZ company, sure, but it works for this example of a low-risk investment:

Say you invest $10,000 in a term deposit for 60 months. Using the above provider, this would mean you’re earning 4.50% interest per-annum, for the duration of the investment. By the time the term comes to an end, you’ll have turned that $10,000 into $12,150. It’s a small amount and may not be the best option, sure (which is why most people would rightfully suggest a slightly riskier, higher return option), but it gets the general idea across! This compares to just $11,330 for a regular savings account. Which is why most would also suggest you not just leave your cash in a savings account and forget about it.

The best way to learn? Do exactly what you’re doing. Be inquisitive. Ask questions. Do your research and read up. If the safer route is one you're more comfortable, then that's totally cool! It's your life, after all. Don’t just take one opinion as investing gospel, but rather listen to a bunch of opinions, learn to parse the reality from the subjective statements, and form your own view of how you’d like to tackle the challenge of investing. It can be a tough job, but it’s also a rewarding one! This post shows you’re already well on your way to doing just that :D

Mr. Green

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Re: Why is investing so important? I'm afraid.
« Reply #21 on: August 08, 2017, 10:10:50 AM »
I'd suggest reading through Jim Collins' site on investing, or check out his book and see if that helps: http://jlcollinsnh.com/stock-series/
+1.

Best thing I ever did with respect to invested was read The Stock Series.
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Chesleygirl

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Re: Why is investing so important? I'm afraid.
« Reply #22 on: August 08, 2017, 03:35:05 PM »
. I don't understand why you wouldn't just keep it in a regular savings account in a bank! Is there anything wrong with my way of thinking? Educate me on the other point of view!

Money will not grow in a savings account.

I had lost some of my investments in a recent stock dip, but I was back up to speed in a few months. It is better to invest, in my opinion. If you choose a conservative investment option (mostly bonds rather than stocks), you would not lose as much if the stock market tanked.

RyanAtTanagra

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Re: Why is investing so important? I'm afraid.
« Reply #23 on: August 09, 2017, 12:47:30 PM »
Your family members committed the Cardinal sin of putting too much into stocks instead of bonds. Notice how if they took the lowest risk (28/72) they were able to do BETTER than 4% returns. How much is the bank paying? Less than 1%?

Ok, I don't where that data comes from, but it's bad information.  And telling someone they made the mistake of having too much in stocks and should have a 28/72 split is just HORRIBLE advice.  Even in that time period shown, which was probably specifically chosen to prove a point for how 'dangerous' stocks are, an 80/20 split still comes within a few thousand, much less all the other periods where it fairs way better.

https://www.portfoliovisualizer.com/backtest-asset-class-allocation?s=y&mode=2&startYear=2000&endYear=2015&initialAmount=100000&annualOperation=3&annualAdjustment=0&inflationAdjusted=true&annualPercentage=4.0&frequency=4&rebalanceType=1&portfolio1=Custom&portfolio2=Custom&portfolio3=Custom&TotalStockMarket1=80&TotalStockMarket2=28&IntlStockMarket1=20&IntlStockMarket2=72

TheThirstyStag

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Re: Why is investing so important? I'm afraid.
« Reply #24 on: August 12, 2017, 06:42:47 AM »
Your family members committed the Cardinal sin of putting too much into stocks instead of bonds. Notice how if they took the lowest risk (28/72) they were able to do BETTER than 4% returns. How much is the bank paying? Less than 1%?

Ok, I don't where that data comes from, but it's bad information.  And telling someone they made the mistake of having too much in stocks and should have a 28/72 split is just HORRIBLE advice.  Even in that time period shown, which was probably specifically chosen to prove a point for how 'dangerous' stocks are, an 80/20 split still comes within a few thousand, much less all the other periods where it fairs way better.

https://www.portfoliovisualizer.com/backtest-asset-class-allocation?s=y&mode=2&startYear=2000&endYear=2015&initialAmount=100000&annualOperation=3&annualAdjustment=0&inflationAdjusted=true&annualPercentage=4.0&frequency=4&rebalanceType=1&portfolio1=Custom&portfolio2=Custom&portfolio3=Custom&TotalStockMarket1=80&TotalStockMarket2=28&IntlStockMarket1=20&IntlStockMarket2=72

I agree wholeheartedly.  I am wondering where those data came from.  Which stocks were included in the "100% stocks" data?

Capt j-rod

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Re: Why is investing so important? I'm afraid.
« Reply #25 on: August 12, 2017, 07:07:01 AM »
As others stated it's awesome to see a 17 year old interested in this. You have probably already figured out that step one is to not spend money on useless hyper consumerism. More junk and debt does not = more happy. So now that you aren't spending every nickel you have some surplus cash. The real secret is to get that money working so you don't have to. Most Americans never reach this level. If you  had 1000 dollars and kept it in a coffee can in 20 years you would have $1000. So we have to invest it. Banks lend you money and you pay interest. You lend others your money and they pay you interest. We never invest "all our eggs in one basket" this is diversification. Vanguard is a solid choice in here. You buy one investment but it is composed of lots of company stocks. Some companies gain, some lose. Overall there are more winners than losers (usually). Investing is not a scratch off lottery ticket. Don't look at it every day, look at it twice a year. We are looking at 10 year averages. I can promise you this, you have come to the right place. If you grow a stache at 17 you won't ever find yourself poor or wondering how you will ever retire.

SwordGuy

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Re: Why is investing so important? I'm afraid.
« Reply #26 on: August 12, 2017, 07:16:22 AM »
The JL Collins stock series link that was posted early on in this thread is a real winner.   I highly recommend it.

Read thru it from front to back.   Maybe twice!  (I have!)

Then come back and ask more questions.  You'll be more ready for the answers and better prepared to understand them.