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PostPosted: Mon Oct 13, 2008 2:08 am 
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Marry me, Pete. :lol:

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my videos: http://www.youtube.com/user/monicapiano
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PostPosted: Mon Oct 13, 2008 2:40 pm 
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PJF wrote:
You are very young Adam! If you find a good, no-load stock mutual fund, you'll get your 20K back times ten in about 25 years. Just keep investing in small, monthly increments and you can hardly be disappointed in the long run. I'm curious about the particulars of your fund, Adam. Is there a link to an analysis of it? A bond fund should not have lost 25% in 10 months! I want to pick its brain, so to speak. I bet it was made of corporate bonds.



My investment is basicly invested in many different markets spread all over the world: Stocks ( of all kinds of companies ), bonds and a small percentage in real estate. I had to make a so called "Investor's profile" so that the ones that take care of my investement would know how much risk I'm willing/able to take. In the end it turned out that 50% of my investment should be put into bonds, 40% into stocks and 10% into real estate. Since the value of most stocks declined rapidly over the past few months, I lost nearly 25% of the investment.
Fortunately, I have regained a part of the losses now, and my investment's value has risen to around 17.000 now again.
The reason why I was surprised that I lost nearly 25% while everything was invested in bonds is that I missed the fact that they sold a large portion of the stocks before they had become worthless. It wasn't purely invested into corporate bonds, but I believe a portion of it was also Government bonds.

I can't seem to find any pages that explain how the fund works, but I hope my explenation was clear enough. :lol:

I might put some money I have saved aside and buy some stocks myself, rather than invest it into another fund. The only problem is that I lack the time and information to make optimum decisions, but the sooner I learn how everything works the better. And most stocks are going up again, so now might be the right time to do it.


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PostPosted: Tue Oct 14, 2008 11:25 am 
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Joined: Tue Dec 12, 2006 12:57 pm
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Well, I guess I'd be one of those folks with a very low risk tolerance :D ... I invest a lot, but avoid the stock market like the plague. I prefer CDs and government bonds instead. I am not very well versed in money matters (I just know it's better to save, not spend!), but my economics course I took when a freshman still weighs heavy on my mind.

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Though everything else may appear shallow and repulsive, even the smallest task in music is so absorbing, and carries us so far away from town, country, earth, and all worldly things, that it is truly a blessed gift of God.

Felix Mendelssohn


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PostPosted: Wed Oct 15, 2008 8:17 pm 
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Joined: Thu Jul 13, 2006 12:34 pm
Posts: 1278
Adam wrote:
PJF wrote:
You are very young Adam! If you find a good, no-load stock mutual fund, you'll get your 20K back times ten in about 25 years. Just keep investing in small, monthly increments and you can hardly be disappointed in the long run. I'm curious about the particulars of your fund, Adam. Is there a link to an analysis of it? A bond fund should not have lost 25% in 10 months! I want to pick its brain, so to speak. I bet it was made of corporate bonds.



My investment is basicly invested in many different markets spread all over the world: Stocks ( of all kinds of companies ), bonds and a small percentage in real estate. I had to make a so called "Investor's profile" so that the ones that take care of my investement would know how much risk I'm willing/able to take. In the end it turned out that 50% of my investment should be put into bonds, 40% into stocks and 10% into real estate. Since the value of most stocks declined rapidly over the past few months, I lost nearly 25% of the investment.
Fortunately, I have regained a part of the losses now, and my investment's value has risen to around 17.000 now again.
The reason why I was surprised that I lost nearly 25% while everything was invested in bonds is that I missed the fact that they sold a large portion of the stocks before they had become worthless. It wasn't purely invested into corporate bonds, but I believe a portion of it was also Government bonds.

I can't seem to find any pages that explain how the fund works, but I hope my explenation was clear enough. :lol:

I might put some money I have saved aside and buy some stocks myself, rather than invest it into another fund. The only problem is that I lack the time and information to make optimum decisions, but the sooner I learn how everything works the better. And most stocks are going up again, so now might be the right time to do it.


Yes, that makes perfect sense.

A bit of advice: don't invest in individual stocks; find a stock-index, no-load, mutual fund (that's a lot of adjectives) and put money into it that you won't need to withdraw for at least 10 years. It's best that you dollar-cost-average (a fancy term for putting a certain amount of money into an investment at regular intervals...example - X number of Euros per month.) It's better to break down an investment over time because when stock prices are higher you buy less individual shares and when prices are lower, you buy more shares; over time, this adds up to a significant advantage. And any advantage OVER TIME, will add up to a large chunk of change!

Of course, I went against mt own advice and pulled a large amount of dollars from the stock market to treasury bonds on August 1, 2008 (my own coarse attempt at timing the market) only to put it all back in to stocks on October 10. I sold in August because of many factors including LIBOR, the price of gold, the price of oil, and reduced credit availability. The probable housing market collapse also factored into it. The stock index charts even gave visual indications of a decline. I guessed right by accident and I don't recommend market timing unless you can afford to lose all your money. Market timing refers to the practice of trying to buy low and sell high. The risk of doing that is you can miss out on large, unpredictable positive changes in the market and be at risk of buying during a down turn.

For those who have 20+ years until they need their money, the stock market continues to be the best bet for long-term capital appreciation. Mid-term (10-20yrs) investments should be a blend of stocks and bonds (the shorter the goal, the less stocks you should own.) If you have shorter term (5-10yrs) investment needs, AAA rated bonds are the best bet. Short term (<5yrs) investments are maybe best placed in money market accounts or lower risk bond funds. If you're trying to protect an already large retirement fund from volatility, you should be <30% stocks, >70% bonds.

My asset allocation is 100% stocks. I'm 29 and won't be needing the money for at least 30 years (unless I get head cancer from watching South Park. :lol: No one can predict when you die.) An all stock portfolio can expect to see an 11% rate of return over the long term. An all bond portfolio can expect to see a long term rate of return of only 5.5%.

Let's examine the difference.

A 1,000Euro investment with a 5.5% rate of return over 40 years will be worth 8,500.
A 1,000Euro investment with an 11% rate of return over 40 years will be worth 65,000!
There's quite a difference (7.64 times, to be exact!)

The longer your investment time horizon, the more stocks you should own. The shorter, the less stocks you should own.


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PostPosted: Fri Oct 17, 2008 4:34 am 
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Joined: Thu Jul 13, 2006 12:34 pm
Posts: 1278
Suggested reading...

Anything by John "Jack" C. Bogle, the man is one of THE great financial minds of our time. His approach is that of reducing management fees by cutting out the middle man - avoiding actively managed funds (those funds who have managers trying to "beat the market" (at BEST a loser's game) - think "the house always wins - "the house" being Wall Street"), and flocking toward passively managed funds (those funds usually mimic a certain benchmark index and don't engage in shenanigans such as constantly swapping a "bad" stock for a "better" one.) The less one shifts around in the stock market, the better the returns will be! For the uninitiated, I recommend: The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns

The Intelligent Asset Allocator: How to Build Your Portfolio to Maximize Returns and Minimize Risk, by William Bernstein A must read for anyone trying to grow their money in the long term.

Seek and ye shall find.


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PostPosted: Sat Oct 25, 2008 3:04 am 
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Joined: Wed Jun 14, 2006 12:38 pm
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I think Pete has disappeared, but I'm glad today because I paid only $2.89 for a gallon a gas this afternoon. :D

_________________
"Simplicity is the highest goal, achievable when you have overcome all difficulties." ~ Frederic Chopin

my videos: http://www.youtube.com/user/monicapiano
my personal website: http://www.monicaalianello.com


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PostPosted: Wed Oct 29, 2008 11:59 pm 
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Joined: Thu Jul 13, 2006 12:34 pm
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I'm here!

I'm just so freakin' busy! (Teaching and school.) :wink:

Gas here is $2.23!


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