Stock Market/ Retirement

[rockettj1225]

With the economy the way it is, Would you say it's a good time to buy stocks for Retirement? Or would you said It's a Better time to be selling? How long do you think the economy will be down for? If you got any other info, about the stock market list it here. Just wondering what I should do.

Rockettj1225

[MagnificentMarcus]

Buying! Stocks are at their lowest since 1997.

[manthing]

oh boy. this is a tough one.

the THEORY is to invest at times when stock prices are low (like now).
save a regular amount, month in, month out.
this will even out troughs and peaks.
and over the LONG term, you should get a good return.

but in reality, this may or may not work out.

e.g. many people's investments mature when markets are low.
these people should have the option to hold back until buoyant times, but maybe some can't wait? e.g. some people need the cash from the investment to pay off for the mortgage on a house etc.

you could go for bonds. like government bonds.
very safe but the fixed rate is the catch.
if inflation goes above the bond rate, you're losing money!

you can look at things in a different way.

i'm basing the following on living in UK and in a city like london.

in today's terms, if i was 65 and have just retired, i will need to have around £250K (around $360K in todays exchange rate terms) to have a comfortable life style.

read that again.
£250K in the bank or some sort of saving account or investment fund etc.

this is above and beyond all other major costs i may have, like a mortgage, bringing up children etc.

the thinking behind this figure is something like this...
might get 5% or 7% returns on my balance (of course now we are lucky to get 1%!).
equates to around £17K or £12K (ignore taxes and such like on the interest).

and if my major outgoings like a mortgage are cleared, then £17K is good enough for my meals, utility costs, maybe 1 or 2 trips a year, running costs of 1 car etc.

each person will have a different figure depending on where they live, what sort of life style they want etc.

but this may give you a rough idea.

of course even if you did invest, there is no certainty that the fund will pay off, or be written off ala madoff type ponzi scheme etc.

maybe the best thing to do is a little bit of everything.
bit in a savings account, bit in stocks and so on.

bottom line:
1) save as much as you can every month
2) cut out waste
3) try putting your money into stock markets if you are willing to take the risks. and if you do, do so over a long term, say like 25 years
4) have some idea how much you'll have by retirement time and plan ahead. e.g if you are going to be short of funds, you may have to sell up and downsize / move elsewhere

sorry i can't give you more specific details rocket.
i'm not financially savvy enough.

[manthing]

rather than trusting your money with a fund management, try buying/selling stocks yourself.

go for medium risk, blue chip companies.
and those that give good yields as you can use this to re-invest.

what is a blue chip company?
nowadays its hard to tell as so many are going to the wall!

but i suppose the coco-colas, microsofts, oil companies etc are as safe as safe can be.

[MagnificentMarcus]

I have to disagree about staying through the cycles. Buy low-sell when it's high, and look for other deals! Only try doing puts if you have a good idea of stock trading! The buy and hold philosphy is for the losers who follow that Orman cow! Sorry, can't stand her! By the way she has a couple of class action suits pending!

[lordsmurf]

Buy. It might go down more, but it will rebound by the time you need it.

[MagnificentMarcus]

People get too greedy, thinking that investments (stocks, bonds, real estate, etc.) will never go down. They always forget the addedum, "what goes up, must always come down!

[manthing]

yeah, nothing wrong with MMs strategy.
buy low - sell high works.
but you'll need to have a finger on the pulse, as stock prices can jump up and down.

perhaps right now, short selling is the way to go?
has short selling ban been lifted?

and in UK, there are ways of playing the stock market, but through a gambling mechanism, and hence no need to pay tax on anything you make as there is no tax on gambling!

[manthing]

you could take the gamble on the pound being relatively low against the dollar.
the exchange rate is about £1 : $1.43 now.
perhaps a rate of £1 : $1.60 is a fairer reflection?
minus commission, this could be something like a 15% return.

so are you willing to take the gamble?
how long will you have to wait for the pound to strengthen? 2 years? longer?
can you wait that long?

also, is it worth doing?
i mean, say you had $1000 spare.
you then exchanged your dollars for pounds.

you wait 2 years for the rate to go to about 1 : 1.6.
you convert your money back.

so you make about $170 (ignore commission or taxes etc).

1) this is "only" $170. is it worth gambling $1000 for this amount back (plus your $1000)?
2) if it did take 2 years, then you are actually only making about 8.5% return per year. and if it took longer, you're making less of a percentage every year.

and the biggest gamble of all is that the rate may stay where it is for a long time. maybe even forever.

then again, perhaps the rate may nudge towards £1 : $2!

so do you think it is worth the gamble?

[manthing]

precious metals is another option.
like gold.

in 2005 gold was selling at about $450 per ounce.
today it is about $940 per ounce.
about a 109% return (over 4 years).

perhaps a strategy is to wait for gold to drop back to about $500 per ounce.
then buy up as much as you can (or dare!).

then patiently wait for the world to hit another recession / or at least for investors to abandon the dollar and put their money into gold, then sell and pocket the profits.

again, you'll need a fair bit of cash to get anything meaningful back, lots of resolve and even more luck.

[manthing]

sell your @ss at the weekends.
easy money.
just lie on your back, err front, and get paid!