Investing For The Far Off Future

Edited due to political content.

 

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I know this was mention at least one time myself not being much older than you(24 almost 25) I've been investing in dividend stock like Duke and Verizon since it does have a nice steady increase. Although i too love silver and gold as another form of investment and try to get a new coin each paycheck. But im thinking of trying in some more high risk stocks since if i lose money now lot easier than if i lose it 40 years from now.

 

I highly recommend a for-fee financial advisor (http://www.napfa.org/), or the best deal, if money is tight, it to accompany your parents to their advisor, and get 'free advice'.
Check this out too. http://money.usnews.com/money/blogs/alpha-consumer/2007/10/05/financial-tips-for-20-somethings
As soon as you're employed, invest in a 401k with a match - that's your best return on investment.

 

Keep in mind that a fee based financial planner is just going to give you a traditional asset allocation model [mix of investments] depending on what that particular firm recommends, and possibly sell you some insurance. Save the money and just put a percentage of your investment dollars into an index fund [typically 100 minus your age] with the balance into a bond index fund, buy some term insurance [from your employer if possible], and you will be very close to what they recommend. All they are trying to do is create a mystique about the complexity of investing to convince you that it cannot be done without professional assistance when, in fact, it is easier than learning how to do basic plumbing in your home.

 

Well I take exception with the plumbing analogy, (though I do both myself), a lot of advice you will receive will be canned. Not to brag, but I have more knowledge and a higher degree in Finance than most of those advisors recommended. In fact I may have taught some of them. I am simply mentioning this to say you could also just follow my generic advice I posted earlier, or ask a question here, and get the same effect.

Chris

 

You do this one thing and EVERYTHING will fall into place

 

My preference has always been to learn how to value stocks and the right way to think about market fluctuations and do it yourself. It isn't that difficult and doesn't require a high degree in finance [sorry] or a high IQ, although it does require a person to be able to read a financial statement. If someone has no interest in this, then the "spread the money around and hope for the best" method is about the only reasonable alternative; but the person using that method must realize that the results might not meet expectations.

 

True, but for most people having them read Financial Statements and understand the context and ramifications of most things requires an accounting and finance background. Most people cannot open up a Financial Statement and hope to really understand it, and more than I can open up a Chilton's for a 66 Dodge Dart and understnad how to overhaul a tranny from it. Background, perspective, and a thorought understanding of the vocabulary is required. A note about a financial derivative profit stuck in Malaysia takes some background to understand how that may affect the value of a firm both long and short term.

 

^Honestly that is just nonsense. A degree is nothing more than a certification from an institution that you passed their coursework for a certain subject. It is not a predictor on what a person will be able to accomplish in the future including picking up a few things about finance. Reading a balance sheet isn't rocket science.

In fact I become concerned and suspicious when a party can only justify a certain position, opinion or conclusion on a subject by quoting accolades printed on paper hanging on the wall, rather than give a rational explanation based on relevant facts. A logical argument doesn't depend upon the qualifications and personal anecdotes of the messenger giving it.

 

There are a few good books and pamphlets that will give new investors enough background on financial statements to invest competently. It isn't necessary to understand the specifics. Most people, including professionals and company management, will not be able to evaluate the impact of those sort of things on the stock price anyway. But being able to calculate debt/equity and free cash flow will go a long way to avoiding major problems. If someone isn't willing to do at least that much work, they should not expect to invest successfully and probably should just keep the money in the bank.

 

Whether keeping money in the bank or spreading it around among a blind basket, chances of keeping up with inflation in today's environment of zero % interest rates are slim to none, and losing tangible value is a real possibility. An educated and properly diversified portfolio may certainly beat inflation and outperform precious metals, but one of the many nice things about investing in gold and silver is that it doesn't require any real education to make the right move.

If there are negative real interest rates (inflation is at a higher rate than interest levels) then precious metals will perform well as a hedge against inflation. If there are high interest rates they will not. That's about all you really need to pay attention to for precious metals valuation, and that's why I backed up the truck in 2008 at the moment interest rates hit zero. If interest rates start to rise I will start offloading some of my silver, but until then I'm buying at any price.

 

I wish you luck sir. To say that investing in ANYTHING doesn't require education to make the right move is never something I would say, especially investing in it solely. If silver is your primary investment asset, and you think its risk free and easy, then I for your sake hope you are right, but am very nervous for you.

"Not requiring education to make the right move" while invest in any type of single asset is horribly risky. That is the reason for diversification.

 

Nothing you've said here is anything I would disagree with, but it doesn't negate what I previously stated either about how to determine whether precious metals are a winning or a losing play. Gold tracks inflation, silver follows gold, it's that simple. You don't have to go to college to learn that. It doesn't mean they will outperform any other commodity. For that assertion we'd have to go into other fundamentals which I have done elsewhere, but that's not the point I'm making here.

 

Interesting that you mention this. The problem with the current system is they can create the money, but they can't get it into the system. People won't borrow money if they no longer have the income to do so and/or they believe that what they purchase (home) is going to fall in value. This poses a problem for a system that can only exist by constant monetary expansion. The Fed is walking a bad tight rope with QE and can't keep that up because of balance sheet issues. QE money has ended up in the stock market and over valued it. It has not ended up where it was intended to go.

So the next plan of voodoo economics is in fact negative interest rates. This essentially means that borrowers get paid to take loans and savers get severely punished for having any savings. If they put forth this insane plan, then expect gold & possibly silver to quickly start appreciating in price. People who have savings won't have any choice in the matter if they want to protect their wealth.

I don't know how much of this is true or if it will happen, but it would seem that the current administration is bound and determined to do everything it can to keep housing, car buying, bankers and the stock market goosed up by any means possible at least through the election. Heaven help all of us.

 

This concept of negative interest rates was covered on ZH today with the unanimous proposal of the Stupor Committee to implement negative yield bonds which is basically QE^infinity under a different name. Yes, savers will be punished. Interest rates are rock bottom, now potentially out right negative which would mean no more stop gap between zero and negative infinity, and the currency supply keeps expanding. It's a recipe for compounding inflation, but it should also lessen the Fed's monetary expansion since they won't have to buy the treasuries outright in order to have the same effect of negative interest rates. So that's a bit of a cancellation. Hard to say just how it will play out, but ultimately inflation rests more so on credit expansion than the Fed, that is assuming they are being forthcoming about how much currency they are creating.

 

That's just it. Fiat dollars can only enter the economy by the issuance of more debt whether it be through federal government borrowing or borrowing from banks. Federal government borrowing has to be authorized by the Congress & President. They just raised, quietly, the debt limit again on Friday by another $1.2T. (a staggering number on its on) However it is private borrowing that has dried up and when this happens, it takes down the banking industry which only makes money by selling debt & risk. The Fed addresses this by dropping rates, but the floor on that is 0% so now they are up to cooking up plans to save the finance system by stealing from the people. There should be people going to jail for this, but alas, in this America, it's not happening.

The only thing a sane person can do is to try and protect themselves by moving wealth out of this system while you still have some. If you take out debt with this system, then they own you and I hope you like years of painful servitude. Don't do it.

 

really? 100%?????? i'd make it 50/50 stocks/pm

 

how.. i want to leearn

also.....

Your best bet however since you are 20 is to ​

stay out of debt

. Debt is why so many people your parent's and even grandparent's age have no money. They gave it all to the banksters.

Read more: http://www.cointalk.com/t199445/#ixzz1lDjobuRN​

 

For the OP, who is 20 years old, I believe a 100% allocation is appropriate since the stock market is the greatest wealth-building opportunity available to most people. PMs were a great investment a decade ago, but less so now. I still think they will go up but it's all speculation now. If a person decided to divide their holdings into 10 stocks, it would be appropriate to make one of them PMs. Someone who is 20 and is investing for retirement can ride out the dips and take advantage of the compounding effect.

 

This is a very dangerous way to think. Many people here are married to their gold and silver and don't realize that the last decade was a once in a lifetime bull market opportunity that may continue for 2-3 more years, but won't last forever. Everything looks easy when you are deep into a bull market and everything is working to your advantage.