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putting your money in to 100% equity funds is volatile , but as long as you are in for decades it IS NOT very risky at all .
picking a handful of stocks and hoping for the next apple is risky . betting the ranch on a sector is risky .
there is a difference and more risk does not always equate to better gains . it is something that just comes many times out of not knowing how to invest and so you end up speculating .
i had my retirement funds 100% in diversified funds but there was little risk , but plenty of volatility along the way . 100k in the model portfolio i used in 1987 without another penny added is 2.40 million . that is little risk but a lot of volatility .
somehow i think you mean volatility but are using the word risk .
the natural market cycles over long periods of time are volatile , but have proved not to be much risk . it is only speculating over the short term and trying to time market cycles that you create more risk by using long term investments for shorter term money .
putting your money in to 100% equity funds is volatile , but as long as you are in for decades it IS NOT very risky at all .
picking a handful of stocks and hoping for the next apple is risky . betting the ranch on a sector is risky .
there is a difference and more risk does not always equate to better gains . it is something that just comes many times out of not knowing how to invest and so you end up speculating .
i had my retirement funds 100% in diversified funds but there was little risk , but plenty of volatility along the way . 100k in the model portfolio i used in 1987 without another penny added is 2.40 million . that is little risk but a lot of volatility .
somehow i think you mean volatility but are using the word risk .
the natural market cycles over long periods of time are volatile , but have proved not to be much risk . it is only speculating over the short term and trying to time market cycles that you create more risk by using long term investments for shorter term money .
I was thinking super aggressive in my IRA account. But I want to hear from other members of this board if you guys would do something so risky as well?
Quote:
Originally Posted by 49erfan916
im 32 years old and probably 30+ years from retirement.
For a 32 year old investor like yourself your best and most important asset is time. Time to recover the market volatility. As mathjak says risky and volatility are two different things. Risky would be investing in the next bright idea only to find that it was just a fad.
Instead think of the investment as volatile and use that to your advantage. If you are investing for retirement and you are 32 you should be 100% in equities. But not in just one or two stocks. You should be in either a nice passively managed or a very good actively managed index fund that covers the entire market. Something like Vanguard's Wellington Global index would be a great first IRA. Once you have an established baseline then add in others. Since it is an IRA remember you should do that as a Roth unless you absolutely need the tax deduction now.
But let me go one step further. If you have access to a 401k at work and it has a matching element to it you should be there first. Take the match as free money and do not leave it on the table. Then next investment available money from your pay go to the Roth up to max ($5,500). After that return to your 401k to as much money as you can afford to invest. The 401k will allow you to put up to $18k of your own money. so the break down goes like this of your investable income you can use.
1- 401k up to company match.
2- Roth IRA up to max (5.5k)
3- 401k as much as you can up to max (18k)
For a 32 year old investor like yourself your best and most important asset is time. Time to recover the market volatility. As mathjak says risky and volatility are two different things. Risky would be investing in the next bright idea only to find that it was just a fad.
Instead think of the investment as volatile and use that to your advantage. If you are investing for retirement and you are 32 you should be 100% in equities. But not in just one or two stocks. You should be in either a nice passively managed or a very good actively managed index fund that covers the entire market. Something like Vanguard's Wellington Global index would be a great first IRA. Once you have an established baseline then add in others. Since it is an IRA remember you should do that as a Roth unless you absolutely need the tax deduction now.
But let me go one step further. If you have access to a 401k at work and it has a matching element to it you should be there first. Take the match as free money and do not leave it on the table. Then next investment available money from your pay go to the Roth up to max ($5,500). After that return to your 401k to as much money as you can afford to invest. The 401k will allow you to put up to $18k of your own money. so the break down goes like this of your investable income you can use.
1- 401k up to company match.
2- Roth IRA up to max (5.5k)
3- 401k as much as you can up to max (18k)
Hope that makes sense to you. Good luck.
Thank you so much, my dudes. I'm opening a roth this year and I get my IRA into more volatile stocks.
It depends on how you evaluate risk. My entire portfolio is like 97% stocks. My 401k itself is 55% Russell 1k, 15% Russell 2k, 20% International Index Fund, 10% Bond Fund, but I'm in my early/mid 30s.
At 32, or even 42 or 52, you should have an emergency fund but investments that are almost all in equities. Long term that will provide the best opportunity for growth.
I'm going to open an roth ira with ETF and apple and boeing. (starting out withthe initial $5500)
I want to go aggressive for about 5 years, then pull it back to a moderately conservative approach.
It sounds like a small portion of your retirement savings. I have no idea whether those 2 stocks will work out well, but if they don't, it probably won't hurt you too much.
At 32, risking one's retirement funds is a far different matter than risking them at 60 or older. The difference is time to recover. "Risk" is also a widely interpreted concept. With some, it is essentially 'gambling,' with others it is 'intelligently investing in less conservative equities.' The notion of "risking" ALL of one's retirement funds on "super aggressive" stocks, sounds more like 'gambling,' than 'investing.'
When I was your age, I confused the concepts of 'gambling' and 'investing' in a highly volatile market. To me, that meant using highly leveraged vehicles to "invest" (puts, calls, straddles, margins, day trading). My rationale was, if I 'won', I would win big, and if I lost, I would be better off losing what I had then, than later when I had more to lose and less time to recover. I lost (about $15-$20K in 1970's), but, ultimately "won" because it taught me a valuable, but, painful lesson about 'gambling' in the stock market -- one that carried me through the rest of my working career and into a comfortable retirement.
Remember, there are a lot of high volume "investors" who have a lot more information and automated tools than you can imagine. They spend all of their time and resources trying to 'beat the market,' yet, for every one that 'wins', another loses. Your odds of winning as a casual investor (of your retirement funds) in super-aggressive stocks ... are not very high. Why not try-out your theories with a small subset of your funds and see what happens?
You can both lower your risk and improve your results by choosing something more like a 60/40 portfolio... and then using leverage.
Can you give an example? What kind of leverage? Buying on margin?
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