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actually many think their situation is simple because they only know about what they know and know nothing about what they don't know.
the first indication they planned badly is when their social security gets taxed and had they planned better it wouldn't have been.
my planning could have been a lot better tax wise if I knew back then what I now know. I was to ignorant to seek help but at this stage it is like telling the guy who built the Brooklyn bridge it is nice but can you move it two inches to the left.
So just like stocks, I have to worry about "buy high, sell low"? That is, I could go in now, and 30 yrs later, I could potentially not make a penny? Wellington is at 191.96 now, but if it's 190.00 30 yrs from now, then no gains?
My one pressing concern about the stock market in general is the student loan "bubble"--real or fake--still something to keep in mind.
That's why there's 'risk' involved. Yes, you're taking the risk that you could make $0, lose $10,000 or make $100,000. You just never know (and nor does ANYONE else, no matter what they say) with the stock market.
That being said, it's still the best way to build financial wealth over the long term.
My advice is to meet with a Ric Edelman financial advisor. It's free and they guys/gals are pretty good at what they do. (I have no financial interest in Edelman financial services, but have used them for about 5 years now).
Wellington is at 191.96 now, but if it's 190.00 30 yrs from now, then no gains?
First of all, thinking like this is a bad idea. If you have a huge amount to invest in one lump sum (not $10k - a huge amount) then doing it all at once is a different strategy and requires different resources. And that is sort of implied by "invest all at once at $191 today, and invest nothing for the next 30 years at which point it is $190".
Don't do that.
Do not take a lump sum, invest it all on the same day, and call it done.
Continuously invest (monthly is best, yearly is ok) and sometimes it will be more, sometimes it will be less, but generally it will increase in value.
And it will increase in value over 30 years because the world's population is growing (we're talking about a mutual fund, it is different for an individual stock). If the world's population stops growing, or if terrible wars occur, major government changes, etc, then we can question the assumption that a well managed mutual fund will generally grow over 30 years.
Even if your fund is at $190 at the end of 30 years, if you continuously invested, then maybe some was bought at $145, and even though you lost $1 on your initial invested value 30 years ago (not considering dividiends or inflation), you made $45 on a later investment. This is why you don't buy all on one day and let it ride.
"invest all at once at $191 today, and invest nothing for the next 30 years at which point it is $190".
...Do not take a lump sum, invest it all on the same day, and call it done. [/b]
Even if your fund is at $190 at the end of 30 years, if you continuously invested, then maybe some was bought at $145, and even though you lost $1 on your initial invested value 30 years ago (not considering dividiends or inflation), you made $45 on a later investment. This is why you don't buy all on one day and let it ride.
Yes, you're describing 'dollar cost averaging' (and 'averaging down' is a similar terminology used in the stock market).
And that particular example of mine was purposely designed to elicit a specific, desired response, and that mission was accomplished--thanks to Petunia 100 (as in, prices may fluctuate, but you'll earn dividends along the way).
Usually not going in lump sum if you have it hurts you over time. Markets are up 2/3's of the time and only down 1/3 so dollar cost averaging has you buying less and less shares at higher and higher prices.
If dollar cost averaging was really better we would all reach our allocation goal and sell every thing off and start over from zero again.
You can see that would be silly. Dollar cost averaging if you have the money usually is for those who are afraid to commit and the performance loss is the price they pay most of the time.
There are times you would have gotten lucky and dollar cost averaging played out better but you are betting against some pretty high house odds hoping to do so.
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