what to do with not-a-lot of savings (long-term, child support, getting married)
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YAY on YOU, Jessie, for coming up with a new topic. I'm a mod, but not the one assigned to this forum. I personally would like to keep this thread going because there isn't another one like it and some valuable information has already been shared; for example, the I Bonds, and also the advice someone gave you to not put your money into the stock market.
Now I have a question for people who feel it's wrong to put money into the stock market.
My little TD Ameritrade "Education" (that is the name of the tab where they have these mini-courses) talked about Index Funds and the S&P 500 and expense ratios (nothing but a high-falutin' term for how much it costs to get into one of these funds). There are so many choices and no one to tell you which one you should pick, and so as an experiment, after reading what I read and looking at other sites for advice and whatnot, I stuck my toe in and bought a whole ten shares of a Schwab Index Fund. Total cost was $667 and change. I have more money than that to invest but I just wanted to see, first of all, the process of how exactly one buys something like that and then let it sit there and see what it does. Yes, I know I can lose it. Every page about every investment reminds you that you can lose all your money.
So the question I have is, say, if I'm thinking of holding that money for ten years or so, since I am 63 and don't have 30 years and don't need the money to live on, at least not anytime soon--
Would it still be a bad idea to put money into a conservative, low-expense-ratio index fund based on the S&P500?
An s&p fund is Not a conservative investment …a 40% to 50% drop has already happened and 20% drops are normal.
While it can part of a conservative portfolio the s&p is not considered conservative by itself.
Broad based funds are volatile , risk is something else and over time it is likely not risky , but it is volatile.
On the other hand many individual stocks may be risky and volatile
Someone mentioned Roth IRAs to me. I rejected the idea at first because I hear "IRA" and I figure that ship sailed a long a time ago when I was busy being too broke to contribute to one. BUT WAIT!
I looked at IRAs because of my "Education", which again, is not always relatable because beginner investing advice is geared to young 'uns. However, it appears that with a Roth, I don't have to be any certain age to contribute to or withdraw the money; I have to hold it for five years to withdraw it without a penalty; I can contribute up to $7K; and it has to be earned money, not my pension. I did earn a little more than $9K working part-time remotely in 2021, and from what I read, I can open a Roth for 2021 if I do it by April.
So the question here is a) should I? and b) if I do, what sort of investments should I buy for the Roth?
I would only buy equities in retirement accounts …at these rates it is silly taking up valuable space in retirement accounts with money barely growing.
I buy my fixed income stuff in the taxable account and equities in retirement money …
Anything with good growth potential should be taking advantage of that tax advantaged space in my opinion.
That includes stocks , reits , commodities, gold , and long term bond funds which can have as powerful moves as stocks
An s&p fund is Not a conservative investment …a 40% to 50% drop has already happened and 20% drops are normal.
While it can part of a conservative portfolio the s&p is not considered conservative by itself.
Broad based funds are volatile , risk is something else and over time it is likely not risky , but it is volatile.
On the other hand many individual stocks may be risky and volatile
OK, thanks much for that information. What WOULD be considered a conservative investment, then?
Although I am a gambler at heart and would LOVE to buy individual stocks, everything I read says old bats like me shouldn't be doing that. But still...
I have an appetite for risk. Right now I spend most of my time with a terminally ill partner who can't do much more than watch TV, and so I'm getting my excitement watching other people play in the World Poker Tournaments.
...I stuck my toe in and bought a whole ten shares of a Schwab Index Fund. Total cost was $667 and change. I have more money than that to invest but I just wanted to see, first of all, the process of how exactly one buys something like that and then let it sit there and see what it does.
Haha. I was thinking of doing something like this. I mean, just to experiment with how a person even does it.
I actually find money to be a combination of stressful and boring. It's a bad combo when it comes to the concept of investing. LOL. But I thought maybe I'd just buy a little something fairly safe from somewhere very mainstream that is low cost and could be lost without any great damage done. Just as an experiment.
(Just to resolve an issue previously raised, I am not saying anything about my financial situation being "somebody else's fault". My financial situation is perfectly fine.)
My son has played around on some app or website or something that let's you learn some beginner investing skills but with pretend money. Maybe I'll ask him about that. Anybody know of such a thing?
Haha. I was thinking of doing something like this. I mean, just to experiment with how a person even does it.
I actually find money to be a combination of stressful and boring. It's a bad combo when it comes to the concept of investing. LOL. But I thought maybe I'd just buy a little something fairly safe from somewhere very mainstream that is low cost and could be lost without any great damage done. Just as an experiment.
(Just to resolve an issue previously raised, I am not saying anything about my financial situation being "somebody else's fault". My financial situation is perfectly fine.)
My son has played around on some app or website or something that let's you learn some beginner investing skills but with pretend money. Maybe I'll ask him about that. Anybody know of such a thing?
It is a good idea to experiment and learn your own pucker factor as it is called .
Human brains are wired to hate losing money more than making it ..
So while hypothetically you tell yourself I am not going to exhibit bad investor behavior , the reality is that when it’s real money our brains use a different portion to reason with …
Jason zweigs book your money your brain was a real eye opener to why so many exhibit poor investor behavior
It can scare you to death with its poor decision making when it comes to losing money and it can have you selling out at the worst time .
So it is a good idea to see how you handle dips and bear markets with actual skin in the game
Someone mentioned Roth IRAs to me. I rejected the idea at first because I hear "IRA" and I figure that ship sailed a long a time ago when I was busy being too broke to contribute to one. BUT WAIT!
I looked at IRAs because of my "Education", which again, is not always relatable because beginner investing advice is geared to young 'uns. However, it appears that with a Roth, I don't have to be any certain age to contribute to or withdraw the money; I have to hold it for five years to withdraw it without a penalty; I can contribute up to $7K; and it has to be earned money, not my pension. I did earn a little more than $9K working part-time remotely in 2021, and from what I read, I can open a Roth for 2021 if I do it by April.
So the question here is a) should I? and b) if I do, what sort of investments should I buy for the Roth?
If you are able to put the money aside, I would absolutely contribute to a Roth.
Where to put it depends on your tolerance for risk...but since it has to be there for 5 years (I assume that it your plan - to not withdraw it early) I would tend to have a higher percentage of equities. I have a good FXAIX position in my Roth, it has done well. I am considering FBGRX for my next purchase.
Last edited by ChessieMom; 01-29-2022 at 08:27 AM..
OK, thanks much for that information. What WOULD be considered a conservative investment, then?
Although I am a gambler at heart and would LOVE to buy individual stocks, everything I read says old bats like me shouldn't be doing that. But still...
I have an appetite for risk. Right now I spend most of my time with a terminally ill partner who can't do much more than watch TV, and so I'm getting my excitement watching other people play in the World Poker Tournaments.
All investments have risk ..even banks are a guaranteed loss after inflation and taxes ….
How conservative something is , is based on the assets it holds and the percentages in each .
As an example , one of the most conservative portfolio is called the permanent portfolio.
It has been in use for 50 years now ..it has more books , forums and articles devoted to it then any other .
Now it contains equal amounts of some of the most volatile assets there are like an s&p or total market fund , gold , long term treasuries, t-bills .
Yet because of the ying and Yang effect within the portfolio it is about as conservative as portfolios go.
It strives to return 3 to 6% above inflation as an average return it does have some down years but so far nothing more than 5% a few times the last 50 years
It is a good idea to experiment and learn your own pucker factor as it is called .
Human brains are wired to hate losing money more than making it ..
I believe that. As a person who is both old and also not very interested in the broad topic of money, let alone the narrower topic of investing it, I'm more focused at this point on where is a good place to just hold on to it without it losing significant value. For me at least (not having an inner gambler like Mightyqueen801 ) I just want to park it somewhere not dumb. (But also not real estate. )
I believe that. As a person who is both old and also not very interested in the broad topic of money, let alone the narrower topic of investing it, I'm more focused at this point on where is a good place to just hold on to it without it losing significant value. For me at least (not having an inner gambler like Mightyqueen801 ) I just want to park it somewhere not dumb. (But also not real estate. )
High aspirations, I am aware. LOL.
You cant separate your money not losing value from investing …over most of the last 40 years cash instruments have lost value after inflation and taxes and you haven’t bet on a thing.
On the other hand even the most conservative portfolios have kept well a head
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I'm a mod, but not the one assigned to this forum. I personally would like to keep this thread going because there isn't another one like it and some valuable information has already been shared; for example, the I Bonds, and also the advice someone gave you to not put your money into the stock market.
) I just want to park it somewhere not dumb. (But also not real estate. 
)
