While you are accumulating your funds in the stock market, any number of things could affect it negatively. It is incumbent on you to take specific steps to ensure that you can preserve and accumulate your wealth for the future.
Based on dollar cost averaging (discussed in a future article) - buy small amounts regularly. I will not go through the math now, but the principle is quite straightforward - and yes, it works in other currencies too. When you buy regularly, you will buy a larger number of shares when the price is low, and fewer when the price is high, giving you better gains than buying at an average price. And you will have far better gains than buying at the highest price.
With the Power of Compounding (another future article), the answer is: the sooner the better. Just like the answer to "when is the best time to plant a tree?" (the correct answer is 20 years ago), we can settle for now as being next best. Sir John Templeton says compounding is simply the interest, dividends, or gains you earn on the earnings from prior years. A simple example: if you earn 12% per year (realistic) on an investment of 100, your total after ten years is not 220 (100 + (10 x 12% x 100)), it is 310.6. And that same 100, earning 12% after 50 years, will be worth 28,900. Try the calculations! Each year you earn 12% on not just the principal (original amount) but also the earnings accumulated over the prior years.
If your employer offers a 401k option, then you should sign up and start contributing now. This money is taken from your check prior to taxes being taken out and deposited into your 401k account. Most employers match up to a certain percentage. There is no reason not to participate in this type of plan. The other most popular types of preparation to retire are IRAs. You will need to research deposing on your needs. Or you can take the advice of your IRA custodian and decide which one or how many of different types that you should invest in. IRAs also give you the chance to play with real estate properties as a form of residual and large pay out amounts. You can generate enough income to pay bills, debts, and contribute to retirement plan savings if done right.
Your goals will be determined by your needs; this will be done whether it is by you or your financial advisor. You will need to factor in current income, living expenses, debt, bills, lifestyle, and what goals and dreams you have for your lifestyle after retirement. You will need a certain amount of savings and investments to realize your retirement needs and wants. There should also be a cushion in cases of emergency, illness, death, or any unforeseen circumstances. There is no better time than the present to begin saving for the future. It is necessary to prepare for that and more. You can also factor in what you will be receiving from social security benefits; however, this should be the amount with the least importance. It is rarely enough to live on, and it should be used as part of the extra and cushion factor.
Sir John Templeton was the person who pioneered the investment fund business in the U.S., and later the concept of global investing, before most Americans knew there were other financial markets. He lived his later years living comfortably in the Bahamas. He is one of the real gentlemen of the investing industry who invested other people's money (and his own) very wisely. The first insight seems obvious - if you do not have money you cannot invest it. If that fits your situation, then you should make sure you do not miss an upcoming article on saving and investing. Even those who buy on margin, or sell short, need some money to do this. The other aspect of his response is more subtle - implying that if you do have money, you should be investing it. Sir John was a long-term investor who was very optimistic about the prospects for the world. I can almost hear him say, "there is no time in history where people were as well off as they are today."
Based on dollar cost averaging (discussed in a future article) - buy small amounts regularly. I will not go through the math now, but the principle is quite straightforward - and yes, it works in other currencies too. When you buy regularly, you will buy a larger number of shares when the price is low, and fewer when the price is high, giving you better gains than buying at an average price. And you will have far better gains than buying at the highest price.
With the Power of Compounding (another future article), the answer is: the sooner the better. Just like the answer to "when is the best time to plant a tree?" (the correct answer is 20 years ago), we can settle for now as being next best. Sir John Templeton says compounding is simply the interest, dividends, or gains you earn on the earnings from prior years. A simple example: if you earn 12% per year (realistic) on an investment of 100, your total after ten years is not 220 (100 + (10 x 12% x 100)), it is 310.6. And that same 100, earning 12% after 50 years, will be worth 28,900. Try the calculations! Each year you earn 12% on not just the principal (original amount) but also the earnings accumulated over the prior years.
If your employer offers a 401k option, then you should sign up and start contributing now. This money is taken from your check prior to taxes being taken out and deposited into your 401k account. Most employers match up to a certain percentage. There is no reason not to participate in this type of plan. The other most popular types of preparation to retire are IRAs. You will need to research deposing on your needs. Or you can take the advice of your IRA custodian and decide which one or how many of different types that you should invest in. IRAs also give you the chance to play with real estate properties as a form of residual and large pay out amounts. You can generate enough income to pay bills, debts, and contribute to retirement plan savings if done right.
Your goals will be determined by your needs; this will be done whether it is by you or your financial advisor. You will need to factor in current income, living expenses, debt, bills, lifestyle, and what goals and dreams you have for your lifestyle after retirement. You will need a certain amount of savings and investments to realize your retirement needs and wants. There should also be a cushion in cases of emergency, illness, death, or any unforeseen circumstances. There is no better time than the present to begin saving for the future. It is necessary to prepare for that and more. You can also factor in what you will be receiving from social security benefits; however, this should be the amount with the least importance. It is rarely enough to live on, and it should be used as part of the extra and cushion factor.
Sir John Templeton was the person who pioneered the investment fund business in the U.S., and later the concept of global investing, before most Americans knew there were other financial markets. He lived his later years living comfortably in the Bahamas. He is one of the real gentlemen of the investing industry who invested other people's money (and his own) very wisely. The first insight seems obvious - if you do not have money you cannot invest it. If that fits your situation, then you should make sure you do not miss an upcoming article on saving and investing. Even those who buy on margin, or sell short, need some money to do this. The other aspect of his response is more subtle - implying that if you do have money, you should be investing it. Sir John was a long-term investor who was very optimistic about the prospects for the world. I can almost hear him say, "there is no time in history where people were as well off as they are today."
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