Re: Risk Tolerance when the Clock is Ticking
Scott Raynovich
4/19/2011 8:07:32 PM
I would add that even if you buy treasuries now you are likely losing money as taxes and inflation would eat up the paltry returns and put you into a negative inflation-adjusted return even if they guarantee to return your capital.
Like Andy wrote, you can't have your cake and eat it too. If you want good longer-term returns you have to accept some risk.
Re: Risk Tolerance when the Clock is Ticking
ARachleff
4/19/2011 7:57:08 PM
Unfortunately the only way to NEVER lose money is to only buy treasuries and that is unlikely to lead to a satisfactory retirement. Perhaps you might consider a reasoned asset allocation that gives you some equity upside with some protection against down markets through your treasuries allocation. you can also dampen your likelihood of loses by focusing your equity allocation on absolute return focused managers. We'd like to think that Weathfront is an ideal place to find such managers :-)
I received this very less a few years ago. From 1999 until 2001 I worked for a .com and I put the maximum amount I could into my 401K, my employer matched it 1:1 so over the time I was able to build it up to a nice amount. When the company went bust I moved all the money from a 401K to an IRA. When it all. Over over I meet with person from the new firm, and I decided to mix up the money with different moderate risk investments. I would check the account once, sometimes twice. Year, some times it has been up, others it has been down. But I have been very lucky that it is still up overall, and has done very well. Now a decade later that account has done very well for me and has strongly outperformed some other investments I have that are low risk.
Re: Risk Tolerance when the Clock is Ticking
Street Smart
4/19/2011 3:59:33 PM
@Value Hiker...Your rules remind me of the famous rock outside Stew Leonard's in Norwalk, CT:
Rule 1: The customer is always right.
Rule 2: If the customer is ever wrong, re-read Rule #1.
But just curious...does your Never Lose Money Rule No. 1 mean no equity investments for you---EVER? And if you do invest in equities, how (even with my handy crystal ball), can you ever be POSITIVE there won't be any losses???
TOTALLY agree with Rule No. 3, and would even (or especially) apply it to staying away from buying on margin.
Good rules to live by...
Andy,
You know that most people are after the quickest result for their money, no one wants to wait. That 2% may not have seemed substantial, but I am sure that when they funds started to deplete due to that major risk that they took, they wished that they would have taken the 2%
Re: Risk Tolerance when the Clock is Ticking
Value Hiker
4/19/2011 3:28:08 PM
How to handle the investment risks:
Rule No. 1: Never lose money
Rule No. 2: Never forget Rule No.1
Rule No. 3: Don't get into debt
Slow and steady?
tokyogai
4/19/2011 10:48:51 AM
With the recent market shocks and unprecidented actions by the Fed, many feel that looking historically at the S&P may not be the best way to gauge the future. Add to that ratings agencies that understated risk for years and you start to see why investors are nervous and looking at 2% as maybe not worth extra risk. If all goes well, over time it is worth a fair amount of extra returns, but if the investment goes belly up , it looks like greed that wasn't worth it.
Risk Tolerance when the Clock is Ticking
Street Smart
4/19/2011 10:13:03 AM
Andy--
I think your points that slow and steady returns may be the sexiest investments of all are very well taken, but I think a lot of investors are feeling especially "off their games" at the moment because of two factors--low interest rates and the residential real estate crash. Everything seems out of whack with their personal risk/reward calculations.
Individual investors had become convinced that their homes were not only their best, "bedrock" safe investments but their checkbooks as well. We have, of course, seen the terrible fallout from that position and will continue to see it for many years to come.
We are also seeing interest rates at historical lows, so that there is a huge "opportunity cost" to leaving money in cash. Back in the late '70s by contrast when interest rates were in the double digits, there was some consolation to parking ones cash in a money market fund.
Now, because the bottom seems to have fallen out of their "sure things," there is the temptation to make up for lost time and take more risk to "make back" the losses more quickly.
That is a recipe for even greater trouble.
The blogs and comments posted on Investor Uprising do not reflect the views of Investor Uprising, PRNewswire, or its sponsors. Investor Uprising, PRNewswire, and its sponsors do not assume responsibility for any comments, claims, or opinions made by authors and bloggers. They are no substitute for your own research and should not be relied upon for trading or any other purpose.
|
 |
Latest Blogs
Telecom-equipment maker Ciena is a stock trader’s dream, as long as the timing is correct.
The FTC is offering a $50,000 cash prize to the person or group that can come up with a solution to those annoying robocalls.
Akamai is in the middle of four significant tech trends.
John Malone of Liberty Media will be taking over Sirius XM satellite radio when the existing CEO Mel Karmazin steps down. What's it mean?
Demand for students of the humanities exists, despite widespread aspersions on the discipline.
IU Education
Resources to help you become a better investor
Investor Uprising on Twitter
25 market-moving companies we're tracking
|
Tweet This