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Subject:  Re: RFO (Request for Opinions) Date:  11/27/2004  12:17 PM
Author:  pauleckler Number:  43311 of 88772

Zentec, I think you need to scope out an overall financial plan for your life. Your family. Their needs. Housing. Education. Retirement. Where will the funds come from?

As noted before on this board, by the time you hit 40, you should have something like 8 years of gross income (or gross living expenses) in savings/investments if you plan to retire early on investment income--espeically if you are thinking of early retirement. That is a substantial sum. Management requires experience and confidence. That is a good reason to start early, so you can learn to do it well as the numbers grow.

If you are far less than 8 years at 40, realize this means you will either not be able to retire, or you will be dependent on Social Security and company pensions. So you should be shopping for a lifetime employer with a solid pension plan.

Realize that Fooldom essentially teaches that index funds are a conservative investment. They have a steady growth rate over the long term. Its a safe place to put your money (but you must learn not to panic during the occasional correction). The reason for index funds over bonds is that index funds tend to give better returns--especially now when bond yields are so low. Plus a few very good years in index funds can do wonders for your balances.

So I would use an index fund, S&P 500 or total market, as your core investment for at least 50% of your funds. Bonds are OK, but personally, I would not waste my time on them. The rest of your funds can be in index funds while you learn, but diversification in a combination of international, real estate (usually in REITs), hot sector funds, and individual stocks is certainly OK, as you learn to spot good ones. But in that latter group, maintain diversification. Do not put too much in any one investment.

Good luck.
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