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Author: wcfenton Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75339  
Subject: Re: Bonds Date: 4/18/2004 3:35 PM
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GollumLives...

At what point do you add bonds, savings accounts and the like to retirement investing and what do you buy? According to the retirement advice posted on the fool site stocks and possibly index funds are the most important thing for long term retirement investing. So that is just fine for while you are saving. At some point though you will want to have some protection against a downturn in the market when you are no longer earning an income. Do you put your money in a savings account, buy bonds, a bond fund, T bills or what?
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You probably also read that in order to know how to proceed with your financial future, you need to take inventory of where you are now.

-How old you are
-Investment goal/s
-Current debt load
-Current investments
-Employment status
-Funds available for investing

These are the main things that someone giving advice on how you might approach your finacial goals would need to know. The order of priority that seems to be generally accepted is:

1)Eliminate bad debt (Primarily, credit card debt - mortgage, car, student loans are considered acceptable debts).
2)Establish an "E" Fund for emergencies like unemployment. (Savings Account, Laddered CDs, etc.)
3)If you have a 401k at your place of business - contribute up to the point where you maximize matching funds offered by your employer.
4)If you have additional funds that you can invest...now would be the point where you might want to consider a Roth IRA.
5)If you still have extra funds (lucky you) go back and max out your 401k.
6)Lastly, there are always taxable brokerage accounts.

As far as what to invest in - well, there you will get a multitude of answers. Personally, I like the idea of not taking too much risk and stand the likely possibility of losing my hard-earned money...so, for someone starting a retirement account/portfolio, I like (stand back because this is a long discription) a passively managed, no-load, low fee, broad-based Index Fund. Something like Vanguard's Total Stock Market Index Fund (VTSMX). That would be a good starting core fund. Where would you go from there? You need to take that inventory I was mentioning earlier in this post before I got carried away.

Regards,
Bill



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