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Okay, I admit it. I'm a novice investor and very confused. On the one hand, given educated stock purchases, even in a bear market or a correction, I can see my retirement nest egg building considerably. On the other hand, I worry about market highs and lows wiping out my retirement savings, leaving me to ponder my poor choices.

I was at Mutual Funds Interactive (www.fundsinteractive.com) the other day, and - surprise, surprise! - they are pretty bullish on mutual funds over the long term (though I did see a number of discussions on their boards about market timing in funds, to make things more confusing).

Am I better off with one mode of investing versus the other, or should I have a portfolio with a mix of stocks and funds, and perhaps some bonds thrown in for income. Any ideas? Thanks. - Not-quite-foolish
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LaurenDi  wrote:
Okay, I admit it. I'm a novice investor and very confused

Welcome to the club.

I am now less then novice but far from expert (and for sure not yet demonstrated even competent) and still somewhat confused. But for what its worth here is where I have gotten to in the last 9 months.

Most of the people on this board believe in the Fools methods of investing for at least part of our portfolios.

What the Fools advocate is spelled out in a fairly easy to read 13 steps (day or two or maybe 3) in the fools school on this web page.
http://www.fool.com/school

So I would suggest you start there and see if what those lessons teach make sense, because, if they do, they will go a long way in pointing you in the direction of a mode of investing.

Hope this helps some.


oldred22
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Hi LaurenDi,
I did not see your original post, but I caught the response from oldred and thought I would add my two cents too.
I am an extreme novice. I am in the process of paying off the rest of my credit cards and getting out of debt. I have two left from eleven. Once that is done I plane on subscribing to the LBYM board and saving for foolish investing.
As you can tell I am a believer in most of the philosphies discussed here. I did not start out this way. I started out thinking a good diversified mutual fund portfolio would easily get me to the millions when I retire (I am 25 and have 40 years until 65)!! I am now licensed to sell mutual funds and began learning all I can. One day, I saw a book store going out of business and decided to stop in. I picked up a book entitled, "The Unemotional Investor" by Robert Sheard. His book mesmorized me. I immediately logged on to this site and here I am. I strongly suggest you read as many books on the subject as you can. Not only foolish books, but books of varying investment philosphies and you will be able to make your own decisions.
The one definite thing I have learned here is that even with all of this information at your fingertips you must still do your homework. Investing can be unemotional but not necessarily so easy as to be called free money.
I have a lot to learn, but I am young, eager and determined to be the best fool I can based on my knowledge, experience and risk tolerance.
I wish you and all the rest of the fools here nothing but peace love and happiness especially with their portfolios.
Dan
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Laurendi:
<<Okay, I admit it. I'm a novice investor and very confused. On the one hand, given educated stock
purchases, even in a bear market or a correction, I can see my retirement nest egg building considerably. On the other hand, I worry about market highs and lows wiping out my retirement savings, leaving me to ponder my poor choices.>>

Don't think for a moment that stock mutual funds are immune from losing money thru making 'poor choices'! The only difference is that you have zero say in how a mutual fund invests your money. If history is any guide, index funds will keep beating actively managed funds decisively, especially once expenses & taxes are included. And the Foolish Four, RP4, etc. will probably keep beating the index funds, on average.

<>

If I may make a sweeping generalization, around these parts, the only good mutual funds are "true" index funds (i.e., those with very low expense ratios & other costs). And even index funds are considered adequate only when either:
1) it's your only choice (e.g., most 401Ks don't allow buying of individual stocks) and/or,
2) you're just starting out & don't have a lot of money to invest. Even deep discount $10-12 commissions eat up too much of your dough unless you're investing >$1K-2K minimum per stock. (expenses again!)

Go ahead & read TMFIG, it will help reduce your confusion.

Chris

PS- If retirement is 5-50 years away, you definitely don't want to buy any bonds or a bond fund. You want stocks!
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First, have you perused the Fool School, (http://www.fool.com/school.htm)? There, the recommended investment is the s&p500 index fund if you want the 'Lazy Investors Way to Riches'. If 10.5% per year, long-term, is enough for you, great. If you want something better, then look into the Dow Dividend Approaches (Beat The Dow, Unemotional Value, & Foolish Four). From there, only your comfort is your limit. Do what makes you comfortable, allows you to sleep at night, and will keep you from cashing in at the first sign of a bear.

You never indicated what you time horizon is? 5, 10, 20 years? Why do you want 'bonds thrown in for
income'? With 10 or more years, you should stay fully vested in stocks.

Zev
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Greetings, LaurenDi and welcome. You wrote:

Okay, I admit it. I'm a novice investor and very confused. On the one hand, given educated stock purchases, even in a bear market or a correction, I can see my retirement nest egg building considerably. On the other hand, I worry about market highs and lows wiping out my retirement savings, leaving me to ponder my poor choices.

I was at Mutual Funds Interactive (www.fundsinteractive.com) the other day, and - surprise, surprise! - they are pretty bullish on mutual funds over the long term (though I did see a number of discussions on their boards about market timing in funds, to make things more confusing).

Am I better off with one mode of investing versus the other, or should I have a portfolio with a mix of stocks and funds, and perhaps some bonds thrown in for income. Any ideas? Thanks. - Not-quite-foolish


Hey, we all start somewhere and we all had qualms when we did. However, there's nothing magic about successful investing on your own. I think a gradual start with the preponderance of your money in mutual funds (especially an S&P 500 index fund) is a great approach. There's no hurry. In the interim, use your time Foolishly and learn.

You say you're new to investing. I assume from that you're also new to Fooldom. That's great on both counts! You have wandered into a forum that believes you, as an individual, can do far better for yourself than most professional money managers. Provided, that is, you take some time to learn a few basic investment concepts and do some self-examination to see where you fit on the risk tolerance scale. Therefore, why not take some time now -- not later -- to be sure about what you want to do. Start first by reading The 13 Steps to Investing Foolishly, which you can access from the main, opening screen to The Motley Fool. They will suggest some important things you should consider. Then I suggest you toddle over to your local library, discount bookstore, or even here in the Fool Mart, and pick up some easily read, easily understood, inexpensive texts that will thoroughly explain how to invest in stocks using some simple systems that will take but an hour per year of your time (if you're slow) yet produce returns that put the majority of professional money managers to shame. I suggest and commend the following to you: "Beating the Dow" by O'Higgins; "The Dividend Investor" by Petty and Knowles; "The Motley Fool Investment Guide" by the Gardner brothers; "One Up on Wall Street" by Lynch; and "What Works on Wall Street" by O'Shaughnessey. All are well worth their low cost and the small investment in time it takes to read them. Get them and read them. You'll be glad you did.

While you're doing all that, also take some time to explore the various nooks and crannies of Fooldom to see what others are doing and what they're discussing. In the process, you'll gain a wealth of knowledge and information that will serve to clarify how you want to approach this very personal issue. Don't be afraid to ask a question anywhere in Fooldom. Folks around here are great about answering questions and clearing up misunderstandings.

Regards.......Pixy


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Dan wrote:

The one definite thing I have learned here is that even with all of this information at your fingertips you must still do your homework. Investing can be unemotional but not necessarily so easy as to be called free money.
I have a lot to learn, but I am young, eager and determined to be the best fool I can based on my knowledge, experience and risk tolerance.
I wish you and all the rest of the fools here nothing but peace love and happiness especially with their portfolios.


You got the Foolish message in spades! I forecast that with that attitude you'll have a right comfortable retirement.

Regards…..Pixy

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