Gather Little by Little

A couple of weeks ago, I started the different investing strategies for beginners with the most secure asset allocations. Especially when you start investing, you don’t know exactly where you are heading and you do not want to take too much risk. However, even among beginner investors, there are some who are willing and able to invest in a more aggressive manner. This is why I am talking about the next 3 asset allocations:

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When we were just babies, we started to crawl in order to explore the “new world”. After a while, we noticed that there was more “out there” and we started to think about a way to go faster and further during our exploration. Then one magical day we decided to stand up on our 2 feet and look out at the horizon. In order to reach this point, we learned, step by step, how to walk. We fell a few times, we got hurt but our mommy was always there to take us in her arms and comfort us. Wouldn’t life be easier if our mom was still there to show us how to manage our personal finances as she was there to teach us how to walk?

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Important: I am not an economist or an investment advisor. Everything you read here is simply opinion based on my limited knowledge and (hopefully) a little common sense.

Lately, I have been hearing all kinds of advertisements for gold. Whenever my six year old sees those “cash for gold” commercials, she tells me to sell all our gold for money. The problem is that we have almost no gold . . . jewelry or otherwise and that does not look like it will change in the near future.

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I am really discouraged about my retirement savings.

I understand the importance of saving for retirement, but debt reduction is our number one priority right now.

My job has a great 5% matching program, but we are still almost living month to month and cannot seem to squeeze out the extra money necessary to enter this program.

I am 35 years old – not too late to start saving, but every day I am losing money.

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I am not a financial advisor, nor do I play one on the internet. So the following story is not necessarily an example for anyone to follow. In fact, you might find a conflicting piece of advice right here on this blog. The coming months and years will tell if I made the correct choice.

I cashed out one of my IRA accounts last week.

It was a Simple IRA from a part-time job. I have not worked for this particular employer for over a year and I am not likely to work there again. The account was held by Vanguard and my experience with that company was positive.I hope to invest there again, if I ever have the opportunity.

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It can be really intimidating to talk to a professional adviser sometimes. They know the lingo and you may not. And of all the confusing financial concepts, the relationship between bonds and interest rates can be uber-confusing.

It’s critical to understand this relationship for a few reasons:

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1. I don’t want to be the first to bring this to your attention…but….eh….in case you haven’t noticed, interest rates are pretty close to zero.
2. You might be tempted to invest in long-term bonds right now to earn a bit more interest.

I don’t check my 401k balance often at all. I prefer not to stress about it and just let it grow. I’m investing for for the long haul and know that overtime my money will grow at a 10-15% increase. I do check it though. Mostly to see if I need to adjust my funds distribution a little based on individual mutual fund performance. I logged in last week to see how things were going, especially with the stock market tanking like it has recently. While I wasn’t shocked, I was very surprised…

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I received a letter from my employer the other day stating that they will begin offering a Roth 401k program in addition to our traditional 401k program beginning in 2009. I had read a little bit about them in the past, but decided since they were now an option for me to begin utilizing, I should probably learn more about them and wanted to share my findings with you as I understand they are becoming more and more prominent.

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It's a long way down

As many of you know, my day job is in the banking industry. Over the past couple of weeks, I’ve been slowly watching my companies stock plummet. It seems each day brings another significant drop. I don’t pay real close attention to my 401k balance. Typically, the only time I even look at it is when I receive my quarterly statement, or need to update my How To Determine And Track Your Net Worth. Due to the declining market, I decided to take a peek. Like most, I’m losing money in my 401k.

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Photo of Taipei 101 by umm

The following is a guest post by Becky at Family and Finances, a blog about finances and saving money. If you like this post, consider subscribing to her feed via RSS.

Remember the tech stock boom and, later, the bust? Doesn’t it bear some resemblance to the housing boom and, now, bust? In both cases, investors put too many eggs in one basket, and that basket broke.

Obviously, the key to successful investing is to diversify your investments. Here are some tips:

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