EagleTed
06-17-2003, 06:10 PM
It's too late to enjoy the runup, but it's not too late to start thinking about your financial future. The stock market will go up and down, and in the long term mostly up (in fits and jerks) if only because of inflation. We may be close to an intermediate top, or we may not. The short term direction of the stock market should little concern us. It's important to put something in the market on a regular basis.
How much of your investment portfolio should be in stocks? A good rule of thumb is to take your age and that should be the percentage of bonds you should own. In other words, if you're 30 you should have 30% bonds, 70% stocks. At 60, you should have 60% bonds and 40% stocks. Reallocate yearly and you will buy more stocks when they are down, and you will sell when stocks are up.
It's a simple formula, and it may not fit your demands for safety.
At any rate, if you're not absolutely sure of your ability to pick stocks, go with a low cost, no load index mutual fund. SPY (symbol) is an ETF with little annual fees that tracks the S&P 500 and may make a good choice for you. Vanguard offers a low fee mutual that also tracks it, the VTSMX (symbol). There is also FFF (symbol) another ETF which tracks the Fortune 500 stocks, DIA (symbol) which tracks the Dow Jones Industrial Average.
If you buy corporate bonds, make sure they are at least "A", although "AAA" is much safer. Naturally, the better the rating, the less yield you get.
How much of your investment portfolio should be in stocks? A good rule of thumb is to take your age and that should be the percentage of bonds you should own. In other words, if you're 30 you should have 30% bonds, 70% stocks. At 60, you should have 60% bonds and 40% stocks. Reallocate yearly and you will buy more stocks when they are down, and you will sell when stocks are up.
It's a simple formula, and it may not fit your demands for safety.
At any rate, if you're not absolutely sure of your ability to pick stocks, go with a low cost, no load index mutual fund. SPY (symbol) is an ETF with little annual fees that tracks the S&P 500 and may make a good choice for you. Vanguard offers a low fee mutual that also tracks it, the VTSMX (symbol). There is also FFF (symbol) another ETF which tracks the Fortune 500 stocks, DIA (symbol) which tracks the Dow Jones Industrial Average.
If you buy corporate bonds, make sure they are at least "A", although "AAA" is much safer. Naturally, the better the rating, the less yield you get.