Quote:
Originally Posted by Carnivore
Minimal means I don't want to have to worry that my money will shrink rapidly or disappear.
I mean where do you go if you want to be 95% sure that your money will at least grow, with decent hopes that you may get a strong return? Is that to be expected? And what is a good return to shoot for or consider a success these days?
This bolded part above is just non-existant. There is no such investment. If there was, there would be a lot of very rich people in the world. The expectations are unreasonable.
One of the most important things you can learn is that with every investment the risk is what dictates reward. Risk is priced in. You can't have little to no risk and have big returns. It just doesn't work this way unless you have inside information of course - which is why it's illegal.
I'd say most people make this mistake. Everything is great when they are doing well, but they go ******* when things don't go well, like the millions of people who got hammered in their mutual funds during the last recession.
In your case I'd invest in a money market (safe, but almost no return), or a short or intermediate term bond fund (small return, but relatively safe). In the 6-8 month time period, there just is no telling what will happen with stocks. No one can tell what happens to oil productions, natural disasters, etc. A good scenario would be what if Libya has a civil war and then in 3 months we have a hurricane that takes out oil refineries in the southern united states? That would cause something like a general stock market fund to lose maybe 15% of 6 months. Not sure how likely that is, but hell, anything is possible.
If you're going to actively manage it in 6-7 months, then put it in something relatively safe and then make your decisions in the future. Just my opinion.
As a general rule of thumb I'd look at it like this
(I know this isn't true, but I'm talking practice, not theory, and I'm thinking in maximum losses and gains in most normal conditions not including things like nuclear wars)
1. Money Markets : always positive, but returns are VERY small. Think less than 1 percent to 3 percent.
2. Bond funds : -5% to +5%
3. Mixed funds (stocks and bonds): -25% to +25%
4. Stock funds: -50% to +50%
5. Sector funds: -60 to 75% to +60 - 75%
6. Specific companies: Can go broke or kick butt.
Very very general, but just wanted to put some type of numbers and ranges to the investment decisions people will usually make.
Last edited by wil318466; 03-04-2011 at 07:17 PM.