I am looking at the Fidelity site to start with $10K. What kind of risk tolerance do you guys use?
Stock Advice Thread
- Thread starter dgtatu01
- Start date
I might be misunderstanding the question, but I think risk tolerance is up to the individual and their situation in life. For example, if I were single in my 20's.......and understood how the market fluctuates........I would be be very, very tolerant and would shoot for higher risk investments knowing that I'll make money eventually. If I'm in my late 50's.......staring at retirement......don't like to watch the market fluctuate......trying to put the kids through college......I'd likely be less risky with my investments.
You understand completely. Fidelity asked for my risk tolerance level 1-10 and I chose 6. Money I will invest is not needed and never will be unless a major depression hits and the banks collapse.
I think you'll do just fine. Start with something simple, easy.......know that it's going to up down in the short term, but go upward long term.
Another note. And this is a complete suggestion.....I am NOT a financial adviser, etc. Companies are starting to report their 2nd quarter earnings over the next few wks. The market "might" dip during this time. Sure, it might not.......cause nobody knows what's going to happen.......but it might. So, it's up to you....you might want to wait a couple of wks before buying in.
I'm surprised they don't have a questionnaire to better pinpoint your tolerance for risk assets. I discovered I had a higher tolerance than I thought in the 90's but it's quickly shrinking the last couple of years with age.
I agree with this. But if you're really sold on an individual name, only buy a portion or your investment before earnings. If it gets hit after the earnings call; you can buy the rest of your stock allocation lower.
A Hidden Danger in Explosion of Index Funds.
(Bloomberg) -- New research has directly connected the explosive growth of passive investing to deteriorating corporate performance over the long haul.
In a paper posted this month, a trio of academics tracked share-buyback activity for a range of companies and found those with higher passive ownership spent more on stock repurchases but saw worse financial outcomes.
Having disengaged owners “lowered the association” between buybacks and future performance, according to authors Brian Bratten and Jeff Payne of the University of Kentucky and Meng Huang of the University of Toledo. It was also positively associated with “suspect” repurchases -- those that resulted in companies meeting or beating near-term earnings expectations.
“Our study provides evidence that passive investment may allow opportunistic management behavior that negatively affects future firm performance,” they wrote. “The growing influence of passive investment may lead firms to make repurchase decisions that are inconsistent with the interests of investors.”
Interesting....
(Bloomberg) -- New research has directly connected the explosive growth of passive investing to deteriorating corporate performance over the long haul.
In a paper posted this month, a trio of academics tracked share-buyback activity for a range of companies and found those with higher passive ownership spent more on stock repurchases but saw worse financial outcomes.
Having disengaged owners “lowered the association” between buybacks and future performance, according to authors Brian Bratten and Jeff Payne of the University of Kentucky and Meng Huang of the University of Toledo. It was also positively associated with “suspect” repurchases -- those that resulted in companies meeting or beating near-term earnings expectations.
“Our study provides evidence that passive investment may allow opportunistic management behavior that negatively affects future firm performance,” they wrote. “The growing influence of passive investment may lead firms to make repurchase decisions that are inconsistent with the interests of investors.”
Interesting....
Supposedly the Senate is going to release the details of the next stimulus package later today. The Cares Act seemed to bump up the market after it's release. I wonder what this new one will do?
Supposedly >120 of the S&P500 companies release their earnings this wk. "Might" be interesting.
^I also don't think it's a coincidence that the next stimulus package will likely be passed this wk.....
Or maybe gets stalled another week, but something will be done at least by then, will be interesting what comes out of Congress.
Supposedly Congress will go on a month long break within the next wk. So, unless they call an emergency session, they'll get it done this wk........or wait a month.
Thursday earnings will signal what the other FAANG leaders are doing other than Netflix. But I agree the stimulus is as big as earnings growth this time around. Love how value is holding up though and that's why you diversify.
Ok, thought it was next week, Pelosi may make them delay things.
How old are you? I'm 33, and firmly believe my age group is looking at a real money dilemma where we *may* find ourselves working longer than the expected retirement age. So when those Vanguard and Fidelity questionnaires put me in a Target 2050.. I actually bumped it to 2055 and I think 2060 for the other. In doing so, I will get higher percentage of growth (and risk) for longer, banking on a bit more money down the road.
I just look at retires now, and I don't have a good feeling for what's in store for my age group in 30 years from now. Retiring at 65, and then living to 103? Going to need a lot of coin.
<- - - - - PFE shareholder since 1993 via Upjohn and Pharmacia acquisitions.
![[smoke]](http://l.yimg.com/j/assets/img/emoticons/classic/smokin.r191677.gif "Cool [smoke]")
Depends on what you live off of. According to the 4% rule, if you choose to live off $40,000/yr and keep the rest of your $1 million nest egg in the market you have a >98% chance to never run out of money.
For sure. 40k does seem light to me. Food and bar bills alone will take a big chunk of that. But i guess the assumption is that if you're retired, you dont have a mortgage and several other loving expenses.
Plus social security......not that you want to plan on having it, but there's a good chance you'll at least have some cut of it.
Also the "4% rule" is a just a guideline. For instance if you have a $2 million nest egg, 4% would be $80,000/yr. If you have $1.5 million, you'd have $60,000/yr.
-It also leaves out dividends.
-It also doesn't take into account in great detail what you're invested in.....at least, not to my knowledge. For instance, if you're invested in the SP500.....which historically makes 7-8%/year over the long term......you "could" take out more than 4% and/or increase the size of your nest egg.
You're way ahead of the game so I wouldn't worry too much about it frankly. With your cash flow an emergency fund wont be an issue unless spending gets way out of control. With your investments let compounding and time do the work for you. I had just bought my first home with maybe $50-$75k in retirement savings at that age. I can probably retire now 27 years later. You're doing fine.
And, Lineski, take it from me, you won’t likely have the energy to travel or socialize as much unless you are an exception.
A friend asked me how I was adjusting my social life to accommodate for the COVID19 quarantine. I laughed and said I had to change nothing.
I am 65.
I treat investing just like gambling...never invest more than you can afford to lose.
Hey, at 65, he’s earned some gambling/trading money, but at times I would like to really jump in and make a fool of myself or hit the “big one.” Not happening.
One can mitigate risk by investing in well-established companies with a demonstrated record of increasing earnings and rising dividends. We're talking "Blue Chips". My best advice is if you have $10,000 to invest, then dollar-cost average this amount into a 1-2 good funds over time, say 6-12 months.
Hey, at 65, he’s earned some gambling/trading money, but at times I would like to really jump in and make a fool of myself or hit the “big one.” Not happening.
Lol. The only thing I was noting was comparing investing to gambling. I invest.
I also gamble/speculate........(remember a while back in this thread when the topic was marijuana......hehe.)
But I don't confuse the 2........
Speaking of gambling ... KODK stock has been insane this week. Fortunate to get in fairly early on this one.
I wanna put a shout out to SMG (Scotts-Miracle Grow). Solidly run company. Nice cash flow/debt ratio. Pays a small 1.60% dividend.....with a 10+ year growth. Has a nice diverse business that's into many different things......from grass seed, irrigation, food production, fertilizers.....and is one of the world's leaders in hydroponics which is likely going to play a huge role in future food and marijuana production.
This is a nice, low risk, slow growth stock. It's a good "Steady Eddie" to add to anyone's portfolio......kinda like Johnson-Johnson.
I was lucky enough to jump on this in the mid $30's........and today it jumped nearly 12%.
This is a nice, low risk, slow growth stock. It's a good "Steady Eddie" to add to anyone's portfolio......kinda like Johnson-Johnson.
I was lucky enough to jump on this in the mid $30's........and today it jumped nearly 12%.
Good move, was tempted, didn’t bite, unfortunately.
Ticker KODK was formerly EK and a member of the DJIA for many years all the way up into the 1990s. What a rare case of a penny stock enriching investors overnight. Happy for the resurgence and those who profited.
