Comments on: The Danger Of Being Too Conservative http://www.moneysmartsblog.com/the-danger-of-being-too-conservative/ Investing and Personal Finance Sat, 11 Feb 2012 04:38:37 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Winner of Wise Investing and Weekly Roundup » The Dividend Guy Blog http://www.moneysmartsblog.com/the-danger-of-being-too-conservative/comment-page-1/#comment-4127 Winner of Wise Investing and Weekly Roundup » The Dividend Guy Blog Fri, 29 Feb 2008 15:32:43 +0000 http://www.moneysmartsblog.com/the-danger-of-being-too-conservative/#comment-4127 [...] The Danger Of Being Too Conservative [...] [...] The Danger Of Being Too Conservative [...]

]]> By: Dividends4Life http://www.moneysmartsblog.com/the-danger-of-being-too-conservative/comment-page-1/#comment-4067 Dividends4Life Wed, 27 Feb 2008 00:46:53 +0000 http://www.moneysmartsblog.com/the-danger-of-being-too-conservative/#comment-4067 When you said conservative, you really meant conservative. I thought it was going to be an article about utility stocks. :) Best Wishes, D4L When you said conservative, you really meant conservative. I thought it was going to be an article about utility stocks. :)

Best Wishes,
D4L

]]> By: Carnival of Personal Finance #141 - The College Years Edition — Broke Grad Student http://www.moneysmartsblog.com/the-danger-of-being-too-conservative/comment-page-1/#comment-4009 Carnival of Personal Finance #141 - The College Years Edition — Broke Grad Student Mon, 25 Feb 2008 12:04:19 +0000 http://www.moneysmartsblog.com/the-danger-of-being-too-conservative/#comment-4009 [...] Pillars from Quest For Four Pillars warns of The Danger Of Being Too Conservative and how it can be hazardous to your financial [...] [...] Pillars from Quest For Four Pillars warns of The Danger Of Being Too Conservative and how it can be hazardous to your financial [...]

]]> By: Four Pillars http://www.moneysmartsblog.com/the-danger-of-being-too-conservative/comment-page-1/#comment-3960 Four Pillars Sat, 23 Feb 2008 00:41:50 +0000 http://www.moneysmartsblog.com/the-danger-of-being-too-conservative/#comment-3960 Even if you are 10 years from retirement, you still have a long way to go in terms of investment horizon (hopefully) so I don't plan to go super safe at that time. Mike Even if you are 10 years from retirement, you still have a long way to go in terms of investment horizon (hopefully) so I don’t plan to go super safe at that time.

Mike

]]> By: Cheap Canuck http://www.moneysmartsblog.com/the-danger-of-being-too-conservative/comment-page-1/#comment-3958 Cheap Canuck Fri, 22 Feb 2008 22:44:07 +0000 http://www.moneysmartsblog.com/the-danger-of-being-too-conservative/#comment-3958 I can understand those with less than 10 years until retirement being ultra-conservative in their investing. It would be hard to stomach working all those years to save, and suddenly see your nest egg drop 40% over a short time period. However, I know people in their early thirties who are just as conservative. To each his own I guess, but I want a "real" return on the money I invest, not just preservation of today's spending power. I can understand those with less than 10 years until retirement being ultra-conservative in their investing. It would be hard to stomach working all those years to save, and suddenly see your nest egg drop 40% over a short time period. However, I know people in their early thirties who are just as conservative. To each his own I guess, but I want a “real” return on the money I invest, not just preservation of today’s spending power.

]]> By: Randall at CreditWithdrawal http://www.moneysmartsblog.com/the-danger-of-being-too-conservative/comment-page-1/#comment-3957 Randall at CreditWithdrawal Fri, 22 Feb 2008 16:33:06 +0000 http://www.moneysmartsblog.com/the-danger-of-being-too-conservative/#comment-3957 My wife is kind of like this. She wants GUARANTEED returns with NO risk. No matter how many times I have to repeat "no risk, no reward", it doesn't really sink in. I've got her investments in Index funds which is about as risk tolerant as she gets. My wife is kind of like this. She wants GUARANTEED returns with NO risk. No matter how many times I have to repeat “no risk, no reward”, it doesn’t really sink in.

I’ve got her investments in Index funds which is about as risk tolerant as she gets.

]]> By: rocketc http://www.moneysmartsblog.com/the-danger-of-being-too-conservative/comment-page-1/#comment-3954 rocketc Fri, 22 Feb 2008 15:38:43 +0000 http://www.moneysmartsblog.com/the-danger-of-being-too-conservative/#comment-3954 That's why we refer to Certificates of Deposit as Certificates of Depreciation. That’s why we refer to Certificates of Deposit as Certificates of Depreciation.

]]> By: Leslie http://www.moneysmartsblog.com/the-danger-of-being-too-conservative/comment-page-1/#comment-3952 Leslie Fri, 22 Feb 2008 14:24:18 +0000 http://www.moneysmartsblog.com/the-danger-of-being-too-conservative/#comment-3952 Good post. In the investment & economic climate right now both fixed income and equity investment is going to make conservative investors uneasy. There's a lot of volatility everywhere and all signs point to interest rates heading down even as inflation is creeping up, particularly in food & energy--the stuff we all use everyday. There is risk with fixed income investing; it's just different and not as apparently volatile as equity investing. As you point out, fixed income is affected primarily by interest rate fluctuations & inflation--this may not seem to be a big deal because you don't notice but it can still run you over: more like a glacier than a Mack truck (equities). Next thing you know your capital is eroded just as much as if your holding of JNJ (Johnson & Johnson) took a hit. While the couch potato portfolio or a proxy of it using something like TD's e-series funds (disclaimer: no affiliation with TD) is a good way to dip your toe into the market, I've learned that you have to know yourself when investing. If a person is comforted to see a GIC roll over and drop the amount invested plus interest in their lap (even though it no longer has the same buying power), then they'll be awake nights everytime the stock market hiccups. Historically recessions last about 11 months, so if we're in one now, look to next year for a recovery. The impact of inflation & taxes on buying power is tough for some people to wrap their mind around--think that every dollar you spend is actually $1.50 (before taxes & inflation). That latte from Starbucks isn't $3.00, it's actually $4.50. If you have a $1,000 debt, it's actually going to cost $1,500 of your gross earnings to pay off, before you even add in usurious interest penalties. Good post. In the investment & economic climate right now both fixed income and equity investment is going to make conservative investors uneasy. There’s a lot of volatility everywhere and all signs point to interest rates heading down even as inflation is creeping up, particularly in food & energy–the stuff we all use everyday.

There is risk with fixed income investing; it’s just different and not as apparently volatile as equity investing. As you point out, fixed income is affected primarily by interest rate fluctuations & inflation–this may not seem to be a big deal because you don’t notice but it can still run you over: more like a glacier than a Mack truck (equities). Next thing you know your capital is eroded just as much as if your holding of JNJ (Johnson & Johnson) took a hit. While the couch potato portfolio or a proxy of it using something like TD’s e-series funds (disclaimer: no affiliation with TD) is a good way to dip your toe into the market, I’ve learned that you have to know yourself when investing. If a person is comforted to see a GIC roll over and drop the amount invested plus interest in their lap (even though it no longer has the same buying power), then they’ll be awake nights everytime the stock market hiccups. Historically recessions last about 11 months, so if we’re in one now, look to next year for a recovery.

The impact of inflation & taxes on buying power is tough for some people to wrap their mind around–think that every dollar you spend is actually $1.50 (before taxes & inflation). That latte from Starbucks isn’t $3.00, it’s actually $4.50. If you have a $1,000 debt, it’s actually going to cost $1,500 of your gross earnings to pay off, before you even add in usurious interest penalties.

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