I've been exploring quite a variety of internet "forums" or "newsgroups" lately, partly because I intend to set up one for the buyer's of an E-Book I'm writing. Still haven't got the title, but tentatively, it's something like "More Fun with Digital Photography".
There's thousands of forums, all manner of special interests, and amazing conversations that go on. Gotta be careful, they can be voracious Time Leaches.
One that I posted on today is the forum for Investment U.
www.InvestmentU.com
It's a free educational service, with weekly email newsletter, and other services including a new forum, which I just entered today.
One person had asked for help--said he'd considered starting investing when he was about 20, but had been too afraid. But now he's newly married and has a daughter to help support, and wonders if it's too late to start.
Another forum member replied with good advice:
"1) Set a goal.
2) Write down your goal.
3) Create a plan. (Those who fail to plan, plan to fail).
4) Seek out a mentor or teacher/coach you can learn from.
5) Based on what you learn, revise your plan so that it has a greater chance of success.
6) Keep visualizing your success.
(Michael Masterson) estimates you will need 1000 hours to become competent in a field, 5000 hours to become a master, and that time can be cut by 25% or so with a good teacher/coach.
So if you devote 10 hours per week to learn investing, you will need up to 100 weeks to become competent (2 years) or 500 weeks (10 years) to become a master.
In other words, what you want won't happen overnight.
Persistence is going to be the key. "
My contribution:
That was excellent advice.
And as far as investing is concerned, a few years of steady experience is about right to become competent (provided you learn steadily from your experience).
I'd caution you not to try to jump into being too aggressive too quickly.
But do get started.
No matter how small.
If your investable funds are going to be very modest for a while, you might buy individual stocks via DRIP programs. There's a local writer Scott Burns here in Dallas who recommends various varieties of Couch Potato Portfolios, based on stock and bond indexes.
(Be sure to maximize your tax savings via IRA/401K's, etc.)
There are lots of sane ways to get started.
Doesn't matter so much which one you pick.
Just get started.
Do a plan.
Then work to gradually improve your results.
As you gradually become more competent as an investor,
and gradually accumulate more capital,
you can gradually ratchet up the level of aggressiveness in your investments.
But always focus as much or more on NOT LOSING MONEY as you do on your rate of return.
One VISUALIZATION TOOL that helped me get started:
Find one of those compound rate of return calculators, where you can plug in an initial amount of investment, and a periodic contribution (like $100 month or whatever), which will extrapolate out what you'll accumulate after so many years. Look at what that does in 20 years or so, and you'll be mighty motivated. It's fun to plug in different contribution rates, and different rates of return, to see what that does over the long run.
Just for instance, according to a calculator @ http://www.dinkytown.net/java/InvestmentReturn.html
If you start with nothing, but invest $200 month @ 20%, after 24 yrs you'll have well over a million dollars ($1,130,355). That's assuming no taxes (use IRA) and without considering inflation.
I'm not so sure that Einstein really said that compound interest was the most powerful force in the universe, but anyway, it's plenty powerful!
Friday, March 31, 2006
Monday, March 06, 2006
World's looking flat, but volcanos simmering
Read some interesting thoughts today at "The Daily Reckoning"--Bill Bonner is chiding Thomas Friedman's idea that "The Earth is Flat", that globalization has carried us into an entirely new world of opportunity:
"Thanks to modern technology and the spread of robust American-style capitalism (to say nothing of the protection racket run by the empire's military forces), we all play on the same level field of global commerce. We also wear the same clothes...talk the same language (English), share the same political ideology (humbug democracy), and worship the same God (mammon)."
Of course Friedman's "Flat Earth" is an important part of what's happening--most of our high tech toys, and even our clothes, are manufactured in China, or other points east. China makes 'em, we buy 'em. We go deeper into debt, but China lends it back to us, at pretty low interest (for now). We need them, but they need us just as bad. For awhile now, we've had it pretty good. The toys get cheaper, and even if we don't earn any more money, nowadays it's easy to be a debtor: our government borrows from China and Japan, our household borrows from HEL (Home Equity Loans).
But Bonner cautions there may be unstable forces of tectonic scale simmering beneath this apparently "flat" world we've become so fat and happy in.
One big instability is increasingly skewed wealth distribution. Within the U.S. and the rest of the "first world", the business owners and investors are getting richer, benefiting from globalized markets. But most of the workers, from auto assemblers to pilots to IT pros to filmworkers, are seeing their incomes stagnate and decline.
I was struck by something called the "Gini Index", which is a measure of income disparity:
"Economists measure wage equality with way they call a Gini Index. At zero, people all earn the same thing. At 100, the rich get all the income.
Currently, in Japan the Gini Index is 25. In Europe, it is 32. In America, the index is at 40, and in China, it is at 45."
If the Gini index is a measure of instability, it's striking how close we are to China on that measure.
Bonner concludes:
"In America, low-level earners can't get ahead because they have no bargaining power. They are competing with a billion workers in Asia willing to do the same work for less than one-tenth the cost. And in China, there is also growing income inequality between those who have joined the global economy and those who have not. Some 500 million people live in coastal cities in China and participate in modern commerce, but there are another 700 million who still live in the countryside. While the cities grow richer, the poor in China are left behind, like America's industrial workers.
In short, the world is not getting flatter at all. It is getting flatter in some areas, and steeper in others. There is less difference between China's industrial workers and those in America, but the difference between the globalized wage slave and the capitalists who employ them is growing.
Beneath the surface of Friedman's flat Earth, the pressure is growing -either in China or in America and sooner or later, it is bound to explode."
(Bill Bonner is one of many contributors to "The Daily Reckoning", a free daily newsletter on economics, investments, politics, etc. @ www.dailyreckoning.com
"Thanks to modern technology and the spread of robust American-style capitalism (to say nothing of the protection racket run by the empire's military forces), we all play on the same level field of global commerce. We also wear the same clothes...talk the same language (English), share the same political ideology (humbug democracy), and worship the same God (mammon)."
Of course Friedman's "Flat Earth" is an important part of what's happening--most of our high tech toys, and even our clothes, are manufactured in China, or other points east. China makes 'em, we buy 'em. We go deeper into debt, but China lends it back to us, at pretty low interest (for now). We need them, but they need us just as bad. For awhile now, we've had it pretty good. The toys get cheaper, and even if we don't earn any more money, nowadays it's easy to be a debtor: our government borrows from China and Japan, our household borrows from HEL (Home Equity Loans).
But Bonner cautions there may be unstable forces of tectonic scale simmering beneath this apparently "flat" world we've become so fat and happy in.
One big instability is increasingly skewed wealth distribution. Within the U.S. and the rest of the "first world", the business owners and investors are getting richer, benefiting from globalized markets. But most of the workers, from auto assemblers to pilots to IT pros to filmworkers, are seeing their incomes stagnate and decline.
I was struck by something called the "Gini Index", which is a measure of income disparity:
"Economists measure wage equality with way they call a Gini Index. At zero, people all earn the same thing. At 100, the rich get all the income.
Currently, in Japan the Gini Index is 25. In Europe, it is 32. In America, the index is at 40, and in China, it is at 45."
If the Gini index is a measure of instability, it's striking how close we are to China on that measure.
Bonner concludes:
"In America, low-level earners can't get ahead because they have no bargaining power. They are competing with a billion workers in Asia willing to do the same work for less than one-tenth the cost. And in China, there is also growing income inequality between those who have joined the global economy and those who have not. Some 500 million people live in coastal cities in China and participate in modern commerce, but there are another 700 million who still live in the countryside. While the cities grow richer, the poor in China are left behind, like America's industrial workers.
In short, the world is not getting flatter at all. It is getting flatter in some areas, and steeper in others. There is less difference between China's industrial workers and those in America, but the difference between the globalized wage slave and the capitalists who employ them is growing.
Beneath the surface of Friedman's flat Earth, the pressure is growing -either in China or in America and sooner or later, it is bound to explode."
(Bill Bonner is one of many contributors to "The Daily Reckoning", a free daily newsletter on economics, investments, politics, etc. @ www.dailyreckoning.com
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