Off Topic — HabitableZone

Off Topic » in reply to Investment Etiquet (Like I'd Know How To Spell That Word)

What's risky about antique car collection? Are his cars not insured?

They are certainly guaranteed to become more rare over time. I applaud folks who have the aptitude, interest, and the willingness to work really hard and make uncommon investments, like gemstones (which do not become more rare), stamps, coins, even real estate.

My bizarre advice follows...

Advice #1: max out contributions to IRA/Keogh every year.

After that, a lot depends on your age, how much risk you are willing to entertain, and how much work you are willing to do to maintain your savings.

age:
Younger = more risky. Older = less risk. Retired = risk only for the fun of it if you like.

risk preference:
The willingness to risk itself is a big variable. Some folks cannot stand to put their money into anything that does not guarantee a fixed appreciation. Some folks love to gamble.

willingness to work:
no risk, interest bearing investments require little work at all. Buying index funds and holding them indefinitely is easy too. Buying and selling stocks is riskier (and provides the possibility of making a killing and becoming wealthy) and a lot more work.

So you have to determine what your own preferences and goals are.

One warning about bonds and (buyable/sellable) interest-bearing investments: their purchase price fluctuates with interest rates, and with investors' interests just like stocks do. For example, if you buy a bond that yields 5% today, and tomorrow the fed increases rates by 2%, then if you wanted to sell your bond, you would have to do so at a discount - you would lose money on the exchanges just like you would for a stock whose price had gone down. (note that fed rates have an indirect effect on bond prices)

A fairly safe and low-work strategy would be to invest in index funds. Tom likes this approach and knows more about it than I do, if you want details.

[You want to gamble on a potential killing, then buy up a few thousand shares of BTUI. I own 4400 shares. Their business is currently in the toilet, but if they get a few high-profile orders for their products, their price will go from $3 to $15 pretty quickly. Or, their price will hang around where it is. I don't see a big downside in their future. I DO NOT RECOMMEND RISKING A SUBSTANTIAL PORTION OF YOUR SAVINGS ON THIS INVESTMENT.]

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