LEOs: How did you get into law enforcement?

[TurboDan]

Apologies for the mild hijack, but it seems appropriate here: if you old(er!) guys were 20 and had 2 grand to play with, what would you do with it besides have it in a CD?  I don't exactly have my parents to fall back on for what I call innovative and impressive financial advice...

Definitely a CD.  When it's all you have, why risk it on some stock?

[S204STi]

Banks are definitely safer than the market.

[hounddog]

That was my point.  People shouldn't tie money up until they have a steady income, and a base of cash to cover unexpected contingencies.

But he asked what he should do with a couple thousand he has "To play with."  He was not asking what he should do with his hard earned savings.  I took it as he was asking what the best yeild would be on what types of investments.  Re-reading the post, I still take it that way.

[hounddog]

Banks are definitely safer than the market.

Maybe, maybe not.  The banks take your money, and use it to play the stockmarket.  The amount you put in is insured, so you shouldn't lose your money.  But, you do not see any real yeild from your savings account because interest rates are so low.

[Eye of the Tiger]

Maybe, maybe not.  The banks take your money, and use it to play the stockmarket.  The amount you put in is insured, so you shouldn't lose your money.  But, you do not see any real yeild from your savings account because interest rates are so low.

Well, if you put $1,000,000 in a savings account, you live a modest life purely off the interest. 

[hounddog]

Well, if you put $1,000,000 in a savings account, you live a modest life purely off the interest. 

True.  Unfortunately, that is not what we were talking about, is it now? 
But again, that could be very risky as well.  Most banks only insure up to $250,000.  So, your other $750,000 would be hanging out to dry.

[TBR]

But he asked what he should do with a couple thousand he has "To play with."  He was not asking what he should do with his hard earned savings.  I took it as he was asking what the best yeild would be on what types of investments.  Re-reading the post, I still take it that way.

Considering Josh's situation (junior or senior in college, planning on law school), it is foolish to recommend an IRA, even if he isn't adverse to risk.

[dazzleman]

True.  Unfortunately, that is not what we were talking about, is it now? 
But again, that could be very risky as well.  Most banks only insure up to $250,000.  So, your other $750,000 would be hanging out to dry.

You could spread it around different banks.

Even so, $1,000,000 wouldn't really yield enough interest to live, especially since the purchasing power of the interest would decline every year.  If you're going to live off interest, you have to generate enough interest so that you can afford to increase your principal sufficiently every year so that your interest income goes up every year to compensate for inflation.

I've been doing my own retirement planning lately, so I'm wrestling with these issues.  The big question for me is how big a portfolio I need, at any given age, to be able to stop working and live comfortably after that.  I need to be careful, because I'm not a low-budget kind of guy.....

[hounddog]

Considering Josh's situation (junior or senior in college, planning on law school), it is foolish to recommend an IRA, even if he isn't adverse to risk.

But, that was NOT how he presented the question.  And, he has not made any statements since then to say otherwise.  And, it is NEVER foolish to give sound investment advice, nor is it foolish to ask for that advice. 

Look, to say its foolish is in itself foolish.  Any man who fails to plan will fail.

[hounddog]

You could spread it around different banks.

Even so, $1,000,000 wouldn't really yield enough interest to live, especially since the purchasing power of the interest would decline every year.  If you're going to live off interest, you have to generate enough interest so that you can afford to increase your principal sufficiently every year so that your interest income goes up every year to compensate for inflation.

I've been doing my own retirement planning lately, so I'm wrestling with these issues.

Doing your own planning?  Have you ever heard of the saying about doctors operating on themselves? 

If I may offer some advice regarding that?  At least have someone look it over as you go and get input.  An example;
I was doing some portfolio investing about a year and a half ago.  I had been watching Honeywell, it was sitting around 32-36 for many months.  But their quarterlies, business news, cash on hand, and credit was always at the higest marks.  I was hesitant and asked my advisor, he told me to buy it as it had historically been stronger that what it is now.  It went to the high 50's earlier this year.  Had I not asked him, I would have hesitated and probably not bought. 

[dazzleman]

Doing your own planning?  Have you ever heard of the saying about doctors operating on themselves? 

If I may offer some advice regarding that?  At least have someone look it over as you go and get input.  An example;
I was doing some portfolio investing about a year and a half ago.  I had been watching Honeywell, it was sitting around 32-36 for many months.  But their quarterlies, business news, cash on hand, and credit was always at the higest marks.  I was hesitant and asked my advisor, he told me to buy it as it had historically been stronger that what it is now.  It went to the high 50's earlier this year.  Had I not asked him, I would have hesitated and probably not bought. 

I should have chosen my words better.  I am working with a financial advisor with respect to my retirement planning.  I agree with you.  I'll give you another variation -- the person who is his own lawyer has a fool for a client.

[S204STi]

Maybe, maybe not.  The banks take your money, and use it to play the stockmarket.  The amount you put in is insured, so you shouldn't lose your money.  But, you do not see any real yeild from your savings account because interest rates are so low.

Safe, but not very lucrative.