Main | December 2005 »

Nov30
How much do I need to save?
In my last post we saw that a person who wants to have $70,000 in annual income from a portfolio yielding 8% without spending principal would need to have $875,000 in savings when he or she retired.

The question today is, how much do I need to save each year to have $875,000 in savings when I retire?  The answer of course depends on how long you have to save.  I will give three examples, 10 years, 20 years, and 40 years.  These would correspond to late career, mid-career, and start of a career.

Again, we will assume that you can earn a return of 8% on your savings.  Using my trusty financial calculator we put $875,000 in the Future Value bucket, 10 years in the period bucket and 8% in the interest bucket.  We solve for payments and get $60,400 per year.  Moving to 20 years you get $19,121.  Finally, if you have 40 years, you only need to save $3,378 per year.
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Nov30
How much money do I need?
I want to retire some day.  How much money will I need?  Individual needs vary of course, depending on health, life style, special needs, etc.  However, a good rule of thumb would be to plan on needing at least 70%... Continue Reading
Nov29
This I Believe - Summary of Basics
There is a program on National Public Radio called, "This I Believe."  People write essays about those beliefs that are basic to their lives or that they have learned through life's experiences.  It is very interesting and worth checking out... Continue Reading
Nov28
Alpha & Beta
I was asked to explain a little more about beta and alpha.  Betas are large asset categories like value stocks, growth stocks, small cap stocks, large cap stocks, treasury bonds, corporate bonds, municipal bonds, precious metals, commodities, real estate, etc. ... Continue Reading
Stock Market Forecasts - basics
I received a couple of questions that have broad appeal.  I will try to answer them in this post.It looks like the period 2000 to 2005 is the third instance where rolling 5 year returns of a broad stock market... Continue Reading
Nov25
Even More on Asset Allocation & Risk
In the last post I talked about beta and alpha in asset allocation decisions.  Remember, betas are few but reliable and alphas are plentiful but hard to earn.I'll finish up Ray Dalio's quote from his paper in 2003:"So: a)       While... Continue Reading
More on Asset Allocation
The return on your overall portfolio will be the simple weighted average of the return streams you choose from the Betas and the Alphas or from the asset allocation decision and the choice of managers. It is important to understand that... Continue Reading
The Most Important Decision You'll Make
No, not who you'll marry, we're talking investments here not eternal happiness. The most important decision you'll make in investing is what mix of assets you'll put your money into.  We call that asset allocation.  Some asset classes would include... Continue Reading
Nov24
Happy Thanksgiving
You may have noticed that our publisher supports UNITUS.  Take the opportunity today to click through and find out how you can make a difference.  UNITUS can multipy you donation so that many more of our family here on earth can be helped.
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Nov23
Is this elevator going up? Yes...mostly.
Why was Alan Delsman so sure he would make money in the stock market over time?  I told you about the study that shows the superiority of the stock market as an asset class for rolling 5 and 10 year... Continue Reading
It was the best of times, it was the worst of times
In the Tale of Alan Delsman, he taught me about the importance of time in realizing your investment goals.  Remember, Alan kept his 401(k) invested in a diversified equity fund and would only look at it once in a very... Continue Reading
Nov22
Don't put all your eggs in one basket
We’ve all heard the adage, “Don’t put all your eggs in one basket.” That is the principle of diversification. It turns out to have a great application in investing.  Investment advisors used to be held legally to a standard called the “Prudent... Continue Reading
The Tale of Alan Delsman
Thanks to everyone for their kind words on the start of this blog.  I appreciate the vote of confidence.  I’d like to tell the story of Alan Delsman.  Early in my career at Chase we switched from a defined benefit... Continue Reading
Nov21
More on Risk
How can you tell if what you are being offered is a high return? Here are some tools you can use. CDs or Certificates of Deposit from FDIC insured banks generally offer you Fed Funds minus a little. Fed Funds right now are... Continue Reading
For Better or for Worse - We need Risk
Risk and return are linked in the investment markets. What you earn on your investments depends on how much risk you are willing to take. How much risk you take is dependent in part on what you want to do with the... Continue Reading
Who the heck is Larry Stay anyway?
Hi, I'll be your host on this blog.  Here's why I think I can help you with your concerns about investing.I received my MBA from Columbia Business School in 1978 in Corporate Finance and International Business.  I worked with The... Continue Reading
Welcome to Grow Your Funds!
You just sold your company.  You recently cashed in those stock options.  You just landed the deal of the year and the fat commission check just arrived.  This conversation is for those of you who are now sitting on a pile of... Continue Reading

Main | December 2005 »

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