What you want is a diversified investment portfolio, with investments selected to match the time horizons of your various goals. I talk some about how to do that in this post:
I'm not saying "don't invest." I'm saying, "Don't expect a financial calculator to predict the future." Even if you have very accurate historical data to feed it, your financial calculator isn't up to that task.
Well, it might be true that huge returns are on the back end. But if you don't get started, there never is a back end, right? I don't think anyone (with any money sense) is portraying compound interest as some type of "get rich quick" investment principle.
And if not compound interest, then what? Bonds? Money markets? Stocks? The first two offer little hope these days, and the last is super risky.
It is kind of a morbid thought, but at least as technology advances, I'm hoping retirement will have more to offer by the time I get to that age. Although I think most of us expect to be working after the current retirement age.
Great point, Kathleen. I couldn't find a lot of data on wages and how they compare. I do suspect there's less job security now, which is also a factor. If someone out there is aware of some data on the wage issue, I hope they add a link to the discussion thread.
Shop at thrift stores almost exclusively--when my husband and I married (2nd marriage for both) we outfitted our entire house with used furniture. After 12 years, we still have not purchased one single new piece of furniture!
I love shopping at thrift stores! No one is ever wearing the same thing I am, and I always get compliments on my unique finds.
My number one tip is to always look for quality. I only buy quality pieces, knowing that if I end up not incorporating them into my wardrobe, I can resell them on Ebay, almost always for significantly more than I paid. I have found numerous designer pieces and gorgeous vintage items for a fraction of the prices at boutiques and vintage stores! I also always look out for cashmere - it holds up well with age and can be found at almost any thrift store for at least 95% off retail!
Also, I used to buy pieces that didn't quite fit (especially high-end items) intending to get them tailored. But I never did. Now I need to be honest with myself about this and realize that if I buy it I will probably end up reselling it. Make sure to take into account whether or not the item will need additional love before it's wearable!
I think you really have to take into consideration the amount of the one income. For instance, my husband grosses $40k a year. We are a family of six. If you can find a way to live on that and not go hungry, I'd sure love to hear it. However, I work part-time at $25k a year, and that we can make work. There is not a whole lot of room for saving for kids college and very few extras, but we do save some money every month. Yet I still feel perfectly content with what we have and what we do. Now, if my husband made $65k a year and that was our one income, I'd be at home right now instead of commenting on a blog when I should be working. ;)
I shop at thrift stores for clothing and household items and find such great things that it pains me to pay regular retail price for most items. Anyone browsing in my closet would think I spend a lot of money on clothes (J Crew, Banana Republic, Ann Taylor). Friends comment about my pretty, "Pottery Barnesque" household decor as well. I readily share that I got the majority of what I have at thrift stores--or yard sales. I enjoy these bargains SO MUCH MORE knowing that I spent my money wisely! Then when I get tired of these things, I don't have the guilt of replacing them with another thrifty bargain.
As a mom of three ages 15-5 who works way more than full time, it's easy to let "me time" go by the wayside of my "have to do's." But I've learned that if I'm not taking time for me to spend a few quiet minutes at my desk before my workday begins, and a few minutes at the end of each night to make my list for the next day and recognize what I'm grateful for, I'm grouchy with my loved ones and feel like the world is working against me. If we don't find the time for "me time" we become resentful and unfulfilled.
I'm excited to find that more time than I feel like I have right now! Thank you for the link to the free download!
I love shopping thrift shops. It requires patience but if you have the time to look you can always find great deals. I've found many great pieces of clothing, as well as collectable items. I usually spent a couple hours each week checking out the stores around me.
I shop at thrift stores for clothes, small housewares, and books. I read around 4-5 paperbacks a month so this really is beneficial for me. I know it is probably better to borrow at the library but some contemporary titles are not available, have to be put on hold, etc. Plus I live closer to the thrift store. What do I do with all these books? Sometimes I sell them online in lots or give them away.
I don't shop my entire wardrobe at the thrift store. For example I always just buy my work pants new since it is easier to find a style I do happen to like since it would be available in different sizes in retail stores. Though shirts, work blouses, casual pants are plentiful to choose from in my size at the thrift stores.
I think my favorite thing I ever thrifted was a Tommy Bahama t-shirt for my fiancé. This was the item that changed his mind about saving in thrift stores. He always thought thrift stores are for poor people only. Tommy bahama was always a brand he thought he would buy when we made much more money but felt he had to wait ( a silk shirt can cost over $100). When I came home with a jersey material tommy bahama shirt in great condition he was so happy and then shocked I only spent $2.00. Now I always on the look out for them and he now has a handful.
I absolutely agree that investing in the stock market is a good choice, for the money that you can safely commit for the long term. I've written about exactly that, such as this post on why stock market investing makes sense:
My objection is not to the idea of making long-term investments, my objection is to latching onto that 8% average return and then saying, "Hey! That's how much money I'll make!" The fact that stock market returns have averaged something over the recent past does not mean that they'll continue to average that—as I would think the experience of the recent twenty-odd years would convince anyone.
There's no guarantee that we'll hit the average. Worse, as I tried to say in this article, it also makes a difference exactly when the gains come. One might say that returns "averaged" 8% if they were 9.4% for 35 years and then -40% for one year. If that year with the -40% was the first year you were investing, it would scarcely matter. But if that year was the year before you planned to retire, you'd end up with a third less than you'd bargained for.
Do save. Do invest. Just don't imagine that "average" returns have a lot to say with how much money you'll end up with.
People don't save enough period. Your article points out some prudent things to do in that area. I like to focus attention on the emergency savings fund. In my tax preparation business I see what lack of such a savings plan can do. That's right, I'm talking about crazy 401k withdrawals or as I call it," the tax return from hell".
Keep saving and I'll see you at the top!!!
The idea of earning 8% annually in the stock market is looking at what it has dome over time. Yes, there will be years when you only earn a 1% return or lose 10%, but over time, the market averages out to be 8%. This also has nothing to do with interest rates. The market may drop or jump when the Federal Reserve announces it's plans for interest rates, but the stock market and interest rates are two different things.
I do agree that you need to see the investment through to realize your goal with compound interest, but I take the opposite viewpoint: I'd rather save for 15 years and end up with some interest rather then leave the money in a savings account earning nothing. In that scenario, I most likely have less money since inflation has been eating away the value of my money.
I would like to say that, women should stop underestimating themselves. If women think that they can't make good financial decision then they can hire financial advisor to help them to take good and worth decision as far as investment and buying financial products like insurance, annuities ans so on. Why to worry, just feel like you can do it.
Insurance should only cover a loss one cannot afford to cover, should the loss occur.
We have been treated appallingly bad by the American insurance industry --what other industry requires one to pay a lawyer just to be treated fairly?? As a result, we have socked away more to cover potential loss. We opt for catastrophic policies which are much cheaper, thus saving money that builds our loss fund.
I have enough time and have ever since I deeply examined beliefs, just as you wisely suggest. Time is endless, apart from every living thing being limited by its lifetime so its a bullseye to define it as being a matter of priorities.
Time expanded for me in direct proportion to my skill at prioritizing to my standard and values. This last part is important since we often get caught up in allowing other folks' standards and values to dominate. Negotiating my obligations to others to mutual satisfaction was where the greatest skill development took place.
"Have it all" is a magazine cover hook and a phoney one at that. There is no having it all since there is always a tradeoff. I quit the accumulation game long ago. It was one of the first significant changes as a result of examining relevant beliefs about time.
I do shop at thrift stores, but I do it with caution. I don't buy just because it's cheap, it has to be in good shape and something that legitimately appeals to my taste before I purchase it.
What you want is a diversified investment portfolio, with investments selected to match the time horizons of your various goals. I talk some about how to do that in this post:
http://www.wisebread.com/best-asset-allocation-for-your-portfolio
I'm not saying "don't invest." I'm saying, "Don't expect a financial calculator to predict the future." Even if you have very accurate historical data to feed it, your financial calculator isn't up to that task.
Well, it might be true that huge returns are on the back end. But if you don't get started, there never is a back end, right? I don't think anyone (with any money sense) is portraying compound interest as some type of "get rich quick" investment principle.
And if not compound interest, then what? Bonds? Money markets? Stocks? The first two offer little hope these days, and the last is super risky.
It is kind of a morbid thought, but at least as technology advances, I'm hoping retirement will have more to offer by the time I get to that age. Although I think most of us expect to be working after the current retirement age.
Yes! All the time. Thrifting is such an adventure for me, and I love the thrill of finding a bargain.
Great point, Kathleen. I couldn't find a lot of data on wages and how they compare. I do suspect there's less job security now, which is also a factor. If someone out there is aware of some data on the wage issue, I hope they add a link to the discussion thread.
Shop at thrift stores almost exclusively--when my husband and I married (2nd marriage for both) we outfitted our entire house with used furniture. After 12 years, we still have not purchased one single new piece of furniture!
I love shopping at thrift stores! No one is ever wearing the same thing I am, and I always get compliments on my unique finds.
My number one tip is to always look for quality. I only buy quality pieces, knowing that if I end up not incorporating them into my wardrobe, I can resell them on Ebay, almost always for significantly more than I paid. I have found numerous designer pieces and gorgeous vintage items for a fraction of the prices at boutiques and vintage stores! I also always look out for cashmere - it holds up well with age and can be found at almost any thrift store for at least 95% off retail!
Also, I used to buy pieces that didn't quite fit (especially high-end items) intending to get them tailored. But I never did. Now I need to be honest with myself about this and realize that if I buy it I will probably end up reselling it. Make sure to take into account whether or not the item will need additional love before it's wearable!
We buy all of our clothes (except underwear) used. I don't want to support sweatshops and, besides saving money, buying used helps me do that.
We spend less than $200 a year on clothing and shoes for two people.
I think you really have to take into consideration the amount of the one income. For instance, my husband grosses $40k a year. We are a family of six. If you can find a way to live on that and not go hungry, I'd sure love to hear it. However, I work part-time at $25k a year, and that we can make work. There is not a whole lot of room for saving for kids college and very few extras, but we do save some money every month. Yet I still feel perfectly content with what we have and what we do. Now, if my husband made $65k a year and that was our one income, I'd be at home right now instead of commenting on a blog when I should be working. ;)
Having been shopping their for over 20 years. I clothed 5 children this way thru high school. Also furnished my home with their unique selections.
I would like to shop more at thrift stores but find that the stores aren't always viable based on my gas budget or work schedule.
I donate to Goodwill more often than I shop there but occasionally I will buy something.
I shop at thrift stores for clothing and household items and find such great things that it pains me to pay regular retail price for most items. Anyone browsing in my closet would think I spend a lot of money on clothes (J Crew, Banana Republic, Ann Taylor). Friends comment about my pretty, "Pottery Barnesque" household decor as well. I readily share that I got the majority of what I have at thrift stores--or yard sales. I enjoy these bargains SO MUCH MORE knowing that I spent my money wisely! Then when I get tired of these things, I don't have the guilt of replacing them with another thrifty bargain.
I like the idea of tracking my time.
As a mom of three ages 15-5 who works way more than full time, it's easy to let "me time" go by the wayside of my "have to do's." But I've learned that if I'm not taking time for me to spend a few quiet minutes at my desk before my workday begins, and a few minutes at the end of each night to make my list for the next day and recognize what I'm grateful for, I'm grouchy with my loved ones and feel like the world is working against me. If we don't find the time for "me time" we become resentful and unfulfilled.
I'm excited to find that more time than I feel like I have right now! Thank you for the link to the free download!
Heather
I love shopping thrift shops. It requires patience but if you have the time to look you can always find great deals. I've found many great pieces of clothing, as well as collectable items. I usually spent a couple hours each week checking out the stores around me.
I shop at thrift stores for clothes, small housewares, and books. I read around 4-5 paperbacks a month so this really is beneficial for me. I know it is probably better to borrow at the library but some contemporary titles are not available, have to be put on hold, etc. Plus I live closer to the thrift store. What do I do with all these books? Sometimes I sell them online in lots or give them away.
I don't shop my entire wardrobe at the thrift store. For example I always just buy my work pants new since it is easier to find a style I do happen to like since it would be available in different sizes in retail stores. Though shirts, work blouses, casual pants are plentiful to choose from in my size at the thrift stores.
I think my favorite thing I ever thrifted was a Tommy Bahama t-shirt for my fiancé. This was the item that changed his mind about saving in thrift stores. He always thought thrift stores are for poor people only. Tommy bahama was always a brand he thought he would buy when we made much more money but felt he had to wait ( a silk shirt can cost over $100). When I came home with a jersey material tommy bahama shirt in great condition he was so happy and then shocked I only spent $2.00. Now I always on the look out for them and he now has a handful.
I absolutely agree that investing in the stock market is a good choice, for the money that you can safely commit for the long term. I've written about exactly that, such as this post on why stock market investing makes sense:
http://www.wisebread.com/why-invest-in-the-stock-market
My objection is not to the idea of making long-term investments, my objection is to latching onto that 8% average return and then saying, "Hey! That's how much money I'll make!" The fact that stock market returns have averaged something over the recent past does not mean that they'll continue to average that—as I would think the experience of the recent twenty-odd years would convince anyone.
There's no guarantee that we'll hit the average. Worse, as I tried to say in this article, it also makes a difference exactly when the gains come. One might say that returns "averaged" 8% if they were 9.4% for 35 years and then -40% for one year. If that year with the -40% was the first year you were investing, it would scarcely matter. But if that year was the year before you planned to retire, you'd end up with a third less than you'd bargained for.
Do save. Do invest. Just don't imagine that "average" returns have a lot to say with how much money you'll end up with.
People don't save enough period. Your article points out some prudent things to do in that area. I like to focus attention on the emergency savings fund. In my tax preparation business I see what lack of such a savings plan can do. That's right, I'm talking about crazy 401k withdrawals or as I call it," the tax return from hell".
Keep saving and I'll see you at the top!!!
The idea of earning 8% annually in the stock market is looking at what it has dome over time. Yes, there will be years when you only earn a 1% return or lose 10%, but over time, the market averages out to be 8%. This also has nothing to do with interest rates. The market may drop or jump when the Federal Reserve announces it's plans for interest rates, but the stock market and interest rates are two different things.
I do agree that you need to see the investment through to realize your goal with compound interest, but I take the opposite viewpoint: I'd rather save for 15 years and end up with some interest rather then leave the money in a savings account earning nothing. In that scenario, I most likely have less money since inflation has been eating away the value of my money.
I would like to say that, women should stop underestimating themselves. If women think that they can't make good financial decision then they can hire financial advisor to help them to take good and worth decision as far as investment and buying financial products like insurance, annuities ans so on. Why to worry, just feel like you can do it.
Insurance should only cover a loss one cannot afford to cover, should the loss occur.
We have been treated appallingly bad by the American insurance industry --what other industry requires one to pay a lawyer just to be treated fairly?? As a result, we have socked away more to cover potential loss. We opt for catastrophic policies which are much cheaper, thus saving money that builds our loss fund.
I have enough time and have ever since I deeply examined beliefs, just as you wisely suggest. Time is endless, apart from every living thing being limited by its lifetime so its a bullseye to define it as being a matter of priorities.
Time expanded for me in direct proportion to my skill at prioritizing to my standard and values. This last part is important since we often get caught up in allowing other folks' standards and values to dominate. Negotiating my obligations to others to mutual satisfaction was where the greatest skill development took place.
"Have it all" is a magazine cover hook and a phoney one at that. There is no having it all since there is always a tradeoff. I quit the accumulation game long ago. It was one of the first significant changes as a result of examining relevant beliefs about time.
I sure do! I look for storage baskets, planters, craft supplies, office supplies, books, furniture and long crinkly skirts.
Nope, I don't shop at Thrift Shops because they usually don't have what I need.
I do shop at thrift stores, but I do it with caution. I don't buy just because it's cheap, it has to be in good shape and something that legitimately appeals to my taste before I purchase it.