it takes money to make money

[bspahn]

What do you all think about this?

Two things I know that are very important are the following:

1) never risk what you can't afford to be without
2) the more money you have the more flexible, diversified you can be and the more you'll compound over time.

we all know the basic math of: start with a little, put a little away very frequently, then wait for compound interest and after 40 years everyone and their dog can have a million bucks. main thing there seems to be discipline and sticking to the simplicity of it.

what I'd like to know is where does everyone stand, and what is their experience on the whole growing-wealth-over-time thing.

Let's look at some scenarios

a) you start with zero and you work a job where you can save a little - what do you do

b) you have some savings but it's sitting in ING let's say at 3.5% and you can add a little to it here and there over time.

c) you have a healthy amount, let's say a min of 25k and you can also add a healthy amount to that, let's say 500-1000 a month.

d) max case you have 1/4 mil and want to work with the money without working a normal job.

[biggerthanboykins]

RISK vs REWARD = TIME

How long do you want to be jobless, take a big risk and get a big reward OR take a big risk and have no money?

With 250,000 I think if you want to live off of that, well it depends, how much rent is at your mommy and daddys house. If you can live there for free, you can sit on that money forever. Now if your an adult and want to live on your own and be a "BALLER" then you'll have to take some chances. Ofcourse there is a huge RISK..

If I had 250k I'd buy a house, and that 500-1000 I was saving, can pay my mortgage. Keep a job like any normal human being.

250k aint that much money.

[asdfvcx]

2) the more money you have the more flexible, diversified you can be and the more you'll compound over time.

I think this is where you are getting confused. You can have a very diversified portfolio with very little money. You're rate of compounding should be about the same as a larger portfolio.

I think you believe there are a huge number of better investments available to people with large amount of money to invest. It's true there are some more exotic investments available. But there's no reason to believe that these are any better.

They're mainly being sold to some rich people, who are convinced that now because they are rich, they should be able to get better returns than everyone else, and so start making some exotic investments. And frequently end up losing large amounts of money.

[bspahn]

Ok this is where I step in and rephrase a little. I'm not interested so much in putting any amount of money whether $500 or $50,000 into stocks/mutual funds/gic's/bonds etc, because you're not doing anything once it's there, it just sits.

I'm looking more for things that are actively done, and by more money i meant that with $5000 you could have a diversified portfolio, but you couldn't own part of a business, and two houses and a condo, and a stock portfolio and are using a chunk to play poker or anything else that could make money on a daily basis...

[volan]

Ok this is where I step in and rephrase a little. I'm not interested so much in putting any amount of money whether $500 or $50,000 into stocks/mutual funds/gic's/bonds etc, because you're not doing anything once it's there, it just sits.


If you want to "actively manage" your money, there's no reason why you couldn't do that with a stock portfolio. Get into day-trading stocks. Then your money doesn't have to just sit. Warning: If you are an inexperienced trader you WILL LOSE MONEY!

Having your money just sit can have huge advantages. A buy and hold approach is boring, but who said making money has to be exciting? Ever hear of Warren Buffet? His favourite holding period for any stock is forever. He's up there with the richest men in the world. You buy stock in a company that is undervalued and has potential to increase in value. Then you wait.

[digidaze]

What do you all think about this?

Two things I know that are very important are the following:

1) never risk what you can't afford to be without
2) the more money you have the more flexible, diversified you can be and the more you'll compound over time.

.


There is very little risk if you are the top of a pyramid scheme and you need very little $$$ to start. The rewards are tremendous and everyone under you works harder than you but you make the most $$$.

Seems fair to me:cheesygri