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I’m not the only one unsure of the market valuations.
The Yale academic, Robert Shiller, and creator of the 10 year (trailing) Shiller PE is at odds with the market strategist, David Bianco. In the Wall Street Journal article, Is the Market Overvalued?, by E.S. Browning. Shiller believes the market is overvalued and Bianco disagrees.
“(Saving) $50 a week for 52 weeks is $2,600, but it still wouldn’t meet the $3,000 minimum initial investment for the Vanguard Total Stock Market Index Fund.”
As a longtime cheerleader of Vanguad low cost Index funds, I WAS TROUBLED BY THAT COMMENT. I immediately called up Vanguard to confirm John’s comment. To my dismay, he is correct, not even with a commitment to automatic monthly contributions can you get around the $3,000 minimum initial investment. That’s way too high!
Yes, it’s coming. That looming certainty. Rates will rise, prices will increase and milk will cost an arm and a leg. We are already seeing the beginning effects of it.
I’m in the midst of teaching a Corporate Finance class for MBA students at a local university. Some of the concepts, although rather complicated, have important real world applicability. One of those uber-important concepts is, NET PRESENT VALUE (NPV). It is a method to put a dollar amount on future cash payments. It’s great if you win the lottery and want to determine whether to choose the lump sum payment or monthly option. Or what if you or your folks want to determine the present value of their monthly social security or annuity checks.
Buy and hold versus valuation informed indexing. Get a peak into a novel take on the traditional indexing approach. What do you think?
Face it, most of us are really busy and a bit avoidant. That can be a real problem when your money is concerned. If you don’t start saving early, IT IS VERY DIFFICULT TO ACCUMULATE WEALTH.
This article is designed to MOTIVATE and INSPIRE you to start saving now with a story of Sam and Audrey. You will learn why the earlier you start putting money away, the less you have to save overall to accumulate wealth.
There is HARD EVIDENCE that jumping in and out of the market is deleterious to your returns.
In investing, large gains and large losses go with the territory. Rarely do you know which investments will outperform and which ones will underperform.
So, don’t judge your investing performance too frequently, either the good or the bad performers.
My earliest teacher of investment principles was my dad. He drilled this FUNDAMENTAL BOND PREMISE into me. It served me well in the beginning and still governs my investing today.
The price of a bond moves in the opposite direction of interest rates.
NO ONE IS UNHAPPY IF THEY MAKE MORE MONEY ON AN INVESTMENT THAN PLANNED!
So the risk is really that your investment will be worth less in the future than when you started. In fact, if you have invested at all, then you already know that sometimes the value of your investment holdings GO DOWN as well as UP.
Copyright © 2012 Barbara Friedberg Personal Finance
