Comments on: We get more conservative with investments as we get older http://www.iwillteachyoutoberich.com/blog/we-get-more-conservative-with-investments-as-we-get-older/ Personal finance blog for college students, recent graduates and everyone else -- including entrepreneurship -- for getting rich. Featured in the Wall Street Journal and New York Times. Sun, 21 Mar 2010 02:45:13 -0700 http://wordpress.org/?v=abc hourly 1 By: Barbara Saunders http://www.iwillteachyoutoberich.com/blog/we-get-more-conservative-with-investments-as-we-get-older/comment-page-1/#comment-62249 Barbara Saunders Tue, 20 May 2008 19:02:59 +0000 http://www.iwillteachyoutoberich.com/blog/we-get-more-conservative-with-investments-as-we-get-older#comment-62249 Hi Ramit, I know that the very young are your primary audience, but there's a situation you left out, a common one here in the Bay Area. I'm 40, no kids, graduated from Stanford before there were columns like yours! Losing it all would not be disastrous for me in the way it would for Norm. However, unlike Stacy, moving back in with the parents would not be an option. In fact, the greatest potential for disaster lies in that direction -- needing money to take care of them (both in their mid-seventies.) Hyper-growth mode does not seem appropriate. 60 year old mode, definitely not appropriate (actually that would be the most risky thing of all.) Hi Ramit, I know that the very young are your primary audience, but there’s a situation you left out, a common one here in the Bay Area. I’m 40, no kids, graduated from Stanford before there were columns like yours! Losing it all would not be disastrous for me in the way it would for Norm. However, unlike Stacy, moving back in with the parents would not be an option. In fact, the greatest potential for disaster lies in that direction — needing money to take care of them (both in their mid-seventies.)

Hyper-growth mode does not seem appropriate. 60 year old mode, definitely not appropriate (actually that would be the most risky thing of all.)

]]> By: Art schultz http://www.iwillteachyoutoberich.com/blog/we-get-more-conservative-with-investments-as-we-get-older/comment-page-1/#comment-9732 Art schultz Sat, 31 Mar 2007 11:13:22 +0000 http://www.iwillteachyoutoberich.com/blog/we-get-more-conservative-with-investments-as-we-get-older#comment-9732 so 50% faster could...hmm equal death 50% sooner so 50% faster could…hmm equal death 50% sooner

]]> By: Greg http://www.iwillteachyoutoberich.com/blog/we-get-more-conservative-with-investments-as-we-get-older/comment-page-1/#comment-92 Greg Wed, 24 Jan 2007 21:41:48 +0000 http://www.iwillteachyoutoberich.com/blog/we-get-more-conservative-with-investments-as-we-get-older#comment-92 Your math is wrong on the fast driver though he would not get there in 27.5 minutes he would get there in 20 minutes. 50% increase in speed = 50% increase in time saved. Your math is wrong on the fast driver though he would not get there in 27.5 minutes he would get there in 20 minutes. 50% increase in speed = 50% increase in time saved.

]]> By: Alex Gierus http://www.iwillteachyoutoberich.com/blog/we-get-more-conservative-with-investments-as-we-get-older/comment-page-1/#comment-91 Alex Gierus Wed, 23 Aug 2006 02:20:06 +0000 http://www.iwillteachyoutoberich.com/blog/we-get-more-conservative-with-investments-as-we-get-older#comment-91 It's not a theory, it's a fact. If you have time, even a low rate will do. If you don't have time, you need a high return and the only place you get that is high risk according to conventional finance theory. I suspect you are thinking of a 60 year old with $1M versus a 20 year old with 10K. The 20 year old has little to lose and plenty of time for a risky strategy to pay off in spite of the bumps BUT: The 20 year old can also take a conservative strategy for 40 years and have it work out just fine. The 60 year old has her lifestyle to lose and no time to ride out the bumps. Undoubtedly she just wants to keep the million safe to turn it into a reliable 60K/year cash flow. A 60 year old with only 20K also has nothing to lose, and does not have the choice of a conservative strategy because she's flat broke and outta time. She needs to multiply her money by 50 in a hurry! She'll likely end up at the food bank whether she goes conservative and spends her equity or risky and loses it. It’s not a theory, it’s a fact. If you have time, even a low rate will do. If you don’t have time, you need a high return and the only place you get that is high risk according to conventional finance theory.

I suspect you are thinking of a 60 year old with $1M versus a 20 year old with 10K. The 20 year old has little to lose and plenty of time for a risky strategy to pay off in spite of the bumps BUT: The 20 year old can also take a conservative strategy for 40 years and have it work out just fine.

The 60 year old has her lifestyle to lose and no time to ride out the bumps. Undoubtedly she just wants to keep the million safe to turn it into a reliable 60K/year cash flow.

A 60 year old with only 20K also has nothing to lose, and does not have the choice of a conservative strategy because she’s flat broke and outta time. She needs to multiply her money by 50 in a hurry! She’ll likely end up at the food bank whether she goes conservative and spends her equity or risky and loses it.

]]> By: Ramit Sethi http://www.iwillteachyoutoberich.com/blog/we-get-more-conservative-with-investments-as-we-get-older/comment-page-1/#comment-90 Ramit Sethi Tue, 22 Aug 2006 20:37:03 +0000 http://www.iwillteachyoutoberich.com/blog/we-get-more-conservative-with-investments-as-we-get-older#comment-90 Alex: Uh, no. In theory, older people "need to be more aggressive" to make the same returns, but the truth is that as you get older, your tolerance for risk goes down--and accordingly, so do your potential gains. Being risky means you also allow for downside risk--meaning that you could could potentially lose lots of your money in a given year. That's simply not palatable for lots of older people who may be depending on that money for consistent income to live. That's why time is a great mitigator of higher risk. It's also why most older people invest in safer areas (e.g., bonds) and don't have the same growth goals as younger people. Alex: Uh, no. In theory, older people “need to be more aggressive” to make the same returns, but the truth is that as you get older, your tolerance for risk goes down–and accordingly, so do your potential gains. Being risky means you also allow for downside risk–meaning that you could could potentially lose lots of your money in a given year. That’s simply not palatable for lots of older people who may be depending on that money for consistent income to live.

That’s why time is a great mitigator of higher risk. It’s also why most older people invest in safer areas (e.g., bonds) and don’t have the same growth goals as younger people.

]]> By: Alex Gierus http://www.iwillteachyoutoberich.com/blog/we-get-more-conservative-with-investments-as-we-get-older/comment-page-1/#comment-89 Alex Gierus Tue, 22 Aug 2006 19:52:23 +0000 http://www.iwillteachyoutoberich.com/blog/we-get-more-conservative-with-investments-as-we-get-older#comment-89 Wrong. Old people who start "saving for retirement" late need a super aggressive strategy or they will be eating ALPO. If you start saving tiny amounts for your baby at tiny interest like 5% they will still be a millionaire by 65. But if you start when you're 30 or 40 you have to get a much higher rate, and if you're 50 then you have to gamble every day. So the truth is the opposite: When you have a lot of time you can be conservative. When you're old, you have to be risky. Wrong. Old people who start “saving for retirement” late need a super aggressive strategy or they will be eating ALPO.

If you start saving tiny amounts for your baby at tiny interest like 5% they will still be a millionaire by 65. But if you start when you’re 30 or 40 you have to get a much higher rate, and if you’re 50 then you have to gamble every day.

So the truth is the opposite: When you have a lot of time you can be conservative. When you’re old, you have to be risky.

]]> By: Jennifer http://www.iwillteachyoutoberich.com/blog/we-get-more-conservative-with-investments-as-we-get-older/comment-page-1/#comment-88 Jennifer Thu, 20 Oct 2005 22:14:02 +0000 http://www.iwillteachyoutoberich.com/blog/we-get-more-conservative-with-investments-as-we-get-older#comment-88 Index funds? Those really don't seem that crazy. They do better than 70% of aggressively managed mutual funds. Not crazy. Here's my list of crazy: ForEx, Options, Futures There's more crazy. But I'm no fin-whiz, so I don't know what they are. If you're talking diversification, a 5-10% pure crazy portfolio sounds pretty sane to me. Half on the bull side, half on the bear side. Index funds? Those really don’t seem that crazy. They do better than 70% of aggressively managed mutual funds. Not crazy.

Here’s my list of crazy: ForEx, Options, Futures

There’s more crazy. But I’m no fin-whiz, so I don’t know what they are.

If you’re talking diversification, a 5-10% pure crazy portfolio sounds pretty sane to me. Half on the bull side, half on the bear side.

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