“In your recent article, you stated that if a person may need the money in 5 years do not consider putting in the stock market. Why do you feel that way? Five years seems to be a nice length of time for your stocks to grow as opposed to leaving it in a bank and getting 3-5% interest a year.” – JPNappy
A.T.: Well, say you have $10,000 you may NEED for something in the next five years and that when you DO need it, it’s only worth $6,300, because stocks are down. That would not only leave you short of cash but force you to sell at what might be close to the bottom. Better to have bumbled along in a bank or money market or Treasury Direct and have $11,500 instead.
Obviously, five years is arbitrary. If you will literally need the money in five years and one day, that doesn’t make the market a completely safe place for it, any more than at four years and 11 months it’s suddenly dangerous. But the notion that stocks can never go down and stay down for more than a few months — or even a few years — is a very modern one with little regard for reality. To me, for money you really can’t afford to lose, five years would be a sensible minimum — and even then there are no guarantees.
One reason “the rich get richer” is that they can afford more risk. They have that first $5 million safely in bonds. <grin>
(Hey, I hate “<grin>s” as much as the next guy — what a tragedy it would be if writers had to begin signaling <irony> or <humor> or <tears> with brackets. But I have this morbid fear one of you might actually think I don’t realize how preposterous $5 million IS to most of us — let alone $5 million safely in bonds. <downward-drooping envious pout>)
Quote of the Day
Beware of little expenses. A small leak will sink a great ship.~Ben Franklin
Request email delivery
- Mar 25:
Of Deficits And That Mechanical Swan
- Mar 22:
Pins And Groats — Be It Ever Thus
- Mar 21:
Demand Your Carbon Dividend
- Mar 20:
Success! Why Do New York’s Mayor And City Council Resist It?
- Mar 19:
The Other Kind Of Bankruptcy
- Mar 18:
- Mar 15:
Pete Buttigieg And John Delaney
- Mar 14:
The Fifth Risk
- Mar 13:
Reader Feedback: How About A Stock Update?
- Mar 12:
Eat Drink And Be Merry? . . .
- Mar 25: