Your Questions About Stocks And Bonds

or copy the link

Steven asks…

Which is the better investment : Stocks / bonds or gold?

I have over $40,000 in stocks and bonds. I’ve noticed that in some recent reports that I’ve received that they are losing value. I am thinking of converting them into gold. Is this a good idea or not, and why?
By the way, I am 56 and the funds I am mentioning here represent the bulk of my retirement funds..

financi4 answers:

Keep them there in stocks and bonds. Don’t speculate. Speculators never win. They might win 9 times out of 10 if they are lucky but that last time wipes away all previous gains. How would I know? I was a speculator who made 300%+ one year and then lost my ass off the next 4 years. And by speculating, I missed many great run ups by great companies.

Keep your money where it is. This is normal and it will increase at some point.

Don’t buy gold. If you want anything safer, buy PFE. The dividend is huge at 5.63% (flat tax of 15% on those dividends) and they aren’t going anywhere. Not much up but definitely not down because everyone needs their healthy pills.

By the way, gold hit its all time high today. Isn’t the idea to buy low, sell high???? How do you value if gold is a good investment or not? They have no cash flows or earnings.

Daniel asks…

What is a reasonable asset allocation PERCENTAGE now & near future – Cash, Stocks & Bonds?

I sold all my stocks about 3 months ago, and then put about 10% back into stocks in last 2 weeks. Thanks.
Additional info: Age 60, just retired, good pension, and mid 6 figure cash (the investment income of which will likely be eaten up by taxes and inflation).

financi4 answers:

At your age I would not be too aggressive. You don’t have time to make-up another big downfall in the market. I would be 55% cash, 40% bonds, and 5% or less stocks. You seem to be on solid financial footing. Why put your money at unnecessary risk and chance losing it? Good luck.

William asks…

what is the best thing to invest in stocks, bonds, mutual funds? should i invest in all or what? help please.?

So my husband and I are in our late 20s and want to start saving for retirement and our kid’s future, what would you suggest we do?
Invest in stocks, bonds, mutual funds?
Any help is appreciated..

financi4 answers:

The key to long term investing is to manage your risk. You should be willing to take larger risks when you are young than when you are nearing retirement. Higher risks do not mean that you are going to take very high risks, only that you need some risk. Why do you need some risk? Rate of return is very dependent on risk. Items with very low risks may not even outperform inflation.

Generally, you do not want to be in bonds when you are in your 20s. The rate of return is too low long term. Picking stocks is also a bad idea. You need to diversify (spread your money out over a large number of companies). For this you use the mutual funds. Mutual funds can spread your money out over thousands of companies. If one company goes bankrupt, you wont even notice.

Now to pick mutual fund. If you are already in an IRA or a defined-contribution pension fund (such as a 401-k) you will have a list of mutual funds. If not, here is my advise. First, don’t follow advise from random people on the internet. Second, use a well known mutual fund screener. I prefer Morningstar ( ). Do a little research first (use a search engine) to make sure that morningstar is real and I am not scamming you. Never trust investment advise on the internet. Morningstar will let you set your own requirements and give your suggested mutual fund. Learn about investing. Most people who are teaching about investing are selling something. Call your community college and see if they have a course or seminar in investing. Don’t buy on tips or trust advise unless you know the person who is giving it (and not even then). Build up your retirement over time. The most important thing to building retirement is to have a lot of years to do it with. Luckily you are still young. Little ups and down in the economy are not really important when you are going to invest for the next 40 years. Invest with your head not your heart. The best time to buy is when stocks are down. Your heart will tell you not to invest if stock is doing poorly. Finally, the longest the US stock market has ever been down is 10 years. You don’t want to sell into a down market. Once you are getting near 10 years of retirement, remember to start moving money away from your stock mutual funds into bond mutual funds. That way if a bear shows up (bear markets occur when stock is down) you can use your bonds and wait the bear out.

Finally, I can tell you I am a college professor that teaches this. (Which I am.) But there is no way you can tell if that is true. Check everything I have said and do your own research. Don’t believe what you read on the internet.

James asks…

What is the best book to buy that best explain stocks, bonds, and just finance in general?

I want to learn more about how to invest my money and understand financial terms and so on. Which book out there best explains all things concerning finance?

financi4 answers:

The best book is one that doesn’t cost any thing. Go to the library and check out: The Bogleheads’ Guide to Investing: Taylor Larimore, Mel Lindauer, Michael LeBoeuf, John C. Bogle

Also, use the planning and education section at:

Robert asks…

How much risk should I take when investing in stocks, bonds or index funds?

I am 27 and make 27k a year. Should I be conservative, moderate or growth? Why? Opinions?

financi4 answers:

If your goal is for retirement, then you have decades to invest and can take a fair amount of risk. How much ultimately depends on how much you are willing to accept for volatility and the roller coaster rides that happen from time to time.
If you don’t have a Roth IRA yet, by all means make one — your money grows tax free, and you can later withdraw it tax free.
Consider choosing a few moderately aggressive index funds or ETFs like Emerging Markets, small-cap, mid-cap, and Energy funds, and add some balance with the S&P500 or total stock market
Choose a company to invest through carefully. Some of the best are Vanguard, T. Rowe Price, Fidelity, and Schwab. Avoid the big banks like the plague. Don’t let them rip you off with loads (sales charges) and fees. Check how much the company charges you as an expense ratio. A good one might charge you 0.2-0.8 %. If they charge more than 1% than go somewhere else. And if they charge any kind of 12b-1 fee, hold on to your wallet and RUN.
For more information, try looking at
and play with it, comparing funds with more or less risk.

Do some reading online such as
and books like Investing for Dummies for a good intro.

Thomas asks…

Why is it important to diversify investment among stocks, bonds, and mutual funds?

when looking for investment that will increase steadily over time

thank you :]
please, this is for a homework assignment and this is the one question i am not sure about.
like why in stead of investing in all stocks or all bonda would i choose to diversify it?

financi4 answers:

Coz, if you invest in only one Stock or whatever, it may not perform as u expected, u know Good time/bad times etc… And your wealth growth rate may halt….
So if you need consistent progress in your wealth in terms of investment and want to reduce the risk exposure then its a must to have a diversified Portfolio… So that your over all return on Investment remain steady… Smooth n sound…..

E.G; if u invested in Oil expecting it to go UP and suddenly it starts falling badly… What will happen to your money??? All your money can be wiped off in a sec….!!!
But if you be cautious and Place a HEDGE (diversifying) against the Oil than nothing to be worried…. Your money wil be safe….

Diversification in finance is a risk management technique, related to hedging, that mixes a wide variety of investments within a portfolio. Because the fluctuations of a single security have less impact on a diverse portfolio, diversification minimizes the risk from any one investment.

A simple example of diversification is this one. On a particular island the entire economy consists of two companies: one that sells umbrellas and another that sells sunscreen. If a portfolio is completely invested in the company that sells umbrellas, it will have strong performance during the rainy season, but poor performance when the weather is sunny. The reverse occurs if the portfolio is only invested in the sunscreen company, the alternative investment: the portfolio will be high performance when the sun is out, but will tank when clouds roll in. To minimize the weather-dependent risk in the example portfolio, the investment should be split between the companies. With this diversified portfolio, returns are decent no matter the weather, rather than alternating between excellent and terrible.

Joseph asks…

What are the best screeners for stocks, bonds, funds and commodities?

What are the best free ones? What are the best commercial ones?

financi4 answers:

That is a good question but I use Yahoo screener. There is also FOX and MSNBC

Donald asks…

How to invest in mutual funds, stocks, bonds, or Treasury bills and securities?

Do I have to diversify or focus in one investment?

financi4 answers:

First u have 2 decide how much return u want in a year?
Suppose u r willing just 6 % return on ur investment then u invest in govt. Bank deposits-these r totally safe & liquid.
But if u want to earn 25% or 50% in a year,then u have2 search avenues which gave such returns last year & expected 2 repeat the results.
So post such questions in yahoo answers2 know in which part of world u can double ur money in what?
Then evaluate the answers regarding feasibility, liquidity and safty.
I know here in my town i double my money in 2 years in property investment, so if u want2 join u r welcome.

Powered by Yahoo! Answers