Teach me the stock market

P71 wrote: Stocks are worthless. Let me repeat that, stocks are *worthless*. One more time now, stocks are WORTHLESS. They are a piece of paper that a company sells with a promise to pay out a yearly dividend. They *never* have to pay the dividend. They *never* have to buy the stock back. And as a stockholder you basically have *no* rights when they go bankrupt. Ask the people who own GM stock.

plus eleventy billion

Since you are starting young put your money in CD's, bonds, and annuity insurance policies. That is what I did. It doesn't grow very fast but it never goes backward either.

I retired for the first time when I was 50. I worked part-time for 12 more years and then quit altogether.

Now the State of Maryland, the US Government, and 3 insurance companies send me a check every month. I have more disposable income now than I ever did while I was working. And I still put $2k a month in savings.

I think Hal's lesson is to get a job with the Government. That does seem to be the only growth industry we have left, especially if you include the prison industry in that.

I'll have to disagree with the annuity insurance policies though. Look up Executive Life and tell me how wonderful they are.

After that, I think diversifying is important. Look up TIPS (Treasury Inflation Protected Securities), and the funds which invest in them. They are a bond that the Fed puts out that gives you a floor level return of whatever, plus whatever the official inflation rate is. So it that's 2% return, that would be 2% plus the "offical" inflation rate. Now, since Regan, the official inflation rate has been tinkered with so that it no longer reflects the true inflation rate, but giving something is better than nothing at all. Now, let's say that SOMEBODY blows, say, TEN TRILLION DOLLARS on blow or whatever, and starts printing money to cover that. Eventually, even the new fudged inflation rate is going to have to reflect that. When it does, your TIPS will get more return. So, if we have a DEMOCRAT PRESIDENT like JIMMY CARTER and an inflation rate of say, 20% again, then your 2% TIPS would get 22% and you're still sort of even, not counting the Regan era fudges that are still in there.

An IRA is good. You need that.

An IRA is a good idea, but if you're young it effectively locks away your money for the next 30-odd years. For shorter-term savings, a money market account gives you much more flexible terms and guess what - you won't lose your investment when the market dips.