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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Paul Senior who wrote (24448)	7/27/2006 12:17:02 AM
From: Spekulatius	Read Replies (1) \| Respond to of 78817

OT advise - Paul you advice to leave the principal untouched in the money market account and put future contributions into a large cap fund is too conservative, IMO. For one, the low yield in the bank account (2.4%) surprises me, as I get 5% in my 401k plans stable value fund already. It's rippoff and you should point this out. Fundamentally i like your idea of a large cap fund, as this is an asset class that is probably undervalued and also less volatile. I would ask her to put an appropriate percentage of her existing account into this fund (25%) with the intention to dollar average another 25% next year into this or other funds available to her. Hopefully this way, she would get positive results from the mutual fund, which would entice her to take a larger risk and move more of her account into higher return options.

To: Paul Senior who wrote (24448)	7/27/2006 12:28:34 AM
From: B.K.Myers	Read Replies (1) \| Respond to of 78817

Paul, I started my serious long term investing by utilizing DRIPs (Dividend Re-Investment Programs). The first DRIP that I invested in was my electric company, Dominion Resources. I started by sending them $50 / month for one full year, which they kept in a money market/savings account. After one year that money was used to fund the original investment in their Dividend Re-Investment Program. Over the course of the next few years I would send them additional money whenever I had the funds and the stock was temporarily beaten down. I have since then started two other DRIPS, in Johnson Controls (JCI) and PepsiCo (PEP). Whenever one of them is beaten down I invest additional funds. (NOTE to self - looks like a good time to send JCI a few more dollars). Usually the companies that have Dividend Re-Investment Programs are secure well-established companies with a long history solid performance. Look at a 10-year charter of JCI to see how an established company can grow over the years. I'm not sure what to tell her to do with her company IRA, but I agree that keeping those funds in a savings account is not a good option. Most companies that offer IRAs usually have a financial advisor to help their employees choose what investment options to select. She should talk with her company's financial advisor. If her company doesn’t have someone she can talk, most banks have qualified financial advisors. Whatever she does, she should speak with someone who can take the time to understand her current situation and tolerance for risk and help setup a plan for her financial future. The longer she puts off establishing a plan for her retirement, the fewer options she will have. Hope that this has been helpful. B.K.

To: Paul Senior who wrote (24448)	7/27/2006 7:54:04 AM
From: bruwin	Respond to of 78817

Personally, Paul, I’d certainly go along with your advice to the lady in question apropos investing in a "fund" related to Large Cap stocks. I would, however, maybe narrow it down to something that contained the "Top 40", or similar. As an example, in my part of the world, two of the Exchange Traded Funds are the "Satrix Industrial", which covers virtually the whole Industrial Index, and the "Satrix 40", which tracks the Top 40 large cap stocks. Over the last twelve months, the former had a price gain of 19%, while the "Satrix 40" increased some 36%. The lady in question wouldn’t have had to know anything about the stock market in order to have received a tax free dividend of 2% (dividends are tax free over here) and a Capital Gain in excess of what very few highly paid Fund Managers manage to achieve, after deduction of their "Management Fees" ! IMO, the above is an adequate "2nd. Prize". 1st. prize is to obtain the know-how, for oneself, as to how to read, understand and analyse an Income Statement and Balance Sheet, preferably of an Industrial type company. Coupled with that, would be the know-how as to which pertinent parts of those Statements reflect a company’s current ability to make ongoing profits and to provide value for Shareholders. This is not, IMO, "rocket science", but I suppose it will depend on the individual’s needs and aspirations.