Can ordinary people manage the risk in the stock market for their retirement?

I am beginning to think there is no way an average American can invest in the market and make any money for their retirement in a 401K. I was reading this morning that 5 and 10 year returns in the portfolios of most mutual funds are negative now when they calculated in the huge losses from recessions in 2001 and 2008 and the beginning of 2009. (Q1 hasn’t been kind) 

As an investor (for my 401K) I look at that and say: yuck! Why would I put my money in something that has no long term value?

My fiance sent me this article saying that now 20 and 30 years are the benchmarks for best overall performance in mutual funds and stocks in the market. Yikes! 20-30 years? Who has that much time before retirement? Who can invest for that long anyway?

When you consider that most people’s salary starts dropping when they reach their 50’s (because employers don’t value old employees and can’t spend time/money updating their skills) you really have 25 years max to work with as far as investments for retirement.

You start your first real paying job with a 401K at age 25 and you may not be fully employable by age 50 although you will likely live to the age of 80 or 90.  There’s your 25 years to save and invest for 30-50 years of retirement.

I also think there is something else going on here affecting the 20-30 year market profit numbers. The US Markets benefited from a long term technology/innovation and growth curve from WWII to the 1980s. Personally, I think that was a one time deal and we will never see that kind of long term prosperity again.

Why? 1. Because we don’t understand enough about technology to innovate on that level again to create that much growth. 2. Because the US has higher paid workers than anywhere else in the world and everything gets manufactured and produced (and serviced) somewhere else. 3. Because we’re too complacent and have too much entitlement as a country of workers. Work creates wealth, not shell games with securities.

That brings up another point: We’ve been playing a shell game with our economy since the 1980’s. De-regulate, re-regulate, stimulus, fix, fund, trade, outsource, sell, leverage, whatever… It’s all a shell game to us worker bees and the internet has been the only significant improvement in technology to create new industries and jobs in the last 20 years. We need more than that to survive and prosper as a nation and a world.

I don’t know about you but I can’t stand to take that much risk with my money. I have some in a 401K but mostly my retirement is locked in a 5 year CD IRA at 5.25% that was a promotion this fall when banks wanted more cash reserves. I changed companies in 2006 and rolled over the old 401K to a bank in 2007 because I knew the 10 year recession was coming soon and I didn’t want to risk timing it.

There will always be people who game the market and come out ahead, but those of us without finance degrees, huge money to invest in undervalued markets or inside scoops will never really profit on the whole. Many of us will get out exactly what we put in and maybe less considering our lack of  investment prowess. So, in that level of risky why not just put it in the bank? Positive 3-5% sounds a lot better than negative 40%.

I hate the inflation argument that says that 3-5% isn’t enough to make money after inflation. Guess what? Inflation has been very low and inflation doesn’t stop when you have negative returns either. I’d rather have some money dependably than none at all when prices are higher. 

You may be asking why I want more innovation and less investment in the market? Doesn’t investment in the market lead to more innovation?

NO. Most of the mutual finds and stocks you can buy that are highly rated are in huge old (one trick pony) risk averse companies that have already peaked and can’t figure out how to do anything new. They sell shares to raise cash and then have old people make decisions like the old days. Venture Capital,  new small businesses and Universities are the place where innovation happens. If I could invest in those, I would. But then again I don’t have millions of dollars and apparently I won’t any time soon.

What are the best proven ways to fund your retirement and create wealth then?

1. Have a side job for extra income you can save (part-time weekends or evenings a few nights a week)

2. Own rental property for extra income (you need to live near it for this to work)

3. Have fewer kids if you’re contemplating having a family (ok we don’t always control this, and we love kids, but nobody is going to debate that they are expensive) 

4. Own a smaller home (smaller mortgage = smaller amount in interest paid (lost) to the bank)

5. Don’t go into debt on credit cards or car loans (hello! 25% interest, MONTHLY! on some cards)

6. Live frugally generally, keep your cars 10 years, don’t buy new clothes every month and don’t buy big ticket items like TVs and Computers every few years. Spread out the expenses over the long term.

7. Share what you have with others. Seriously, knowledge, help with projects, donating time and donating items you no longer need, as well as hand me downs between families help kids and neighbors live better within their means and help the community live better too.

8. Take care of your health. Eat less junk, lower fat, lower salt, lower carbs. Exercise daily. Take vitamins. Don’t work in an industry that has a side effect of cancer. Visit the doctor regularly and if something comes up treat it early, it will cost so much less in the long run. Heath issues start in your 30’s and get more frequent in the 40’s, 50’s and 60’s. Expect to pay more every decade for health costs in your life/budget.

These are all real tactical changes we can make to save more money monthy and yearly that will get better returns than the stock market and help prepare for inflation. What else do you think can help?

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Google to hit 900? Then what?

I was reading yesterday that Google increased it’s marketshare in search by about 1 percent to 64.5% of the searches done in the US each month. The up side of this is that they are gaining marketshare from the other few search competitors and are poised to continue being the leaders for a long time to come. The down side is that they may only be able to obtain around 80% of the market (without buying competitors) and that last 15% they have to go before topping out may only take another year to obtain or 2 at the most. That means that this Google run on stock is a limited time deal. The increase in stock price seems to follow the increase in market share and we now see the end in our sights. We know they are doing a lot to pursue getting google offline to cell phones via mobile advertising and maps on gas station pumps, but this is not the same as tapping a 180 million person online market by becoming everyone’s home page. It will take a lot longer and more technology develpment before google is relevant on phones. Most people have web access but if they are like me, they decline it now as a costly extra service that runs really slowly and is difficult to use on a cell phone screen. User interfaces have to become better. Screens have to become better. Unlimited Web access has to be free on your phone with your plan. I know that Google has overcome other challenges in the past but they are used to getting what they want quickly and this beyond the web growth is not going to happen as quickly as they would like and it may not arrive soon enough to pull us out of a recession in 09. It’s the 10 year curse and it’s coming back at the end of 09.

New Email Marketing Social Network Site

I am always interested in what other marketers have to say and are working on. There is always a lively debate about theory and practice of any marketing medium or method going on. Email marketing is also a huge success area for marketers and they debate heavily on what is best, worst and the new latest thing. Yes the email newsletter has still remained on top for providing push marketing messages out to consumers and creating conversions to purchase when there are sales goals to be met. We all get the “limited time only”, “huge sale” and “new product” emails from retailers and some of them actually work.

icontact logoThere is a new online social networking community just for email marketers now. It is from iContact. They are an email marketing management company. Someone you buy email management and sending services from to manage your email marketing process. They want marketers to not only use their management solutions, but to also log on and chat with other marketers. I think this will give both the marketers and iContact insight into what works and doesn’t work and what innovations are needed. The new iContact community is a lot like other social networks allowing people to rate and “digg” stories and content. There are also a lot of blogs and newsletters about email marketing that contribute there too. I have not done any email marketing for a while so I might go check it out just to keep up my knowledge up on this topic.

The web community service already has 120,000 registered members (so it is going strong) that are logged in and because it is a professional service they charge $9.95 per month. (this is something your company would most likely reimburse you for) Check it out to see what is new and working in email marketing right now. http://community.icontact.com

Holy Jebus Google Stock hits $700.00 per share

I thought that the Google stock had to top out at 3 or 4 hundred dollars. Apparently the $700.00 price proves I was wrong. What I wonder is why does it keep climbing? Are Google revenues still climbing that much? They aren’t doing that much more now than they did when they went public. Why is it still forecasting such growth? I have heard that stocks don’t represent present or past revenue and growth they represent what these forecasters and market traders think will happen over the next 6-12 months. So what’s in store that drove up the share price $100 bucks in less than a month? I work with google media and I have no idea. they lost out on facebook ad serving and selling and adwords is getting too expensive for some small and medium size businesses. And some forecasters still think it will hit $900 by years end in 2 months. I can’t possibly see that as a justifiable price. It so buzzy though and it does drive all other online media to be perceived as more successful right now. Is it a bubble ala 1999-2000 all over again? I am not sure, but I personally think there will be another recession around 2010. The old 30 year boom bust cycle has been condensed into 10 years by companies shortening the lifespan of products and maximizing their growth methods to grow revenue the same amounts in less time than it took pre- internet. If it becomes less than 10 years in each cycle it will be a really scary roller coaster ride. So lets not be all speculative and buzzy about everything on the net. Look at what drives revenue and converts into sales and don’t take too much buzz into account as far as what media to buy and what companies to invest in.

OMG! Puppy Cuteness!

puppyA lot of my friends have dogs, and one just got a new Boston Terrier puppy and named him Gilbert. She is just thrilled with Gilbert and thinks he is the best dog in the world. She got him from a local breeder and all the puppes there were unbelievably cute. In her quest to show the world how cute Gilbert is, and how photogenic he is, she has posted a lot of pictures on the internet on photo sharing sites. One she likes for seeing other puppy pictures is BreederRetriever.com. All the photos there are organized by breed and are really cute. If you have an adorable puppy you should share your photo there too and meet other dog owners online. In the midwest we do love our pets and I don’t know anyone that doesn’t have a dog or a cat at home. We should share that online and meet other people who have similar interests. That is what the internet is all about.