This statement struck a chord with me. My mom often asked me for advice on where she should invest. I’d often reply with a question: “What do you want to do with this money?” – meaning, how long do you want it invested? Can you tolerate a 10% drop between now and then? 20%? 30%?
She’d often reply that she was old and couldn’t afford to lose anything. (Yes, she said this for 30+ years of retirement!).
She wanted something safe, something that would get some decent amount of return and, down in her heart of hearts, she wanted something SEXY! She wanted to be able to chat over the coffee table about how she invested in X. In those 30 years, I made one solid suggestion that hit home: Buy windmills. (Vestas). Mom had a high-old time talking about how she was going to make it rich while saving the world.
That made it all worthwhile for the rest of the thirty years when I’d ask if the money was for her (CDs, money market) or her kids / grand-kids (S&P 500 index fund). She’d get mad and go back to her broker and pay a 5%+ fee for the “Next big thing” mutual fund. Oh well, brokers gotta pay rent too…
Dad got me interested in money, Jack Bogle and Lou Roukeyser kept me interested… it was Mom that got me started in FWF-type shenanigans WAAAAY before FWF existed. She helped me out with a CD play in the early '80s high interest era that paid a substantial part of my college education. Here’s to you, Mom. Rest in peace.
Motu – Think about the Chipotle Burrito factor – how large is the IRA? Is the difference between the various suggestions above on a par with the price of a delicious Chipotle burrito? (relatively speaking). If so, then take the easy path. It’s not worth extra effort. If you are talking big money, then some small differences in interest rate / return can add up and it is worth the extra effort.