Thursday, September 01, 2005

Today's Financial Lessons

I was just over at Investopedia.com to read up on some information. One of the current stories is The Indiana Jones Guide to Getting Ahead. I like getting ahead and I like Indiana Jones. This made the article a good read.

In the trading simulator at Investopedia, I am at a $101,243.97; which includes $23,469.97 in cash. I made a good chunk on shorting BIDU. The rest of the gains, despite my capital loss, is from interest and dividends. $271 in interest and dividends last month. My interest and dividends for September, so far, is about $75.

In my real purchases, over at sharebuilder.com, I had three purchases pay dividends last month. That account is not big yet. I'll start working on it later as more cash comes in.

On the retirement front, I am expecting to get another share from dividend reinvestment. I wasted the first few years of the IRA going for growth. Growth is good, but unreliable. I need reliability for planning ahead. So, recently, I exchanged funds from growth to income. So, now I consistently gain value on my IRA every month whether I have cash to invest or not. Income funds have a tendency to trade within a tight price range.

My overall concern, and goal, is to prepare for the coming baby boom retirement. For now, many of the baby boomers arein growth and beginning to exchange. Once they retire, I imaging that growth funds will have people pulling out in droves and income funds will be bringing the droves in. Obviously, growth funds should decline in value and income funds should increase in value with such a massive change. I still have 30 or 40 years before retirement, so I am buying income cheap now.

That last sentence just struck a cord. Buying income. I hadn't thought of the strategy in such simple terms. I like the concept.
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