Bonds and CDs are for grandmas. A 4% return will not even grow your money sometimes, as inflation can be up to 4 or 5 percent yearly. The only people whom I would recommend a high allocation of bonds and CDs to would be people who need to avoid any and all possible risk, or people who are going to need their money soon.
What you want is a no-load, passively managed index fund. Index funds return 10% yearly on average since 1926. All 'index' funds do is track the S&P 500, Wilshire 5000, DJIA, or some other market index and purchase stocks in an equal 'weight' to the index they are tracking. These are the hands down best way to invest in mutual funds since they are not actively managed (cutting down on fees), they don't buy and sell often (cutting down on taxes), and they don't flip out and lose their mind when the market crashes (allowing you to buy cheap at the bottom). Passively managed funds are managed often by a computer, sometimes by one man with a checklist and program that does the buying and selling with one click every day.
The proportion of stocks and bonds you want is based on your age and risk tolerance. Since you are young, you want to weigh heavily (80-90%) in stocks, since thats where the money is made. The reason people move out of stocks when they get older is that stocks also fluctuate, and they dont want to withdraw their money at a time when their overall portfolio is down 30%.
To give you an overall picture of what you could make, it all depends on the dollar amount you invest. If you want to invest for 20 years, (best way to go) and start with 500 dollars investing 500 dollars a year, (and increase annual amount with inlfation - important) you will have invested 18gs total and you will come out with 60,000 in the end.
The more you invest, obviously, the more money you will make. If you could afford to put away 400 dollars a month, (5 gs a year), at the end of 20 years you will have made 326,000 dollars, and invested about 120k. It doesn't sound like much, especially considering you invested 120 thousand dollars, but if your annual expenses are 50k a year, 320,000 means you won't have to work for 6 years, and thats if you stop working. If you keep your money in and continue to let it reinvest, the benefits can be substantial. That same 5k a year over 30 years instead of 20 will make you 900,000 dollars, almost a million, off a 200k investment.
Now, of course, this sounds like a lot of fuckin money to everyone here (400 a month...), but it's actually not hard to shave off.
I dont:
1. Eat out at restaurants or fast food places.
2. Go to the movies
3. Spend extra money on shit I don't need (clothes, dumb shit like rims, jewelry, etc.)
Right now I make 15 dollars an hour, and after inve4sting for 4 years I have a portfolio worth of about 50k. Even if I completely stopped investing now, I would still have 250k in 20 years. It's all about sacrifices now to get what you want, and finding cost-effective ways of entertaining yourself.
I'm all about reading, free or low cost arts and music exhibitions, and what I call "urban BMX", smashin through the city on a one speed at like 20 mph - probly dangerous, but still fun as fuck.
The most important thing you can do, money-wise, is learn to live below your means. It's all about shavin that 5 dollars here and that 10 dollars there. I was making 9 dollars an hour and still putting away 250 a month. Now I'm definitely not financially independent at 15...lmao...but I have a better paying job lined up and I already have way more than I should in my portfolio.
Gettin rich is not complex or impossible, and it has nothing to do with the amount of crack or records you sell...
How much did you lose and was it significant? Would you say YOUR index funds are risky?
