Early retirement plan?

Question

My wife and I contribute a good amount of money into our 401K's and have increased as of March due to the stock market decline. We also have a good amount already in our nest egg and a good amount of equity in our home (about 70%). As the market has been on a decline, we have decided to start investing in stocks (for the long term; about 20 years) with our extra money. So, is this a good idea to build up extra income a ways off? I am trying to follow the Graham approach to investing-long term; value investing strategy. Is this a good methodology or is there something better?

Answer 1

average into the market, don't put a lump sum in, but for your age you should stick with the value stocks

Answer 2

In my experience value investing is probably the most successful investment strategy ever created. You are definitely in the right track but think about the 'intrinsic' value of the company you are investing in.

If you are investing in blue chips (ex. GE, Wal-Mart) w/ prices seemingly undervalued and bought at the right time is the key in investing for the long term. With the stock market decline means lowering prices means buying cheap. I know that in the short term you may be losing some money but in the long term it is worth it.

Regarding to the question of whether value investing is a good methodology depends on what you are going for. If you want steady streams of income then income investing is right for you. Growth in capital gains is important for a growth investor. Value investing, buying undervalued firms by their intrinsic value.

If you want more info as to whether your money should be invested, may I recommend some sites for you?

Answer 3

You said " extra income a ways off"...but you didn't mention a ROTH IRA....not only extra income, but TAX-FREE.

It would not be a bad idea to do your long-term stock investing IN a ROTH IRA.  Pick your own stocks or go with a mix of mutual funds and stocks.

It's called a " self- directed IRA" and all the companies have them... your portfolio and your buying or selling is all at your fingertips on- line. Check your status any time you're at the computer.