STEP 5  
Resolve to grow your money by
putting it in the one investment that over the long term
outperforms all others: stock mutual funds:
- Stocks buy ownership of
companies; mutual funds invest in many companies
to give you the safety of diversification
- The stock market's spectacular
long-term returns can come with painful
short-term fluctuation, and that means not giving
in to your emotions and selling when the market
dives
- We're all living longer, and with shifting
too early into bonds you risk outliving your
money: instead, keep 100% of your money in stock
funds while you're young; beginning at age 45,
shift 2% of your portfolio each year into into
bonds
NEXT
STEP
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A single dollar invested in
stocks in 1800 returned $11.1 million by 2005—some
622 times more than bonds—as this graph from Jeremy
Siegel's book Stocks for the Long Run, so clearly shows. See a larger
version of this graph here.
| "When I
was 24, I didn't have much money, and that felt
like being pretty close to zero. I didn't know
everything, but I knew I wanted to get as far
away from zero as I could. Today I'd encourage
people on the younger side of things to consider
doing the same. What's young? 25 is young. 35 is
still young, and I'd even call 45 young. Those
are the years to invest for growth and put as
many miles as you can between you and zip. You'll
be glad you did." - Charles Schwab, Charles
Schwab's Guide to Financial Independence
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