Side-Bar Discussion With Another Investor Friend -- Nothing New Here

This is what I tell my grandchildren (and have a blog for them on this very matter).

1. First of all, don't call it "investing for retirement." Call if "investing for financial independence." Plan to be financially independent by age 30.

2. I don't care how you invest, just invest from day one (1), and be serious about it, but don't let it be all-encompassing.

2a. Invest in yourself: education, education, education.

3. Read, read, read. And not just business / investment. It's amazing where you will find investment ideas.

4. My father had a very, very challenging  time investing (for many, many reasons). Your generation (his great-grandchildren) and your parents (his grandchildren) had it (investing) incredibly easy compared to my father (your great-grandfather). My generation was caught during the transition (from guaranteed pensions to "on your own") and the transition was very difficult for some in my generation.

5. It will be many, many years before you can invest all the money you have to invest ... in tax-free vehicles. You need to max out tax-free vehicles before anything else -- IRAs, Roth IRAs, 529s, real estate (?).

6. Until you know what you are doing, everything should be professionally managed.

7. Taxes and fees are not trivial.

8. Once you get to investing on your own which can be very enjoyable, look at the big picture and have a long horizon. The big picture -- everything -- global and sector. Global: I don't see anything on the horizon better than the US for overall investing. Sector: the eye of the beholder. I like energy and communications.

9. Personal lifestyle and habits: don't live beyond your means; either marry once or don't get married. In other words don't lose half  your "estate" through a divorce.

10. Personal lifestyle and habits: invest on a regular basis -- i.e., put at least one dollar into your savings / investments every month. Taking eve one dollar out of your savings / investments needs to be done for a very, very good reason and must be paid back as quickly as possible.

Now the fun part, or the challenging part.

1. Once you are comfortably on the road to financial independence, then and only then should you think about doing your own investment (rather than through a profressional).

1a. If you do not feel you are on the road to financial independence, you are not ready to do your own investing.

2. But that doesn't mean that you don't want to control your own investment decisions.

3. Professional management: IRAs, Roth IRAs, 529s. With IRAs (to include Roth IRAs), you have control over what kind of IRAs in which to invest: very, very conservative -- low rate of return, but safe -- or very speculative -- possibly high rate of return, but very risky.

4. 529s: they sound good but by their nature, are probably poor investments -- or better said, very, very, very conservative investments. They have to be. By law. They have a fiduciary responsibility to have cash ready when folks need it for education. Which means some of the investors are very, very short term, investing at age 16 years of age and using it when they are are 18 years of age for college. Technically, no one's horizon is more than about 15 years. On top of that, the manager of the 529 has to have enough cash to pay out every every for those going to college, or foreced to sell assets to pay those going to college. 529s are very, very close to a Ponzi scheme, if you think about it. Probably closer to term life insurance policies.

5. Anyway, that's a start.