Expert: Paul Henneman - 2/7/2009

Question
Hi Mr. Henneman,
I am 35Year Old man leaving in India with housewife having 1 son who is studied in Good School.
In India we are not more people who invest in stock market or Mutual Funds. We already started but not as US or other develop country.

In my age (35), what you suggest to invest monthly basis for my retirement (60) and my child (Current 6 year old) future? I already started monthly investment in equity mutual fund, especially Index fund and good quality madcap Mutual Fund. But is it good to invest in equity for long term (How much time you prefer to my age). And what will the time (my age) that I have to withdrew my equity investment and put in to secure fund? I am asking this question because if market will fall at the age of my retirement, I will be loose my saving. I already have taken health insurance for my family.

Thanks in advance.

Regards,

Devendra


Answer
Devendra,
   Thank you for your question!
Yes, I believe that everyone should have some investments in equities. THey are more risky, but do return much greater amounts over time. At 35 you are young, with 30 years of investing ahead of you. Investment portfolios should always be in different things, some more risky with higher returns, and some less risky investments. As you get older, it is wise to shift from the equites to the safer investments. This should start at around age 50, and by 55 or 60 most of your investment should be in relatively safe investments.
    The amount of your investments in stocks is up to you. It depends upon if you are willing to take on more risk with a chance of greater gain, or if you are more conservative in how you wish to invest.  I would also add safe investments to your portfolio, a portion of your savings should be in things like CD's (certificate of deposits) or a money market account.  You are invested already in an index mutual fund, that is good, but should really be considered an equity investment. An index fund tracks the overall market of stocks that are traded for that market, so it is based upon a group of equities. This is safer than investing in one or a small number of equities directly, but is still I believe in the risky category of equities in general.
   Picking individual stocks takes alot of research and knowledge. If you are willing to put in a few hours each week to research stocks, then you may want to try this. But do it slowly, invest only a small amount in the stocks you choose at least for the first year or two. If you do not want to spend a few hours each week researching, that is fine, the index mutual funds are a great way to invest in equities without having to select individual stocks.
    I congratulate you on thinking about your future at an early age. Most people wait until they are in their 40's or 50's to start saving for retirement. Investments take time to grow, and with the additional time you have you can build up far greater wealth for your family.

I hope this helps! Please do not hesitate to follow up with me if I can be of any additional service,

Sincerely,
Paul Henneman
President
ValuEngine Inc
www.ValuEngine.com