I am being approached to invest for 20 years....?

Question

I am 40 years old and am being approached by a "financial adviser" to invedst 30% of my salary into long term investments for a contracted 20 years. Is this wise?

Answer 1

Not much info. to go on here - but alarm bells go off when I hear 'contracted 20 years'.

You have many, many, many investment choices that require nowhere near 20-year commitments. What is this person trying to sell you - annuity, life insurance policy, shares in oil/gas trust, something else? Whatever it is, I don't like the smell of it.

If you want to work with a financial advisor, you have many choices - and whomever you choose should NEVER be recommending a particular investment to you until after they've taken the time to learn your investing temperament (i.e. how much risk you can live with comfortably), your financial situation (are you investing your retirement nest egg with them - i.e. funds you can't afford to lose - or is this one of many investments for you, or are you somewhere in between?), not to mention your age and life situation (how long before retirement, any major financial obligations, etc.).

If you want a suggestion for financial advisor, I would check FundAdvice.com. I have no affiliation, and I'm not a client of theirs - but I've been reading their investment advice for years and I trust it and them. (Yes, their advice has paid off for me.)

Bottom line - tell this person no thanks and run.

Answer 2

Well, I don't want to give advice, but I'll say what I would do for my reasons.

A contracted 20 years is a long time. Life changes and I may need that money before the time is up.

Do I really want to hire an employee who does one thing in 20 years and then files and forgets my money?

The economy and interest rates change. Having something locked in could prove to be disasterous. What if he came to see me while the tech boom was on and invested all my money in tech companies? Most of my money would be gone.

What if he came around when Bre-X was around and gold was skyrocketing along with gold stocks and gold bars and coins and commodity contracts? I would have lost most of my money after Bre-X was proved a fraud and if my long term investment involved rolled over commodity contracts, I might even end up owing money.

What if I was 40 years old during the mid eighties and my money was invested in savings and loans stocks which were skyrocketing and considered safe because they gave out mostly real-estate loans? Yet most of the savings and loans companies went bust and almost brought the entire banking system down with them when real estate prices collapsed?

What if there was a change in the tax code? And it affected my investments and they went into the tank because of the tax code?

What about investing in industrials and not tech which crashed, industrials held their values -- except during the 70s when there was gross inflation and in the early 90's when there was a recession.

Gee, bank investments, Government instruments, industrials, technology and natural resources, they all have had rough times . There is no one safe investment, except the one investment that helps protect me against changing conditions -- me. No one looks after my money better than me and that includes getting financial advice but not locking in for 20 years.

I'm not sure I'd like to entrust 30 percent of my money to something long range when everything can run into trouble?

Hmm there are long term investments that are also liquid, so I can get my money out if something unforseen happens. Why should I lock in when I can get the advantage of long term investing but still have a safety net of being able to get my money out should the unexpected occur.

Lastly saving is good, but money is of no use unless I spend it. I'm careful and I don't go into debt, but at some point of time I'm going to want to enjoy my money. I can't take it with me.

No I think I'll continue to listen to other financial advisors and advisory services that I can get from my brokerage for free like Standard and Poors.

I think I'll continue to monitor the news, just in case I'm invested in the long term in Japan, but all of a sudden Japan it looks like the Japanese government is making a lot of bad decisions, I'd rather get my money out and find another country than take the chance, nothing may happen, but why take the chance.

Those would be my thoughts.

I read Wabboc's post, while there are a couple of things I don't agree with, he gave a cornacopia of outstanding information and things you can explore, 5+ stars from me anyway.

Answer 3

If somebody walks up to you and wants you to invest for a fee, walk away. Good (and even some bad) investment people make too much money to bother with begging and cold calling people to invest in their projects. 30% and for 20 years is steep. The majority of professionals can't beat the SP 500 over the long term, so the odds are this person can't either. You also want some liquitity is case you want that money sooner (one of the reasons I hate annuities).

Answer 4

If the only description of this investment is that your money will be tied up for 20-years, then run. Did he have a gun? On the otherhand. It may be a legimate investment. No way to tell from your description.

Answer 5

At this age, I personally would not go for long term investments. I would go for short term, high returns investments. But of course, there will be risks.

Answer 6

about a yr ago i opened a high yield savings account with aid4families.com I receive my interest through monthly payments which are directly deposited into my bank account each month. There are other program options which allow for compounded interest and such. The minimum investment term is 1 yr, so it isn't that bad. This programs really pays the highest APY around. You should check it out for yourself

Answer 7

Cheung Kong Holdings China cellular (finding on modern cost, it gets rich each and every so often) Hong Kong Exchanges and Clearing Gushan Env. means China Direct Berkshire Hathaway (even the B shares - enable them to do the purchase and carry for you) Citibank (they are way too beat up on the instant) GE IBM digital Arts My biases are obvious. the subsequent 15-2 many years ought to have substantial exposure to China. the subsequent 3-4 may well be bouncy by fact the modern run-up, however the numbers are overwhelming. India would be good to spectacular, too. I in simple terms have not appeared at it as lots.

Answer 8

if you want to invest in safe, guaranteed plans, with high returns in short term say 6 yr to 10 yr., in whole life policy which you can terminate as per your wish, For your children's higher education or want to save tax.... call me at 08253020181. regards H.Rajesh

Answer 9

Depends on the actual investment. If it's in, say, anything related to America, then no it's not wise. haha Another thing about that is how healthy you are and if you will even live that long.

Answer 10

Are you rich enough to afford "throwing away" 30% of your salary? If so then it's your decision, but if your job is not 100% secure for the rest of your work-life, and who does have a secure job except for God, then I would definitely say "No thanks!"