ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

Three Key Questions on Investing

Updated on December 3, 2018
jackclee lm profile image

Before retiring, Jack worked at IBM for over 28 years. His articles have over 120,000 views.


Investing for your future is your first priority. You can’t rely on your spouse, your kids, your extended famly or your government. What are the top 3 questions to answer before you get started?

- Nov. 2018

First Question - What rate of return should I aim for?

When it comes to investing, the rate of return is key. It varies depending on risk factor. If you want to be perfectly safe, you put your money in a bank and it pays very low interest. It is safe and you can never loose your principle. However, the rate of return is also very low...perhpas less than 0.1% in today’s environment.

If you invest in the stock market, depending what stocks you buy, you can expect very high rate of return or you can loose it all. The rate of return generally follow the risk. The higher the risk, the higher the return. The safer the investment, the lower the return.

To answer the question I posed, what rate of return should you aim for? The answer is 4 percent above the inflation rate. Therefore, this answer is not a fixed quantity. The reason is very simple. When investing for the future, we cannot control the price of goods. If the prices rise for whatever reason, you need to adjust your income to help pay for those goods.

The inflation rate or the CPI is tracked by our government. It is an index that estimate the approximate rise in prices from year to year. It is an average based on an assortment of items in a basket. These are common things you need to live, such as foods, energy and housing, and consumer products.

In fact, our social security benefits are adjusted to the CPI as well. When the inflation rate rises, we need to adjust our income to compensate.

Why 4%? I chose 4% to estimate how much you will need to live off your nest egg. For example, if you saved a million dollars, and you need to spend $50K per year, you will run out of money in about 20 years. If you retired at age 65, you will be broke by age 85.

If you invested that $1 million dollars, and you got a 4% return a year, you will be ahead by 40K each year and when you withdraw 50K you are only down 10K. This will allow your money to last almost indefinitely.

Historical CPI

Second Question - Where Should I invest My Money?

The answer is Equities. Equities includes stocks, bonds, mutual funds index funds and ETF... Do not invest in bank saving accounts or annuities or insurance schemes...

Why only equities? It is the only investment that can generate the returns you will need over a long period of time say 30-40 years.

My simple suggestion is SPY. It is an index fund that tracks the top 500 companies.

Plot of S&P for the Last 5 Years

Third Question - How Should I Invest?

The last question is how to go about this. Here is what you can do.

1. Start an online broker account like Etrade or Firstrade.

2. Transfer your money into the account as Cash Account.

3. Buy SPY using dollar cost averaging over a period of 1-3 months.

For example, if you have $50K to start...

On week one, Monday, you buy approx. $10K of SPY shares, rounded off to the nearest 10 shares.

On week two, Monday, you buy the next $10K of SPY...

Continue each week until all the 50K is spent with any left over kept in cash.

By doing this, you insure you are buying SPY at an average amount rather than catching it at a high or a low.


This simple investment strategy will get you started on your way. You should monitor your investment periodically to see how you are doing. My advice is once a month, check your balance. Track your progress and see how much your nest egg is growing. Every year, compute the rate of return for that year. It is very simple.

(Year End Balance) - (Beginning balance) divided by (Beginning balance) x 100.

This is the Rate of Return for that year. Repeat this for every year...

Also, go the the BLS site and look up the yearly CPI.

See how you are doing each year. If you are getting 4% or more above the CPI, you are doing great. If any given year, you either lost or are below the 4%, you are not keeping on target. If a few years in a row of losses, revisit the strategy.

SPY Bump Post Election

Stock Market Volitility

Recent weeks have seen the stock market going up and down like a yoyo. Most down compared to a year ago. This volatility can be unnerving to novice investors. They panic and want to bail out. That is exactly the wrong move.

The simple strategy is BUY LOW, SELL HIGH.

That is how you make money. In these turbulent times, stay put. You have a long term perspective and short term gyrations should have no effect. Investing for your future should be a life long activity. As long as you follow the basic rules, you can’t be too far off. Those who try to time the market, or are greedy tends to loose in the long haul.

© 2018 Jack Lee


This website uses cookies

As a user in the EEA, your approval is needed on a few things. To provide a better website experience, uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at:

Show Details
HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
LoginThis is necessary to sign in to the HubPages Service.
Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
AkismetThis is used to detect comment spam. (Privacy Policy)
HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the or domains, for performance and efficiency reasons. (Privacy Policy)
Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
MavenThis supports the Maven widget and search functionality. (Privacy Policy)
Google AdSenseThis is an ad network. (Privacy Policy)
Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
Index ExchangeThis is an ad network. (Privacy Policy)
SovrnThis is an ad network. (Privacy Policy)
Facebook AdsThis is an ad network. (Privacy Policy)
Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
AppNexusThis is an ad network. (Privacy Policy)
OpenxThis is an ad network. (Privacy Policy)
Rubicon ProjectThis is an ad network. (Privacy Policy)
TripleLiftThis is an ad network. (Privacy Policy)
Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)
ClickscoThis is a data management platform studying reader behavior (Privacy Policy)