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Investment basics can take you far

My holiday "Advice for Kids" column typically offers grist for the mill designed to stimulate a family discussion around saving and managing money. This year, some regular readers over the years may find the usual advice like "stay out of Starbucks and invest the $2 per day" a little tedious. For them, I'll offer the fundamentals that explain how Facebook's Mark Zuckerberg can suddenly be worth close to $15 billion -- and how it could just as well happen to you.

For retirees, stick to tried-and-true strategies

At the five-year anniversary of the Bernie Madoff tragedy, major news publications have published interviews with victims regarding how their lives have been altered, in some cases, by losing everything. It brings us to the question of how much money is enough.

People were attracted to Madoff because of a lack of understanding about what they were trying to accomplish. They talked themselves into taking risks to achieve what they thought was important.

Target-date funds not a good investment strategy

If ignorance is bliss, then target retirement date funds have arrived just in time for those who are seeking that state of mind. Start humming that mantra as you invest your 401(k) account with the target date that matches the time you have left until retirement. Then, sit and watch as your contemporaries at work slowly accumulate substantially more money in their account over time -- maybe 50 percent more -- by actively managing their money and safely adopting more risk. What I just wrote is not a contradiction in terms as I'll explain in a moment.

For higher stock returns, take more risk

Like "Me and my shadow," the Dow Jones industrial average and the S&P 500 index are major benchmarks that could walk their miles in each others' moccasins ... or each others' Manolos. Women, after all, are said to own greater amounts of stock than men in this country thanks to inheritance, longer life spans, and their superior investment acumen due to less compulsive behavior.

Reading between the financial lines

Since 1928, the market has dropped by 20 percent roughly once every four years on average. Thirty-percent downdrafts have occurred nine times since then or about once every decade. One would think that with the Dodd-Frank financial regulations on their way to enactment, we will soon be able to sleep better at night.

But, as Woody Allen, paraphrasing the Bible, once said, "the lion will lay down with the lamb, but the lamb won't get much sleep."

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