Well-timed Disaster

For people under 35 - or better - people with limited financial liabilities. So, no mortgage or kiddies.

[extra psychological boost if you start at zero sans trampled stock portfolio]

This is because the decline in investment valuations caused by the financial crisis potentially presents the greatest transfer of wealth in history from the cold (not) dead hands of baby boomers and beyond into those of younger generations. But that's only if you get smart.

Why? Because your pathetic paycheck (relative to someone 20 years your senior) is now roughly 5 times more powerful when it comes to investing. It's like you hand your broker a 20 dollar bill and he buys up a hundred dollars worth of beaten up blue chip stock (especially financials.) Pretend its a $100 Apple gift card that cost you $20. Sweet deal, right?


What's the first thing you need to do? Up your 401K. Its a downturn, damnit. Cut costs and turn up the volume on your investing strategy. Beer instead of cocktails, itunes instead of concerts. You are probably mostly in equities anyway so don't worry about bond/stock ratios.

Is the market at a bottom? Maybe, maybe not. What we know is that a ton of stocks are trading cheap and -for once- you can afford a fistful full of them. Attempting to perfectly time a market recovery is like using liquid liner - It should be left to the pros. Otherwise, you'll likely end up with a black eye.

So take a cue from Warren "Snowball" Buffet and be fearful when others are greedy and greedy when others are fearful.

Homework
Making the Most of Double the Investing Power