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How much importance should be given to the fact that while the gains from the retirement of a loan can be estimated with certainty the returns from an investment carry a risk attached to them?
Wiki User
∙ 16y ago
The importance is in practicality, to me. Retiring a loan means that I have more discretionary income to invest. Since my income comes periodically, the investment would be on a average cost basis (rarely are prices the same over time, and I would be buying a few at a time), so you could make a reasonable expectation of the return. To do both at the same time, there would come a point (I don't have the calculator though) where the differences between the interest paid and the unrealized interest from the investment would be nearly zero.
Wiki User
∙ 16y ago
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How much imprtance should be given to the fact that while the gains from the retirement of a loan can be estimated with certainty the returns from an investment always carry a risk attached to them?
The level of importance depends completely on how much you need the money you are talking about for some other use. If you have a pool of money to either pay back debt (risk-free) or invest in a money making project (risky) the importance is how you would feel if you could not pay back the debt if you lose 100% of your money. If you would feel real bad about losing it, then it is real important, if you can afford to lose it and can make your debt payments some other way that is risk-free then not very important. Should this "feeling" be decided before you do something with the money? You betcha!
How much importance should be given to the fact that while the gains from the retirement of a loan can be estimated the returns from an investment always carry a risk?
Maybe it is because of the uncertainty of the economy ( the ups and downs of the stock market)"How much importance should be given to the fact that (while the gains from the retirement of a loan can be estimated) (the returns from an investment always carry a risk?)"I sincerely apologize for getting technical with grammar but I would like to answer your question as accurately as possible. I bracketed the parts of your question because I'm not sure what you're actually asking. I will try to answer it in the two ways I can see it being asked.1) How does the retirement of a loan impact investment risk?The reduction of debt on the books of a corporation can positively impact its financial strength, thereby potentially reducing some of the risk involved in investing in that company. However, any investment, including a savings account, will always carry some element of risk.(With a savings account you can carry "opportunity" risk. By not investing in the bond or stock markets, or anything other than a savings account, you lose out on the opportunity to earn higher returns.)2) How much importance should be given to the fact that the returns from an investment always carry a risk, regardless of potentially positive factors affecting a companies balance sheet?Simply put, risk is one of the most, if not (arguably) THE most, important factors in evaluating a stock to purchase into, or sell out of, your portfolio.Through careful analysis and/or just listening to the consensus opinions of stock researchers, it's plain to see how much risk a stock has relative to the market and stocks in its peer group.What is much harder to evaluate, and what can only be answered by you, is how much risk is appropriate for YOU. There are plenty of online resources to help you determine that for yourself. Or you can seek out the help of a qualified financial professional.. Again I'm sorry for being picky with grammar. Good Luck!!
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Did Maxus Energy purchase additional benefits with Prudential Retirement for some of Diamond Shamrock Chemical Consolidated pension plan?
No - I believe Prudential received plan assets sufficient for them to provide estimated retirement benefits to vested plan members. Actuaries probably figured out the expected cash outlay to Prudential and worked back to the $$ needed from Maxus to fund Prudential's future obligation. Back in the mid-90's I received a letter with estimated retirement benefits. Unless you years of service or salary history changes, no change in retirement benefits. Since the plan was closed, no way to change years of service or salary history.
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Retirement can be a tricky business. There are so many factors to take into account. Generally, it is advised to seek the help of a tax professional, but sometimes the cost of this can be prohibitive. Even if you do consult an expert, it usually never hurts to educate yourself on all the different ways that you might save for your retirement. One of the most popular retirement vehicles is an IRA (Individual Retirement Arrangement) account. These accounts are great, because they allow you to put in money before it has been taxed. When you withdraw the money during your retirement, you will usually be in a lower tax bracket, so you can save a lot of money on taxes. One of the best ways to quickly figure out how much you need to save in order to live the lifestyle you want in your retirement is to make use of an IRA calculator. With an IRA calculator, you will be asked to input information such as: Current IRA balance Monthly contribution Years until retirement Estimated pre-retirement yield on investments Estimated post-retirement yield on investments Estimated inflation Desired retirement income Some IRA calculators have even more options, such as whether you plan on increasing your contribution every year. Once you have inputted all your values, the calculator will let you know whether it is a good plan or not. Will you run out of money within the first decade of your retirement, or will you be set for life? An IRA can help you determine this within a few seconds. After using an IRA calculator, you might find that you aren’t being aggressive enough with your savings plan. You might find that you can retire 5 or 10 years earlier simply by setting aside a few hundred dollars more per month. There will be no greater feeling in the world than the day you retire. You will be able to take the trips you desire, and you will be able to spend your days the way you want to spend them. You won’t have to be a slave to your alarm clock or to your boss any longer. Use an IRA calculator to figure out how to achieve this in the quickest amount of time possible.
