Ask the Fool

Start or Wait?

Q. I'm about to start having a portion of each paycheck automatically invested in an S&P 500 index fund. The stock market might be crashing soon, though -- should I wait?

-- B.N., Gainesville, Florida

A. No. It's true that the stock market (as measured by the S&P 500) has been on a tear, posting positive returns in nine of the past 10 years, and as of this writing, it's up double digits in 2021. But a crash might have looked likely a year or two ago, and if you'd waited then, you would have missed out on gains. It's generally not smart to try to time the market, because no one can know what it will do in the short term (though over most long periods, it has risen).

If you're worried about where the market is headed, you can make regular investments of equal size over time -- also known as "dollar-cost averaging." That's what you'll be doing if your automatic investments are within a company 401(k) account. The same sum will go from your paycheck into investments regularly, so you'll be buying shares both when they're lower-priced and when they're higher-priced.

Q. How can I find out what Social Security benefits to expect in retirement? --

F.S., Adrian, Michigan

A. Visit the Social Security Administration website and set up a "my Social Security" account at SSA.gov/myaccount. Then you can pop in anytime to see estimates of your future benefits, based on your earnings record and on when you'll start collecting your benefits. Delaying the start date will make your checks bigger, but you'll receive fewer of them -- so read up on Social Security strategies to see what makes the most sense for you.

Fool's School

Being a Landlord: Pros and Cons

Many people think it could be appealing to be a landlord, owning property and renting it out to tenants. It certainly might seem like relatively easy money: You collect big checks every month, you can get some large tax deductions -- and real estate values aren't that likely to suddenly fall, the way some stocks might.

There are a lot of downsides to "landlording," though. For starters, there's a lot more to it than just collecting rent checks. You have to find tenants first, and it can be hard to find good ones sometimes. Bad ones can cause massive, long-lasting headaches if they are repeatedly behind with the rent or, worse, damage your property. If you're not comfortable dealing with a wide range of people, you may have trouble dealing with some tenants -- though you might hire a management company to do that for you for a fee (which is often around 10% of rent).

If an eviction is necessary, that can be a lengthy and difficult process. And there will likely be periods between tenants when you are still making mortgage payments on the property but not collecting any income from it.

Meanwhile, just as with any property you own, you'll not only be making those mortgage payments (unless you were able to buy it outright), but you'll also face insurance costs, property taxes, and maintenance and repair expenses. Those expenses include keeping the lawn mowed, painting rooms and replacing carpeting between tenants if needed, and fixing things that need repairs. Also, renters may not take as good care of others' property as they would their own.

Read up on local laws relating to investment properties before buying any rental property. You might also read a book such as "Real Estate Investing for Dummies" by Eric Tyson and Robert S. Griswold (For Dummies, $42). And weigh the pros and cons of investing in real estate against those of, say, stocks. For example, you can sell some or all of your stocks anytime, but selling real estate can take a while.

My Dumbest Investment

My Dumb Quadrupling

My dumbest investment? I bought shares of Starbucks at $8, sold them when they hit $32, and bought a motorcycle. I figured the stock had quadrupled, so there was no way it would go higher, right?

-- J.N.W., online

The Fool responds: Well, you certainly know what happened: Starbucks shares have recently been trading around $114 per share (after several 2-for-1 stock splits over the years). Your selling may have been perfectly sensible if you really needed to generate cash for the motorcycle, or if you just didn't see Starbucks growing much more anytime soon. But if you did still believe that Starbucks had a golden future and you didn't really need the motorcycle, hanging onto the shares would have kept assets in your portfolio that likely would have appreciated further over time. Most motor vehicles, on the other hand, lose value over time.

Starbucks has grown from one store in 1971 to more than 33,800 stores worldwide today, and there's ample reason to believe it can keep growing. It recently sported more than 5,300 locations in China, for example; that's far fewer than it has in the U.S. -- but China has more than four times the population of the U.S. Meanwhile, the company is having great success with its drive-through and mobile ordering systems and its Starbucks Rewards program, which boasts nearly 25 million members.

Foolish Trivia

Name That Company

I trace my roots back to the 1940 founding of an oil and refining company. Today, based in Wichita, Kansas, I'm one of the world's largest privately held companies, with around $115 billion in annual revenue. My operations range from ranching to data analytics, and my businesses include Flint Hills Resources, INVISTA, KBX, Matador Cattle Company, Molex, Infor, Guardian Industries and Georgia-Pacific -- with brands Angel Soft, Brawny, Dixie, Quilted Northern, Sparkle and Vanity Fair. I boast more than 120,000 workers in more than 70 countries, with about half in the U.S. Who am I?

Last Week's Trivia Answer

I trace my roots back to the 1830s, when a Vermont blacksmith moved to Illinois. Cast iron plows weren't working in prairie soil, so he developed the hugely successful self-scouring steel plow. By 1846, he was cranking out 1,000 plows annually, and by 1857, 10,000. My founder (whose name I'm generally known by) later moved his operations to Moline, Illinois, and ended up mayor of the town. I expanded my offerings over time, adding cultivators, tractors, balers, and even chainsaws and forklifts. With a recent market value topping $110 billion, I'm the largest agricultural machinery maker in the world. Who am I? (Answer: Deere and Co.)

The Motley Fool Take

Playing Defense

Defense specialist Lockheed Martin (NYSE: LMT) has quite a diverse business, including aeronautics (about 40% of sales), rotary and mission systems (25%), space (nearly 19%), and missiles and fire control (the remainder). It's involved in some of the biggest and most important long-term military contracts around, including the F-35 Joint Strike Fighter and the Patriot missile defense system. These types of programs provide a solid foundation for long-term revenue, even though the company's top line can wax and wane over shorter periods. The company primarily works for the U.S. government (74% of sales) and its allies (25%).

With a massive recent market value of $95 billion, Lockheed Martin has a scale and reach that's hard for smaller competitors to match. As such, it can take on big programs, outsourcing work to smaller players. And if those smaller players become important enough, it has the resources to step in and buy them. Generally speaking, this is how the military-industrial complex works, with very large and diversified companies using bolt-on acquisitions to maintain their leadership positions over time.

Lockheed Martin is also looking fairly cheap, with a recent price-to-earnings (P/E) ratio below 16 versus its own five-year average of above 22. Its dividend recently yielded 3.2% -- and that dividend has been increased annually for 19 consecutive years. (The Motley Fool has recommended Lockheed Martin.)

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